What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-02 compared with 2021-03-31 · 300 added, 257 removed, 1001 unchanged (36% of the section changed)

4 unchanged sentences

Because of the inherent limitations surrounding internal controls over financial reporting, our disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure

controls and procedures.

Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements would not be prevented or detected on a timely basis.

Our management, under the supervision of and with the participation of our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting and disclosure controls and procedures as of December 31, 2021.

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Based on our assessment under the COSO Internal Control-Integrated Framework, management believes that, as of December 31, 2021, our disclosure controls and procedures and internal control over financial reporting were effective.

Remediation of Material Weakness from 2019

As previously disclosed, in connection with the preparation of our financial statements for the year ended December 31, 2019, we concluded that we had a material weakness in internal controls over our information technology general controls (ITGCs) related to change and access management processes, and that as a result, internal controls related to substantially all underlying financial statement accounts and disclosures were ineffective.

We also identified deficiencies in internal controls over our quarterly revenue recognition procedures in that they were not operating effectively for a sufficient period of time in 2019 and certain controls related to the implementation of ASC 606 which, taken together, led us to determine that we had a material weakness in the revenue recognition process.

To remediate the material weaknesses identified, we performed the following actions during 2020:

• With respect to the material weakness in ITGCs, we have reevaluated our risk assessment and IT control environment within the finance department, developed an IT policy with a clear description on how the controls are designed to operate and established more rigorous controls over system access, administration and system changes.

• With respect to the material weakness in the revenue recognition controls, we have implemented improved policies and enhanced the rigor of our review documentation with regards to internal controls over our revenue recognition process.

As the enhanced policies, procedures and controls have functioned effectively for multiple quarters, we concluded that we have remediated the material weaknesses previously disclosed from 2019.

Management, including our principal executive officer and principal financial officer, has concluded that the financial statements and other financial information included in this Annual Report on Form 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented.

Changes in Internal Control over Financial Reporting

Except for the remediation activities described above, there have been no changes in internal control over financial reporting identified in connection with the evaluation of such internal control required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the fourth quarter of 2020 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in internal control over financial reporting identified in connection with the evaluation of such internal control required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the fourth quarter of 2021 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

Not applicable.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Certificate of Designation of Series D Convertible Preferred Stock Form 8-K (Exhibit 3.1) April 6, 2020 001-37471

Certificate of Designation of Series E Convertible Preferred Stock

Form 8-K (Exhibit 3.1) May 21, 2021 001-37471

Amended and Restated Bylaws of the Registrant Form 8-K (Exhibit 3.2) December 18, 2014 333-190728

9 unchanged sentences

Form of Stock Option Award Agreement under the Registrant’s 2018 Employee, Director and Consultant Equity Incentive Plan # Form S-8 (Exhibit 10.2) August 9, 2018 333-226733

Form of Stock Option Award Agreement under the Registrant’s 2020 Employee, Director and Consultant Equity Incentive Plan # Form S-8 (Exhibit 10.2) August 5, 2021 333-258502

2018 Employee Stock Purchase Plan # Form 8-K (Exhibit 10.2) July 26, 2018 001-37471

1 unchanged sentence

2020 Employee, Director and Consultant Equity Incentive Plan # Form 8-K (Exhibit 10.1) June 29, 2020 001-37471

2020 Employee, Director and Consultant Equity Incentive Plan, as amended # Form 8-K (Exhibit 10.1) June 29, 2021 001-37471

Research and Licensing Agreement by and between Pieris AG and Technische Universität München, dated as of July 26, 2007 ± Form 10-K (Exhibit 10.10) March 30, 2015 333-190728

10 unchanged sentences

and Pieris Pharmaceuticals GmbH, effective as of January 3, 2020 + Form 10-K (Exhibit 10.16) March 13, 2020 001-37471

Exclusive Option Agreement by and among the Registrant, Pieris Pharmaceuticals GmbH and ASKA Pharmaceutical Co., Ltd., dated as of February 27, 2017 ± Form 10-Q/A (Exhibit 10.3) April 26, 2018 001-37471

License & Collaboration Agreement by and between Pieris Pharmaceuticals Inc., Pieris Pharmaceuticals GmbH & Pieris Australia Pty.

Limited and AstraZeneca AB, dated as of May 2, 2017 ± Form 10-Q/A (Exhibit 10.1) April 26, 2018 001-37471

Amendment No.

2, dated March 29, 2021, to the License & Collaboration Agreement by and between the Registrant and AstraZeneca AB ± Form 10-Q (Exhibit 10.4) May 17, 2021 001-37471

Non-Exclusive Anticalin® Platform Technology License Agreement, by and between Pieris Pharmaceuticals Inc., Pieris Pharmaceuticals GmbH and Pieris Australia Pty.

Limited and AstraZeneca AB, dated as of May 2, 2017 ± Form 10-Q/A (Exhibit 10.2) April 26, 2018 001-37471

Amendment No.

1, dated March 29, 2021, to the Non-Exclusive Anticalin® Platform Technology License Agreement, dated May 2, 2017, by and between the Registrant and AstraZeneca AB ± Form 10-Q (Exhibit 10.5) May 17, 2021 001-37471

Subscription Agreement, dated March 29, 2021, by and between the Registrant and AstraZeneca AB ± Form 10-Q (Exhibit 10.6) May 17, 2021 001-37471

License and Collaboration Agreement by and among the Registrant, Pieris GmbH and Seagen, Inc., dated February 8, 2018 ± Form 10-Q (Exhibit 10.1) May 10, 2018 001-37471

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1 to License and Collaboration Agreement by and among the Registrant, Pieris GmbH and Seagen, Inc., dated June 2, 2020 Form 10-Q (Exhibit 10.3) August 10, 2020 001-37471

Amended and Restated License and Collaboration Agreement, dated March 24, 2021, by and between the Registrant and Seagen Inc.

Form 10-Q (Exhibit 10.1) May 17, 2021 001-37471

Combination Study Agreement, dated March 24, 2021, by and between the Registrant and Seagen Inc.

Form 10-Q (Exhibit 10.2) May 17, 2021 001-37471

Subscription Agreement, dated March 24, 2021, by and between the Registrant and Seagen Inc.

Form 10-Q (Exhibit 10.3) May 17, 2021 001-37471

Non-Exclusive Anticalin Platform Technology License Agreement by and among the Registrant, Pieris Pharmaceuticals GmbH and Seagen, Inc., dated February 8, 2018 ± Form 10-Q (Exhibit 10.2) May 10, 2018 001-37471

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Clinical Trial Collaboration and Supply Agreement by and among the Registrant and Eli Lilly and Company, dated August 10, 2020 Form 10-Q (Exhibit 10.1) November 4, 2020 001-37471

Exclusive Product License Agreement, dated April 24, 2021, by and among the Registrant, Pieris Pharmaceuticals GmbH and BP Asset XII, Inc.

Form 10-Q (Exhibit 10.1) August 5, 2021 001-37471

Research Collaboration and License Agreement, dated May 19, 2021, by and among the Registrant, Pieris Pharmaceuticals GmbH and Genentech, Inc.

Form 10-Q (Exhibit 10.3) August 5, 2021 001-37471

Form of Indemnification Agreement by and between the Registrant and each of its current directors and executive officers # Form 8-K (Exhibit 10.10) December 18, 2014 333-190728

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Yoder, dated as of December 17, 2014 # Form 8-K (Exhibit 10.15) December 18, 2014 333-190728

Employment Agreement by and between the Registrant and Louis A.

Matis, M.D., dated as of July 20, 2015 # Form 10-Q (Exhibit 10.1) November 13, 2015 001-37471

Letter Agreement by and between the Registrant and Louis A.

Matis, M.D., dated as of January 3, 2020 # Form 10-K (Exhibit 10.25) March 13, 2020 001-37471

Non-Employee Director Compensation Policy, as amended # Form 10-K (Exhibit 10.26) March 13, 2020 001-37471

Lease Agreement by and between Pieris AG and Födergesellschft IZB mbH, dated as of May 4, 2011 Form 8-K (Exhibit 10.23) December 18, 2014 333-190728

Employment Agreement by and between the Registrant and Ahmed Mousa, dated as of October 7, 2021 # Form 10-Q (Exhibit 10.1) November 2, 2021 001-37471

Employment Agreement by and between the Registrant and Tom Bures, dated as of October 7, 2021 # Form 10-Q (Exhibit 10.2) November 2, 2021 001-37471

Non-Employee Director Compensation Policy, as amended *#

Agreement of Sublease by and between Berenberg Capital Markets LLC and the Registrant, dated as of August 27, 2015 Form 10-Q (Exhibit 10.3) November 13, 2015 001-37471

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Form 8-K (Exhibit 10.1) April 6, 2020 001-37471

Exchange Agreement by and among the Registrant and Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P., and MSI BVF SPV, L.L.C., dated as of May 20, 2021 Form 8-K (Exhibit 10.1) May 21, 2021 001-37471

Open Market Sale Agreement, dated as of August 9, 2019, by and between Pieris Pharmaceuticals, Inc.

2 unchanged sentences

Non-Qualified Stock Option Agreement by and between the Registrant and Hitto Kaufmann, Ph.D., dated as of August 30, 2019 # Form 10-Q (Exhibit 10.3) November 12, 2019 001-37471

Corporate Code of Ethics and Conduct and Whistleblower Policy *

Form of Non-Qualified Stock Option Agreement by and between the Registrant and Tim Demuth, M.D., Ph.D.

Form S-8 (Exhibit 10.3) August 5, 2021 333-258502

Corporate Code of Ethics and Conduct and Whistleblower Policy Form 10-K (Exhibit 14.1) March 31, 2021 001-37471

List of Subsidiaries *

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Yoder, Chief Executive Officer and President, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

Certification of Thomas Bures, Vice President of Finance, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

Certification of Thomas Bures, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

Certification of Stephen S.

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Section 1350 **

Certification of Thomas Bures, Vice President of Finance, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.

Certification of Thomas Bures, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.

Section 1350 **

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101.PRE XBRL Taxonomy Extension Presentation Linkbase Document *

104 Cover Page Interactive Data File (embedded within the Inline XBRL document) *

* Filed herewith

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Yoder Director (Principal Executive Officer )

/s/ Thomas Bures Vice President, Finance and March 31, 2021

Thomas Bures Treasurer (Principal Financial and Accounting Officer )

/s/ Thomas Bures Chief Financial Officer March 1, 2022

Thomas Bures (Principal Financial and Accounting Officer )

/s/ James Geraghty

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PIERIS PHARMACEUTICALS, INC.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

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We have audited the accompanying consolidated balance sheets of Pieris Pharmaceuticals, Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ 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 “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, 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 U.S.

generally accepted accounting principles.

Adoption of New Accounting Standards

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue in 2020 due to the adoption of Accounting Standards Update (ASU) No.

2018-18, Collaborative Arrangements:

Clarifying the Interaction Between Topic 808 and Topic 606.

Basis for Opinion

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Cash and cash equivalents $ 117,764 $ 70,436

Short term investments — 41,894

Accounts receivable 3,313 1,706

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Stockholders’ equity:

Preferred stock, $ 0.001 par value per share, 10,000,000 shares authorized and 14,429 and 11,429 shares issued and outstanding at December 31, 2020 and 2019, respectively

Common stock, $ 0.001 par value per share, 300,000,000 shares authorized and 56,002,815 and 55,212,437 issued and outstanding at December 31, 2020 and 2019, respectively

Convertible preferred stock, $ 0.001 par value per share, 10,000,000 shares authorized and 15,617 and 14,429 shares issued and outstanding at December 31, 2021 and 2020, respectively

Common stock, $ 0.001 par value per share, 300,000,000 shares authorized and 72,222,661 and 56,002,815 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital 306,998 242,672

Accumulated other comprehensive loss ( 295 ) ( 1,995 )

Accumulated other comprehensive income (loss) 829 ( 295 )

Accumulated deficit ( 257,144 ) ( 211,406 )

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Loss from operations ( 51,831 ) ( 33,921 )

Other income (expense)

Interest income 4 511

Other expense, net ( 3,656 ) ( 26 )

Grant income 3,685 —

Other income (expense), net 2,404 ( 3,656 )

Loss before income taxes ( 45,738 ) ( 37,066 )

4 unchanged sentences

Comprehensive loss $ ( 44,614 ) $ ( 35,530 )

Reconciliation of net loss to net loss attributable to common stockholders:

Net loss $ ( 37,230 ) $ ( 25,469 )

Accretion of Series C convertible preferred stock — ( 2,830 )

Net loss attributable to common stockholders ( 37,230 ) ( 28,299 )

Net loss per share:

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comprehensive

loss Accumulated

income (loss) Accumulated

deficit Total equity

3 unchanged sentences

Unrealized gain on investments — — — — — 70 — 70

Adoption of ASC 606, Revenue from Contracts with Customers

— — — — — — ( 1,641 ) ( 1,641 )

Stock based compensation expense — — — — 5,090 — — 5,090

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Issuance of common stock resulting from exercise of warrants — — — — — — — —

Issuance of common stock and Series C preferred stock resulting from offering, net of $ 1.0 million in offering costs

Issuance of common stock pursuant to ATM, net of $ 0.4 million in offering costs

— 3,571 4 9,620 — — 9,624

Preferred stock conversion (Series B) 5 — ( 5,000 ) ( 5 ) 5 — — —

Preferred stock conversion (Series D) 3 — ( 3,000 ) ( 3 ) 3 — — —

Balance as of December 31, 2020 14 $ — 56,003 $ 56 $ 242,672 $ ( 295 ) $ ( 211,406 ) $ 31,027

1 unchanged sentence

Foreign currency translation adjustment — — — — — 1,124 — 1,124

Unrealized gain on investments — — — — — 70 — 70

Stock based compensation expense — — — — 5,215 — — 5,215

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Issuance of common stock resulting from purchase of employee stock purchase plan shares — — 64 — 165 — — 165

Issuance of common stock resulting from exercise of warrants — — 1,391 1 836 — — 837

Issuance of common stock resulting from conversion of preferred stock ( 4 ) — 3,812 4 ( 4 ) — — —

Preferred stock conversion (Series E) 5 — ( 5,000 ) ( 5 ) 5 — — —

Issuance of common stock pursuant to at the market offering program, net of $ 1.5 million in offering costs

— 8,180 8 38,180 — — 38,188

Preferred stock conversion (Series D) 3,000 — ( 3,000 ) ( 3 ) 3 — — —

Issuance of common stock pursuant to private placement offering, net of $ 0.1 million in offering costs

— — 7,290 8 18,905 — — 18,913

Balance as of December 31, 2021 16 — 72,222 72 306,998 829 ( 257,144 ) 50,755

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Net loss $ ( 45,738 ) $ ( 37,230 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash (used in) operating activities:

Depreciation and amortization 2,459 2,311

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Realized investment gain/loss — 471

Deferred tax liability 164 —

Deferred tax expense — 164

Foreign currency re-measurement loss — ( 8 )

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Proceeds from maturities of investments — 83,437

Proceeds from sale of investments — 8,292

Purchase of investments — ( 41,499 )

Net cash provided by investing activities 39,212 9,838

Net cash (used in) provided by investing activities ( 949 ) 39,212

Financing activities:

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Proceeds from exercise of warrants 837 —

Issuance of Common and Preferred Stock, net of issuance costs 9,624 30,998

Proceeds from issuance of common stock resulting from ATM sales, net of $ 1.5 million in transaction costs

Proceeds from issuance of common stock from private placement, net of $ 0.1 million in issuance costs

Net cash provided by financing activities 59,127 10,115

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Supplemental cash flow disclosures:

Accretion of Series C convertible preferred stock $ — $ 2,830

Net unrealized gain on investments $ 70 $ —

Property and equipment included in accounts payable $ 237 $ 131

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and its wholly-owned subsidiaries, hereinafter collectively Pieris, or the Company, is a clinical-stage biopharmaceutical company that discovers and develops Anticalin-based drugs to target validated disease pathways in unique and transformative ways.

Pieris' corporate headquarters is located in Boston, Massachusetts and its research facility, as of December 31, 2020, was located in Freising-Weihenstephan, Germany.

The Company moved its research facility to Hallbergmoos, Germany in February 2020.

Pieris's clinical pipeline includes an inhaled IL-4Rα antagonist Anticalin protein to treat moderate-to-severe asthma and an immuno-oncology, or IO, bispecific targeting 4-1BB and HER2.

Pieris' corporate headquarters is located in Boston, Massachusetts and its research facility, as of December 31, 2021, was located in Hallbergmoos, Germany.

Pieris’ clinical pipeline includes an inhaled IL-4Rα antagonist Anticalin protein to treat moderate-to-severe asthma and an immuno-oncology, or IO, bispecific targeting 4-1BB and HER2.

The Company’s core Anticalin technology and platform was developed in Germany, and the Company has partnership arrangements with several major multi-national pharmaceutical companies.

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As of December 31, 2021, cash and cash equivalents were $ 117.8 million.

In March 2021, the Company amended its strategic collaboration agreement with Seagen which resulted in their purchase of $ 13.0 million of the Company’s common stock (See Note 3).

In March 2021, the Company earned a $ 13.0 million milestone from AstraZeneca related to the initiation of the phase 2a study for PRS-060/AZD1402 and AstraZeneca agreed to purchase $ 10.0 million of the Company's common stock (See Note 3).

The Company’s net loss was $ 45.7 million and $ 37.2 million for the years ended December 31, 2021 and 2020, respectively.

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Cash necessary to fund operations will increase significantly over the next several years as the Company continues to conduct these activities necessary to pursue governmental regulatory approval of clinical-stage programs and other product candidates.

The Company plans to raise additional capital to fulfill its operating and capital requirements through public or private equity financings, utilization of its current ATM program, strategic collaborations, licensing arrangements, and/or the achievement of milestones under its collaborative agreements.

The Company plans to raise additional capital to fulfill its operating and capital requirements through public or private equity financings, utilization of its current ATM program, strategic collaborations, licensing arrangements, government grants and/or the achievement of milestones under its collaborative agreements.

The funding requirements of the Company’s operating plans, however, are based on estimates that are subject to risks and uncertainties and may change as a result of many factors currently unknown.

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

Until such time as the Company can generate substantial product revenues, if ever, the Company expects to finance its cash needs through a combination of equity offerings, debt financings, strategic partnerships and licensing arrangements.

The terms of any future financing may adversely affect the holdings or the rights of the Company’s existing stockholders.

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If actual results are different from management’s estimates, the Company may need to seek additional funding.

If the Company is unable to obtain additional

funding on acceptable terms when needed, it may be required to defer or limit some or all of its research, development, and/or clinical projects.

If the Company is unable to obtain additional funding on acceptable terms when needed, it may be required to defer or limit some or all of its research, development, and/or clinical projects.

Summary of Significant Accounting Policies

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GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period.

Significant estimates are used for, but are not limited to, assumptions used to estimate its ability to continue as a going concern;

revenue recognition;

Significant estimates are used for, but are not limited to, revenue recognition;

deferred tax assets, deferred tax liabilities and valuation allowances;

determination of the incremental borrowing rate to calculate right-of-use assets and lease liabilities;

beneficial conversion features;

fair value of stock options, preferred stock, and warrants;

and various accruals.

and prepaid and accrued clinical trial expenses.

Management evaluates its estimates on an ongoing basis.

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Realized and unrealized gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are reflected as other (expense) income, net in the consolidated statements of operations.

Foreign currency gains and losses on available-for-sale investment transactions are recorded to other comprehensive income on the Company's balance sheet per Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 830, Foreign Currency Matters.

Foreign currency gains and losses on available-for-sale investment transactions are recorded to other comprehensive income (loss) on the Company's balance sheet per Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 830, Foreign Currency Matters.

Cash, Cash Equivalents and Investments

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The Company classifies investments available to fund current operations as current assets on its balance sheets.

Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive loss on the Company’s balance sheets.

Realized gains and losses are determined using the specific identification method and are included as a component of other income.

Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss) on the Company’s balance sheets.

Realized gains and losses are determined using the specific identification method and are included as a component of other income (expense).

The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time.

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The Company’s cash, cash equivalents, and investments are held in accounts with financial institutions that management believes are creditworthy.

The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company

believes minimizes the exposure to concentration of credit risk.

The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds.

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments measured at fair value on a recurring basis include cash equivalents and investments ( Note 5 ).

Financial instruments measured at fair value on a recurring basis include cash equivalents and investments, if any ( Note 6 ).

An entity may elect to measure many financial instruments and certain other items at fair value at specified election dates.

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During the year ended December 31, 2020, the Company added material assets related to the February 2020 move to a new research and development facility in Hallbergmoos, Germany.

The Company expanded its presentation of property and equipment to be more descriptive and updated the useful life for one asset category on a prospective basis.

The disclosures for property and equipment, net as of December 31, 2019 have

been reclassified to conform with the current period presentation.

Substantially all of the Company's fixed assets are located in Germany.

The estimated useful life of the different groups of property and equipment is as follows:

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The terms of these agreements provide for the transfer of multiple goods or services which may include:

(i) licenses, or options to obtain licenses, to Pieris’s Anticalin technology and/or specific programs and (ii) research and development activities to be performed on behalf of or with a collaborative partner.

(i) licenses, or options to obtain licenses, to Pieris’ Anticalin technology and/or specific programs and (ii) research and development activities to be performed on behalf of or with a collaborative partner.

Payments to Pieris under these agreements may include upfront fees (which include license and option fees), payments for research and development activities, payments based upon the achievement of certain milestones, and royalties on product sales.

There are no performance, cancellation, termination or refund provisions in any of the arrangements that could result in material financial consequences to Pieris.

Effective January 1, 2019, the Company adopted ASC 606.

The standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services.

The Company elected the modified retrospective approach and applied it to contracts not completed at the date of adoption.

Therefore, comparative prior periods have not been adjusted.

The reported results for 2019 reflect the application of ASC 606 guidance while the reported results for 2018 were prepared under the guidance of FASB ASC Topic 605, Revenue Recognition, or ASC 605.

Furthermore, the Company adopted the contract modification practical expedient set forth in ASC 606 and will reflect the aggregate effect of all modifications that occurred before January 1, 2019 when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligations.

See Note 3 for additional details on these arrangements.

As the Company's intellectual property is located in Germany, the Company records all consolidated revenue in its Pieris Pharmaceuticals, GmbH subsidiary.

Collaborative Arrangements

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The Company classifies payments received as revenue and payments made as a reduction of revenue in the period in which they are earned.

Revenue recognized under a collaborative arrangement involving a participant that is not a customer is presented as Collaboration Revenue in the Statement of Operations.

In November 2018, the FASB issued ASU 2018-18, which makes targeted improvements to U.S.

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The Company adopted ASU 2018-18 in the first quarter of 2020.

The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements;

however, revenue recognized under a collaborative arrangement involving a participant that is not a customer (Collaboration revenue) is now

presented separately from Customer revenue.

This change has been reflected in the consolidated statement of operations and the 2019 amounts were adjusted to conform to ASC 808 as follows:

Twelve Months Ended December 31, 2019

As reported pre-adoption ASC 808 Adoption Adjustment As reported post-adoption

Customer revenue $ 43,646 $ ( 11,581 ) $ 32,065

Collaboration revenue 2,633 11,581 14,214

Total Revenue $ 46,279 $ — $ 46,279

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements;

however, revenue recognized under a collaborative arrangement involving a participant that is not a customer (Collaboration revenue) is now presented separately from Customer revenue.

All amounts presented herein are in conformity with ASU 2018-18.

Revenue from Contracts with Customers

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The Company evaluates all promised goods and services within a customer contract and determines which of such goods and services are separate performance obligations.

This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract.

This evaluation includes an assessment of whether the good or service is capable

of being distinct and whether the good or service is separable from other promises in the contract.

In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

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If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless a portion of the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations.

The Company must develop

assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.

The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.

The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation.

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If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

Revenue recognized under an arrangement involving a participant that is a customer is presented as Customer Revenue.

Milestones and Royalties

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Commercial milestones and sales royalties are determined by sales or usage-based thresholds and will be accounted for under the royalty recognition constraint as constrained variable consideration.

The Company calculates the maximum amount of potential milestones achievable under each collaboration agreement and discloses such potential future milestones for all current collaborations using such a maximum calculation.

Contract Balances

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Certain costs to obtain customer contracts, including success-based fees paid to third-party service providers, and costs to fulfill customer contracts are capitalized in accordance with FASB ASC 340, Other Assets and Deferred Costs , or ASC 340.

costs are amortized to expense on a systemic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

These costs are amortized to expense on a systemic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

The Company will expense the amortization of costs to obtain customer contracts to general and administrative expense and costs to fulfill customer contracts to research and development expense.

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The Company applies ASC Topic 740 Income Taxes , which established financial accounting and reporting requirements for the effects of income taxes that result from the Company’s activities during the current and preceding years.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating losses and tax credit carry forwards.

Deferred tax assets and

liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating losses and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the jurisdictions and years in which those temporary differences are expected to be recovered or settled.

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Where the Company determines that it is more likely than not that some portion or all of the deferred tax assets will not be realized in the future, the deferred tax assets are reduced by a valuation allowance.

The Company records interest related and penalties related to uncertain tax positions as part of income tax expense.

The Company records interest and penalties related to uncertain tax positions as part of income tax expense.

The Tax Cuts and Jobs Act (TCJA) subjects a U.S.

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Determining the appropriate fair value model and related assumptions requires judgment, including estimating share price volatility and expected terms of the awards.

For employee options, the fair value measurement date is generally on the date of grant and the related compensation expense is recognized on a straight-line basis over the requisite period of the awards, less expense for actual forfeitures.

For employee options, the fair value measurement date is generally on the date of grant and the related compensation expense is recognized on a straight-line basis over the requisite service period of the awards, less expense for actual forfeitures.

The Company uses the Black-Scholes option pricing model to determine the estimated fair value for stock-based awards.

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For the years ended December 31, 2021 and 2020, the Company did not record an income statement benefit for excess tax benefits as a valuation allowance is also required on these amounts.

In February 2016, the FASB issued ASU No.

2016-2, Leases (Topic 842) , or ASC 842.

Under the amendments in ASC 842, lessees will be required to recognize (i) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis;

Government Grants

The Company recognizes grants from governmental agencies when there is reasonable assurance that the Company will comply with the conditions attached to the grant arrangement and the grant will be received.

The Company evaluates the conditions of each grant as of each reporting period to evaluate whether the Company has reached reasonable assurance of meeting the conditions of each grant arrangement and that it is expected that the grant will be received as a result of meeting the necessary conditions.

Grants are recognized in the consolidated statements of operations on a systematic basis over the periods in which the Company recognizes the related costs for which the government grant is intended to compensate.

Specifically, grant income related to research and development costs is recognized as such expenses are incurred.

Grant income is included as a separate caption within Other income (expense), net in the consolidated statements of operations.

The Company accounts for leases pursuant to ASC 842 Leases (Topic 842) , or ASC 842.

As a lessee, the Company is required to recognize (i) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis;

and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term for all leases (with the exception of short-term leases) at the commencement date.

The Company adopted ASC 842 in the fourth quarter of 2019 using the required modified retrospective approach, effective January 1, 2019.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard expedients which allows the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of its existing leases as of the transition date, and the treatment of initial direct costs.

In addition, the Company elected the practical expedient not to apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that it is reasonably certain to exercise) and the practical expedient to not separate lease and non-lease components for all asset classes.

Any variable components of lease costs are excluded from lease payments and are recognized in the period incurred.

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and (3) the Company has the right to direct the use of the identified asset.

In addition, the Company does not apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that it is reasonably certain to exercise) and does not separate lease and non-lease components for all asset classes.

Any variable components of lease costs are excluded from lease payments and are recognized in the period incurred.

At the commencement date, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term.

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Segment Reporting

Operating segments are identified as components of an enterprise where separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance.

Operating segments are identified as components of an enterprise where separate discrete financial information is evaluated by the chief operating decision maker in making decisions on how to allocate resources and assess performance.

The Company operates as a single segment dedicated to the discovery and development of biotechnological applications and the Company’s chief operating decision maker, or CODM, makes decisions based on the Company as a whole.

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Therefore, basic and diluted net loss per share were the same for all periods presented.

Recent Accounting Pronouncement Adopted

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes which amends and aims to simplify accounting disclosure requirements regarding a number of topics including intraperiod tax allocation, accounting for deferred taxes when there are changes in consolidation of certain investments, tax basis step up in an acquisition and the application of effective rate changes during interim periods, among other improvements.

This standard is effective for fiscal years beginning after December 15, 2020 and was adopted by the Company on January 1, 2021.

Adoption of this new standard did not have a material impact on the Company.

In November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832) , or ASU 2021-10.

ASU 2021-10 provides clarity on increasing transparency over the disclosure of certain government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.

Diversity currently exists in the recognition, measurement, presentation, and disclosure of government assistance received by business entities because of the lack of specific authoritative guidance in generally accepted accounting principles.

The guidance in ASU 2021-10 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company adopted this standard for the period ended December 31, 2021 on a prospective basis and concluded that we have made the required disclosure in Footnote 5 below.

Recent Accounting Pronouncements Not Yet Adopted

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Servier 4,070 11,313

Other — 2,910

Boston Pharmaceuticals 5,711 —

Genentech 1,950 —

Total Revenue $ 31,418 $ 29,323

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Seagen 754 450

Boston Pharmaceuticals 88 265

Genentech 844 600

Total potential milestone payments $ 2,918 $ 5,692

Strategic Partnerships

On May 19, 2021, the Company and Genentech, Inc., or Genentech, entered into a Research Collaboration and License Agreement, or the Genentech Agreement, to discover, develop and commercialize locally delivered respiratory and ophthalmology therapies that leverage the Company’s proprietary Anticalin technology.

Upon signing the Genentech Agreement, Genentech paid the Company a $ 20 million upfront fee.

In addition, the Company may be eligible to receive additional milestone payments across multiple programs, as well as tiered royalty payments on net sales at percentages ranging from the mid-single to low double-digits, subject to certain standard reductions and offsets.

Under the terms of the Genentech Agreement, the Company will be responsible for discovery and preclinical development of two initial programs.

The Company will be responsible for research activities following target nomination through the late-stage research go decision.

The parties will then collaborate on drug candidate characterization until the development go decision.

After the development go decision, Genentech will be responsible for pursuing the preclinical and clinical development of each program, and thereafter, the commercialization efforts.

Each party will be responsible for the costs incurred to perform their respective responsibilities.

Genentech has an option to expand the collaboration to encompass two additional programs with the payment of a $ 10 million fee per additional program.

If Genentech exercises its option to start additional programs, payment to the Company of additional fees, milestone payments and royalties would result.

Unless earlier terminated, the term of the Genentech Agreement continues until no royalty or other payment obligations are or will become due under the Genentech Agreement.

The Genentech Agreement may be terminated (i) by either party based on insolvency or breach by the other party and such insolvency proceeding is not dismissed or such breach is not cured within 90 days;

or (ii) after 9 months from the effective date of the Genentech Agreement, by Genentech as a whole or on a product-by-product and/or country-by-country basis upon 90 days prior written notice before the first commercial sale of a product or upon 180 days prior written notice after the first commercial sale of a product.

While the Genentech Agreement allows for up to four research programs, only two research programs are initially identified and committed in the Genentech Agreement.

To reach a total of up to four research programs, the Company has granted Genentech options to nominate an additional two collaboration targets of their choosing, subject to the legal availability of the target to be researched.

Genentech will have three years after the effective date to nominate the subsequent targets.

The Company has also granted Genentech options to replace any of the collaboration targets identified with another target.

However, at no point will there be more than four identified collaboration targets for which there are ongoing research programs.

The arrangement with Genentech provides for the transfer of the following goods or services:

(i) exclusive research and commercial license for the collaboration programs, (ii) a non-exclusive platform improvement license, (iii) research and development services, (iv) participation in a governance committee, and (v) replacement target options on the first two programs upon a screening failure which were assessed as material rights.

Management evaluated all of the promised goods or services within the contract and determined which such goods and services were separate performance obligations.

The Company determined that the licenses granted, at arrangement inception, should be combined with the research and development services to be provided for the related target programs as they are not capable of being distinct.

A third party would not be able to provide the research and development services due to the specific nature of the intellectual property and knowledge required to perform the services, and Genentech could not benefit from the licenses without the corresponding services.

The Company determined that the participation in the governance committees was distinct as the services could be performed by an outside party.

As a result, management concluded there were five separate performance obligations at the inception of the Genentech Agreement:

(i) two combined performance obligations, each comprised of an exclusive research and commercial license, a non-exclusive platform improvement license, and research and development services for the first two Genentech programs, (ii) two performance obligations each comprised of a material right for a target swap option for the first two Genentech programs, and (iii) one performance obligation comprised of the participation on the governance committee.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices.

The Company developed standalone selling prices for licenses by applying a risk adjusted, net present value, estimate of future potential cash flows approach, which included the cost of obtaining research and development services at arm’s length from a third-party provider, as well as internal full-time equivalent costs to support these services.

The Company developed the standalone selling price for committee participation by using management’s estimate of the anticipated participation hours multiplied by a market rate for comparable participants.

The transaction price at inception is comprised of fixed consideration of $ 20.0 million in upfront fees and was allocated to each of the performance obligations based on the relative proportion of their standalone selling prices.

The amounts allocated to the performance obligations for the two research programs will be recognized on a proportional performance basis through the completion of each respective estimated research term of the individual research programs.

The amounts allocated to the material right for the target options will be recognized either at the time the material right expires or, if exercised, on a proportional performance basis over the estimated research term for that program along with any remaining deferred revenue associated with the replacement target.

The amounts allocated to the participation on the committee will be recognized on a straight-line basis over the anticipated research term for all research programs.

As of December 31, 2021, there was $ 16.6 million of aggregate transaction price allocated to remaining performance obligations.

Under the Genentech Agreement, the Company is eligible to receive various research, development, commercial and sales milestones.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology.

The Company has determined that all other research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

As of December 31, 2021, there were $ 8.1 million and $ 8.5 million of current and non-current deferred revenue, respectively, related to the Genentech Agreement.

Boston Pharmaceuticals

On April 24, 2021, the Company and BP Asset XII, Inc., or Boston Pharmaceuticals, a subsidiary of Boston Pharma Holdings, LLC, entered into an Exclusive Product License Agreement, or the BP Agreement, to develop PRS-342, a 4-1BB/GPC3 preclinical immuno-oncology Anticalin-antibody bispecific fusion protein.

Under the terms of the BP Agreement, Boston Pharmaceuticals exclusively licensed worldwide rights to PRS-342.

The Company received an upfront payment of $ 10.0 million and is further entitled to receive development, regulatory and sales-based milestone payments, tiered royalties up to low double-digits on sales of PRS-342 and a percentage of consideration received by Boston Pharmaceuticals in the event of a sublicense of a program licensed under the BP Agreement or a change of control of Boston Pharmaceuticals.

The Company will also contribute up to $ 4.0 million toward manufacturing activities.

The term of the BP Agreement ends upon the expiration of all of Boston Pharmaceuticals’ payment obligations thereunder.

The BP Agreement may be terminated by Boston Pharmaceuticals in its entirety for convenience beginning nine months after its effective date upon 60 days’ notice or, for any program under the BP Agreement which has received marketing approval, upon 120 days’ notice.

If any program is terminated by Boston Pharmaceuticals, the Company will have full rights to continue such program.

The BP Agreement may also be terminated by Boston Pharmaceuticals or the Company for an uncured material breach by the other party upon 180 days’ notice ( 60 days in the case of non-payment of undisputed amounts due and payable), subject to extension for an additional 180 days in certain cases and subject, in all cases, to dispute resolution procedures.

The Agreement may also be terminated due to the other party’s insolvency.

The Company may also terminate the BP Agreement if Boston Pharmaceuticals challenges the validity of any patents licensed under the BP Agreement, subject to certain exceptions.

The Company does not have any obligations to assist in the research and development efforts of Boston Pharmaceuticals under the BP Agreement.

However, the Company has an obligation to fund up to $ 4.0 million in costs, including out-of-pocket costs incurred by Boston Pharmaceuticals, in connection with the manufacture of products under the BP Agreement.

The arrangement with Boston Pharmaceuticals provides for the transfer of the following:

(i) exclusive license of PRS-342, (ii) non-exclusive Pieris platform license, (iii) initial know-how, (iv) product cell line license, and (v) materials (as each such term is defined under the BP Agreement).

Management evaluated all of the promised goods or services within the BP Agreement and determined which such goods and services were separate performance obligations.

The Company determined that the licenses granted, at arrangement inception, should be combined with the transfer of know-how, materials and the product cell line license.

Boston Pharmaceuticals could not benefit from the exclusive and non-exclusive licenses without the corresponding transfer of know-how and materials.

As a result, management concluded there was only one combined performance obligation.

The transaction price at inception is comprised of fixed consideration of $ 10.0 million in upfront fees, offset by $ 4.0 million in consideration payable to Boston Pharmaceuticals to reimburse them for expected out-of-pocket manufacturing costs, for a total transaction price of $ 6.0 million.

Management has assessed the forms of variable consideration within the BP Agreement and concluded that the payments are either constrained by the royalty recognition constraint or because management has assessed the most likely amount associated with the payments as zero.

The amounts allocated to the performance obligations did not meet the criteria to be recognized over time on a proportional performance basis and thus will be recognized at a point in time.

The Company determined that the performance obligation will be fully satisfied when all of the deliverables in the combined performance obligation are transferred to Boston Pharmaceuticals as that is the point at which Boston Pharmaceuticals can fully use and benefit from the license to PRS-342.

The Company transferred all such deliverables to Boston Pharmaceuticals in the fourth quarter of 2021.

As of December 31, 2021, the Company has recognized the full transaction price, or $ 5.7 million, as revenue and there is no remaining deferred revenue.

On February 8, 2018, the Company entered into a license and collaboration agreement, or the Seagen Collaboration Agreement, and a non-exclusive Anticalin platform technology license agreement, or the Seagen Platform License, and together with the Seagen Collaboration Agreement, the Seagen Agreements, with Seagen, Inc., or Seagen, pursuant to which the parties will develop multiple targeted bispecific IO treatments for solid tumors and blood cancers.

Under the terms of the Seagen Agreements, the companies will pursue multiple antibody-Anticalin fusion proteins during the research phase.

Under the terms of the Seagen Agreements, the companies will pursue multiple Anticalin-antibody fusion proteins during the research phase.

The Seagen Agreements provide Seagen a base option to select up to three programs for further development.

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Upon signing the Seagen Agreements, Seagen paid the Company a $ 30.0 million upfront fee and an additional $ 4.9 million was estimated to be paid for research and development services as reimbursement to the Company through the end of the research term.

In addition, the Company may receive tiered royalties on net sales up to the low double-digits and up to $ 1.2 billion in total success-based research, development, commercial, and sales milestones payments across the product candidates, depending on the successful development and commercialization of those candidates.

In addition, the Company may receive tiered royalties on net sales up to the low double-digits and success-based research, development, commercial, and sales milestones payments across the product candidates, depending on the successful development and commercialization of those candidates.

If Seagen exercises its option to select additional candidates from the initial research phase for further development, payment to Pieris of additional fees, milestone payments, and royalties would result.

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The Seagen Collaboration Agreement may also be terminated due to the other party’s insolvency and may in certain instances, including for reasons of safety, be terminated on a product-by-product basis.

Each party may also

terminate the Seagen Agreements if the other party challenges the validity of any patents licensed under the Seagen Agreements, subject to certain exceptions.

Each party may also terminate the Seagen Agreements if the other party challenges the validity of any patents licensed under the Seagen Agreements, subject to certain exceptions.

The Seagen Platform License will terminate upon termination of the Seagen Collaboration Agreement, whether in its entirety or on a product-by-product basis.

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The Company also recorded $ 5.0 million of milestone revenue in June 2020.

Under the Seagen Agreements, the Company is eligible to receive various research, development, commercial and sales milestones.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology.

The Company has thus determined that all research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

As of December 31, 2020, there is $ 5.7 million and $ 11.8 million of current and non-current deferred revenue, respectively, related to the Seagen Agreements.

On March 24, 2021, the Company announced that Seagen made a strategic equity investment in Pieris, and that the companies had entered into a combination study agreement, or the Combination Study Agreement, to evaluate the safety and efficacy of combining Pieris’ cinrebafusp alfa with Seagen’s tucatinib, a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of the upcoming phase 2 study to be conducted by Pieris.

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In connection with the agreements described above, the Company and Seagen entered into a subscription agreement, or the Seagen Subscription Agreement, pursuant to which the Company agreed to issue to Seagen, and Seagen agreed to acquire from the Company, 3,706,174 shares of the Company’s common stock for a total purchase price of $ 13.0 million, or $ 3.51 per share, in a private placement transaction pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Seagen Subscription Agreement includes a requirement that the Company file a registration statement to register the resale of the shares issued to Seagen within 60 calendar days of the issuance of the shares.

The Seagen Subscription Agreement includes a provision to the effect that Seagen may ask the Company to file a registration statement to register the resale of the shares issued to Seagen, at any time beginning on the date that is 60 calendar days from the date of issuance of the shares.

The Company assessed the ASC 606 implications of the Seagen Subscription Agreement and concluded that the fair value of the shares on a per share basis was $ 2.61 per share as of the transaction date.

This resulted in a premium paid for the shares of $ 3.3 million, all of which was recorded in deferred revenue upon contract execution and allocated to the remaining performance obligations.

The Company has concluded that the Combination Study Agreement is within the scope of ASC 808, which defines collaborative arrangements and addresses the presentation of the transactions between the two parties in the income statement and related disclosures.

However, ASC 808 does not provide guidance on the recognition of consideration exchanged or accounting for the obligations that may arise between the parties.

The Company has concluded that ASC 730, Research and Development , should be applied by analogy.

There is no financial statement impact for the Combination Study Agreement as the value of the drug supply received from Seagen is offset against the drug supply cost.

Under the Seagen Agreements, the Company is eligible to receive various research, development, commercial and sales milestones.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology.

The Company has thus determined that all research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

As of December 31, 2021, there is $ 10.3 million and $ 8.2 million of current and non-current deferred revenue, respectively, related to the Seagen Agreements.

On May 2, 2017, the Company entered into a license and collaboration agreement, or the AstraZeneca Collaboration Agreement, and a non-exclusive Anticalin platform technology license agreement, or AstraZeneca Platform License, and together with the AstraZeneca Collaboration Agreement, the AstraZeneca Agreements with AstraZeneca AB, or AstraZeneca, which became effective on June 10, 2017, following expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Under the AstraZeneca Agreements the parties will advance several novel inhaled Anticalin proteins.

In addition to the Company’s lead inhaled drug candidate, PRS-060/AZD1402, or the AstraZeneca Lead Product, the Company and AstraZeneca will also collaborate to progress four additional novel Anticalin proteins against undisclosed targets for respiratory diseases, or the AstraZeneca Collaboration Products, and together with the AstraZeneca Lead Product, the AstraZeneca Products.

In addition to the Company’s lead inhaled drug candidate, PRS-060/AZD1402, or the AstraZeneca Lead Product, the Company and AstraZeneca, under the original terms of the the AstraZeneca Collaboration Agreement, would also collaborate to progress four additional novel Anticalin proteins against undisclosed targets for respiratory diseases, or the AstraZeneca Collaboration Products, and together with the AstraZeneca Lead Product, the AstraZeneca Products.

The Company is responsible for advancing the AstraZeneca Lead Product through its phase 1 study, with the associated costs funded by AstraZeneca.

The parties will collaborate thereafter to conduct a phase 2a study in asthma patients, with AstraZeneca continuing to fund development costs.

After completion of a phase 2a study, Pieris has the option to co-develop the AstraZeneca Lead Product and also has a separate option to co-commercialize the AstraZeneca Lead Product in the United States.

After completion of a phase 2a study, Pieris has the option to co-develop the AstraZeneca Lead Product and

also has a separate option to co-commercialize the AstraZeneca Lead Product in the United States.

For the AstraZeneca Collaboration Products, the Company will be responsible for the initial discovery of the novel Anticalin proteins, after which AstraZeneca will take the lead on continued development of the AstraZeneca Collaboration Products.

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The Company may receive tiered royalties on sales of potential products commercialized by AstraZeneca and for co-developed products, gross margin share on worldwide sales equal dependent on the Company’s level of committed investment.

Prior to the adoption of ASC 606, the budgeted research and development services for the AstraZeneca Lead Product increased and were approved by the JSC.

The increases included additional phase 1 services as well as the addition of certain phase 2a services.

The Company determined that these increases were contract modifications.

Upon the adoption of ASC 606, the Company reflected the aggregate effects of these modifications as of the last modification date.

The Company determined that the AstraZeneca Agreements should be combined and evaluated as a single arrangement under ASC 606 as they were executed on the same date.

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The Company determined that the licenses granted for the AstraZeneca Lead Product at the inception of the arrangement should be combined with the research services related to the AstraZeneca Lead Product and the licenses granted for the AstraZeneca Collaboration Products should be combined with the research services for the AstraZeneca Collaboration Products, as the licenses are not capable of being distinct.

A third party would not be able to provide the research and development services, due to the specific nature of the intellectual property and knowledge required to perform the services and AstraZeneca could not benefit from the licenses without the corresponding services.

A third party would not be able to provide

the research and development services, due to the specific nature of the intellectual property and knowledge required to perform the services and AstraZeneca could not benefit from the licenses without the corresponding services.

The Company also determined that each of the phase 1 services and the phase 2a services for the AstraZeneca Lead Product were distinct and that the participation on the various committees was also distinct as all of the phase 1 services, phase 2a services and the committee services could be performed by an outside party.

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As a result, management concluded that there were 16 performance obligations:

(i) combined performance obligation comprised of a non-exclusive platform technology license, research and development license, and commercial licenses for the AstraZeneca Lead Product and research services for the AstraZeneca Lead Product, (ii) combined performance obligation comprised of development and manufacturing services, and technology transfer services for the AstraZeneca Lead Product, (iii) committee participation, (iv-vii) four combined performance obligations each comprised of a non-exclusive platform technology license, research licenses, and research services for each AstraZeneca Collaboration Product (viii-xi) four performance obligations comprised of a material right to acquire the development licenses granted for the AstraZeneca

Collaboration Products, (xii-xv) four performance obligations comprised of the commercial licenses granted for the AstraZeneca Collaboration Products and (xvi) phase 2a services.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices.

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The Company has thus determined that all research and development milestones, other than the phase 1 initiation milestone achieved in December 2017 and included in the impact of adoption of ASC 606, will be constrained until it is deemed probable that a significant revenue reversal will not occur.

In October 2019, the JSC formally approved the termination of a certain performance obligation determined at the origination of the agreement, resulting in the acceleration of remaining revenue associated with the performance obligations.

The JSC's termination of the performance obligations does not impact the remainder of the Pieris-AstraZeneca alliance and the parties continue to advance the Lead Product through Phase 2a activities.

As of December 31, 2020, there is $ 0.9 million and $ 18.6 million of current and non-current deferred revenue, respectively, related to the AstraZeneca Agreements.

The Company incurred $ 1.6 million of third-party success fees to obtain the contract with AstraZeneca.

Upon adoption of ASC 606, the Company capitalized $ 1.1 million in accordance with ASC 340.

As of December 31, 2020, the remaining balance of the asset recognized from transaction costs to obtain the AstraZeneca contract is $ 0.7 million.

Amortization during the year ended December 31, 2020 was de minimis.

On March 29, 2021, the Company and AstraZeneca entered into (1) Amendment No.

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1 dated September 14, 2020, collectively, the Amended Collaboration Agreement.

Under the Amended Collaboration Agreement, the parties agreed to restructure certain commercial economics for the AZD1402/PRS-060 program by increasing potential sales milestones and reducing potential sales royalties, while fundamentally maintaining the overall value split between AstraZeneca and the Company.

Under the Amended Collaboration Agreement, the parties agreed to restructure certain commercial economics for the PRS-060/AZD1402 program by increasing potential sales milestones and reducing potential sales royalties, while fundamentally maintaining the overall value split between AstraZeneca and the Company.

In connection with the Amended Collaboration Agreement, the Company and AstraZeneca entered into a Subscription Agreement pursuant to which the Company agreed to issue to AstraZeneca, and AstraZeneca agreed to acquire from the Company, 3,584,230 shares of the Company’s common stock for a total purchase price of $ 10.0 million, or $ 2.79 per share, in a private placement transaction pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Subscription Agreement will close on April 1, 2021 and includes a requirement that the Company file a registration statement to register the resale of the shares issued to AstraZeneca within 60 calendar days of the issuance of the shares.

The Subscription Agreement closed on April 1, 2021 and includes a requirement that the Company file a registration statement to register the resale of the shares issued to AstraZeneca within 60 calendar days of the issuance of the shares.

The Company assessed the payment under ASC 606 and concluded that the fair value of the shares on a per share basis was $ 2.60 per share as of the transaction date.

This resulted in a premium paid for the shares of $ 0.7 million, which was added to the deferred revenue balance and will be recognized over time in line with our revenue recognition pattern for all remaining performance obligations.

Also in March 2021, the Company earned a $ 13.0 million milestone from AstraZeneca related to the initiation of the phase 2a study for PRS-060/AZD1402.

The Company assessed the milestone payment under ASC 606 and determined that there no longer existed a constraint on the milestone as the performance obligation related to the phase 2a study was fully satisfied.

Therefore, the Company realized the full $ 13.0 million as milestone revenue for the year ended December 31, 2021.

In January 2022, the Company and AstraZeneca jointly discontinued one discovery-stage programs as they were not able to validate an exploratory target.

Pieris retains co-development and co-commercialization options for two of the three remaining active discovery programs.

As of December 31, 2021, there is $ 0.9 million and $ 17.0 million of current and non-current deferred revenue, respectively, related to the AstraZeneca Agreements.

The Company incurred $ 1.6 million of third-party success fees to obtain the contract with AstraZeneca.

Upon adoption of ASC 606, the Company capitalized $ 1.1 million in accordance with ASC 340.

As of December 31, 2021, the remaining balance of the asset recognized from transaction costs to obtain the AstraZeneca contract is $ 0.6 million.

Amortization during the years ended December 31, 2021 and 2020 was de minimis.

On January 4, 2017, the Company entered into a license and collaboration agreement, or Servier Collaboration Agreement, and a non-exclusive Anticalin platform license agreement, or Servier Platform License, and together with the Servier Collaboration Agreement, the Servier Agreements with Les Laboratoires Servier and Institut de Recherches Internationales Servier, or Servier, pursuant to which the Company and Servier agreed to initially pursue five bispecific therapeutic programs.

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In addition to the JEC, the Servier Collaboration Agreement requires the participation of both parties on:

(i) a JSC, (ii) a JDC, (iii) a joint intellectual property committee, or JIPC, and (iv) a joint

research committee, or JRC.

(i) a JSC, (ii) a JDC, (iii) a joint intellectual property committee, or JIPC, and (iv) a joint research committee, or JRC.

The responsibilities of these committees vary, depending on the stage of development and commercialization of the Collaboration Products.

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In addition, the Company is eligible to receive research, development, commercial, and sales milestone payments as well as tiered royalties up to low double digits on the sales of commercialized products in the Servier territories.

The Company achieved two preclinical milestones under the program, one in December 2018 for € 0.5 million (approximately $ 0.6 million) and another in February 2019 for € 1.5 million (approximately $ 1.7 million), both of which became billable on their respective achievement dates.

Since inception of the Servier Collaboration Agreement, the Company has achieved four development milestones under Servier Agreements totaling € 3.8 million (approximately $ 4.3 million), all of which became billable on their respective achievement dates.

The initial research collaboration term, as it relates to the Initial Lead and Collaboration Products, shall continue for three years from the effective date of the Servier agreements, and may be mutually extended for two one-year terms consecutively applied.

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were separate performance obligations.

The Company determined that the licenses granted at the inception of the Servier collaboration, should be combined with the research and development services to be provided for the Initial Lead and Collaboration Products, over the term of the Servier Agreements, as such licenses are not capable of being distinct.

The Company determined that the licenses granted at the inception of the Servier collaboration, should be combined with the research and development services to be provided for the Initial Lead and

Collaboration Products, over the term of the Servier Agreements, as such licenses are not capable of being distinct.

A third party would not be able to provide the research and development services, due to the specific nature of the intellectual property and knowledge required to perform the services, and Servier could not benefit from the licenses without the corresponding services.

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(i) combined performance obligation comprised of a non-exclusive platform technology license, commercial license, development license and research and development services for the Initial Lead, (ii) two separate performance obligations each comprised of a combined non-exclusive platform technology license, research license, and research and development services for each Co-Development Collaboration Product (iii) one performance obligation comprised of participation in the various governance committees, and (iv) two combined performance obligations comprised of the development and commercial licenses granted for the Co-Development Collaboration Products (and corresponding discounts) upon the achievement of specified preclinical activities, resulting in material rights.

Revenue recognized associated with these performance obligations are presented as Collaboration Revenue within the Statement of Operations.

The following performance obligations are within the scope of ASC 606:

(i) two separate performance obligations each comprised of a combined non-exclusive platform technology license, research license and research and development services for each Servier Worldwide Collaboration Product, and (ii) two combined performance obligations comprised of the development and commercial licenses granted for the Servier Worldwide Collaboration Products (and corresponding discounts) upon the achievement of specified preclinical activities, resulting in material rights.

Revenue recognized associated with these performance obligations are presented as Customer Revenue within the Statement of Operations.

The Company allocated consideration to the performance obligations based on the relative proportion of their standalone selling prices.

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Under the Servier Agreements the Company is eligible to receive various research, development, commercial, and sales milestones.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the nature of clinical development and the stage of the Company’s technology.

There is uncertainty that the events to obtain the research and development milestones will be achieved given the

nature of clinical development and the stage of the Company’s technology.

The Company has thus determined that all research and development milestones will be constrained until it is deemed probable that a significant revenue reversal will not occur.

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The parties continue to advance the development of two preclinical programs:

PRS-344, a 4-1BB/PD-L1 bispecific designed as a co-development program, and PRS-352, which addresses undisclosed targets and for which Servier has worldwide rights.

PRS-344/S095012, a 4-1BB/PD-L1 bispecific designed as a co-development program, and PRS-352, which addresses undisclosed targets and for which Servier has worldwide rights.

In February 2021, the research term was extended for another 12 months.

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As of December 31, 2021, the remaining balance of the asset recognized from costs to obtain the Servier contract is $ 0.1 million.

Amortization during the twelve months ended December 31, 2021 was de minimis.

Amortization during the twelve months ended December 31, 2020 was $ 0.1 million.

Other License Agreements

On February 27, 2017 the Company entered into an exclusive option agreement, or the ASKA Option Agreement with ASKA Pharmaceutical Co., Ltd., or ASKA, pursuant to which Pieris granted ASKA an option to acquire (i) a non-exclusive license to certain intellectual property rights associated with the Company’s Anticalin platform, and (ii) an exclusive license to certain intellectual property rights specifically related to the Company’s PRS-080 Anticalin protein, in order to develop, manufacture, import, sale, export, and offer for sale and export any pharmaceutical formulation containing PRS-080, the Company’s PEGylated Anticalin protein targeting hepcidin, or the Licensed Product, in Japan and certain other Asian territories.

Upon receipt, ASKA had up to 60 days to evaluate the results of the phase 2a study, or the Evaluation Period.

In November 2019, the Company delivered the finals results of the study to ASKA, thus triggering the 60-day evaluation period.

The Company determined that the completed phase 2a study represents the sole good or service to be transferred, and the only performance obligation under the ASKA Option Agreement for which an upfront payment of $ 2.75 million was received from ASKA.

With the formal delivery of the final results in November 2019, the full $ 2.75 million revenue that was previously constrained was recognized in connection with this arrangement for the year ended December 31, 2019.

No revenue under this arrangement was recognized in 2020.

On January 20, 2020 ASKA notified the Company that it does not intend to exercise its option to obtain an exclusive license to develop and commercialize the PRS-080.

The term of the ASKA Option Agreement ended as of the date of ASKA’s notification of its decision not to exercise its option rights.

In connection with obtaining the contract with ASKA, the Company additionally incurred $ 0.3 million in third-party service fees which were capitalized in accordance with ASC 340.

These costs were fully amortized as of December 31, 2019.

Contract Balances

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Under the terms of the non-exclusive Lilly Agreement, the Company will sponsor the Study and Lilly will supply the Company with ramucirumab as well as provide input on certain clinical and regulatory aspects of the Study in exchange for jointly owning clinical data and inventions relating to the combination regimen that may arise from the Study.

Any material changes to

the protocol for the Study, and any changes relating to ramucirumab, will require Lilly’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

Any material changes to the protocol for the Study, and any changes relating to ramucirumab, will require Lilly’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

The Lilly Agreement will expire upon completion of the parties’ contractual obligations.

The Lilly Agreement may also be terminated (a) by either party for an uncured material breach by the other party upon 60 days’ notice, subject to a reasonable extension if such material breach requires more than 60 days to cure;

(b) by either party in the event that the Study unreasonably affects patient safety, provided that the terminating party promptly notifies the other party and the other party is given the opportunity to propose modifications to the Study to address the safety issues;

(b) by either party in the event that the Study unreasonably affects patient safety, provided that the terminating party promptly notifies the other party and the other party is

given the opportunity to propose modifications to the Study to address the safety issues;

(c) by either party, following 15 days’ written notice, if regulatory action is taken preventing the terminating party from providing its compound or if the terminating party decides to discontinue development of its compound;

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There is no financial statement impact for the Lilly Agreement as the value of the drug supply received from Lilly is offset against the drug supply cost.

One of the Company's proprietary respiratory assets is PRS-220, an oral inhaled Anticalin protein targeting connective tissue growth factor, or CTGF, and it is being developed as a local treatment for idiopathic pulmonary fibrosis.

In June 2021, the Company received a € 14.2 million (approximately $ 17.0 million) grant from the Bavarian Ministry of Economic Affairs, Regional Development and Energy (the Bavarian Grant) supporting research and development for post-acute sequelae of SARS-CoV-2 infection (PASC) pulmonary fibrosis, or PASC-PF, also known as post-COVID-19 syndrome pulmonary fibrosis, or “long COVID”.

The Bavarian Grant provides partial reimbursement for qualifying research and development activities on PRS-220, including drug manufacturing costs, activities and costs to support an IND filing, and phase 1 clinical trials costs.

The Bavarian Grant provides reimbursement of qualifying costs incurred through August 2023, which follows the expected development timeline of this program.

Qualifying costs incurred may exceed the annual grant funding thresholds.

If the Company receives any proceeds from the sale of or licensing income from PRS-220, the funds available for reimbursement will be reduced proportionally if they are obtained prior to August 2023.

The Company is required to communicate such proceeds in each case with the request to draw-down the funds.

Cash, Cash Equivalents and Investments

As of December 31, 2020 and 2019, cash, cash equivalents and investment comprised funds in depository, money market accounts, U.S.

treasury securities, asset backed securities, and corporate bonds.

The following table presents the cash equivalents and investments carried at fair value in accordance with the hierarchy defined in Note 2 at December 31, 2020 and 2019 (in thousands):

Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs

December 31, 2020

Money market funds, included in cash equivalents $ 63,951 $ 63,951 $ — $ —

Total $ 63,951 $ 63,951 $ — $ —

Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs

December 31, 2019

Money market funds, included in cash equivalents $ 47,384 $ 47,384 $ — $ —

Investments - US treasuries 5,300 5,300 — —

Investments - Asset-backed securities 7,950 — 7,950 —

Investments - Corporate bonds 28,644 — 28,644 —

Total $ 89,278 $ 52,684 $ 36,594 $ —

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data.

The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value.

The Company validates the prices provided by its third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources, as needed.

After completing its validation procedures, the Company did not adjust any fair value measurements provided by the pricing services as of December 31, 2019.

Investments at December 31, 2019 consist of the following (in thousands):

Contractual maturity

(in days) Amortized Cost Unrealized gains Unrealized losses Fair Value

US treasuries 46 - 182

$ 5,293 $ 25 $ ( 18 ) $ 5,300

Asset-backed securities 49 - 106

7,962 12 ( 24 ) 7,950

Corporate bonds 2 - 204

28,709 20 ( 85 ) 28,644

Total $ 41,964 $ 57 $ ( 127 ) $ 41,894

There were $ 0.6 million of realized losses for the year ended December 31, 2020 and $ 0.3 million of realized gains for the year ended December 31, 2019.

As of December 31, 2021 and 2020, cash equivalents were $ 56.9 million and $ 64.0 million, respectively, and are comprised of money market accounts, all of which are Level 1 investments.

The Company did not hold any Level 2 or 3 investments as of December 31, 2021 and 2020 and did not have any transfers of investments between levels during the years ended December 31, 2021 and 2020.

The Company did no t have any realized gains or losses for the year ended December 31, 2021.

The Company had $ 0.6 million of realized losses for the year ended December 31, 2020.

Property and Equipment, Net

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Years Ended December 31,

Leasehold improvements

$ 13,130 $ 14,159

Laboratory equipment

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Computer equipment 396 394

Leasehold improvements

14,159 10,710

Property and equipment at cost

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Years Ended December 31,

Compensation expense $ 2,759 $ 2,870

Research and development fees $ 5,682 $ 2,001

Compensation expense 3,581 2,759

Accrued accounts payable 2,980 1,220

Lease liabilities 1,030 733

Collaboration cost-sharing obligation 1,610 16

Accrued license obligations 1,541 358

Audit and tax fees 128 522

Lease liabilities 1,049 1,030

Other current liabilities 393 347

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Permanent items ( 0.2 ) ( 2.4 )

Provision to return 3.3 —

Other — ( 0.4 )

Rate change - trade tax NOL — ( 6.4 )

Change in valuation allowance ( 27.4 ) ( 18.7 )

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Right-of-use asset ( 3,729 ) ( 4,235 )

Accrued expenses ( 68 ) —

Total deferred tax liabilities ( 3,797 ) ( 4,235 )

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The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable

income, and tax-planning strategies in making this assessment.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment.

Management believes it is more likely than not that the results of future operations will not generate sufficient taxable income in the United States or in its foreign jurisdictions to realize the full benefits of its deferred tax assets.

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State loss carryforwards expire starting in 2035.

In the United States, utilization of the NOL carryforwards may be subject to a substantial annual limitation under Section 382 of the Code and similar state provisions due to ownership change limitations that have occurred previously or that could occur in the future.

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

The Company has not currently completed a study to assess whether an ownership change has occurred, or whether there have been multiple ownership changes since the acquisition of the U.S.

entity in 2014.

Since the Company has incurred net operating losses since inception, it has never been subject to a revenue agent review.

The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended 2016 through 2019.

Pursuant to Section 382 of the Internal Revenue Code, and similar state tax law, certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss and tax credit carryforwards that may be used in future years.

Utilization of the net operating loss and tax credit carryforwards may be subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

The Company completed a Section 382 study through December 31, 2020.

Based on the study, the Company underwent an ownership change for Section 382 purposes which occurred in February 2018.

As a result of the ownership change, the Company’s net operating loss and tax credit carryforwards as of the ownership change dates are subject to limitation under Section 382;

however, these limitations are not expected to result in any of the impacted net operating loss and tax credit carryforwards to expire unutilized.

Any net operating losses or tax credits generated after the February 2018 change are not subject to this annual limitation.

However, subsequent ownership changes, as defined by Section 382, may potentially further limit the amount of net operating loss and tax credit carryforwards that could be utilized to offset future taxable income and tax.

The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended

2016 through the current year.

Carryforward tax attributes generated in years past may still be adjusted upon future examination if they have or will be used in a future period.

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No interest and penalties related to uncertain tax positions were accrued at December 31, 2021 and December 31, 2020.

The following table sets forth a reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding the impact of interest and penalties, for the years ended December 31, 2020 and 2019 (in thousands):

Unrecognized tax benefits at December 31, 2020 $ 6,135

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Stockholders’ equity

The Company has issued multiple tranches of preferred stock that consist of the following:

• Series A Convertible, 2,907 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively.

• Series B Convertible, 5,000 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively.

• Series C Convertible, 3,522 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively.

• Series D Convertible, 3,000 and zero shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively.

The Company had 300,000,000 shares authorized and 72,222,661 and 56,002,815 shares of common stock issued and outstanding as of December 31, 2021 and December 31, 2020, respectively, with a par value of $ 0.001 per share.

The Company had 10,000,000 shares authorized and 15,617 shares of preferred stock issued and outstanding as of December 31, 2021.

The Company had 10,000,000 shares authorized and 14,429 shares of preferred stock issued and outstanding as of December 31, 2020.

Preferred stock has a par value of $ 0.001 per share, and consists of the following tranches:

• Series A Convertible, 85 and 2,907 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively.

• Series B Convertible, 4,026 and 5,000 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively.

• Series C Convertible, 3,506 and 3,522 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively.

• Series D Convertible, 3,000 shares issued and outstanding at both December 31, 2021 and December 31, 2020.

• Series E Convertible, 5,000 and zero shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively.

Each share of the Company’s common stock is entitled to one vote and all shares rank equally as to voting and other matters.

Dividends may be declared and paid on the common stock from funds legally available therefor, if, as and when determined by the Board of Directors.

Preferred Stock

The Company has issued multiple series (Series A through E) of preferred stock to certain entities affiliated with Biotechnology Value Fund, L.P., or BVF.

In each case, each share Preferred Stock is convertible into 1,000 shares of the Company's common stock (subject to adjustment as provided in the Certificate of Designation for each series) at any time at the option of the holder, provided that the holder is prohibited from converting the Preferred Stock into shares of the Company's common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99 % of the total number of shares of Common Stock then issued and outstanding, or the Beneficial Ownership Limitation.

The holder may reset the Beneficial Ownership Limitation to a higher or lower number, not to exceed 19.99 % of the total number of common shares issued and outstanding immediately after giving effect to a conversion, upon providing written notice to the Company.

Any such notice providing for an increase to the Beneficial Ownership Limitation will be effective 61 days after delivery to the Company.

Series A, Series B, Series C, Series D and Series E Preferred Stock rank senior to the Company’s common stock;

senior to any class or series of capital stock of the Company created after the designation of and specifically ranking by its terms as junior to the five series of Preferred Stock;

in parity with each other and with any class or series of capital stock of the Company created after the designation of and specifically ranking by its terms as in parity with the existing five series of Preferred Stock;

and junior to any class or series of capital stock of the Company created after the designation of and specifically ranking by its terms as senior to the existing five series of Preferred Stock.

In the event of the Company’s liquidation, dissolution or winding up, subject to the rights of holders of, holders are entitled to receive a payment equal to $ 0.001 per share of Preferred Stock pursuant to the rights and preferences discussed above, plus an additional amount equal to any dividends declared but unpaid on such shares.

However, if the assets of the Company are insufficient to comply with the preceding sentence, then all remaining assets of the Company shall be distributed ratably to holders of the shares of the existing five series of Preferred Stock.

For each series of Preferred Stock, the Company designated the requisite number of shares of its authorized and unissued preferred stock as a specific series of Preferred Stock and filed a Certificate of Designation with the Nevada Secretary of State.

Shares of Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Preferred Stock is required to amend the terms of the Certificate of Designation for each respective series of Preferred Stock.

Holders of Preferred Stock are entitled to receive any dividends payable to holders of the Company's common stock subject to the rights and preferences discussed above, in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily and/or the right to receive dividends.

Series A Preferred Stock

In June 2016, the Company entered into a securities purchase agreement, or the Securities Purchase Agreement, for a private placement of the Company’s securities with a select group of institutional investors, or the 2016 PIPE.

In June 2016, the Company entered into a securities purchase agreement for a private placement of the Company’s securities with a select group of institutional investors, or the 2016 PIPE.

The 2016 PIPE sale transaction, by the Company, consisted of 8,188,804 units at a price of $ 2.015 per unit for gross proceeds, to the Company, of approximately $ 16.5 million.

After deducting for placement agent fees and offering expenses, the aggregate net proceeds from the private placement was approximately $ 15.3 million.

Each unit consisted of (i) one share of the Company’s common stock or non-voting series A convertible preferred stock, or the Series A Preferred Stock, which are convertible into one -thousand shares of common stock, (ii) one warrant to purchase 0.4 shares of common stock at an exercise price of $ 2.00 per share and (iii) one warrant to purchase 0.2 shares of common stock at an exercise price of $ 3.00 per share.

The warrants will be exercisable for a period of 5 years from the date of issuance.

Each share of Series A Preferred Stock was issued at a price of $ 2.015 per share, and is convertible into 1,000 shares of common stock, provided the holder and/or its affiliates do not own greater than 9.99 % of the total number of Pieris common stock then outstanding.

The Series A Preferred Stock has a par value of $ 0.001 per share, has no registration or voting rights, and holders are entitled to receive dividends on a pari passu basis with the Company´s common stock, when, and if declared.

In event of a true liquidation or winding down of the business, holders of Series A Preferred Stock will be paid prior to the holders of common stock.

In connection with the 2016 PIPE, the Company issued 3,225,804 shares of common stock and 4,963 shares of Series A Preferred Stock to the 2016 PIPE investors.

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On January 30, 2019, the Company and certain entities affiliated with Biotechnology Value Fund, L.P., or BVF entered into an exchange agreement pursuant to which BVF agreed to exchange an aggregate of 5,000,000 shares of the Company’s common stock owned by BVF for an aggregate of 5,000 shares of Series B Preferred Stock.

On January 31, 2019, the Company designated 5,000 shares of its authorized and unissued preferred stock as Series B Preferred Stock and filed a Certificate of Designation of Series B Convertible Preferred Stock of Pieris Pharmaceuticals, Inc., or the Series B Certificate of Designation, with the Nevada Secretary of State.

Each share of Series B Preferred Stock is convertible into 1,000 shares of the Company's common stock (subject to adjustment as provided in the Series B Certificate of Designation) at any time at the option of the holder, provided that the holder is prohibited from converting the Series B Preferred Stock into shares of the Company's common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99 % of the total number of shares of Common Stock then issued and outstanding, or the Beneficial Ownership Limitation.

Any such notice providing for an increase to the Beneficial Ownership Limitation will be effective 61 days after delivery to the Company.

In the event of the Company’s liquidation, dissolution or winding up, subject to the rights of holders of Senior Securities (defined below), holders of Series B Preferred Stock are entitled to receive a payment equal to $ 0.001 per share of Series B Preferred Stock before any proceeds are distributed to the holders of common stock and Junior Securities (defined below) and pari passu with any distributions to the holders of the previously issued Series A convertible preferred stock, or the Series A Preferred Stock, plus an additional amount equal to any dividends declared but unpaid on such shares.

Shares of Series B Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series B Preferred Stock is required to amend the terms of the Series B Certificate of Designation.

Holders of Series B Preferred Stock are entitled to receive any dividends payable to holders of the Company's common stock and rank:

• senior to all of the Company's common stock;

• senior to any class or series of capital stock of the Company created after the designation of the Series B Preferred Stock specifically ranking by its terms junior to the Series B Preferred Stock;

• on parity with all shares of Series A Preferred Stock and any class or series of capital stock of the Company created after the designation of the Series B Preferred Stock specifically ranking by its terms on parity with the Series B Preferred Stock;

• junior to any class or series of capital stock of the Company created after the designation of the Series B Preferred Stock specifically ranking by its terms senior to the Series B Preferred Stock;

in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily and/or the right to receive dividends.

2019 Private Placement

Series C and 2019 Private Placement

In November 2019, the Company entered into a securities purchase agreement for a private placement, or the Purchase Agreement with a select group of institutional investors, including lead investor BVF as well as existing and new investors, or Investors.

At the time of entering into the Purchase Agreement, BVF was a more than 5% stockholder of the Company, holding shares of common stock, Series A Preferred Stock, Series B Preferred Stock and warrants to purchase shares of common stock.

The private placement consisted of 9,014,960 units, at a price of $ 3.55 per unit, or the Financing, for gross proceeds of approximately $ 32.0 million, and net proceeds to the Company of approximately $ 31.0 million.

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If (i) the initial public disclosure of the phase 2a Study of PRS-060/AZD1402 that includes the “p” value achieved for the primary endpoint of such study reveals top-line data on the primary efficacy endpoint in the phase 2a Study with a “p” value below 0.05 (i.e., p < 0.05) in at least one dose level;

and (ii) the 10-day volume weighted average stock price commencing on the trading day immediately after the initial public disclosure is at least three percent more than the Exercise Price, ((i) and (ii), collectively, the “Performance Condition”), then the warrants will be exercisable for a period of 60 days from the date of the initial data disclosure and may only be exercised for cash.

initial data disclosure and may only be exercised for cash.

Otherwise, the warrants will be exercisable for a period of five years from the date of issuance, or Exercise Date.

If the Performance Condition has not been met and the last reported sale price of the Company’s common stock immediately prior to the Expiration Date was greater than the Exercise Price, then the warrants shall be automatically deemed exercised on a cashless basis on the Expiration Date.

Each Preferred Share is convertible into 1,000 shares of the Company’s common stock.

The Company will not undertake any conversion of the Series C Preferred Shares, and a stockholder shall not have the right to convert any portion of the Series C Preferred Shares, to the extent that, after giving effect to the conversion such stockholder would beneficially own in excess of 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such conversion.

The Series C Preferred Shares have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series C convertible preferred stock is required to amend the terms of the Series C Certificate of Designation.

The Series C Preferred Shares are entitled to receive dividends on a pari passu basis with the Company’s common stock, when, and if declared.

In any liquidation or dissolution of the Company, the Series C Preferred Shares rank senior to the Company’s common stock in the distribution of assets, to the extent legally available for distribution.

Upon issuance, each Series C Preferred Share included an embedded beneficial conversion feature as the market price of the Company’s Common Stock on the date of issuance of the Series C convertible preferred stock was $ 3.43 per share.

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On March 31, 2020, the Company and certain entities affiliated with BVF entered into an exchange agreement pursuant to which, on April 1, 2020, BVF exchanged an aggregate of 3,000,000 shares of the Company’s common stock owned by BVF for an aggregate of 3,000 shares of Series D Preferred Stock.

The Company designated 3,000 shares of its authorized and unissued preferred stock as Series D Preferred Stock and filed a Certificate of Designation of Series D Convertible Preferred Stock of Pieris Pharmaceuticals, Inc., or the Series D Certificate of Designation, with the Nevada Secretary of State.

Each share of Series D Preferred Stock is convertible into 1,000 shares of Common Stock (subject to adjustment as provided in the Series D Certificate of Designation) at any time at the option of the holder, provided that the holder is prohibited from converting the Series D Preferred Stock into shares of Common Stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99 % of the total number of shares of Common Stock then issued and outstanding.

The holder may reset the Beneficial Ownership Limitation to a higher or lower number (not to exceed 19.99 % of the total number of Common Shares issued and outstanding immediately after giving effect to a conversion) upon providing written notice to the Company.

Any such notice providing for an increase to the Beneficial Ownership Limitation will be effective 61 days after delivery to the Company.

In the event of the Company’s liquidation, dissolution, or winding up, subject to the rights of holders of Senior Securities (defined below), holders of Series D Preferred Stock are entitled to receive a payment equal to $ 0.001 per share of Series D Preferred Stock before any proceeds are distributed to the holders of Common Stock and Junior Securities (defined below) and pari passu with any distributions to the holders of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, plus an additional amount equal to any dividends declared but unpaid on such shares.

Shares of Series D Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series D Preferred Stock is required to amend the terms of the Series D Certificate of Designation.

Holders of Series D Preferred Stock are entitled to receive any dividends payable to holders of Common Stock, and rank:

• senior to all of the Common Stock;

• senior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms junior to the Series D Preferred Stock;

• on parity with all shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms on parity with the Series D Preferred Stock;

• junior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms senior to the Series D Preferred Stock,

in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily and/or the right to receive dividends.

Open Market Sale Agreement

In August 2019, the Company entered into a sale agreement pursuant to which the Company may offer and sell shares of its common stock, from time to time, up to an aggregate gross sales proceeds of $ 50.0 million through an “at the market offering” program, the ATM Program, under a shelf registration statement on Form S-3.

In the third quarter of 2020, the Company sold 3,571,428 shares at a price of $ 2.80 per share under the ATM Program.

The transaction resulted in gross proceeds of $ 10.0 million, less a 3 % contractual commission incurred for the sales agent, resulting in $ 9.7 million in net proceeds to the Company.

Subsequent Event Equity Issuances

Additionally, the Company completed two transactions subsequent to December 31, 2020, with two partners, Seagen and AstraZeneca, which included equity transactions as part of the agreements.

Additional details regarding these transactions are included in Footnote 3 .

Series E Preferred Stock Conversion

On May 20, 2021, the Company and certain entities affiliated with BVF entered into an exchange agreement pursuant to which, BVF exchanged an aggregate of 5,000,000 shares of the Company’s common stock owned by BVF for an aggregate of 5,000 shares of Series E Preferred Stock.

Open Market Sales Agreement

In August 2019, the Company entered into a sales agreement with Jefferies LLC pursuant to which the Company may offer and sell shares of its common stock, from time to time, up to an aggregate gross sales proceeds of $ 50.0 million (the 2019 ATM Program).

In August 2021, the Company established a second ATM offering program, or the 2021 ATM Program, under the existing sales agreement with Jefferies LLC, pursuant to which the Company may offer and sell shares of its common stock, par value $ 0.001 per share, from time to time, up to an aggregate amount of gross sales proceeds of $ 50.0 million.

The 2021 ATM Program is offered under a shelf registration statement on Form S-3 that was filed with and declared effective by the SEC in August 2021.

For the year ended December 31, 2021, the Company sold 8.2 million shares for gross proceeds of $ 39.7 million under both ATM programs at an average stock price of $ 4.85 .

For the year ended December 31, 2020, the Company sold 3.6 million shares at a price of $ 2.80 per share resulting in gross proceeds of $ 10.0 million under the 2019 ATM Program only, which expired in August 2021.

Net Loss per Share

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At the Annual Shareholder Meeting, held on June 23, 2020, the shareholders approved the 2020 Employee, Director and Consultant Equity Incentive Plan, or the 2020 Plan.

The 2020 Plan permits the Company to issue up to 3,500,000 shares of common stock pursuant to awards granted under the 2020 Plan.

Upon approval of the 2020 Plan, the 2019 Employee, Director and Consultant Equity Incentive Plan, or the 2019 Plan, was terminated;

The 2020 Plan originally permitted the Company to issue up to 3,500,000 shares of common stock pursuant to awards granted under the 2020 Plan.

Upon approval of the 2020 Plan, the

2019 Employee, Director and Consultant Equity Incentive Plan, or the 2019 Plan, was terminated;

all unissued options were canceled and no additional awards will be made thereunder.

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The 2020 Plan, similar to the 2019 Plan, provided for the grant of stock options, restricted and unrestricted stock awards, and other stock-based awards to employees of the Company, non-employee directors of the Company, and certain other consultants performing services for the Company as designated by either the Board of Directors or the compensation committee of the Board of Directors.

At the 2021 Annual Meeting of Stockholders, held on June 25, 2021, the Company’s stockholders approved the first amendment to the 2020 Plan to add 2,250,000 shares for issuance under the 2020 Plan, which increased the total permitted for issuance under the 2020 Plan to 5,750,000 .

There were approximately 1,579,678 shares remaining and available for grant under the 2019 Plan that terminated pursuant to the approval of the 2020 Plan.

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Outstanding, December 31, 2021 660,000 $ 4.01 8.71 years $ 108

Vested or expected to vest 420,313 $ 5.00 8.12 years $ —

Vested or expected to vest, December 31, 2021 660,000 $ 4.01 8.71 years $ 108

Exercisable, December 31, 2021 168,750 $ 4.65 7.66 years $ —

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Total shares purchased under the plan were 64,257 and 69,544 for the years ended December 31, 2021 and 2020, respectively.

The fair value of shares expected to be purchased under the 2018 ESPP using the Black-Scholes model with the following assumptions:

The fair value of shares expected to be purchased under the 2018 ESPP was determined using the Black-Scholes model with the following assumptions:

Years Ended December 31,

Risk free interest rate 0.04 % - 0.10 %

0.10 % - 0.18 %

Expected term (in years) 0.5 years 0.5 years

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Expected volatility 60.46 % - 131.21 %

74.36 % - 120.89 %

Total Stock-based Compensation Expense

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In August 2015, the Company entered into a sublease to lease approximately 3,950 square feet.

The sublease expires on February 27, 2022 or such earlier date pursuant to the termination provisions of the sublease.

The sublease originally expired on February 27, 2022 or such earlier date pursuant to the termination provisions of the sublease.

In July 2021, the Company extended the lease for this office space for an additional 10 months through December 31, 2022.

In October 2018, Pieris GmbH entered into a lease for office and laboratory space located in Hallbergmoos, Germany, or the Hallbergmoos Lease.

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The Hallbergmoos Lease included $ 11.5 million of tenant improvements allowance for normal tenant improvements, for which construction began in March 2019.

The date of the construction coincided with the lease commencement date for accounting purposes under ASC 840, which did not change with the adoption off ASC 842.

The Company capitalized the leasehold incentives which are included in Property and equipment, net on the Consolidated Balance Sheet and are amortized on a straight-line basis over the shorter of the useful life or the remaining lease term.

The lease incentive allowance was also factored in as a reduction to the right-of-use asset upon the adoption of ASC 842.

The Company also leased approximately 19,000 square feet of office and laboratory space in Freising, Germany under four agreements, the Freising Leases, including three leases for space on three floors of the same building and a letter agreement for additional conference room space within the building.

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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