What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-10 compared with 2021-03-12 · 489 added, 542 removed, 870 unchanged (54% of the section changed)

Controls and Procedures

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

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Based on this assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies.”

Inherent Limitations of Internal Controls

While we believe we have a robust and efficient system of internal and disclosure controls and procedures, our management, including our Chief Executive Officer and Chief Financial Officer, recognize that it is impossible for our disclosure controls and procedures or our internal controls to prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all

control issues and instances of fraud, if any, within our company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls 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.

Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established for “smaller reporting companies.”

Other Information

Directors, Executive Officers and Corporate Governance

Our board of directors has adopted a written Code of Business Conduct and Ethics applicable to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

We have posted a current copy of our Code of Business Conduct and Ethics on our website at www.selectabio.com in the “Investors & Media” section under “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics, as well as the Nasdaq Stock Market LLC’s requirement to disclose waivers with respect to directors and executive officers, by posting such information on our website at the address and location specified above.

The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K.

The information required by this Item is contained in part under the caption “Information about our Executive Officers” at the end of Part I of this Annual Report on Form 10-K.

The remainder of the response to this item will be included in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the headings “Proposal 1⸻Election of Directors,” “Delinquent Section 16(a) Reports,” and “Committees of the Board” and is incorporated herein by reference.

Incorporated by reference from the information in our Proxy Statement for our 2022 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

Executive Compensation

The information required by this Item regarding executive compensation will be included in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the headings “Executive and Director Compensation” and “Compensation Committee Interlocks and Insider Participation” and is incorporated herein by reference.

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

The information required by this Item will be included in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Executive and Director Compensation⸻Equity Compensation Plan Information” and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

The information required by this Item will be included in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the headings “Corporate Governance,” “Committees of the Board” and “Certain Relationships” and is incorporated herein by reference.

Principal Accountant Fees and Services

The information required by this Item regarding principal accountant fees and services will be included in our definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the heading “Independent Registered Public Accounting Firm Fees and Other Matters” and is incorporated herein by reference.

Exhibits, Financial Statement Schedules

(a)(1) Financial Statements

The financial statements listed below are filed as part of this Annual Report on Form 10-K.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Changes in Stockholders' (Deficit) Equity for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018

Notes to Consolidated Financial Statements

See the “Index to Consolidated Financial Statements” on page F-1 below for the list of financial statements filed as part of this report.

(a)(2) Financial Statement Schedules

All financial schedules have been omitted because the required information is either presented in the consolidated financial statements filed as part of this Annual Report on Form 10-K or the notes thereto or is not applicable or required.

(a)(3) Exhibits

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8-K 001-37798 4.1 12/26/2019

Form of Pre-Funded Common Stock Purchase Warrant, dated December 23, 2019

8-K 001-37798 4.2 12/26/2019

Form of Warrant to Purchase Stock, dated August 31, 2020, issued by Selecta Biosciences, Inc.

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Description of Securities

— — — Filed herewith

2016 Incentive Award Plan and form of award agreements thereunder

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S-1 333-211555 10.10 5/24/2016

Lease, dated as of September 30, 2008, as amended by the First Amendment, dated as of July 12, 2011, the Second Amendment, dated as of October 11, 2011 and the Third Amendment, dated as of April 6, 2015, by and between the Registrant and ARE-480 Arsenal Street, LLC

S-1 333-211555 10.13 5/24/2016

Fourth Amendment to Lease, dated August 21, 2016, by and between ARE-480 Arsenal Street LLC and Selecta Biosciences, Inc.

8-K 001-37798 10.1 9/14/2016

Lease Agreement by and between BRE-BMR Grove LLC and Selecta Biosciences, Inc.

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S-1/A 333-211555 10.18 6/8/2016

Employment Agreement, dated as of June 6, 2016, by and between the Registrant and Lloyd P.

Johnston, Ph.D.

Employment Agreement, dated as of June 6, 2016, by and between the Registrant and Lloyd Johnston, Ph.D.

S-1/A 333-211555 10.21 6/8/2016

Employment Agreement, dated as of August 12, 2019, by and between the Registrant and Bradford D.

10-Q 001-37798 10.1 11/8/2019

Employment Agreement, dated as of July 31, 2020, by and between the Registrant and Peter G.

10-Q 001-37798 10.1 11/5/2020

Employment Agreement, dated September 3, 2021, by and between Selecta Biosciences, Inc.

and Kevin Tan

10-Q 001-37798 10.1 11/10/2021

Stock Purchase Agreement, dated as of December 2, 2016, by and between Spark Therapeutics, Inc.

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8-K 001-37798 10.1 8/20/2019

Securities Purchase Agreement, dated December 18, 2019, by and among the Registrant and the Investors named therein

8-K 001-37798 10.1 12/26/2019

Stock Purchase Agreement, dated as of June 11, 2020, by and between the Registrant and Swedish Orphan Biovitrum AB (Publ)

10-Q 001-37798 10.3 8/6/2020

Loan and Security Agreement, dated August 31, 2020, between Selecta Biosciences, Inc., Oxford Finance LLC, as Collateral Agent and as a lender, and Silicon Valley Bank, as a lender.

8-K 001-37798 10.1.1 9/3/2020

First Amendment to Loan and Security Agreement, dated September 7, 2021, by and among Selecta Biosciences, Inc., Oxford Finance LLC, and Silicon Valley Bank

10-Q 001-37798 10.3 11/9/2021

Subsidiaries of Selecta Biosciences, Inc.

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

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer

Section 1350 Certification of Chief Executive Officer

Section 1350 Certification of Chief Financial Officer

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101.SCH Inline XBRL Taxonomy Extension Schema Document ***

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document ***

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document ***

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document ***

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document ***

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ***

— — — Filed herewith

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

— — — Filed herewith

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

— — — Filed herewith

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

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

— — — Furnished herewith

*** Submitted electronically herewith.

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101.SCH Inline XBRL Taxonomy Extension Schema Document — — — Filed herewith

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document — — — Filed herewith

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document — — — Filed herewith

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document — — — Filed herewith

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document — — — Filed herewith

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) — — — Filed herewith

# Indicates management contract or compensatory plan.

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(Principal Executive Officer)

/s/ Bradford D.

Dahms Chief Financial Officer March 12, 2021

Dahms (Principal Financial and Accounting Officer)

/s/ Kevin Tan Chief Financial Officer March 10, 2022

Kevin Tan (Principal Financial and Accounting Officer)

/s/ Carrie S.

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Barabe Director March 10, 2022

/s/ Nishan de Silva, M.D.

Director March 10, 2022

Nishan de Silva, M.D.

Myers Director March 10, 2022

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Patrick Zenner

Selecta Biosciences, Inc.

and Subsidiaries

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets at December 31, 2021 and 2020

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Selecta Biosciences, Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ (deficit) equity and cash flows for each of the three 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 (deficit) and cash flows for each of the three 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 three years in the period ended December 31, 2021, in conformity with U.S.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition for License and Development Agreement with Swedish Orphan Biovitrum (“Sobi License Agreement”)

Description of the Matter

As discussed in Note 12 to the consolidated financial statements, the Company recognized $83.5 million in revenue under the Sobi License Agreement during the year ended December 31, 2021.

The Company recognizes revenue for the Combined License Obligation using the output method, based on the proportion of cumulative supply shipped for use in the clinical trials to the Company’s estimate of the total supply required during the clinical trial period.

Auditing management’s calculation of revenue recognized for the Combined License Obligation under the output method is especially challenging because the assessment of the proportion of cumulative supply shipped required a high degree of audit judgment due to the subjectivity in estimating the remaining supply necessary to satisfy the Combined License Obligation.

How We Addressed the Matter in Our Audit

To audit the Company’s revenue recognition for the Combined License Obligation, we performed audit procedures that included, among others, testing the reasonableness of the Company’s estimate of the total supply required during the clinical trial period as well as testing the accuracy and completeness of the underlying data used in those estimates.

We corroborated management estimates and judgments by reviewing the clinical plans and evaluating the accuracy of the prior period estimates and judgments.

We also discussed the estimate of the total supply required during the clinical trial period with the Company’s research and development personnel that oversee the activity related to the Sobi License Agreement.

Additionally, we performed an independent sensitivity analysis to evaluate the impact on revenues of changes in management’s estimate of remaining supply required to satisfy the Combined License Obligation.

/s/ Ernst & Young LLP

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Cash and cash equivalents $ 114,057 $ 138,685

Restricted cash — 279

Marketable securities 13,998 —

Accounts receivable 9,914 7,224

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Total current assets 144,443 151,343

Non-current assets:

Property and equipment, net 2,142 1,395

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Long-term restricted cash 1,379 1,379

Investments 2,000 —

Other assets 90 370

Total assets $ 159,883 $ 165,435

Liabilities and stockholders’ (deficit) equity

Liabilities and stockholders’ equity (deficit)

Current liabilities:

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Lease liability 1,049 908

Income taxes payable 601 —

Deferred revenue 53,883 72,050

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Loan payable, net of current portion 19,673 24,793

Lease liability 9,647 —

Lease liability, net of current portion 8,598 9,647

Deferred revenue 11,417 38,746

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Commitments and contingencies (Note 17)

Stockholders’ (deficit) equity:

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

no shares issued and outstanding at December 31, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

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Accumulated other comprehensive loss ( 4,566 ) ( 4,563 )

Total stockholders’ (deficit) equity ( 18,006 ) 8,397

Total liabilities and stockholders’ (deficit) equity $ 165,435 $ 99,569

Total stockholders’ equity (deficit) 22,521 ( 18,006 )

Total liabilities and stockholders’ equity (deficit) $ 159,883 $ 165,435

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

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2021 2020 2019

Grant and collaboration revenue $ 16,597 $ 6,677 $ 903

Collaboration and license revenue $ 85,077 $ 16,597 $ 6,677

Operating expenses:

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Total operating expenses 89,674 73,418 59,132

Loss from operations ( 56,821 ) ( 52,455 ) ( 65,022 )

Operating loss ( 4,597 ) ( 56,821 ) ( 52,455 )

Investment income 44 260 834

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Other income (expense), net 15 89 ( 1,306 )

Loss before income taxes ( 9,721 ) ( 68,876 ) ( 55,350 )

Income tax expense ( 15,966 ) — —

Net loss ( 25,687 ) ( 68,876 ) ( 55,350 )

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustment ( 2 ) ( 40 ) 34

Unrealized gain on securities — — 16

Unrealized loss on marketable securities ( 1 ) — —

Total comprehensive loss $ ( 25,690 ) $ ( 68,916 ) $ ( 55,316 )

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and Subsidiaries

Consolidated Statements of Changes in Stockholders’ (Deficit) Equity

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(Amounts in thousands, except share data)

Additional other Stockholders’

Common stock paid-in Accumulated comprehensive (Deficit)

Shares Amount capital deficit loss Equity

Balance at December 31, 2017 22,343,254 $ 3 $ 273,128 $ ( 216,897 ) $ ( 4,420 ) $ 51,814

Adoption of new accounting principle — — — 1,830 — 1,830

Issuance of common stock under Employee Stock Purchase Plan 24,738 — 196 — — 196

Issuance of common stock upon exercise of options 103,784 — 501 — — 501

Stock-based compensation expense — — 5,714 — — 5,714

Currency translation adjustment — — — — ( 153 ) ( 153 )

Unrealized gains on securities — — — — 16 16

Net loss — — — ( 65,336 ) — ( 65,336 )

Common stock paid-in Accumulated comprehensive Equity

Shares Amount capital deficit loss (Deficit)

Balance at December 31, 2018 22,471,776 $ 3 $ 279,539 $ ( 280,403 ) $ ( 4,557 ) $ ( 5,418 )

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Issuance of common stock upon exercise of pre-funded warrants 8,342,128 1 — — — 1

Issuance of common stock upon exercise of common warrants 6,637,608 1 24,262 — — 24,263

Issuance of common stock upon exercise of warrants 6,637,608 1 24,262 — — 24,263

Other financing fees — — ( 370 ) — — ( 370 )

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Balance at December 31, 2020 108,071,249 $ 11 $ 391,175 $ ( 404,629 ) $ ( 4,563 ) $ ( 18,006 )

Issuance of common stock under Employee Stock Purchase Plan 58,794 — 161 — — 161

Issuance of common stock upon exercise of options 447,492 — 778 — — 778

Issuance of vested restricted stock units 201,250 — — — — —

Issuance of common stock through at-the-market offering, net 13,767,511 1 51,933 — — 51,934

Issuance of common stock upon exercise of warrants 1,076,669 — 5,624 — — 5,624

Stock-based compensation expense — — 7,720 — — 7,720

Currency translation adjustment — — — — ( 2 ) ( 2 )

Unrealized loss on marketable securities — — — — ( 1 ) ( 1 )

Net loss — — — ( 25,687 ) — ( 25,687 )

Balance at December 31, 2021

123,622,965 $ 12 $ 457,391 $ ( 430,316 ) $ ( 4,566 ) $ 22,521

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

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Consolidated Statements of Cash Flows

(Amounts in thousands)

Year Ended December 31,

2021 2020 2019

Cash flows from operating activities

Cash flows from operating activities (Amounts in thousands)

Net loss $ ( 25,687 ) $ ( 68,876 ) $ ( 55,350 )

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Depreciation and amortization 1,252 734 726

Accretion of discounts on investments — ( 154 ) ( 101 )

Amortization of premiums and discounts on marketable securities 57 — ( 154 )

Non-cash lease expense 1,119 1,127 1,301

(Gain) loss on disposal of property and equipment

( 52 ) 104 ( 81 )

Loss on disposal of property and equipment

Stock-based compensation expense 7,720 5,422 5,161

2 unchanged sentences

Loss on extinguishment of debt — 461 —

Net realized losses on investments — ( 1 ) —

Net realized losses on marketable securities — — ( 1 )

Changes in operating assets and liabilities:

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Accounts payable ( 219 ) ( 57 ) ( 600 )

Income taxes payable 601 — —

Deferred revenue ( 45,496 ) 94,462 337

Accrued expenses and other liabilities 1,061 ( 2,761 ) ( 2,397 )

Net cash provided by (used in) operating activities 34,881 ( 51,435 ) ( 59,161 )

Net cash (used in) provided by operating activities ( 60,382 ) 34,881 ( 51,435 )

Cash flows from investing activities

Receipts from the maturity of short-term investments — 16,350 41,655

Purchases of short-term investments — ( 18,188 ) ( 15,598 )

Sale of short term investments — 1,992 —

Proceeds from maturities of marketable securities 16,400 — 16,350

Payment made for investments ( 2,000 ) — —

Purchases of marketable securities ( 30,455 ) — ( 18,188 )

Sales of marketable securities — — 1,992

Purchases of property and equipment ( 1,085 ) ( 815 ) ( 47 )

Proceeds from the sale of property and equipment — 74 122

Net cash (used in) provided by investing activities ( 741 ) 229 25,272

Net cash used in investing activities ( 17,140 ) ( 741 ) 229

Cash flows from financing activities

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Other financing fees — ( 343 ) —

Net proceeds from exercise of pre-funded and common warrants 979 70,000 —

Proceeds from exercise of pre-funded and common warrants — 979 70,000

Proceeds from exercise of stock options 778 193 150

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Equity offering costs in accrued liabilities $ 24 $ 27 $ 4,381

Unrealized gain on marketable securities $ — $ — $ 16

Unrealized loss on marketable securities $ ( 1 ) $ — $ —

Debt issuance costs in accrued liabilities $ — $ 2 $ —

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Notes to Consolidated Financial Statements

Nature of the Business and Basis of Presentation

Selecta Biosciences, Inc.

(the “Company”) was incorporated in Delaware on December 10, 2007, and is based in Watertown, Massachusetts.

The Company is a clinical-stage biopharmaceutical company leveraging its ImmTOR™ immune tolerance platform with the goals of amplifying the efficacy of biologics, including enabling the re-dosing of life-saving gene therapies, and restoring self-tolerance in autoimmune diseases.

The Company's ImmTOR platform encapsulates rapamycin, also known as sirolimus, an immunomodulator, in biodegradable nanoparticles and is designed to induce antigen-specific immune tolerance.

The Company believes ImmTOR has the potential to enhance the efficacy without compromising the safety of biologic therapies, improve product candidates under development, and enable novel therapeutic modalities.

Description of the Business

Selecta Biosciences, Inc., or the Company, was incorporated in Delaware on December 10, 2007, and is based in Watertown, Massachusetts.

The Company is a clinical-stage biopharmaceutical company.

The Company’s ImmTOR® platform encapsulates rapamycin, also known as sirolimus, an FDA approved immunomodulator, in biodegradable nanoparticles ImmTOR is designed to induce antigen-specific immune tolerance.

The Company believes, by combining ImmTOR with antigens of interest, the Company’s precision immune tolerance platform has the potential to restore self-tolerance to auto-antigens in autoimmune diseases, amplify the efficacy of biologics (including gene therapies) and mitigate the formation of anti-drug antibodies, or ADAs, against biologic drugs.

Since inception, the Company has devoted its efforts principally to research and development of its technology and product candidates, recruiting management and technical staff, acquiring operating assets, and raising capital.

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Liquidity and Management’s Plan

The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations.

The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain and sustain profitable operations.

The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful development of its product candidates, raising additional capital with favorable terms, protection of proprietary technology and market acceptance of any approved future products.

The successful development of product candidates requires substantial working capital, which may not be available to the Company on favorable terms or at all.

To date, the Company has financed its operations primarily through the initial public offering of its common stock, private placements of its common stock, issuances of common and preferred stock, debt, research grants and research collaborations.

The Company currently has no source of product revenue, and it does not expect to generate product revenue for the foreseeable future.

To date, all of the Company's revenue has been collaboration and grant revenue.

The Company has devoted substantially all of its financial resources and efforts to developing its ImmTOR platform, identifying potential product candidates and conducting preclinical studies and its clinical trials.

To date, the Company’s revenue has primarily been from collaboration agreements.

The Company is in the early stages of development of its product candidates, and it has not completed development of any ImmTOR-enabled therapies.

As of December 31, 2020, the Company’s cash, cash equivalents and restricted cash were $ 140.1 million, of which $ 1.4 million was restricted cash related to lease commitments and $ 0.3 million was held by its Russian subsidiary designated solely for use in its operations.

The Company believes the cash, cash equivalents, and restricted cash as of December 31, 2020 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2023.

The Company has incurred losses and negative cash flows from operating activities since inception.

As of December 31, 2021, the Company’s cash, cash equivalents, restricted cash and marketable securities were $ 129.4 million, of which $ 1.4 million was restricted cash related to lease commitments and $ 0.3 million was held by its Russian subsidiary designated solely for use in its operations.

The Company believes the cash, cash equivalents, restricted cash and marketable securities as of December 31, 2021 will enable it to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements, though it may realize additional cash resources upon the achievement of certain contingent collaboration milestones or it may pursue additional cash resources through public or private equity or debt financings or by establishing collaborations with other companies.

Management’s expectations with respect to its ability to fund current and long term planned operations are based on estimates that are subject to risks and uncertainties.

If actual results are different from management’s estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected.

However, there is no guarantee that any collaboration milestones will be achieved or that any of these strategic or financing opportunities will be executed on favorable terms, and some could be dilutive to existing stockholders.

If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research or development programs or be unable to expand its operations or otherwise capitalize on its commercialization of its product candidates.

As of December 31, 2021, the Company had an accumulated deficit of $ 430.3 million.

The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of its product candidates, conducting preclinical studies and clinical trials, and its administrative organization.

The Company will require substantial additional financing to fund its operations and to continue to execute its strategy, and the Company will pursue a range of options to secure additional capital.

At this time, there is significant uncertainty relating to the trajectory of the COVID-19 pandemic and the impact of related responses.

Any impact of COVID-19 on our business, revenues, results of operations and financial condition will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and

other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

The Company anticipates operating losses to continue for the

foreseeable future due to, among other things, costs related to research and development of its product candidates and its administrative organization.

At this time, any impact of COVID-19 on the Company’s business, revenues, results of operations and financial condition will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the emergence of new virus variants, travel restrictions and social distancing in the United States and other countries, business closures or disruptions, supply chain disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Guarantees and Indemnifications

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Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Selecta (RUS), LLC, or Selecta (RUS), a Russian limited liability corporation, and Selecta Biosciences Security Corporation, a Massachusetts Security Corporation.

All significant intercompany accounts and transactions have been eliminated.

Foreign Currency

The functional currency of Selecta (RUS) is the Russian ruble.

Assets and liabilities of Selecta (RUS) are translated at period-end exchange rates, while revenues and expenses are translated at average exchange rates for the period.

Translation gains and losses are reflected in accumulated other comprehensive loss within stockholders’ (deficit) equity.

Foreign currency transaction gains or losses are reflected in the consolidated statements of operations and comprehensive loss.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company’s management considers many factors in selecting appropriate financial accounting policies and controls, and bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances.

In preparing these consolidated financial statements, management used significant estimates in the following areas, among others:

revenue recognition, the valuation of its warrant liabilities and estimating accrued research and development expenses.

revenue recognition, and estimating accrued research and development expenses.

The Company assesses the above estimates on an ongoing basis;

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Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Company’s Chief Executive Officer, in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating segment, the research and development of nanoparticle immunomodulatory drugs for the treatment and prevention of human diseases.

Cash Equivalents, Investments and Restricted Cash

Cash Equivalents, Restricted Cash, Marketable Securities and Investments

Cash equivalents include all highly liquid investments maturing within 90 days from the date of purchase.

Investments consist of securities with remaining maturities greater than 90 days when purchased.

The Company classifies these marketable securities and records them at fair value in the accompanying consolidated balance sheets.

Investments with less than one year until maturity are classified as short term, while investments with maturities greater than one year are classified as long term.

Marketable securities consist of securities with remaining maturities greater than 90 days when purchased.

The Company classifies these marketable securities as available-for-sale and records them at fair value in the accompanying consolidated balance sheets.

Marketable securities with less than one year until maturity are classified as short term, while marketable securities with maturities greater than one year are classified as long term.

Unrealized gains or losses are included in accumulated other comprehensive income (loss).

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The cost of securities sold is determined based on the specific identification method for purposes of recording realized gains and losses.

During the year ended December 31, 2020, there were no realized losses on sales of investments, and no investments were adjusted for other than temporary declines in fair value.

As of December 31, 2020, the Company had restricted cash balances relating to a secured letter of credit in connection with its Headquarters Lease (as defined in Note 8).

The following table provides a reconciliation of cash, cash equivalents, and

restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the consolidated statement of cash flows:

Year Ended December 31,

2020 2019 2018

Cash and cash equivalents $ 138,685 $ 89,893 $ 37,403

Short-term restricted cash — 279 —

Long-term restricted cash 1,379 1,379 279

Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows $ 140,064 $ 91,551 $ 37,682

We also invest in equity securities of companies whose securities are not publicly traded and where fair value is not readily available.

These investments are recorded using cost minus impairment adjusted for changes in observable prices, depending on our ownership percentage and other factors that suggest we have significant influence.

We monitor these investments to evaluate whether any increase or decline in their value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

These investments are included in investments and other assets in our consolidated balance sheets.

Concentrations of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term deposits and investments, and accounts receivable.

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term deposits and marketable securities, investments, and accounts receivable.

Cash and cash equivalents are deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits.

Management believes that the financial institutions that hold the Company’s deposits are financially creditworthy and, accordingly, minimal risk exists with respect to those balances.

Generally, these deposits may be redeemed upon demand and therefore bear minimal interest rate risk.

As an integral part of operating its Russian subsidiary, the Company also maintains cash in Russian bank accounts in denominations of both Russian rubles and U.S.

The Company also maintains cash in Russian bank accounts in denominations of both Russian rubles and U.S.

As of December 31, 2021, the Company maintained approximately $ 0.3 million in Russian bank accounts, all of which was held in U.S.

The Company did not have any off-balance sheet arrangements as of December 31, 2020 and December 31, 2019.

Fair Value of Financial Instruments

The Company’s financial instruments consist mainly of cash equivalents, restricted cash, accounts payable, loans payable, and common warrants.

The Company’s financial instruments consist mainly of cash equivalents, restricted cash, accounts payable, loans payable, marketable securities, investments and common warrants.

The carrying amounts of cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their estimated fair value due to their short-term maturities.

At December 31, 2020, given the recent issuance of the Term A Loan under the 2020 Term Loan (each, as defined below), the Company believes the carrying value approximates the fair value of the loan.

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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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.

The fair value of warrant liabilities were determined using Level 3 inputs.

The fair value of warrant liabilities is determined using Level 3 inputs.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.

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This condition could cause an instrument to be reclassified within levels in the fair value hierarchy.

There were no transfers within the fair value hierarchy during the years ended December 31, 2020 or December 31, 2019.

The carrying amounts reflected in our consolidated balance sheet for investments approximate fair value, and are assessed for impairment quarterly.

Property and Equipment

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The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group.

Based on management's evaluation, the fair value of the asset group, measured as the market capitalization of the Company exceeds its carrying value, and for this reason the Company did no t recognize any material impairment losses during the years ended December 31, 2020 and 2019.

Based on management’s evaluation, the fair value of the asset group, measured as the market capitalization of the Company exceeds its carrying value.

Debt Issuance Costs

Debt issuance costs and fees paid to lenders are classified as a debt discount and are recorded as a direct deduction from the face amount of the related debt.

Issuance costs paid to third parties that are the direct result of the debt issuance are capitalized as a direct deduction from the face amount of the related debt.

Debt issuance costs are amortized over the term of the related debt using the effective interest method and recorded as interest expense.

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(i) all components of net loss and (ii) all components of comprehensive loss other than net loss, referred to as other comprehensive loss.

Other comprehensive loss is comprised of foreign currency translation adjustments.

Other comprehensive loss is comprised of unrealized gains and losses on debt securities and foreign currency translation adjustments.

Revenue Recognition

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The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

For example, certain performance obligations associated with Swedish Orphan Biovitrum (“Sobi”), Asklepios Biopharmaceutical, Inc.

(“AskBio”), Sarepta Therapeutics, Inc.

(“Sarepta”), and Spark Therapeutics, Inc.

(“Spark”) (see Note 12) will be satisfied over time, and revenue will be recognized using the output method, based on the proportion of actual deliveries to the total expected deliveries over the initial term.

Collaboration and Grant Revenue:

The Company currently generates its revenue through grants, collaboration and license agreements with strategic collaborators for the development and commercialization of product candidates.

Grants and license agreements with customers are accounted for in accordance with ASC 606.

For example, certain performance obligations associated with Swedish Orphan Biovitrum, or Sobi, Asklepios Biopharmaceutical, Inc., or AskBio, Sarepta Therapeutics, Inc., or Sarepta, and Takeda Pharmaceuticals USA, Inc., or Takeda, (see Note 12) will be satisfied over time, and revenue will be recognized using the output method, based on the proportion of actual deliveries to the total expected deliveries over the initial term.

Collaboration and License Revenue:

The Company currently generates its revenue through collaboration and license agreements with strategic collaborators for the development and commercialization of product candidates.

Collaboration and license agreements with customers are generally accounted for in accordance with ASC 606.

The Company analyzes collaboration arrangements by first assessing whether they are within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808 ), and evaluates whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities.

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To the extent the collaboration agreement is within the scope of ASC 808, the Company also assesses whether any aspects of the agreement are within the scope of other accounting literature (specifically ASC 606).

The Company early adopted

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 , which provides guidance on evaluating certain transactions between collaborative arrangement participants.

If the Company concludes that some or all aspects of the agreement are distinct and represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC 606.

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The terms of the Company’s arrangements typically include one or more of the following:

(i) up-front fees;

(i) upfront fees;

(ii) milestone payments related to the achievement of development, regulatory, or commercial goals;

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Licenses of Intellectual Property:

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 recognizes revenues 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.

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 recognizes revenues from non-refundable, upfront 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.

If not distinct, the license is combined with other performance obligations in the contract.

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The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Optional licenses are evaluated to determine if they are issued at a discount, and therefore, represent material rights and accounted for as separate performance obligations.

licenses are evaluated to determine if they are issued at a discount, and therefore, represent material rights and accounted for as separate performance obligations.

Milestone Payments:

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The historical clinical accrual estimates made by the Company have not been materially different from the actual costs.

On June 11, 2020, we and Sobi entered into a license and development agreement (the “Sobi License”).

In June 2020, the Company and Sobi entered into a license and development agreement, or the Sobi License.

Pursuant to the Sobi License, clinical trial costs incurred to complete development of SEL-212, including but not limited to costs incurred while conducting and completing the Phase 3 DISSOLVE trials, will be reimbursed by Sobi.

These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Footnote 12.

These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Note 12.

The reimbursable costs exclude any costs of additional development activities required that are related to ImmTOR and that are unrelated to SEL-212.

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Stock-based compensation is measured at the grant date fair value and is recognized over the requisite service period of the awards, usually the vesting period, on a straight-line basis, net of estimated forfeitures.

To the extent that actual forfeitures differ from the Company’s estimates, the differences are recorded as a cumulative adjustment in the period the estimates were

To the extent that actual forfeitures differ from the Company’s estimates, the differences are recorded as a cumulative adjustment in the period the estimates were adjusted.

Stock-based compensation expense recognized in the consolidated financial statements is based on awards that ultimately vest.

Net Loss Per Share

The Company has reported losses since inception and has computed basic net loss per share by dividing net loss by the weighted average number of common shares and pre-funded warrants outstanding for the period.

The Company has computed diluted net loss per common share after considering all potentially dilutive common shares, including stock options, convertible preferred stock, and warrants outstanding during the period except where the effect of including such securities would be antidilutive.

Because the Company has reported net losses since inception, these potential common shares have been anti-dilutive and basic and diluted loss per share have been the same.

The Company calculates basic net loss per share by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including any dilutive effect from outstanding stock options, restricted stock units, warrants to purchase common stock, and employee stock purchase plan stock using the treasury stock method.

Given that the Company recorded a net loss for each of the periods presented, there is no difference between basic and diluted net loss per share since the effect of common stock equivalents would be anti-dilutive and are, therefore, excluded from the diluted net loss per share calculation.

Contingent Liabilities

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Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities.

The Company elected not to recognize leases with a term less than one year on its balance sheet.

Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term.

The Company elected not to recognize leases with an original term less than one year on its balance sheet.

Operating lease right-of-

use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term.

The interest rate implicit in lease contracts is typically not readily determinable.

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Right-of-use assets and operating lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification.

See Note 8 for details.

The Company enters into lease agreements with terms generally ranging from 2 - 8 years.

Some of the Company’s lease agreements include Company options to either extend and/or early terminate the lease, the costs of which are included in its operating lease liabilities to the extent that such options are reasonably certain of being exercised.

Leases with renewal options allow the Company to extend the lease term typically between 1 and 5 years.

When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term.

When determining if a renewal option is reasonably certain of being exercised, the Company considers several economic factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, underlying contractual obligations, or specific characteristics unique to that particular lease that would make it reasonably certain that the Company would exercise such option.

Renewal and termination options were generally not included in the lease term for the Company’s existing operating leases.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Recent Accounting Pronouncements

Recently Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) which changes the fair value measurement disclosure requirements of ASC 820.

Entities will no longer be required to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy of timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements , which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations.

The Company adopted the new standard effective January 1, 2021, and there was no impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.

ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The Company adopted the new standard effective January 1, 2021, and there was no impact on its consolidated financial statements.

Not Yet Adopted

This ASU is effective for public entities for fiscal years beginning after December 15, 2020.

The Company is assessing the impact this standard will have on its consolidated financial statements and disclosures.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021-04 provides guidance as to how entities should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains equity-classified after modification or exchange as an exchange of the original instrument for a new instrument.

An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date.

This new standard will be effective for us for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years.

The adoption of ASU 2021-04 is not expected to have an impact on the Company’s financial position or results of operations upon adoption.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) .

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

This ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, with early adoption permitted no earlier than January 1, 2021.

The Company is assessing the impact this standard will have on its consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes.

ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in

This ASU is effective for public entities for fiscal years beginning after December 15, 2020.

This new standard will be effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The Company is assessing the impact this standard will have on its consolidated financial statements and disclosures.

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ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts.

ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses.

ASU 2016-13 also requires enhanced disclosures to help financial

statement users better understand significant estimates and judgments used in estimating credit losses.

This ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company is assessing the impact this standard will have on its consolidated financial statements and disclosures.

Marketable Securities

As of December 31, 2020, and December 31, 2019, the Company did not have marketable securities.

The adoption of ASU 2016-13 is not expected to have an impact on the Company’s financial position or results of operations upon adoption.

Marketable Securities and Investments

The following table summarizes the marketable securities held as of December 31, 2021 (in thousands):

cost Unrealized gains Unrealized losses Fair

December 31, 2021

Corporate bonds $ 2,007 $ — $ ( 1 ) $ 2,006

Commercial paper 11,992 — — 11,992

Total $ 13,999 $ — $ ( 1 ) $ 13,998

All marketable securities held at December 31, 2021 had maturities of less than 12 months when purchased and are classified as short-term marketable securities on the accompanying consolidated balance sheet.

During the year ended December 31, 2021, there were no marketable securities adjusted for other than temporary declines in fair value.

The Company does not intend to sell its investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity.

As of December 31, 2021, the Company has a $ 2.0 million investment in Cyrus pursuant to the Cyrus Agreement.

The Company’s maximum exposure to loss related to this variable interest entity is limited to the carrying value of the investment.

See Note 14 for details.

As of December 31, 2020, the Company held no marketable securities or investments.

Net Loss Per Share

The Company has reported a net loss for the years ended December 31, 2021, 2020 and 2019.

For this reason basic and diluted net loss per share are the same for all periods presented.

Since the shares underlying the 8,342,128 pre-funded warrants were issuable for little or no consideration, they were considered outstanding for both basic and diluted earnings per share.

During the second quarter 2020, all 8,342,128 pre-funded warrants were exercised, but had no effect on basic and diluted shares at exercise because all were included in both basic and diluted from the period of issuance.

The Company used the treasury stock method to determine the number of dilutive shares.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per-share data):

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2021 2020 2019

Net loss attributable to common stockholders $ ( 68,876 ) $ ( 55,350 ) $ ( 65,336 )

Weighted-average common shares and pre-funded warrants outstanding—basic and diluted 101,202,176 45,548,511 22,389,286

Net loss per share attributable to common stockholders —basic and diluted $ ( 0.68 ) $ ( 1.22 ) $ ( 2.92 )

All potential dilutive common shares have been excluded from the computation of the diluted net loss per share for all periods presented, as the effect would have been anti-dilutive.

Potential dilutive common share equivalents consist of the following:

Net loss $ ( 25,687 ) $ ( 68,876 ) $ ( 55,350 )

Weighted-average common shares outstanding - basic and diluted 114,328,798 101,202,176 45,548,511

Net loss per share:

Basic and diluted $ ( 0.22 ) $ ( 0.68 ) $ ( 1.22 )

The following table represents the potential dilutive common shares excluded from the computation of the diluted net loss per share for all periods presented, as the effect would have been anti-dilutive:

Year Ended December 31,

2021 2020 2019

Stock options to purchase common stock 7,775,249 6,796,669 4,093,979

Unvested restricted stock units 87,500 181,250 175,000

Stock warrants to purchase common stock 12,378,016 23,084,120 95,619

Options, RSUs and ESPP shares 11,492,002 7,909,583 7,002,527

Warrants to purchase common stock 10,735,980 12,378,016 23,084,120

Total 22,227,982 20,287,599 30,086,647

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value as of December 31, 2020 and December 31, 2019, and indicate the level within the fair value hierarchy where each measurement is classified.

Below is a summary of assets and liabilities measured at fair value on a recurring basis (in thousands):

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021 and 2020 (in thousands):

December 31, 2021

Total Level 1 Level 2 Level 3

Money market funds $ 80,576 $ 80,576 $ — $ —

Total $ 80,576 $ 80,576 $ — $ —

Money market funds (included in cash equivalents) $ 66,563 $ 66,563 $ — $ —

Marketable securities:

Corporate bonds 2,006 — 2,006 —

Commercial paper 11,992 — 11,992 —

Total assets $ 80,561 $ 66,563 $ 13,998 $ —

Warrant liabilities $ 25,423 $ — $ — $ 25,423

Total $ 28,708 $ — $ — $ 28,708

Total liabilities $ 25,423 $ — $ — $ 25,423

December 31, 2020

Total Level 1 Level 2 Level 3

Money market funds $ 50,401 $ 50,401 $ — $ —

Total $ 50,401 $ 50,401 $ — $ —

Money market funds (included in cash equivalents) $ 80,576 $ 80,576 $ — $ —

Total assets $ 80,576 $ 80,576 $ — $ —

Warrant liabilities $ 28,708 $ — $ — $ 28,708

Total $ 41,549 $ — $ — $ 41,549

As of December 31, 2020 and December 31, 2019, the money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.

Assumptions Used in Determining Fair Value of Common Warrants

Total liabilities $ 28,708 $ — $ — $ 28,708

There were no transfers within the fair value hierarchy during the years ended December 31, 2021 or 2020.

Cash, Cash Equivalents, and Restricted Cash

As of December 31, 2021 and 2020, the money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.

As of December 31, 2021, the Company had restricted cash balances relating to a secured letter of credit in connection with its lease for the Company’s headquarters (see Note 8 included elsewhere in this Annual Report).

The Company’s consolidated statement of cash flows includes the following as of December 31, 2021, 2020 and 2019 (in thousands):

Year Ended December 31,

2021 2020 2019

Cash and cash equivalents $ 114,057 $ 138,685 $ 89,893

Short-term restricted cash — — 279

Long-term restricted cash 1,379 1,379 1,379

Total cash, cash equivalents, and restricted cash $ 115,436 $ 140,064 $ 91,551

Marketable Securities

As of December 31, 2021, marketable securities classified as Level 2 within the valuation hierarchy consist of corporate bonds and commercial paper.

Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy.

The Company estimates the fair value of these marketable securities by taking into consideration valuations that include market pricing based on real-time trade data for the same or similar securities, and other observable inputs.

The amortized cost of available-for-sale debt securities is adjusted for amortization of premiums and accretion of discounts to the earliest call date for premiums or to maturity for discounts.

Loans Payable

At December 31, 2021, in light of the recent issuance of the Term A Loan under the 2020 Term Loan, the Company believes the carrying value approximates the fair value of the loan.

Common Warrants

In December 2019, the Company issued common warrants in connection with a private placement of common shares.

Pursuant to the terms of the common warrants, the Company could be required to settle the common warrants in cash in the event of certain acquisitions of the Company and, as a result, the common warrants are required to be measured at fair value and reported as a liability on the balance sheet.

The Company recorded the fair value of the common warrants upon issuance using the Black-Scholes valuation model and is required to revalue the common warrants at each reporting date with any changes in fair value recorded in the statement of operations.

The valuation of the common warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable.

The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants.

The valuation of the common warrants is considered Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable including the volatility rate and the estimated term of the warrants.

Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.

The change in the fair value of the Level 3 warrant liability is reflected in the statement of operations for the year ended December 31, 2020.

The estimated fair value of warrants is determined using Level 3 inputs inherent in the Black-Scholes simulation valuation.

The changes in the fair values of the Level 3 warrant liability are reflected in the statement of operations and comprehensive loss for the years ended December 31, 2021, 2020 and 2019.

The estimated fair value of warrants is determined using the following inputs to the Black-Scholes simulation valuation:

Estimated fair value of the underlying stock .

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Property and equipment consists of the following (in thousands):

December 31, December 31,

Laboratory equipment $ 5,134 $ 4,427

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Property and equipment, net $ 2,142 $ 1,395

Depreciation expense was $ 0.6 million, $ 0.7 million and $ 1.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

During the fourth quarter of 2020, capitalized website development costs of $ 0.1 million were recorded within construction in process.

The Company recorded accelerated depreciation costs of less than $ 0.1 million in the reported property and equipment for the year ended December 31, 2020 relating to the new corporate headquarters move in 2020.

Depreciation expense was $ 0.6 million, $ 0.6 million and $ 0.7 million for the years ended December 31, 2021, 2020 and

2019, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

December 31, December 31,

Payroll and employee related expenses $ 3,179 $ 3,049

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Accrued interest 170 170

Issuance costs, December 2019 financing — 4,381

Other 1,721 216

Accrued expenses $ 10,533 $ 8,146

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective approach.

The Company recorded operating lease assets (right-of-use assets) of $ 1.6 million and operating lease liabilities of $ 1.8 million and reversed a lease liability of $ 0.2 million related to straight-line rent and incentives.

There was no impact to accumulated deficit upon adoption of ASC 842.

The underlying assets of the Company’s leases are primarily office space.

The Company determines if an arrangement qualifies as a lease at its inception.

As a practical expedient permitted under ASC 842, the Company elected to account for the lease and non-lease components as a single lease component for all leases of which it is the lessee.

Lease payments, which may include lease and non-lease components, were included in the measurement of the Company’s lease liabilities to the extent that such payments were either fixed amounts or variable amounts dependent upon on a rate or index as stipulated in the lease contract.

When the Company cannot readily determine the rate implicit in the lease, the Company determines its incremental borrowing rate by using the rate of interest that it would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

On January 1, 2019, the discount rate used on existing operating leases at adoption, which had remaining lease terms of 15 months, was 10.0 %.

The Company enters into lease agreements with terms generally ranging from 2 - 8 years.

Leases with renewal options allow the Company to extend the lease term typically between 1 and 5 years.

When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term.

Renewal and termination options were generally not included in the lease term for the Company’s existing operating leases.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

480 Arsenal Way Lease

The Company had a non-cancellable operating lease for its laboratory and office space located at 480 Arsenal Way, Watertown, Massachusetts, or the Prior Headquarters Lease.

Pursuant to the Prior Headquarters Lease, the landlord provided the Company a tenant improvement allowance of up to $ 0.7 million, which the Company fully utilized during 2012.

The leasehold improvements were capitalized as a component of property and equipment.

In connection with the Prior Headquarters Lease, the Company had a letter of credit for $ 0.3 million which renewed automatically each year and was classified in restricted cash.

In August 2016, the Company signed an amendment to the Prior Headquarters Lease, which extended the term through March 31, 2020.

In March 2020, the Company signed an amendment to extend the lease term one additional month to April 30, 2020.

The right-of-use asset and lease liability were remeasured and recorded based on the change in the lease term in which the net impact was immaterial.

75 North Beacon Street Lease

In October 2017, the Company entered into a lease for approximately 5,100 square feet of additional office space located at 75 North Beacon Street, Watertown, Massachusetts, or the 75 North Beacon Lease for a term through March 31, 2020.

On January 11, 2019, the Company vacated 75 North Beacon Street, Watertown, MA and consolidated all employees at its then- corporate headquarters at 480 Arsenal Way, Watertown, MA.

The right-of-use asset with carrying amount of $ 0.2 million attributable to the 75 North Beacon Lease was written down to zero during the first quarter of 2019.

Other accrued expenses as of December 31, 2021 include a $ 0.9 million estimated liability for plaintiff’s litigation relating to the two lawsuits described further within Note 17.

65 Grove Street Lease

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As part of the Headquarters Lease, the Company incurred $ 0.8 million in non-reimbursable construction costs.

The lease began in March 2020, consistent with when the Company took control of the office space and the lease term is 8 years.

The lease began in March 2020, when the Company took control of the office space, and the lease term is 8 years.

The discount rate of 8.9 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term, including any reasonably certain renewal periods.

Rent payments began in May 2020, and the base rent for the first year is $ 0.2 million per month.

In connection with the Headquarters Lease, the Company secured a letter of credit from Silicon Valley Bank for $ 1.4 million which renews automatically each year.

The Company recorded the right-of-use asset and operating lease liabilities of $ 11.8 million during the three months ended March 31, 2020 as control of the premises was transferred to the Company.

In connection with the Headquarters Lease, the Company secured a letter of credit from Silicon Valley Bank, or SVB, for $ 1.4 million, recognized as long-term restricted cash, as of December 31, 2021 and 2020, respectively, which automatically renews each year.

Moscow, Russia Lease

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Rent expense for the years ended December 31, 2021, 2020 and 2019 was $ 2.9 million, $ 2.7 million, and $ 2.1 million, respectively.

As of December 31, 2020 and 2019, the components of the operating leases were as follows (in thousands):

Right-of-use asset, net $ 10,948 $ 301

Current operating lease liabilities $ 908 $ 372

Non-current operating lease liabilities 9,647 —

Total operating lease liabilities $ 10,555 $ 372

For the years ended December 31, 2021, 2020 and 2019, the components of lease costs were as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Operating lease cost 2,023 2,096 1,365

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The supplemental disclosure for the statement of cash flows related to operating leases were as follows (in thousands):

Year Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

$ 1,812 $ 2,523

Other than the initial recording of the right-of-use asset and lease liability for the Headquarters Lease, which is non-cash, the changes in the Company’s right-of-use asset and lease liability for the years ended December 31, 2020 and 2019 are reflected in the non-cash lease expense and accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows.

Other than the initial recording of the right-of-use asset and lease liability for the Headquarters Lease in 2020, which was non-cash, the changes in the Company’s right-of-use asset and lease liability for the years ended December 31, 2021 and 2020 are reflected in the non-cash lease expense and accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows.

The following summarizes additional information related to operating leases:

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2020 Term Loan

On August 31, 2020, the Company entered into a term loan of up to $ 35.0 million (the “2020 Term Loan”), consisting of term loans in an aggregate amount of $ 25.0 million (the “Term A Loan”) and term loans in an aggregate amount of $ 10.0 million (the “Term B Loan”), governed by a loan and security agreement between the Company and Oxford Finance LLC, a Delaware limited liability company (“Oxford”) as Collateral Agent and a Lender, and Silicon Valley Bank, a California corporation (“SVB”), as a Lender (the “Loan Agreement”).

The Term A Loan was funded in full on August 31, 2020 (the “Funding Date”).

The Term B Loan will be available, subject to Collateral Agent’s discretion and customary terms and conditions, during the period commencing on the date the Company has delivered to the Collateral Agent and the Lenders evidence:

(i) the Company or one of the Company’s collaboration partners has enrolled its first randomized patient for a Phase 1 clinical trial evaluating the treatment of methylmalonic acidemia (“MMA”), and (ii) the Company has enrolled the first patient in each of two Phase 3 pivotal trials evaluating SEL-212 (the “Second Draw Period Milestone”) and ending on the earliest of (i) the date which is thirty (30) days following the date the Second Draw Period Milestone is achieved, (ii) September 30, 2021 (iii) and the occurrence of an event of default, other than an event of default that has been waived in writing by Collateral Agent and the Lenders in their sole discretion (such period, the “Second Draw Period”).

On August 31, 2020, the Company entered into a term loan of up to $ 35.0 million, or the 2020 Term Loan, consisting of term loans in an aggregate amount of $ 25.0 million, or the Term A Loan, and term loans in an aggregate amount of $ 10.0 million, or the Term B Loan, governed by a loan and security agreement, or the Loan Agreement, between the Company and Oxford Finance LLC, or Oxford, as Collateral Agent and a Lender, and SVB, as a Lender.

The Term A Loan was funded in full on August 31, 2020, or the Funding Date.

The second draw period expired on September 30, 2021 and the Term B Loan is no longer available to be drawn by the Company in the future.

The 2020 Term Loan will mature on August 1, 2025.

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The Term Loan provides for interest-only payments on a monthly basis until April 1, 2022.

provided however, if the Company has delivered to the Collateral Agent and the Lenders prior to September 30, 2021 evidence that Borrower has achieved the Second Draw Period Milestone, the Term Loan provides for interest-only payments on a monthly basis until October 1, 2022.

Thereafter, amortization payments will be payable monthly in equal installments of principal and interest to fully amortize the outstanding principal over the remaining term of the loan, subject to recalculation upon a change in the prime rate.

The Company may prepay the Term Loan in full but not in part provided that the Company (i) provides ten days’ prior written notice to Collateral Agent, (ii) pays on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest, and (B) a prepayment fee of between 3.0 % and 1.0 % of the aggregate original principal amount advanced by the lender depending on the timing of the prepayment.

timing of the prepayment.

Amounts outstanding during an event of default are payable upon SVB’s demand and shall accrue interest at an additional rate of 5.0 % per annum of the past due amount outstanding.

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As part of this analysis, the Company assessed the economic characteristics and risks of the 2020 Term Loan, including any put, call, and contingent features.

The Company determined that the interest rate collar and

prepayment call option did not require bifurcation;

The Company determined that the interest rate collar and prepayment call option did not require bifurcation;

whereas the contingent put option and default (contingent) interest rate feature met bifurcation criteria resulting in immaterial amounts.

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In accordance with ASC 815-40, these warrants are classified as permanent equity in the accompanying consolidated balance sheets and will expire ten years from the date of issuance.

The initial grant date fair value of the warrants was $ 0.4 million as determined by the Black-Scholes valuation model and recorded to shareholders' equity, with the SVB portion allocated to the reacquisition price of the 2017 Term Loan and the Oxford fair value portion as a loan discount to the Term A Loan.

Additionally, on August 31, 2020, pursuant to the terms of a Warrant Side Letter agreement among the Company and the Lenders, the Company agreed to issue to the Lenders, on the date the Company draws the Term B Loan and in accordance with each party’s respective pro rata share with respect to the Term B Loan, one or more warrants to purchase an aggregate number of shares of its common stock that is equal to $ 200,000 divided by the average closing price of the Company’s common stock on The Nasdaq Stock Market LLC for the ten consecutive trading days ending the day before such issuance, rounded down to the nearest whole number of shares, and having an exercise price equal to the Term B Warrant Price.

On the Funding Date, the Company entered into a payoff letter with SVB, pursuant to which the Company utilized $ 13.7 million of the 2020 Term Loan to pay off all outstanding obligations under the 2017 Term Loan (as defined below), consisting of the principal payment, final prepayment and accrued interest.

During the three months ended September 30, 2020, the Company recognized a loss on extinguishment of debt in the amount of $ 0.5 million determined as the difference between the reacquisition price and carrying value at August 31, 2020.

2017 Term Loan

On September 12, 2017, the Company entered into a term loan of up to $ 21.0 million (the “2017 Term Loan” and, together with the 2020 Term Loan, the “Term Loans”)) with Silicon Valley Bank.

The 2017 Term Loan was governed by a loan and security agreement, dated September 12, 2017, between the Company and SVB.

The 2017 Term Loan was funded in full on September 13, 2017.

The Company incurred less than $ 0.1 million in debt issuance costs in connection with the closing of the 2017 Term Loan.

Debt issuance costs were presented in the consolidated balance sheet as a direct deduction from the associated liability and amortized to interest expense over the term of the related debt.

Prior to the extinguishment of the 2017 Term Loan in August 2020 discussed in greater detail above, the 2017 Term Loan was secured by a lien on substantially all of the assets of the Company, other than intellectual property, provided that such lien on substantially all assets included any rights to payments and proceeds from the sale, licensing or disposition of intellectual property.

The Company had also granted SVB a negative pledge with respect to its intellectual property.

Each advance under the 2017 Term Loan accrued interest at a floating per annum rate equal to one-half of one percent above the prime rate (as published in the money rates section of The Wall Street Journal).

The 2017 Term Loan provided for interest-only payments monthly through August 31, 2019.

The monthly interest was subject to recalculation upon a change in the prime rate.

As of December 31, 2020, the outstanding principal balance was $ 25.0 million under the 2020 Term Loan and as of December 31, 2019, the outstanding principal balance was $ 18.2 million under the 2017 Term Loan.

Future minimum principal and interest payments on the 2020 Term Loan as of December 31, 2020 are as follows (in thousands):

Total minimum debt payments $ 33,257

Amount representing interest ( 6,008 )

Debt discount and deferred charges ( 2,456 )

The initial grant date fair value of the warrants was $ 0.4 million as determined by the Black-Scholes valuation model and recorded to stockholders' equity, with the SVB portion allocated to the reacquisition price of the 2017 Term Loan and the Oxford fair value portion as a loan discount to the Term A Loan.

On the Funding Date, the Company entered into a payoff letter with SVB, pursuant to which the Company utilized $ 13.7 million of the 2020 Term Loan to pay off all outstanding obligations under the previous term loan, consisting of the principal payment, final prepayment and accrued interest.

During the year ended December 31, 2020, the Company recognized a loss on extinguishment of debt in the amount of $ 0.5 million determined as the difference between the reacquisition price and carrying value at August 31, 2020.

As of December 31, 2021 and 2020, the outstanding principal balance under the 2020 Term Loan was $ 25.0 million.

Total 2020 Term Loan and unamortized debt discount balances as of December 31, 2021 are as follows (in thousands):

Face value $ 25,000

Venture debt termination fee 2,250

Debt discount ( 1,616 )

Current portion of loan payable ( 5,961 )

Loan payable, net of current portion $ 19,673

Future minimum principal payments on the 2020 Term Loan as of December 31, 2021 are as follows (in thousands):

Total minimum principal payments $ 25,000

During the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 2.8 million, $ 1.6 million and $ 1.5 million respectively of interest expense related to the 2020 and 2017 Term Loans.

Equity Financings

August 2020 Shelf Registration Statement

“At-the-Market” Offerings

2017 Sales Agreement and August 2020 Shelf Registration Statement

In August 2017, the Company entered into a sales agreement, or the 2017 Sales Agreement, with Jefferies LLC, as sales agent, to sell shares of its common stock with an aggregate value of up to $ 50.0 million in an “at the market offering.” On August 6, 2020, concurrent with the filing of the updated shelf registration statement, the Company entered into a sales agreement, or the 2020 Sales Agreement with Jefferies LLC, as sales agent, pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $ 50.0 million in an “at the market offering.” The 2017 Sales Agreement terminated pursuant to its terms in August 2020.

On August 6, 2020, the Company filed an updated universal shelf registration statement on Form S-3 (Reg.

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The shelf registration statement was declared effective by the SEC on August 14, 2020.

“At-the-Market” Offerings

In August 2017, the Company entered into a sales agreement (the “2017 Sales Agreement”), with Jefferies LLC, as sales agent, to sell shares of its common stock with an aggregate value of up to $ 50 million in an “at the market offering.” On August 6, 2020, concurrent with the filing of the updated shelf registration statement, the Company entered into a new sales agreement (the “2020 Sales Agreement”) with Jefferies LLC, as sales agent, pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $ 50 million in an “at the market offering.” The 2017 Sales Agreement terminated pursuant to its terms in August 2020.

Sales of common stock, if any, pursuant to the 2020 Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through the Nasdaq Stock Market or on any other existing trading market for the Company’s common stock.

The Company intends to use the proceeds from the offering for working capital and other general corporate purposes.

The Company may suspend or terminate the 2020 Sales Agreement at any time.

During the year ended December 31, 2019, the Company sold 615,453 shares of its common stock pursuant to the 2017 Sales Agreement at an average price of approximately $ 1.84 per share for aggregate net proceeds of $ 1.0 million, after deducting commissions and other transaction costs, pursuant to its shelf registration statement filed in August 2017.

During the year ended December 31, 2020, the Company sold 1,069,486 shares of its common stock pursuant to the 2017 Sales Agreement and the 2020 Sales Agreement, as applicable, at an average price of approximately $ 2.16 per share for aggregate net proceeds of $ 2.1 million, after deducting commissions and other transaction costs.

On October 8, 2021, the Company delivered notice to Jefferies LLC that the Company was terminating the 2020 Sales Agreement, with effect as of October 19, 2021.

2021 Sales Agreement

On October 25, 2021, the Company entered into a Sales Agreement, or the 2021 Sales Agreement, with SVB Leerink LLC to sell shares of the Company’s common stock, from time to time, through an “at the market” equity offering program under which SVB Leerink will act as sales agent.

The shares of common stock sold pursuant to the 2021 Sales Agreement will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-241692), filed on August 6, 2020 with the Securities and Exchange Commission and related prospectus supplement, filed on October 25, 2021 with the SEC, for aggregate gross sales proceeds of up to $ 75.0 million.

During the year ended December 31, 2021, the Company sold 13,767,511 shares of its common stock pursuant to the 2021 and 2020 Sales Agreement for aggregate net proceeds of $ 51.9 million, after deducting commissions and other transaction costs.

During the year ended December 31, 2020, the Company sold 1,069,486 shares of its common stock pursuant to the 2020 and 2017 Sales Agreements for aggregate net proceeds of $ 2.1 million, after deducting commissions and other transaction costs.

June 2020 Sobi Stock Purchase

On June 11, 2020, the Company entered into a stock purchase agreement with Swedish Orphan Biovitrum AB (Publ), pursuant to which the Company sold an aggregate of 5,416,390 shares of its common stock at a purchase price equal to $ 4.6156 per share, which represented 120 % of the 10-day volume-weighted average price of the Company’s common stock prior to signing, for aggregate gross proceeds of $ 25 million, the Sobi Private Placement.

On June 11, 2020, the Company entered into a stock purchase agreement with Sobi, pursuant to which the Company sold an aggregate of 5,416,390 shares of its common stock at a purchase price equal to $ 4.6156 per share, which represented 120 % of the 10-day volume-weighted average price of the Company’s common stock prior to signing, for aggregate gross proceeds of $ 25.0 million, or the Sobi Private Placement.

The closing of the Sobi Private Placement occurred on July 31, 2020.

The shares of common stock acquired in the Sobi Private Placement are subject to a one-year lock-up from closing, during which time Sobi is prohibited from selling or otherwise disposing of such shares.

In accordance with ASC 815, this forward sale treatment qualified as equity classification as the shares are not within the scope of ASC 480.

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December 2019 Financing

On December 18, 2019, the Company entered into a securities purchase agreement (the “2019 Purchase Agreement”) with a group of institutional investors and certain members of the board of directors.

Pursuant to the 2019 Purchase Agreement, the Company sold an aggregate of 37,634,883 shares of its common stock at a purchase price of $ 1.46 per share, warrants to purchase an aggregate of 22,988,501 shares of common stock at a purchase price of $ 0.125 per share underlying each common warrant, and pre-funded warrants to purchase an aggregate of 8,342,128 shares of common stock at a purchase price of $ 1.46 per share, all with five year terms (the “2019 PIPE”).

On December 18, 2019, the Company entered into a securities purchase agreement, or the 2019 Purchase Agreement, with a group of institutional investors and certain members of the Board of Directors.

The closing of the 2019 PIPE occurred on December 23, 2019.

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In the event of a certain sale of the Company, the terms of the common warrants require us to make a payment to such common warrant holders based on a Black-Scholes valuation (using variables as specified in the warrants).

This provision does

not apply to the pre-funded warrants.

This provision does not apply to the pre-funded warrants.

Therefore, the Company is required to account for the common warrants as liabilities and record them at fair value, while the pre-funded warrants met the criteria to be classified as permanent equity.

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Issuance costs were allocated between the equity component with an offset to additional paid-in capital and the liability component recorded as expense on a relative fair value basis.

Total net proceeds from the equity offering was $ 65.6 million, after deducting transaction costs and commissions of $ 4.4 million which was paid in the three months ended March 31, 2020.

Total net proceeds from the equity offering was $ 65.6 million, after deducting transaction costs and commissions of $ 4.4 million.

The common warrants were revalued as of December 31, 2021 at $ 25.4 million.

During the years ended December 31, 2020 and 2019, the Company recorded losses on the increases in the fair value of the warrants of $( 10.4 ) million and $( 0.9 ) million, respectively, in the consolidated statements of operations.

On December 23, 2019, in connection with the 2019 PIPE, the Company entered into a registration rights agreement (the “2019 Registration Rights Agreement”), pursuant to which the Company agreed to prepare and file a registration statement with the SEC within 45 days after the closing of the 2019 PIPE for purposes of registering the resale of the shares of common stock issued and sold in the 2019 PIPE, shares of common stock issuable upon exercise of the warrants sold in the 2019 PIPE, and any shares of common stock issued as a dividend or other distribution with respect to the shares of common stock or shares of common stock issuable upon exercise of the warrants.

The 2019 PIPE registration statement was declared effective by the SEC on February 6, 2020.

The Company agreed, among other things, to indemnify the investors in the 2019 PIPE, and their officers, directors, members, employees and agents, successors and assigns, under the registration statement from certain liabilities and to pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to the Company’s obligations under the 2019 Registration Rights Agreement.

During the years ended December 31, 2021, 2020 and 2019, the Company recorded a decrease in the fair value of the warrants of $ 2.3 million, $ 10.4 million, and $ 0.9 million, respectively, in the consolidated statements of operations and comprehensive loss.

June 2017 Financing

On June 26, 2017, the Company entered into a securities purchase agreement (the “Institutional Purchase Agreement”) with a select group of institutional investors (the “Institutional Investors”) and a securities purchase agreement with Timothy A.

Springer, Ph.D., a member of the board of directors (the “Springer Purchase Agreement”) for a private placement of the Company's securities (the “2017 PIPE”).

The closing of the 2017 PIPE occurred on June 27, 2017.

In June 2017, the Company entered into a securities purchase agreement, or the Institutional Purchase Agreement with a select group of institutional investors, or the Institutional Investors and a securities purchase agreement with Timothy A.

Springer, Ph.D., a member of the board of directors, or the Springer Purchase Agreement, for a private placement of the Company’s securities, or the 2017 PIPE.

Pursuant to the Institutional Purchase Agreement, the Company sold an aggregate of 2,750,000 shares of its common stock at a purchase price equal to $ 16.00 per share.

Pursuant to the Springer Purchase Agreement, the Company sold to Dr.

Springer an aggregate of 338,791 shares of common stock at a purchase price equal to $ 17.71 per share, which was equal to the most recent consolidated closing bid price on the Nasdaq Stock Market on June 23, 2017, and warrants to purchase up to 79,130 shares of common stock (“Warrant Shares”), exercisable at $ 17.71 per Warrant Share, and with a term of five years .

Springer an aggregate of 338,791 shares of common stock at a purchase price equal to $ 17.71 per share, which was equal to the most recent consolidated closing bid price on the Nasdaq Stock Market on June 23, 2017, and warrants to purchase up to 79,130 shares of common stock, or the Warrant Shares, exercisable at $ 17.71 per Warrant Share, and with a term of five years .

The purchase price for each warrant was equal to $ 0.125 for each Warrant Share, consistent with Nasdaq Stock Market requirements for an “at the market” offering.

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After deducting for placement agent fees and offering expenses, the aggregate net proceeds from the 2017 PIPE were approximately $ 47.1 million.

On June 27, 2017, in connection with the 2017 PIPE, the Company entered into a registration rights agreement (the “2017 Registration Rights Agreement”) with the Institutional Investors and Dr.

Pursuant to the 2017 Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the SEC within 20 days after the closing of the 2017 PIPE for purposes of registering the resale of the shares of common stock issued and sold in the 2017 PIPE, the Warrant Shares, and any shares of common stock issued as a dividend or other distribution with respect to the shares of common stock or Warrant Shares.

The 2017 PIPE registration statement was declared effective by the SEC on July 21, 2017.

The Company agreed to indemnify the Institutional Investors and Dr.

Springer, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to the Company’s obligations under the 2017 Registration Rights Agreement.

During the year ended December 31, 2021, warrant holders exercised 1,642,036 common warrants on a cashless basis and received 1,076,669 shares of common stock.

In addition, warrant holders exercised 669,800 common warrants and 8,342,128 pre-funded warrants, and paid the exercise price in cash.

On August 31, 2020, in connection with the 2020 Term A Loan, 196,850 equity classified warrants were issued to the Lenders.

Number of Warrants

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Outstanding at December 31, 2020 292,469 12,085,547 12,378,016 $ 1.60

Exercises — ( 1,642,036 ) ( 1,642,036 ) 1.46

Outstanding at December 31, 2021 292,469 10,443,511 10,735,980 $ 1.62

As of December 31, 2021, the Company had 200,000,000 shares of common stock authorized for issuance, $ 0.0001 par value per share, with 123,622,965 shares issued and outstanding.

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December 31, 2021 December 31, 2020

Exercise of common warrants 12,378,016 31,426,248

Exercise of warrants 10,735,980 12,378,016

Shares available for future stock incentive awards 6,039,564 4,916,374

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Stock Incentive Plans

Stock Options

The Company maintains the 2008 Stock Incentive Plan (the “2008 Plan”) for employees, consultants, advisors, and directors.

The Company maintains the 2008 Stock Incentive Plan, or the 2008 Plan, for employees, consultants, advisors, and directors.

The 2008 Plan provided for the granting of incentive and non-qualified stock option and restricted stock awards as determined by the Board.

At inception of the 2008 Plan, a total of 2,213,412 shares of common stock were authorized for grants under the 2008 Plan.

The Company ceased granting awards under the 2008 Plan upon the effectiveness of the 2016 Plan (as defined below);

however, awards issued under the 2008 Plan remain subject to the terms of the 2008 Plan and the applicable 2008 Plan agreement.

Shares subject to awards that were granted under the 2008 Plan and that expire, lapse or terminate following the effectiveness of the 2016 Plan become available under the 2016 Plan as shares available for future grants.

All unvested stock options granted under the 2008 Plan may be exercised into restricted stock subject to forfeiture upon termination prior to vesting.

On June 7, 2016, the Company’s stockholders approved the 2016 Incentive Award Plan (the “2016 Plan”), which became effective June 21, 2016.

Pursuant to the terms of the 2016 Plan, the Board is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board or executive officers of the Company the authority to grant options and restricted stock units.

In June 2016, the Company’s stockholders approved the 2016 Incentive Award Plan, or the 2016 Plan, which authorized 1,210,256 shares of common stock for future issuance under the 2016 Plan and the Company ceased granting awards under the 2008 Plan.

Upon the effective date of the 2016 Plan, awards issued under the 2008 Plan remain subject to the terms of the 2008 Plan.

Awards granted under the 2008 Plan that expire, lapse or terminate become available under the 2016 Plan as shares available for future grants.

Additionally, pursuant to the terms of the 2016 Plan, the Board is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board or executive officers of the Company the authority to grant options and restricted stock units.

On December 9, 2020, the Board established a Stock Option Committee authorized to grant awards to certain employees and consultants subject to conditions and limitations within the 2016 Plan.

Shares subject to awards that are granted under the 2016 Plan and that expire, lapse or terminate are available for future grants under the 2016 Plan.

At inception of the 2016 Plan, a total of 1,210,256 shares of common stock were authorized for future issuance under the 2016 Plan.

The number of shares of common stock that may be issued under the 2016 Plan automatically increases on the first day of each calendar year, beginning in 2017 and ending in and including 2026, by an amount equal to the lesser of:

(i) 4 % of the number of shares of the Company’s common stock outstanding on the last day of the applicable preceding calendar year and (ii) such smaller number of shares as is determined by the Board.

During the year ended December 31, 2020 and 2019, the number of shares of common stock that may be issued under the 2016 Plan was increased by 3,453,022 shares and 898,871 shares, respectively.

In January 2021 and 2020, the number of shares of common stock that may be issued under the 2016 Plan was increased by 4,322,850 and 3,453,022 shares, respectively.

As of December 31, 2021, 1,925,537 shares remain available for future issuance under the 2016 Plan.

The 2008 Plan and 2016 Plan provide that the exercise price of incentive stock options cannot be less than 100 % of the fair market value of the Company's common stock on the grant date for participants who own 10 % or less of the total combined voting power of the Company, and not less than 110 % for participants who own more than 10 % of the Company’s voting power.

Options and restricted stock awards granted under the 2008 Plan and 2016 Plan vest over periods as determined by the Board, which are generally four years and, for options, with terms that generally expire ten years from the grant date.

The Company’s 2018 Employment Inducement Incentive Award Plan (the “2018 Inducement Incentive Award Plan”), which was adopted by the Board on September 25, 2018 without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”), provides for the grant of equity-based awards in the form of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock or cash based awards.

In accordance with Rule 5635(c)(4), awards under the 2018 Inducement Incentive Award Plan may only be made to a newly hired employee who has not previously been a member of the Board, or an employee who is being rehired following a bona fide period of non-employment by the Company, as a material inducement to the employee’s entering into employment with the Company.

The Company reserved 1,175,000 shares of its common stock for issuance under the 2018 Inducement Incentive Award Plan.

On March 25, 2019, the Board approved the amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance thereunder.

In September 2018, the Company’s 2018 Employment Inducement Incentive Award Plan, or the 2018 Inducement Incentive Award Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules, which authorized 1,175,000 shares of its common stock for issuance.

In March 2019, the Board approved the amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance thereunder.

As of December 31, 2021, there are 1,591,661 shares available for future grant under the 2018 Inducement Incentive Award Plan.

The fair value of each option award was estimated on the grant date using the Black-Scholes option pricing model.

Expected volatilities are based on the Company’s historical volatility and the historical volatilities of peer companies because the Company's common stock has not traded for a period that is at least equal to the expected term of its stock option awards.

The Company uses the “simplified” method to estimate the expected life of options granted and are expected to be outstanding.

The risk-free interest rate used is the rate for a U.S.

Treasury zero coupon issue with a remaining life consistent with the options expected life on the grant date.

The Company has not paid and does not expect to pay in the foreseeable future, any cash dividends.

Forfeitures are estimated at the time of grant and are adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company has estimated a forfeiture rate of 10 % based on historical attrition trends.

The Company records stock-based compensation expense only on awards that are expected to vest.

Effective June 25, 2020, the Company entered into transition agreements with two executive officers, under which the right to exercise their vested options was extended for a period of two years following their respective separation dates.

The subsequent stock based compensation amount recognized in connection with the option modification in the second quarter was less than $ 0.1 million.

Stock-Based Compensation Expense

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive loss was as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Research and development $ 3,204 $ 2,271 $ 2,079

General and administrative 4,516 3,151 3,082

Total stock-based compensation expense $ 7,720 $ 5,422 $ 5,161

Stock Options

The estimated grant date fair values of employee stock option awards granted under the 2016 Plan and the 2018 Inducement Incentive Award Plan were calculated using the Black-Scholes option pricing model, based on the following weighted-average assumptions:

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The weighted average grant date fair value of stock options granted to employees during the years ended December 31, 2021, 2020 and 2019 was $ 2.73 , $ 1.86 , and $ 1.47 respectively.

As of December 31, 2020 and December 31, 2019, total unrecognized compensation expense related to unvested employee stock options was $ 8.0 million and $ 9.8 million, respectively, which is expected to be recognized over a weighted average period of 2.3 years and 2.5 years, respectively.

Non-employee consultants

No stock option awards were granted to non-employee consultants during the year ended December 31, 2020.

The estimated grant date fair values of non-employee consultants stock option awards granted under the 2016 Plan were calculated using the Black-Scholes option pricing model, based on the following weighted-average assumptions:

Year Ended December 31,

2020 2019 2018

Risk-free interest rate — % 1.92 % 2.77 %

Dividend yield — — —

Expected term 0.00 5.33 5.81

Expected volatility — % 88.60 % 85.86 %

The weighted average grant date fair value of stock options granted to non-employee consultants during the years ended December 31, 2019 and 2018 was $ 1.32 and $ 6.78 , respectively.

As of December 31, 2020, no unrecognized compensation expense related to unvested non-employee consultants stock options remained.

The following table summarizes the activity under the 2008 Plan, 2016 Plan, and 2018 Inducement Incentive Award Plan:

As of December 31, 2021 and 2020, total unrecognized compensation expense related to unvested employee stock options was $ 11.5 million and $ 8.0 million, respectively, which is expected to be recognized over a weighted average period of 2.7 years and 2.3 years, respectively.

The following table summarizes the stock option activity under the 2008 Plan, 2016 Plan, and 2018 Inducement Incentive Award Plan:

Weighted-average

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options exercise price ($) (in years) (in thousands)

Employee awards

Outstanding at December 31, 2020 7,302,176 $ 3.98 8.43 $ 4,456

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Vested and expected to vest at December 31, 2021 9,917,248 $ 4.03 8.13 $ 4,796

Non-employee awards

Non-employee consultants

Outstanding at December 31, 2020 473,073 $ 5.89 5.23 $ 86

Granted — $ —

Exercised ( 50,000 ) $ 2.04

Forfeited — $ —

Outstanding at December 31, 2021 423,073 $ 6.34 3.85 $ 42

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Restricted Stock Units

During the second quarter of 2020, the Company entered into a transition agreement with an executive officer under which previously awarded restricted stock units under the Inducement Incentive Award Plan remain eligible to vest in accordance with their terms, notwithstanding the requirement that the executive remain in continuous service with the Company through the applicable vesting date, if the administrator of the Inducement Incentive Award Plan determines the applicable performance conditions are achieved on or prior to December 31, 2020.

In accordance with ASC718, the restricted stock units granted were remeasured with a weighted average fair value of $ 2.92 per share based on the closing price of the Company’s common stock on the date the transition agreement was executed.

Since the performance condition is probable of achievement, the restricted stock units were re-valued, resulting in additional expense of less than $ 0.1 million.

Unrecognized compensation expense for the restricted stock units was $ 0.5 million as of December 31, 2020, which is expected to be recognized over a weighted average period of 1.9 years.

The following table summarizes the status of the Company’s restricted stock units:

During the year ended December 31, 2021, the Company granted 407,700 restricted stock awards with a weighted average fair value of $ 3.11 per share based on the closing price of the Company’s common stock on the date of grant to employees under the 2016 Plan, which will vest over a four year term.

Forfeitures are estimated at the time of grant and are adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company has estimated a forfeiture rate of 10 % for restricted stock awards to employees based on historical attrition trends.

In addition, the Company awarded 197,500 restricted stock units to executives under the 2016 Plan.

These restricted stock units vested in two equal installments on the dates applicable performance conditions were achieved during the year ended December 31, 2021.

Unrecognized compensation expense for all restricted stock units was $ 0.9 million as of December 31, 2021, which is expected to be recognized over a weighted average period of 2.7 years.

The following table summarizes the Company’s restricted stock units under the 2016 Plan and 2018 Inducement Incentive Award Plan:

Number of shares Weighted average

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Unvested at December 31, 2020

87,500 $ 6.03

Granted 605,200 2.10

Vested ( 201,250 ) 1.31

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Unvested at December 31, 2021

394,450 $ 3.45

Employee Stock Purchase Plan

On June 7, 2016, the Company’s stockholders approved the 2016 Employee Stock Purchase Plan (the “ESPP”), which became effective June 21, 2016.

The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986 with the purpose of providing employees with an opportunity to purchase the Company's common stock through accumulated payroll deductions.

Under the ESPP, the Company has set two six-month offering periods during each calendar year, one beginning March 1 st and the other beginning September 1 st of each calendar year, during which employees may elect to have up to 25 % of their eligible compensation deducted on each payday on an after-tax basis for use in purchasing the Company's common stock on the last trading day of each offering period, subject to limits imposed by the Internal Revenue Code.

The purchase price of the shares may not be less than 85 % of the fair market value on the first or last trading day of the offering period, whichever is lower.

The first ESPP offering period began on March 1, 2017.

At inception of the ESPP, a total of 173,076 shares of common stock were authorized and reserved for future issuance under the ESPP.

The number of shares of common stock that may be issued under the ESPP will automatically increase on the first day of each calendar year, beginning in 2017 and ending in and including 2026, by an amount equal to the lesser of:

(i) 1 % of the number of shares of the Company’s common stock outstanding on the last day of the applicable preceding calendar year and (ii) such smaller number of shares as is determined by the Company’s Board of Directors.

During the years ended December 31, 2020 and 2019, the number of shares of common stock that may be issued under the ESPP was increased by 863,254 shares and 224,717 shares, respectively.

In June 2016, the Company approved the 2016 Employee Stock Purchase Plan, or the ESPP, which authorized 173,076 shares of common stock for future issuance under the ESPP to participating employees.

In January 2021 and 2020, the number of shares of common stock authorized for issuance under the ESPP was increased by 1,080,711 shares and 863,254 shares, respectively.

During the year ended December 31, 2021, the Company issued 58,794 shares of common stock under the ESPP.

As of December 31, 2021, 2,522,366 shares remain available for future issuance under the ESPP.

For each of the years ended December 31, 2020 and 2019, the Company recognized $ 0.1 million of stock-based compensation expense under the ESPP.

The Company recorded stock-based compensation expense related to stock option awards, restricted stock units and the ESPP in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

Year Ended December 31,

2020 2019 2018

Research and development $ 2,271 $ 2,079 $ 2,453

General and administrative 3,151 3,082 3,261

Total stock-based compensation expense $ 5,422 $ 5,161 $ 5,714

For each of the years ended December 31, 2021 and 2020, the Company recognized $ 0.1 million of stock-based compensation expense under the ESPP, respectively.

Revenue Arrangements

Takeda Pharmaceuticals USA, Inc.

License and Development Agreement

On October 1, 2021, the Company entered into a License Agreement, or the Takeda Agreement, with Takeda.

Under the Takeda Agreement, the Company granted Takeda an exclusive license to the Company’s ImmTOR technology initially for two specified disease indications within the field of lysosomal storage disorders.

Takeda paid a $ 3.0 million upfront payment to the Company upon signing of the Takeda Agreement, and the Company is entitled to receive up to $ 1.124 billion in future additional payments over the course of the partnership that are contingent on the achievement of development or commercial milestones or Takeda’s election to continue its activities at specified development stages.

The Company is also eligible for tiered royalties on future commercial sales of any licensed products.

Pursuant to the Takeda Agreement, the Company determined the Takeda Agreement represents a service arrangement under the scope of ASC 606, and given the reversion of the rights under the Takeda Agreement represents a penalty in substance for a termination by Takeda, the contract term would remain the stated term of the Takeda Agreement.

The Company determined that the research license, the licensed know-how, and the manufactured supply and delivery of materials represent a single promise and performance obligation to be transferred to Takeda over time due to the nature of the promises in the contract.

The delivery of the manufactured supply is the predominant promise within the arrangement, as it is essential to the utility of the licensed intellectual property.

The material to be supplied by the Company to Takeda is unique to the Company and cannot be obtained by other vendors.

As such, consideration in the initial transaction price will be allocated to the single performance obligation and the recognition period would not extend beyond the initial contractual period.

The Company will recognize the revenue associated with the upfront payment and combined single performance obligation utilizing the output method over the term that manufactured supply is delivered to Takeda.

In determining the transaction price, the Company concluded the payment associated with all the performance milestones will be fully constrained and only be included in the transaction price when the respective milestone is deemed probable of achievement.

Each of these variable consideration items were evaluated under the most likely amount method to determine whether such amounts were probable of occurrence, or whether such amounts should be constrained until they become probable.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt and timing of such study milestones is outside the control of the Company and probability of success criteria is estimated.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

Takeda has the right to exercise covenant release rights on a field-by-field basis.

If Takeda exercises its covenant release rights, we could receive exercise payments per indication and would be entitled to significant development and commercial milestone payments and tiered royalties on commercial sales.

The Company determined that a significant financing component does not exist in its arrangement with Takeda.

The Company also determined the options to negotiate additional fields, pursue other products, enter into a supply agreement explore additional fields, and pursue additional development under the initial fields do not represent material rights under the agreement.

Takeda has the right to terminate the Takeda Agreement in its entirety or on a field-by-field basis, upon 90 days’ written notice to the Company.

As of December 31, 2021, the Company recorded $ 1.0 million and $ 1.0 million, as a short-term and long-term contract liabilities, respectively, representing deferred revenue associated with this agreement.

Revenue of $ 1.0 million related to the Takeda Agreement was recognized during the year ended December 31, 2021.

Swedish Orphan Biovitrum

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Pursuant to the Sobi License, the Company has agreed to grant Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize the Company’s SEL-212 drug candidate, which is currently in development for the treatment of chronic refractory gout.

The SEL-212 drug candidate is a pharmaceutical composition containing a combination of SEL-037 (the “Compound”) and ImmTOR.

Pursuant to the Sobi License, in consideration of the license, Sobi agreed to pay the Company a one-time, up-front payment of $ 75 million.

The SEL-212 drug candidate is a pharmaceutical composition containing a combination of SEL-037, or the Compound, and ImmTOR.

Pursuant to the Sobi License, in consideration of the license, Sobi agreed to pay the Company a one-time, upfront payment of $ 75.0 million.

Sobi has also agreed to make milestone payments totaling up to $ 630.0 million to the Company upon the achievement of various development and regulatory milestones and, if commercialized, sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier.

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Given the reversion of the rights under the Sobi License represents a penalty in substance for a termination by Sobi, the contract term would remain the stated term of the Sobi License.

The Company determined that the Sobi License contains three distinct performance obligations due to the nature of the promises in the contract, which includes conducting the Phase 3 DISSOLVE trials, Sobi’s option to set-up a second source supplier, and a combined obligation comprised of the delivery of the license to SEL-212, transfer of the know-how and the manufacturing and delivery of SEL-212 supply for development (the “Combined License Obligation”).

As the set-up of a second source supplier is optional for Sobi and the Company will be reimbursed at cost for its efforts in the subsequent set-up and technology transfer, the option for this future service was determined to be at a significant and incremental discount to its standalone selling price and treated as a material right in the arrangement, namely a distinct performance obligation.

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Similar to the Phase 3 program estimate, the Company estimated the discount of the option by forecasting the set-up costs and applying a margin that is reflective of the industry.

As the Company will be providing the set-up and technology transfer services and the future supply at cost, the discount of the option is equal to the margin

As the Company will be providing the set-up and technology transfer services and the future supply at cost, the discount of the option is equal to the margin amount.

The Company considered discussions with Sobi as well as probability of regulatory success of SEL-212 in determining the likelihood of exercise.

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The Company will recognize the revenue allocated to the second source supplier option when the future services and goods are transferred.

As of December 31, 2020, the Company recorded $ 68.3 million as a short-term contract liability and $ 24.2 million as a long-term contract liability representing deferred revenue associated with this agreement.

In addition, the Company has recorded $ 1.4 million of contract assets related to incremental costs that would not have been incurred if the Sobi License had not been obtained, of which $ 1.0 million is presented in prepaid expenses and other current assets and $ 0.4 million is in other assets in the accompanying Consolidated Balance Sheets.

As of December 31, 2021 and 2020, the Company recorded $ 37.5 million and $ 68.3 million, respectively, as a short-term contract liability and $ 5.1 million and $ 24.2 million, respectively, as a long-term contract liability, representing deferred revenue associated with this agreement.

In addition, as of December 31, 2021 the Company has recorded $ 0.7 million of contract assets related to incremental costs that would not have been incurred if the Sobi License had not been obtained, of which $ 0.6 million is presented in prepaid expenses and other current assets and less than $ 0.1 million is presented in other assets in the accompanying consolidated balance sheets.

Amortization of contract assets was $ 0.7 million for the year ended December 31, 2021.

As of December 31, 2020, the Company recorded a total outstanding receivable of $ 6.9 million, representing billings for the Phase 3 DISSOLVE program that are subject to reimbursement by Sobi.

Revenue of $ 16.6 million related to the Sobi License was recognized during the year ended December 31, 2020.

As of December 31, 2021 and 2020, the Company recorded a total outstanding receivable of $ 9.9 million and $ 6.9 million, respectively, representing billings for the Phase 3 DISSOLVE program that are subject to reimbursement by Sobi.

Revenue of $ 83.5 million and $ 16.6 million related to the Sobi License was recognized during the years ended December 31, 2021 and 2020, respectively.

Sarepta Therapeutics, Inc.

Research License and Option Agreement

On June 13, 2020, the Company and Sarepta entered into a Research License and Option Agreement (the “Sarepta Agreement”).

Pursuant to the Sarepta Agreement, the Company agreed to grant Sarepta a license under the Company’s intellectual property rights covering the Company’s antigen-specific biodegradable nanoparticle encapsulating ImmTOR to research and evaluate ImmTOR in combination with Sarepta’s adeno-associated virus gene therapy technology, or gene editing technology, using viral or non-viral delivery, to treat Duchenne Muscular Dystrophy and certain Limb-Girdle Muscular Dystrophy subtypes (the “Indications”).

In June 2020, the Company and Sarepta entered into a Research License and Option Agreement, or the Sarepta Agreement.

Sarepta will have an option term of 24 months during which it can opt-in to obtain an exclusive license to further develop and commercialize the Product to treat at least one Indication, with a potential to extend the option term for an additional fee.

The Company will supply ImmTOR to Sarepta for clinical supply on a cost-plus basis.

Sarepta paid a $ 2.0 million up-front payment to the Company upon signing of the Sarepta Agreement, and the Company is eligible to receive additional preclinical payments during the option term.

Sarepta paid a $ 2.0 million upfront payment to the Company upon signing of the Sarepta Agreement, and the Company is eligible to receive additional preclinical payments during the option term.

If Sarepta opts-in to an exclusive license agreement, the Company could receive option exercise payments per Indication upon execution of the exclusive license, and the Company would be entitled to significant development and commercial milestone payments and tiered royalties ranging from the mid-to-high single digits based on net sales.

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As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of such study milestones is outside the control of the Company and probability of success criteria is estimated.

As of December 31, 2020, all milestones were constrained.

The Company will re-evaluate the transaction price in each reporting period, as uncertain

events are resolved.

The Company will recognize the revenue associated with the upfront payment and combined single performance obligation utilizing the output method, over the 24 month term as the Manufactured Supply is delivered to Sarepta.

The Company also determined the option to enter into a future commercial license agreement and extend the term of the option does not represent a material right since it was not priced at an incremental discount.

2 unchanged sentences

During the year ended December 31, 2020, the Company and Sarepta entered into two amendments relating to an additional feasibility study.

Neither of the amendments had a material impact on deferred revenue or revenue recognition.

As of December 31, 2020, the Company recorded $ 2.0 million as a short-term contract liability representing deferred revenue associated with this agreement.

Revenue of $ 0.3 million related to the Sarepta Agreement was recognized during the third quarter and subsequently adjusted during the fourth quarter due to a change in the supply estimate, resulting in de minimis revenue recognition during the year ended December 31, 2020.

During the year ended December 31, 2021, the Company and Sarepta entered into a third amendment relating to the additional feasibility study.

On April 13, 2021, the Company was notified by Sarepta of the achievement of the milestone event related to the completion of a non-clinical study for Duchenne muscular dystrophy and certain limb-girdle muscular dystrophies under the Sarepta Agreement.

Accordingly, the Company received a milestone payment of $ 3.0 million during the three months ended June 30, 2021.

As of December 31, 2021, two milestones remained constrained, and as of December 31, 2020, all milestones were constrained.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved.

As of December 31, 2021 and 2020, the Company recorded $ 4.6 million and $ 2.0 million, respectively, as a short-term contract liability representing deferred revenue associated with this agreement.

Revenue of $ 0.4 million related to the Sarepta Agreement was recognized during the year ended December 31, 2021.

De minimis revenue related to the Sarepta License Agreement was recognized during the year ended December 31, 2020.

Asklepios Biopharmaceutical, Inc.

License Agreement for Pompe Disease

On December 17, 2019, the Company and AskBio entered into a license agreement (the “AskBio License Agreement”).

In December 2019, the Company and AskBio entered into a license agreement, or the AskBio License Agreement.

Pursuant to the AskBio License Agreement, AskBio has exercised its option to exclusively license the Company’s intellectual property rights covering the Company’s ImmTOR platform to research, develop, and commercialize certain AAV gene therapy products utilizing ImmTOR, and targeting the GAA gene, or derivatives thereof, to treat Pompe Disease.

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Under the terms of the agreement, the Company will be eligible to receive these royalties commencing on the first commercial sale of the licensed product until the expiration of the later of (i) ten years after the first commercial sale and (ii) expiration of the last to expire valid claim on patents covering the licensed product.

Pursuant to the AskBio License Agreement, the Company will supply AskBio with its ImmTOR platform (“Supply Obligation”) and AskBio will be responsible for all preclinical, clinical and commercial manufacture and supply of licensed products (other than ImmTOR) and carry out all other activities related to the research, development, and commercialization of licensed products at its sole expense, including all regulatory activities related thereto.

Pursuant to the AskBio License Agreement, the Company will supply AskBio with its ImmTOR platform, or the Supply Obligation, and AskBio will be responsible for all preclinical, clinical and commercial manufacture and supply of licensed products (other than ImmTOR) and carry out all other activities related to the research, development, and commercialization of licensed products at its sole expense, including all regulatory activities related thereto.

The Company determined that the AskBio License Agreement and Supply Obligation represent a single promise and performance obligation.

This is because AskBio cannot derive benefit from the license without the simultaneous transfer of the patent protected ImmTOR supply.

Therefore, the License Obligation and Supply Obligation represent the only promise in the arrangement and are combined as a single performance obligation (the “AskBio License and Supply Obligation”).

Therefore, the License Obligation and Supply Obligation represent the only promise in the arrangement and are combined as a single performance obligation.

In determining the transaction price, the Company concluded that the future development milestones, regulatory milestones, sales milestones, and sales royalties all represent variable consideration.

2 unchanged sentences

Consideration related to sales-based milestones as well as royalties on net sales upon commercialization by AskBio, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property granted to AskBio and, therefore, have also been excluded from the transaction price in accordance with the royalty recognition constraint.

As of December 31, 2020 and December 31, 2019, all milestones were constrained.

As of December 31, 2021 and 2020, all milestones were constrained.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

The total initial transaction price of the contract on the effective date was $ 7.0 million, comprised of a $ 2.0 million initial up-front payment upon agreement of terms, and a $ 5.0 million initial up-front execution fee.

As of December 31, 2020 and December 31, 2019, the Company recorded $ 1.7 million as a short-term contract liability and $ 5.3 million as a long-term contract liability representing deferred revenue associated with this agreement.

The total initial transaction price of the contract on the effective date was $ 7.0 million, comprised of a $ 2.0 million initial upfront payment upon agreement of terms, and a $ 5.0 million initial upfront execution fee.

At each of December 31, 2021 and 2020, the Company recorded $ 1.7 million as short-term contract liability and $ 5.3 million as a long-term contract liability, representing deferred revenue associated with this agreement.

Revenue will be recognized over the period in which the particles are delivered.

No revenue related to the AskBio License Agreement was recognized during the year ended December 31, 2020 as no deliveries were made during the period.

No revenue related to the AskBio License Agreement was recognized during the years ended December 31, 2021 and 2020 as no deliveries were made during these periods.

Spark Therapeutics, Inc.

Spark License Agreement

In December 2016, the Company entered into a license and option agreement (“Spark License Agreement”) with Spark pursuant to which the Company and Spark agreed to collaborate on the development of gene therapies for certain targets

utilizing the ImmTOR platform.

The Spark License Agreement provides Spark with certain exclusive, worldwide, royalty bearing licenses to the Company’s intellectual property, allowing Spark to develop and commercialize gene therapies in combination with ImmTOR for an initial identified target.

In addition to an upfront cash payment of $ 10.0 million under the Spark License Agreement, additional payments of an aggregate of $ 5.0 million in two payments of $ 2.5 million each were paid within twelve months of December 2, 2016 (“Contract Date”).

The first of the two additional payments was scheduled to be made on or before May 31, 2017 (the “May 2017 License Payment”) (see “Spark Letter Agreement” below) and the second was made on October 31, 2017.

Spark may also exercise options to research, develop and commercialize gene therapies utilizing the ImmTOR platform for up to four additional targets.

The Company was eligible to receive a variable fee up to $ 2.0 million for each additional target option elected, dependent on the incidence of the applicable indication.

The election period in which Spark could have exercised additional targets under the Spark License Agreement was a term of three years from the Contract Date, which expired on December 1, 2019.

Assuming successful development and commercialization, the Company could receive up to an additional $ 65.0 million in development and regulatory milestone payments and $ 365.0 million in commercialization milestone payments for each indication.

If commercialized, the Company would be eligible to receive tiered royalties on global net sales at percentages ranging from mid-single to low-double digits, all of which apply on a target-by-target basis.

Under the terms of the agreement, the Company will be eligible to receive these royalties commencing on the first commercial sale of the licensed product and terminating upon the later of (i) ten years after the first commercial sale, (ii) expiration of the last to expire valid claim on patents covering the jointly invented field specific improvements, or (iii) the expiration of regulatory exclusivity in the applicable country for the licensed product.

The Spark License Agreement may be terminated by Spark for convenience upon ninety days ’ notice.

Either party may terminate the Spark License Agreement on a target-by-target basis for material breach with respect to such target.

In December 2016, the Company also entered into a share purchase agreement (the “Spark Purchase Agreement”) with Spark.

Pursuant to the Spark Purchase Agreement, the Company sold 197,238 shares of the Company’s common stock to Spark for gross proceeds of $ 5.0 million, or $ 25.35 per share of common stock, at an initial closing (the “Initial Closing”).

The purchase price per share represents an amount equal to 115 % of the average daily volume weighted average price (“VWAP”) of the common stock during the thirty consecutive calendar days leading up to and ending on the day prior to the Contract Date.

Beyond the Initial Closing, the Spark Purchase Agreement contemplated potential future sales of shares by the Company to Spark as follows:

• First Acquisition Right.

During the period beginning on May 1, 2017 and ending on June 1, 2017, Spark had the right (the “First Acquisition Right”) to purchase a number of shares of common stock equal to an aggregate price of $ 5.0 million.

See “Spark Letter Agreement” below.

• Second Acquisition Right.

During the period beginning on October 1, 2017 and ending on November 1, 2017, Spark had the right (the “Second Acquisition Right”) to purchase a number of shares of common stock equal to an aggregate price of $ 5.0 million.

On October 31, 2017 Spark exercised this right and purchased 205,254 shares of common stock from the Company for $ 5.0 million, or $ 24.36 per share of common stock.

The purchase price per share represents an amount equal to 115.0 % of the average daily VWAP of the common stock during the thirty consecutive calendar days leading up to and ending on the day prior to the Second Acquisition Right notification date.

The First Acquisition Rights and Second Acquisition Rights are collectively referred to herein as the “Acquisition Rights”.

Under the Spark Purchase Agreement, Spark agreed not to dispose of any of the shares acquired at either the Initial Closing or the from the subsequent Acquisition Rights that it may acquire until January 1, 2018 and, thereafter, transfers are contractually subject to volume limitations applicable to an “affiliate” under Rule 144 of the Securities Act.

In connection with the Spark License Agreement and Spark Purchase Agreement, the Company has made contractual payments defined in the MIT license agreement (see Note 14) totaling $ 2.2 million for the MIT sub-license provided to Spark, and $ 0.4 million relative to the calculated premium paid by Spark for the equity investments made under the Spark Purchase Agreement.

The terms of the Spark Purchase Agreement and the Spark License Agreement were negotiated at the same time between the parties and the terms of the Spark Purchase Agreement are referenced in the Spark License Agreement in multiple sections.

The pricing and terms of the agreements are unique and must be considered in contemplation with each other.

There are provisions within the Spark License Agreement that link to the Spark Purchase Agreement related to provisions that constitute a material breach of the license agreement.

Therefore, the Company concluded that the two agreements must be combined and evaluated as a single agreement.

While the Spark Purchase Agreement and the Spark License agreement are considered to be a single agreement, the Company determined that the purchase of common stock and future acquisition rights are not within the scope of ASC 606.

The Company determined that the initial purchase of common stock combined with the embedded future

stock Acquisition Rights had a fair value of $ 2.7 million and this amount was recorded in equity as of the effective date.

The remaining $ 2.3 million of cash received in exchange for the stock and acquisition rights is included in allocable consideration, as this represents the premium paid by Spark on the purchase of common stock, and should be allocated to the remaining performance obligations.

The Company identified the following components of the agreement:

(1) certain exclusive, worldwide, royalty bearing licenses to the Company’s intellectual property and a license to conduct certain research activities under the collaboration, (the “Spark License”), (2) options to research, develop and commercialize gene therapies utilizing the ImmTOR platform for up to four additional target therapy options, (the “Option Obligation”), (3) manufactured supply of ImmTOR, (the “Supply Obligation”) at a discount.

In exchange, the Company received an upfront payment of $ 15.0 million and is eligible to receive additional payments of up to $ 35.0 million based on the achievement by Spark of future specified development milestones, up to $ 30.0 million based on the achievement by Spark of future specified regulatory milestones, up to $ 110.0 million based on the achievement by Spark of future specified commercial milestones, and up to $ 255.0 million based on the achievement by Spark of future specified sales milestones.

The Company will also be eligible to receive tiered royalty payments that reach low double-digits based on future net sales for the duration of the royalty term.

The Company determined that the Spark License and Supply Obligation represent a single promise and performance obligation (the “Combined License and Supply Obligation”).

This is because Spark cannot derive benefit from the license without the simultaneous transfer of the patent protected ImmTOR supply.

The Company also determined that the Option Obligation, which includes the related Supply Obligation, provides the customer with a material right and is considered a performance obligation in the arrangement since it was priced at an incremental discount.

Therefore, the Company determined that the Spark agreement contains five distinct performance obligations:

the Combined License and Supply Obligation, and the four separate target options.

In determining the transaction price, the Company considered the future development milestones, regulatory milestones, commercial milestones, sales milestone, and sales royalties all represent variable consideration.

Each of these variable consideration items was evaluated under the most likely amount method to determine whether such amounts were probable of occurrence, or whether such amounts should be constrained until they become probable.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of such milestones is outside the control of the Company.

Separately, any consideration related to sales-based milestones as well as royalties on net sales upon commercialization by Spark, will be recognized when the related sales occur as they were determined to relate predominantly to the intellectual property granted to Spark and, therefore, have also been excluded from the transaction price in accordance with the royalty recognition constraint.

As of December 31, 2020, all future milestones are constrained.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

The Company determined that the up-front payment of $ 12.3 million ($ 15.0 million, less fair value of the equity totaling $ 2.7 million as discussed above) was included in the transaction price and was allocated to the performance obligations based on the Company’s best estimate of their relative stand-alone selling prices.

The Company allocated $ 7.1 million to the Combined License and Supply Obligation and $ 5.2 million to the discount on the target options ($ 1.3 million for each option) using the relative standalone selling price method to each obligation.

The standalone selling price for the Combined License and Supply Obligation was determined using a discounted cash flow model.

The standalone selling prices for the target options were determined based on the fair values of the licenses minus the strike prices of the option (the probability of exercise was included in the valuation) as well as the estimated discount of the Supply Obligation.

The estimated proceeds expected to be received from the sale of the Supply Obligation were also included in the transaction price for the Combined License and Supply Obligation.

The total consideration allocated to the Combined License and Supply Obligation will be recognized using the output method, based on the proportion of actual deliveries to the total expected deliveries over the initial term which was initially estimated to be approximately four years .

On December 1, 2019, the term for Spark to exercise additional target options expired;

the Company recognized $ 6.7 million in revenue from deferred revenue as originally allocated.

In addition, during the year ended December 31, 2019, there were two deliveries resulting in less than $ 0.1 million of revenue recognized.

No revenue related to the Spark License Agreement was recognized during the year ended December 31, 2020 as no deliveries were made during the period.

As of December 31, 2020 and December 31, 2019, there was a contract liability of $ 9.2 million representing deferred revenue presented as long-term associated with this agreement.

Spark Letter Agreement

On June 6, 2017, the Company and Spark entered into a letter agreement (the “Letter Agreement”), pursuant to which the parties agreed that Spark would make the May 2017 License Payment by June 6, 2017.

The May 2017 License Payment was received, and recorded as a liability as of June 30, 2017, of which some or all may potentially constitute the reimbursement described below.

The parties also agreed that Spark would be deemed to have delivered notice on May 31, 2017 exercising its

right to purchase the shares pursuant to the First Acquisition Right.

The Letter Agreement further outlines a cost reimbursement arrangement, pursuant to which the Company agreed to reimburse Spark for all costs and expenses, including the cost of materials provided by the Company, associated with the preclinical research and toxicology studies being performed by Spark for any licensed products for a specified amount of time (the “Reimbursement Period”), in an amount not to exceed $ 2.5 million.

Consistent with the First Acquisition Right, Spark purchased 324,362 shares of common stock pursuant to the Spark Purchase Agreement, as amended by the Letter Agreement, for an aggregate purchase price of $ 5.0 million, or $ 15.41 per share of common stock.

The purchase price per share represented an amount equal to 115.0 % of the average daily VWAP of the common stock during the thirty consecutive calendar days leading up to and ending on the day prior to the First Acquisition Right notification date.

At the initial contract assessment, the Company allocated $ 2.7 million to equity (representing the fair value of the initial purchase of common stock combined with the embedded future stock Acquisition Rights).

Upon exercise of the First Acquisition Right, the Company recorded the purchase amount to stockholders ’ (deficit) equity.

The Company determined that the Letter Agreement resulted in a modification to the original agreement.

The amount received totaling $ 2.5 million and the reimbursements pursuant to the Letter Agreement totaling $ 2.5 million were both included in the transaction price, and a liability was recorded for the amount expected to be repaid.

As repayments were made, the underlying liability was reduced.

To the extent that an amount was expected to be applied towards the clinical supply obligation, the analysis of variable consideration was updated accordingly.

On October 31, 2017, Spark paid the Company a $ 2.5 million milestone payment pursuant to the Spark License Agreement, which was included in the transaction price and allocated to the performance obligations using the relative standalone selling price.

In addition, Spark exercised the Second Acquisition Right set forth in Section 2.4 of the Spark Purchase Agreement and purchased 205,254 shares of common stock from the Company for $ 5.0 million, or $ 24.36 per share of common stock.

On June 5, 2019, the term of the Reimbursement Period under the Letter Agreement expired.

In December 2016, the Company entered into a license and option agreement, or the Spark License Agreement, with Spark pursuant to which the Company and Spark agreed to collaborate on the development of gene therapies for certain targets utilizing the ImmTOR platform.

Pursuant to the Spark License Agreement, Spark made an upfront payment of $ 15.0 million.

Additionally, in connection with the Spark License Agreement, the Company entered into a Stock Purchase Agreement with Spark.

Pursuant to the Spark Purchase Agreement, Spark purchased a total of $ 15.0 million of the Company’s common stock including 197,238 shares for an aggregate purchase price of $ 5.0 million at the Initial Closing, 324,362 shares of common stock for an aggregate purchase price of $ 5.0 million on June 8, 2017, and 205,254 shares of common stock from the Company for an aggregate purchase price of $ 5.0 million on October 31, 2017.

In June 2017, the Company and Spark entered into a letter agreement, or the Letter Agreement, pursuant to which the parties agreed that Spark and the Company agreed to reimburse Spark for all costs and expenses, including the cost of materials provided by the Company, associated with the preclinical research and toxicology studies being performed by Spark for any licensed products for a specified amount of time, or the Reimbursement Period, in an amount not to exceed $ 2.5 million.

June 2019, the term of the Reimbursement Period under the Letter Agreement expired.

During the year ended December 31, 2019, the Company updated its estimate of variable consideration included in the transaction price to include $ 1.2 million of unpaid reimbursements to Spark.

In December 2019, the term for Spark to exercise additional target options expired.

Therefore, during the year ended December 31, 2019, the Company recognized $ 6.7 million in revenue.

Additionally, during the year ended December 31, 2019, there were two deliveries resulting in less than $ 0.1 million of revenue recognized.

As of December 31, 2020, there was a contract liability of $ 9.2 million representing long-term deferred revenue to be recognized upon the occurrence of future deliveries under this agreement.

No revenue related to the Spark License Agreement was recognized during the years ended December 31, 2021 and 2020, as no deliveries were made during these periods.

On January 18, 2022, both parties agreed to mutually terminate the Spark License Agreement.

Therefore, the contract liability of $ 9.2 million representing deferred revenue is presented as short-term on the accompanying consolidated balance sheet as of December 31, 2021.

Skolkovo Foundation

The Company has received grant funding from the Russia-based Development Fund of New Technologies Development and Commercialization Center (“Skolkovo”).

From grant inception through December 31, 2020, the Company received $ 2.0 million from Skolkovo.

Based on the guidance in ASC 606, the Company concluded that the entire $ 2.0 million of grant funds received from Skolkovo is variable consideration.

Although the Company believes it has an enforceable right to the amounts received, there is risk that an audit could result in the Company needing to refund certain amounts back to Skolkovo, resulting in variability in the transaction price.

The Company utilized the “expected value” approach in determining the amount that can be recognized.

The Company estimated that it will be entitled to revenue of $ 1.8 million from the Skolkovo grant, and recorded this amount.

The remainder of $ 0.2 million was recorded as a contract liability.

During the year ended December 31, 2018, the Company made a decision to cease work relating to the Skolkovo grant.

As a result, Skolkovo performed a formal review of project expenses incurred by the Company.

Skolkovo concluded that the Company should (i) return unused grant funds to Skolkovo in the amount of less than $ 0.1 million and (ii) reimburse $ 0.1 million of costs deemed to have been overspent relative to the cost share requirement stipulated in the grant.

As of December 31, 2020, a contract liability of $ 0.1 million remains on the balance sheet and will not be recognized as revenue until the expiration of the three-year audit period, expected April 2021, or sooner, if resolution is reached with Skolkovo or there is a change in the estimate.

During the year ended December 31, 2021, revenue of $ 0.1 million related to the remaining contract liability of the Russia-based Development Fund of New Technologies Development and Commercialization Center, or Skolkovo, grant funding was recognized at the expiration of the three-year audit period.

Transaction Price Allocated to Future Performance Obligations

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As of December 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 65.3 million.

Contract Balances from Contracts with Customers ( Sobi, Sarepta, AskBio, Spark and Skolkovo Foundation )

Contract Balances from Contracts with Customers ( Takeda, Sobi, Sarepta, AskBio, Spark and Skolkovo )

The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2021 (in thousands):

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beginning of period Additions Deductions end of period

Twelve Months Ended December 31, 2020

Contract liabilities:

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The Company incurred expenses for consulting services provided by its founders totaling $ 0.1 million, $ 0.1 million and $ 0.5 million during the years ended December 31, 2021, 2020 and 2019, respectively.

The Company entered into consulting agreements with its founders to serve on its Scientific Advisory Board, effective January 1, 2020 to December 31, 2021, under which they will be paid quarterly for their services.

Collaboration Agreements

The Company entered into consulting agreements with its founders to serve on its Scientific Advisory Board, effective January 1, 2020 to December 31, 2021, under which they were paid quarterly for their services.

Collaboration and License Agreements

Ginkgo Bioworks Holdings, Inc.

Collaboration and License Agreement

On October 25, 2021, the Company entered into a Collaboration and License Agreement, or the First Ginkgo Agreement, with Ginkgo.

Under the First Ginkgo Agreement, Ginkgo will design next generation IgA proteases with potentially transformative therapeutic potential.

In return, Ginkgo is eligible to earn both upfront research and development fees and milestone payments, including certain milestone payments for fixed fair values in the form of Selecta common stock, clinical and commercial milestone payments of up to $ 85.0 million in cash.

The Ginkgo Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the Ginkgo Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company is accounting for the contingently issuable shares to be issued in exchange for the license obtained from Ginkgo as a liability classified stock based compensation arrangement with a non-employee which will be recognized when achievement of the milestones is probable.

The Company will assess the capitalization of costs incurred

after the receipt of regulatory approval and, if applicable, will amortize these payments based on the expected useful life of each asset, typically based on the expected commercial exclusivity period.

The Company is also obligated to pay Ginkgo tiered royalties ranging from low-single digit to high-single digit percentages of annual net sales of collaboration products which will be expensed as the commercial sales occur.

Genovis AB (publ.)

License Agreement

On October 21, 2021, the Company entered into an Exclusive License Agreement, or the Genovis Agreement, with Genovis.

Under the Genovis Agreement, the Company paid to Genovis an upfront payment in exchange for an exclusive license to Genovis’ IgG Protease, or Xork, enzyme technology across all therapeutic uses in humans, excluding research, preclinical, diagnostic and other potential non-therapeutic applications of the enzyme.

Genovis is eligible to earn development and sales-based milestones.

The Genovis Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the Genovis Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company will assess the capitalization of costs incurred after the receipt of regulatory approval and, if applicable, will amortize these payments based on the expected useful life of each asset, typically based on the expected commercial exclusivity period.

The Company is also obligated to pay Genovis tiered royalties of low double digit percentages of worldwide annual net sales of collaboration products which will be expensed as the commercial sales occur.

Cyrus Biotechnology, Inc.

Collaboration and License Agreement

On September 7, 2021, the Company and Cyrus Biotechnology, Inc., or Cyrus, entered into a collaboration and license agreement, or the Cyrus Agreement.

Pursuant to the Cyrus Agreement, Cyrus agreed to grant the Company an exclusive, worldwide license to certain intellectual property to form a protein engineering collaboration combining the Company’s ImmTOR platform with Cyrus’ ability to redesign protein therapeutics.

The lead program is a proprietary interleukin-2, or IL-2, protein agonist designed to selectively promote expansion of regulatory T cells for treatment of patients with autoimmune diseases and other deleterious immune conditions.

In return for the licensed intellectual property, the Company made an upfront payment and is obligated to pay certain discovery, development, and sales-based milestones which could potentially total up to approximately $ 1.5 billion across multiple programs.

The Cyrus Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the Cyrus Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company is also obligated to pay Cyrus tiered royalties ranging from mid-single digit to low-double digit percentages of annual net sales of collaboration products which will be expensed as the commercial sales occur.

Additionally, on September 7, 2021, the Company entered into a stock purchase agreement, or the Series B Preferred Stock Purchase Agreement, in connection with the Cyrus Agreement.

Pursuant to the Series B Preferred Stock Purchase Agreement, the Company purchased 2,326,934 shares of Cyrus’ Series B Preferred Stock, par value $ 0.0001 per share, at a purchase price of $ 0.8595 per share for $ 2.0 million.

In accordance with ASC 810, the Company has a variable interest in Cyrus resulting from its equity investment.

The Company will share in Cyrus’ expected losses or receive a portion of its expected returns and absorb the variability associated with changes in the entity’s net assets.

However, the Company is not the primary beneficiary as it does not have the power to direct the activities most significant to Cyrus, and therefore it is not required to consolidate Cyrus.

The Company determined its equity interest to be within the scope of ASC 321 and elected to record the $ 2.0 million investment of Cyrus’ Series B Preferred Stock at cost on the purchase date.

As of December 31, 2021, no impairment indicators are present and therefore the carrying value of the investment in Cyrus is $ 2.0 million on the accompanying consolidated balance sheet.

The Company’s maximum exposure to loss related to this variable interest entity is limited to the carrying value of the investment.

The Company has not provided financing to Cyrus other than the amount contractually required by the Series B Preferred Stock Purchase Agreement.

Asklepios Biopharmaceutical, Inc.

Feasibility Study and License Agreement

On August 6, 2019, the Company entered into a feasibility study and license agreement with AskBio (the “AskBio Collaboration Agreement”).

In August 2019, the Company entered into a feasibility study and license agreement with AskBio, or the AskBio Collaboration Agreement.

Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to license intellectual property rights to each other as part of a collaboration to research, develop, and commercialize certain AAV gene therapy products utilizing the Company’s ImmTOR platform to enable re-dosing of such AAV gene therapy products to treat serious rare and orphan genetic diseases for which there is a significant unmet medical need.

Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to conduct proof of concept studies to potentially validate the use of ImmTOR in conjunction with AskBio's AAV gene therapy, or MMA-101, for the treatment of MMA, to mitigate the formation of neutralizing anti-AAV capsid antibodies (the “POC Studies”).

If the POC Studies are successful, or the parties otherwise elect to do so, the parties will proceed with a collaboration to pursue the development and commercialization of AAV gene therapy product candidates utilizing ImmTOR for the treatment of certain agreed serious rare and orphan genetic diseases.

If the POC Studies fail to demonstrate a proof-of-concept, and the parties do not mutually agree in writing to proceed with the collaboration, the AskBio Collaboration Agreement will expire.

The SEL-399 program combines an empty AAV capsid (EMC-101), which is an AAV capsid containing no transgene, with ImmTOR and is being conducted in partnership with AskBio.

Building on the preclinical data we have generated showing ImmTOR’s effect on mitigating or reducing the formation of neutralizing antibodies to AAV gene therapies, we have commenced a clinical trial of SEL-399 in healthy adult volunteers in Belgium.

The goal of the SEL-399 clinical trial is to demonstrate the appropriate dose of ImmTOR in humans to mitigate the formation of antibodies to AAV capsids used in gene therapies.

The Company and AskBio will share responsibility for the research, development and commercialization of products developed under this collaboration.

Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to conduct proof of concept studies to potentially validate the use of ImmTOR in conjunction with AskBio’s AAV gene therapy, or SEL-302, (previously disclosed as MMA-101, in combination with ImmTOR) for the treatment of MMA, to mitigate the formation of neutralizing anti-AAV capsid antibodies, or the POC Studies.

On April 29, 2021, the Company was notified by AskBio that it intended to opt-out of development of the MMA indication.

The feasibility study and license agreement with AskBio, or AskBio Collaboration Agreement, otherwise remains in effect.

Consequently, the Company has assumed all rights to the MMA program and intends to continue to progress the SEL-302 program through clinical development.

The Company filed an IND to conduct a Phase 1/2 clinical trial of its SEL-302 product candidate in pediatric patients with methylmalonic acidemia in the third quarter of 2021.

On November 23, 2021, this trial was placed on clinical hold by the FDA, with questions specifically relating to chemistry, manufacturing and controls, or CMC, of the AAV vector.

On February 9, 2022, we submitted a written response to the FDA to answer its questions.

On March 9, 2022, we received a letter from the FDA indicating the clinical hold was removed and the trial may proceed.

The SEL-399 program combined an empty AAV capsid (EMC-101), which is an AAV capsid containing no transgene, with ImmTOR and is being conducted in partnership with AskBio.

Building on the preclinical data the Company has generated showing ImmTOR’s effect on mitigating or reducing the formation of neutralizing antibodies to AAV gene therapies, the Company completed a clinical trial of SEL-399 in healthy adult volunteers in Belgium.

The goal of the SEL-399 clinical trial was to demonstrate the appropriate dose of ImmTOR in humans to mitigate the formation of antibodies to AAV capsids used in gene therapies.

This promising study in healthy volunteers provides support for the potential use of ImmTOR for the inhibition of neutralizing antibodies to AAV8 in gene therapy clinical trials.

The Company and AskBio will share responsibility for the research, development and commercialization of products developed under the SEL-399 program collaboration.

The parties will also share research, development, and commercialization costs equally for all collaboration products, but with a right of either party to opt out of certain products, and thereby no longer be required to share costs for such products.

Each party will receive a percentage of net profits for each product sold under the collaboration equal to the percentage of shared costs borne by such party in the development of such product.

Each party will receive a percentage of net profits under the collaboration equal to the percentage of shared costs borne by such party in the development of such product.

Pursuant to the AskBio Collaboration Agreement, AskBio is responsible for manufacturing the AAV capsids and AAV vectors and the Company is responsible for manufacturing ImmTOR.

The AskBio Collaboration Agreement is considered to be within the scope of ASC 808, as both parties are active participants and exposed to the risks and rewards of the collaborative activity.

manufactured supply of preclinical and clinical ImmTOR, (the “Manufactured Supply”), (5) participation on identified steering committees responsible for the oversight of the collaboration, (the “JSC Participation”), and (6) granting an exclusive option to obtain a license under the IP Rights to research, develop and commercialize Licensed Products.

The Company evaluated the terms of the AskBio Collaboration Agreement and have identified the following promises in the arrangement (1) conducting research and development activities to develop and commercialize products under the collaboration, or the R&D Services, (2) granting a non-exclusive, non-transferable, royalty-free, fully paid up, worldwide license to certain intellectual property of the Company, or the IP Rights, for the purpose of performing the POC Studies, or the Research License, (3) granting an exclusive, nontransferable, worldwide license to the IP Rights for use in certain indications, or the Collaboration License, (4) providing manufactured supply of preclinical and clinical ImmTOR, or the Manufactured Supply, (5) participation on identified steering committees responsible for the oversight of the collaboration, or the JSC Participation, and (6) granting an exclusive option to obtain a license under the IP Rights to research, develop and commercialize Licensed Products.

The Company determined that the R&D Services, Research License, Collaboration License, Manufactured Supply, and JSC Participation were not capable of being distinct, and therefore must be combined into a single performance obligation.

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In accordance with ASC 808, collaboration expenses are recognized within R&D expense and selling, general and administrative expense on the Company’s condensed consolidated statements of operations.

For the year ended December 31, 2020, the Company recognized $ 3.8 million, of collaboration expense under the AskBio Collaboration Agreement in which actual costs incurred by both parties approximate a 50 % cost share.

Under certain collaborative arrangements, the Company is entitled to reimbursement of certain R&D expense.

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In accordance with ASC 730, the Company records reimbursement payments received from collaborators as reductions to R&D expense.

For the years ended December 31, 2021 and 2020, the Company recognized $ 2.7 million and $ 3.8 million, respectively, of collaboration expense under the AskBio Collaboration Agreement in which actual costs incurred by both parties approximate a 50 % cost share.

Massachusetts Institute of Technology

On November 25, 2008, the Company entered into an exclusive patent license agreement (the “MIT License”) with the Massachusetts Institute of Technology (“MIT”).

The Company received an exclusive royalty-bearing license to utilize patents held by MIT in exchange for upfront consideration and annual license maintenance fees.

In November 2008, the Company entered into an exclusive patent license agreement, or the MIT License, with the Massachusetts Institute of Technology, or MIT, under which the Company received an exclusive royalty-bearing license to utilize patents held by MIT in exchange for upfront consideration and annual license maintenance fees.

Such fees are expensed as incurred and have not been material to any period presented.

On June 12, 2020, the Company entered into a Fifth Amendment (the “MIT Amendment”) to the MIT License, which is effective as of May 15, 2020.

Pursuant to the MIT Amendment, certain of the Company’s diligence obligations were extended, including a diligence obligation to commence a Phase 3 trial for a licensed product by a specific date in the second quarter of 2021.

In June 2020, the Company entered into a Fifth Amendment, or the MIT Amendment, to the MIT License, which is effective as of May 15, 2020.

Pursuant to the MIT Amendment, certain of the Company’s diligence obligations were extended.

The extension included the obligation to commence a Phase 3 trial for a licensed product by the second quarter of 2021 or to file an IND (or equivalent) with the FDA or comparable European regulatory agency for a licensed product by the second quarter of 2023.

Additionally, certain of the Company’s development and regulatory milestones and payments upon achievement of such milestones were adjusted.

As of December 31, 2020, and in connection with the execution of the Spark License Agreement, the Company has made contractual payments pursuant to the MIT License totaling $ 2.2 million for the sublicense granted to Spark, and $ 0.4 million relative to the calculated premium paid by Spark for the equity investments made under the Spark Purchase Agreement.

As of December 31, 2021, and in connection with the execution of the Spark License Agreement, the Company has made contractual payments pursuant to the MIT License totaling $ 2.2 million, and $ 0.4 million relative to the calculated premium paid by Spark for the equity investments made under the Spark Purchase Agreement.

The Company made no additional payments during the year ended December 31, 2021.

Shenyang Sunshine Pharmaceutical Co., Ltd

In May 2014, the Company entered into a license agreement (the “3SBio License”) with Shenyang Sunshine Pharmaceutical Co., Ltd.

In May 2014, the Company entered into a license agreement, or the 3SBio License, with Shenyang Sunshine Pharmaceutical Co., Ltd., or 3SBio.

The Company has paid to 3SBio an aggregate of $ 7.0 million in upfront and milestone-based payments under the 3SBio License as of December 31, 2021.

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Under ASC 740, the Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse.

On June 11, 2020, the Company entered into the Sobi License (see note 12).

In September 2020, Sobi paid the Company a one-time upfront payment of $ 75.0 million.

Sobi has also agreed to make milestone payments totaling up to $ 630.0 million to the Company upon achievement of various development and regulatory milestones and sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from low double digits on the lowest sales tier to high teens on the highest sales tier.

For income tax purposes, the transfer of trademark and product rights is treated as a sale and the net proceeds from the sale are taxed under the default installment method as cash is received by the Company.

During the year ending December 31, 2021, the Company completed an analysis of future tax obligations under the default installment sale method versus making a timely filed election on its 2020 tax return due October 15, 2021 to elect out of the installment sale method for income tax purposes.

As a result, the Company elected out of the default installment sale treatment with the filing of its tax return.

In the elect out method, the Company was taxed based upon the estimated fair value of all present and future proceeds from the sale and the Company utilized all of its available net operating losses and income tax credits, which served to reduce the federal and state tax liability.

As the Company recognizes future revenue under the Sobi license for US GAAP purposes, the Company will exclude that revenue from taxable income.

For the year ended December 31, 2021, the Company recognized a current tax expense of $ 16.0 million, inclusive of estimated penalties and interest of $ 1.3 million.

For the years ended December 31, 2020 and 2019, the Company did not record a current or deferred income tax expense or benefit.

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Permanent items 8.3 % ( 2.9 %) ( 2.1 %)

Research tax credits/other 1.0 % 1.1 % 1.6 %

Research tax credits 55.0 % 1.0 % 1.1 %

Deferred revenue 156.5 % — % — %

Other ( 3.7 %) — % — %

Valuation allowance, net ( 230.1 %) ( 23.6 %) ( 26.3 %)

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The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and concluded that it is more likely than not that the Company will not realize the benefit of its deferred tax assets.

The valuation allowance increased by $ 16.3 million for the year ended December 31, 2020, primarily as a result of an increase in deferred revenue.

The valuation allowance increased by $ 14.6 million for the year ended December 31, 2019, primarily as a result of an increase in net operating loss.

The valuation allowance increased by $ 22.4 million and $ 16.3 million for the years ended December 31, 2021, and 2020, respectively, primarily as a result of an increase in deferred revenue.

In 2014, the Company’s Russian subsidiary was granted a 10 year tax holiday in Russia.

The Company’s foreign operations continue to benefit from the tax holiday, which is set to expire on December 31, 2023, however the Company is in the process of closing down operations in Russia and does not expect any tax liability.

At December 31, 2020, the Company has federal and state net operating loss carryforwards of $ 234.5 million and $ 228.5 million, respectively, which will expire at various times beginning 2028.

Of the federal net operating losses, $ 99.6 million can be carried forward indefinitely.

At December 31, 2021, the Company has federal and state net operating loss carryforwards of $ 51.1 million and $ 50.8 million, respectively, which will expire at various times through 2041.

Of the federal net operating losses, $ 51.1 million can be carried forward indefinitely but will be subject to an 80% limitation.

The Company has $ 1.2 million and $ 0.3 million, respectively, of federal and state research and development tax credit carryforwards, which will expire at various times through 2041.

Utilization of the net operating loss and research and development credit carryforwards may be subject to a substantial annual limitation under Section 382 and 383 of the Internal Revenue Code 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 research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

As of December 31, 2020, the Company completed a Section 382 study, noting that an ownership change occurred

The Company has determined that all of the $ 234.5 million of net operating losses are available in the future, with approximately $ 36.5 million of that total limited under Section 382 and therefore available for future use through 2028.

Utilization of the NOL carryforwards and research and orphan drug credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), and similar state law due to ownership changes that could occur in the future.

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

If the Company experiences a change of control, as defined by Section 382 of the Code and similar state law, utilization of the NOL carryforwards or research and orphan drug credit carryforwards may be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

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

The Company performed an analysis of ownership changes through December 31, 2021.

Based on this analysis, the Company does not believe that any of its tax attributes through December 31, 2021 will expire unutilized due to Section 382 limitations.

The Company applies ASC 740, Income Taxes to uncertain tax positions.

As of December 31, 2020 and 2019, the Company had no unrecognized tax benefits or related interest and penalties accrued.

The Company has not, as of yet, conducted a study of its research and development credit carryforwards.

This study may result in an adjustment to the Company’s research and development credit carryforwards;

however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position.

As of the adoption date on January 1, 2010 and through December 31, 2021, the Company had no unrecognized tax benefits or related interest and penalties accrued.

During 2021, the Company completed a detailed study of its research and development and orphan drug credits through December 31, 2020.

As a result, the Company adjusted its current tax payable and deferred tax asset balances and the impacts are included in the federal research and orphan drug credit and state income taxes lines in the effective rate reconciliation above.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the accompanying statement of operations.

As of December 31, 2021, the Company had no accrued interest related to uncertain tax positions.

The statute of limitations for assessment by the Internal Revenue Service and Massachusetts tax authorities is open for tax years since inception.

The statute of limitations for assessment by the Internal Revenue Service and Massachusetts tax authorities is open for tax years since inception as the Company claimed research tax credits on its 2020 tax return which remains open for examination for the 2020 year as well as for any year in which a credit has been claimed for.

The Company files income tax returns in the United States and Massachusetts.

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Defined Contribution Plan

The Company maintains a defined contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”).

The Company maintains a defined contribution plan, or the 401(k) Plan, under Section 401(k) of the Internal Revenue Code.

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

The 401(k) Plan provides for matching contributions on a portion of participant contributions pursuant to the 401(k) Plan’s matching formula.

All matching contributions vest ratably over 4 years and participant contributions vest immediately.

All matching contributions vest ratably over four years and participant contributions vest immediately.

Contributions by the Company totaled $ 0.2 million, $ 0.1 million, and $ 0.1 million during each of the years ended December 31, 2021, 2020 and 2019, respectively.

Commitments and Contingencies

As of December 31, 2020, the Company has an operating lease agreement for an office in Watertown, MA.

See Note 8 for additional information regarding the Company's leases.

As of December 31, 2020 and December 31, 2019, the Company was not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

On August 4, 2020, a putative stockholder of Selecta filed a stockholder derivative action, purportedly on behalf of Selecta and against certain current and former members of the Company’s Board of Directors, as well as one affiliated company owned by a current board member, in the Court of Chancery of the State of Delaware, namely Franchi v.

As of December 31, 2021, the Company was not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

On August 3, 2020, a stockholder of Selecta filed a stockholder derivative action, purportedly on behalf of Selecta and against certain current and former members of the Company’s Board of Directors, as well as one affiliated company owned by a current board member, in the Court of Chancery of the State of Delaware, namely Franchi v.

Barabe, et al.

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On December 31, 2020, we received a litigation demand letter from two other putative stockholders relating to the same private placement transaction.

At this time, the Company has not accrued a liability for this matter, as any liability has been determined to be either not estimable or probable.

On April 12, 2021, the Court of Chancery in the State of Delaware granted a motion to stay the litigation pending a review by a Special Committee appointed by the Company’s Board of Directors.

While the litigation was stayed, the parties reached an agreement in principle to settle the matter, and they expect to submit documentation to the Court for its approval of the settlement in the near future.

As of December 31, 2021, the Company accrued an estimated liability of $ 0.9 million for the plaintiff’s litigation, as the liability has been determined to be probable.

As permitted under Delaware law, the Company indemnifies its directors for certain events or occurrences while the director is, or was, serving at the Company’s request in such capacity.

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The term of the indemnification is for the term of the related lease agreement.

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

The maximum potential amount of future payments the Company could be

required to make under these indemnification agreements is unlimited.

To date, the Company had not experienced any material losses related to any of its indemnification obligations, and no material claims with respect thereto were outstanding.

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Subsequent Events

Collaboration and License Agreements

On January 3, 2022, the Company entered into a Collaboration and License Agreement with Ginkgo Bioworks, Inc, or the Second Ginkgo Agreement.

Under this agreement, the Company will engage with Ginkgo to develop AAV capsids designed to enhance transduction efficiency and transgene expression.

In return, Ginkgo is eligible to earn both upfront research and development fees and milestone payments, including certain milestone payments in the form of Selecta common stock, clinical and commercial milestone payments of up to $ 207 million in cash, as well as downstream value in the form of royalties on sales.

“At-the-Market” Offerings

Subsequent to December 31, 2020 through March 5, 2021, the Company sold 4,119,613 shares of its common stock pursuant to the 2020 Sales Agreement, at an average price of approximately $ 4.59 per share for aggregate net proceeds of $ 18.3 million, after deducting commissions and other transaction costs of $ 0.6 million which was paid in the three months ended December 31, 2020.

Subsequent to December 31, 2021, the Company sold 576,418 shares of its common stock pursuant to the 2021 Sales Agreement for aggregate net proceeds of $ 1.7 million, after deducting commissions and other transaction costs.

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