You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited Condensed Consolidated
Financial Statements and the related notes included elsewhere in this Quarterly
Report on Form 10-Q. This discussion and analysis and other parts of this
Quarterly Report on Form 10-Q contain forward-looking statements based upon
current beliefs, plans and expectations related to future events and our future
financial performance that involve risks, uncertainties and assumptions, such as
statements regarding our intentions, plans, objectives and expectations for our
business. Our actual results and the timing of selected events could differ
materially from those described in or implied by these forward-looking
statements as a result of several factors, including those set forth in the
section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on
Form 10-Q. See also the section titled "Special Note Regarding Forward-Looking
Statements."

Overview

We are a clinical-stage cell therapy company advancing a pipeline of product
candidates for patients with solid tumors utilizing our proprietary ex vivo
genetic and epigenetic T­cell reprogramming technologies. Our investigational
therapies use the patient's own cells as the starting point to generate highly
tumor-reactive, longer-lasting functional T cells with enhanced ability to
defeat solid tumors. Our innovative reprogramming technologies address what we
believe are the primary barriers that limit consistent and long-lasting
responses to T­cell therapy in solid tumors: T­cell exhaustion and lack of
durable stemness. Our technologies are designed to generate T cells with the
ability to persist and self­renew while driving durable tumor cytotoxicity, even
in the setting of an immunosuppressive tumor microenvironment. The goal is for
our technologies to provide patients with T cells that are potent and
long-lasting to achieve durable antitumor responses. Furthermore, our
technologies can be applied in a target agnostic manner to multiple T­cell
modalities, including chimeric antigen receptor (CAR), tumor-infiltrating
lymphocytes (TIL) and T­cell receptor (TCR) therapies.

We apply our technologies with the aim to develop T­cell therapies with improved
durable clinical outcomes. Our growing pipeline of promising cell product
candidates targets solid tumor indications with large unmet needs that are
collectively responsible for approximately 180,000 deaths in the US annually.
Each of our programs provide opportunities to expand into additional indications
beyond the patient populations we are initially targeting. Our lead product
candidates are summarized in the table below:

                  [[Image Removed: 10K_2022_Pipeline_v3.jpg]]
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We were incorporated in June 2018. Our primary activities to date have included
developing T-cell therapies, performing research and development, acquiring
technology, entering into strategic collaboration and license agreements,
enabling and executing manufacturing activities in support of our product
candidate development efforts, organizing and staffing our company, business
planning, establishing our intellectual property portfolio, regulatory
submissions and other preparations to initiate clinical trials, raising capital
and providing general and administrative support for these activities. We are
early in our research and development efforts and are in Phase 1 clinical
development of LYL797, our ROR-1 targeted CAR-T cell product candidate
overexpressing c-Jun, and LYL845, an epigenetically reprogrammed TIL product
candidate. Two additional product candidates are in preclinical development and
include LYL119, a ROR-1 targeted CAR-T cell product candidate and a TIL product
candidate, each incorporating novel genetic and epigenetic reprogramming
technologies. We do not have any products approved for sale.

We anticipate that our expenses and operating losses will increase substantially
over the foreseeable future. The expected increase in expenses will be driven in
large part by our ongoing activities, if and as we:

•continue preclinical development of our current and future product candidates and initiate additional nonclinical studies;

•commence and continue clinical trials of our current and future product candidates;

•advance our genetic and epigenetic reprogramming technologies as well as other research and development efforts;

•expand our manufacturing and process development capabilities;

•seek regulatory approval of our current and future product candidates;

•expand our operational, financial and management systems;

•attract, hire and retain qualified personnel;

•acquire and license technology or technology platforms;

•continue to develop, protect and defend our intellectual property portfolio; and

•incur additional legal, accounting or other expenses in operating our business, including the additional costs associated with operating as a public company.

Pipeline Programs and Operational Updates

Pipeline Programs

We are advancing four wholly-owned product candidates; two product candidates, LYL797 and LYL845, are in Phase 1 clinical development and two additional product candidates, LYL119 and a TIL product candidate incorporating novel genetic and epigenetic reprogramming technologies, are in preclinical development.



LYL797 - A genetically and epigenetically reprogrammed ROR1 CAR T-cell product
candidate designed for differentiated potency and durability targeting multiple
solid tumor indications.

We are applying our c-Jun and Epi­R technologies to our lead CAR T­cell product
candidate, LYL797, which is expected to be an intravenously­administered CAR
T­cell product targeting the receptor tyrosine kinase-like orphan receptor 1
(ROR1) protein. ROR1 is a fetal protein expressed during embryogenesis and is
believed to be important in cell migration, polarity and survival. It is
expressed in several cancer types, including triple-negative breast cancer
(TNBC), non-small cell lung cancer (NSCLC), ovarian cancer and chronic
lymphocytic leukemia, and is generally associated with a poor prognosis. LYL797
contains a CAR with a 4-1BB/CD3? intracellular domain, a transmembrane domain,
an optimized spacer domain and a single-chain variable fragment (scFv) derived
from an R12 rabbit monoclonal antibody that recognizes and binds with high
specificity to human ROR1. LYL797 also incorporates c-Jun and a proprietary
optimized truncated version of human EGFR (EGFRopt) used for tracking the CAR T
cells in the peripheral blood post treatment and can also be used as a safety
measure with the administration of cetuximab, if needed. LYL797 is manufactured
utilizing our proprietary Epi­R technology.

We are initially developing LYL797 for the treatment of ROR1-positive TNBC and
NSCLC. Significant subsets of patients with common cancers express ROR1,
including TNBC (~60%) and NSCLC (~40%), two of the highest ROR1­expressing solid
tumor indications. If successful, we may expand into other ROR1-positive cancers
with a lower incidence of ROR1 expression, including potentially
hormone-receptor positive breast cancer, ovarian and other solid tumors.
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•Enrollment in the Phase 1 clinical trial of LYL797 is ongoing at nine sites in
the U.S. The study will enroll at least 15 patients each with relapsed or
refractory triple-negative breast cancer or with non-small cell lung cancer.
Initial clinical data from the Phase 1 trial of LYL797 are expected in the first
half of 2024.

•The Phase 1 clinical trial is designed as an open label, dose escalation and
expansion trial in patients with relapsed/refractory TNBC who have failed at
least two lines of therapy and patients with relapsed/refractory NSCLC who have
failed at least one line of therapy.

LYL845 - A novel epigenetically reprogrammed TIL product candidate designed for differentiated potency and durability targeting multiple solid tumor indications.



We are applying our epigenetic reprogramming technology, Epi­R, to develop
LYL845, which is expected to be an intravenously­administered autologous TIL
therapy for multiple solid tumors. Our Epi­R protocol comprises proprietary
media, optimized cytokine compositions and well-defined cell activation and
expansion protocols used during our manufacturing process.

TIL have previously shown clinical benefit in patients with advanced melanoma
and other solid tumors with high mutational burden. Published data from
third-party TIL trials show that treating metastatic melanoma patients with TIL
can result in complete and durable responses. Response rates to TIL therapy in
patients with other advanced solid tumors such as lung, colorectal and breast
are much lower than that observed in advanced melanoma. Broad TIL efficacy has
been limited by poor enrichment of tumor-reactive T cells and the poor quality
and limited growth potential of expanded T cells. Failure to maintain
polyclonality of TIL during production may also limit their ability to eradicate
cancer cells given the inherent heterogeneous nature of solid tumors. LYL845
incorporates our Epi­R technology that has shown promising improvements in
enhancing T-cell potency, antitumor activity and increased polyclonality of TIL
in nonclinical experiments.

We are initially developing LYL845 for advanced melanoma, NSCLC and colorectal
cancer (CRC). Based on our success with those, we may include patients with
other solid tumors, potentially including head and neck, cervical, breast and
pancreatic cancer.

•Enrollment in the Phase 1 clinical trial for LYL845 is ongoing at five sites in
the U.S. The study will enroll at least 15 patients each with advanced melanoma,
and relapsed or refractory non-small cell lung cancer or colorectal cancer.
Initial clinical data from the Phase 1 trial of LYL845 are expected in 2024.

•The Phase 1 clinical trial is designed as an open label, dose escalation and expansion trial in patients with relapsed and/or refractory metastatic or locally advanced melanoma, NSCLC and CRC.

LYL119 - An innovative ROR1 CAR T-cell product designed for enhanced cytotoxicity.



A key pillar of our strategy is to continually innovate to develop and advance
novel, breakthrough technologies that address key barriers to successful cell
therapy for solid tumors. We have advanced a new genetic reprogramming
technology, NR4A3 knockout, and a new epigenetic reprogramming technology,
Stim­R, that are being applied in our new CAR T-cell product candidate, LYL119.
These technologies are stackable and complementary to c-Jun and Epi­R and are
designed to further improve the antitumor potency and durability of T cells.
LYL119 is being advanced with the goal of potentially creating even greater
benefit for patients with ROR1-positive solid tumors.

•An IND application is expected to be submitted for LYL119 in the first half of 2024.



•An abstract highlighting preclinical development of LYL119 has been selected
for presentation at the American Society for Gene and Cell Therapy (ASGCT) 26th
Annual Meeting taking place in Los Angeles, California on May 16-20, 2023.

T­cell rejuvenation technologies: We and others have documented the impact of
aging on T­cell function, which begins to decline after puberty, and at an
increasingly accelerated rate after age 65. Morbidity and mortality from cancer
also increase with age. Thus, we are working to advance another novel
reprogramming technology that focuses on rejuvenation of antitumor T cells. We
are developing a method to maintain T­cell identity while reducing the
epigenetic age of the cells. This technology is currently in the research stage.
We have generated data illustrating the ability to "turn back" the epigenetic
clock in a process called cellular rejuvenation, without changing the T­cell's
identity as would occur in the setting of induced pluripotent stem cell-derived
T cells.

Our Manufacturing Capabilities



We believe it is critically important to own, control and continuously monitor
all aspects of the cell therapy manufacturing process to mitigate risks,
including challenges in managing production, supply chain, patient specimen
chain of custody and quality control. We made a strategic decision to invest in
building our own manufacturing facility to
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control our supply chain, maximize efficiencies in cell product production time,
optimize cost and quality, and have the ability to rapidly incorporate
disruptive advancements and new innovations. Controlling manufacturing also
enables us to protect proprietary aspects of our reprogramming technologies. We
view our manufacturing team and capabilities as a significant competitive
advantage.

Our LyFE™ manufacturing center located in Bothell, Washington is approximately
73,000 square feet and is comprised of manufacturing suites, laboratories and
offices. LyFE is commissioned and designed to be in compliance with U.S. and
European Union current Good Manufacturing Practices (cGMP) standards and has a
flexible and modular design enabling CAR T cell, TIL, TCR T cell and GMP viral
vector production to control and de-risk the manufacturing sequence and timing
of the major components of our supply chain. Owning our own facility encourages
seamless collaboration across research, process development and manufacturing
for high-quality reproducibility at manufacturing scale.

We are currently producing clinical supply for our Phase 1 trials at LyFE. At
full staffing and capacity, we expect to be able to manufacture approximately
500 infusions per year depending on product candidate mix. At this time, we
believe this capacity is sufficient to support our pipeline programs into
pivotal trials and, if approved, early commercialization.

Macroeconomic Environment



Our business and operations may be affected by worldwide economic conditions,
which may continue to be impacted by global macroeconomic challenges such as the
effects of the ongoing geopolitical conflicts in Ukraine, tensions in U.S.-China
relations, the continuing effects of the COVID-19 pandemic, inflationary
pressures, interest rate environment, instability in the banking industry and
overall market volatility. Fiscal year 2022 and the first quarter of 2023 were
marked by significant market uncertainty, increasing inflationary pressures,
banking turmoil, supply constraints and ongoing effects from the COVID-19
pandemic. These market dynamics may continue in the rest of 2023, and these and
similar adverse market conditions may negatively impact our business.

The effects of the global COVID-19 pandemic continue to evolve and, as a result,
the ultimate impact of the COVID-19 pandemic or other similar health epidemic or
pandemic on our business, operations and development timelines and plans remains
uncertain and will continue to depend on certain developments, including virus
transmission rates and duration of the pandemic, other next-level effects and
the resulting impact on our CROs, contract manufacturing organizations, clinical
sites and other third parties with whom we do business, as well as the impact on
regulatory authorities and our key scientific and management personnel.

For a further discussion of trends, uncertainties and other factors that could
impact our operating results, see the section entitled "Risk Factors" in Part
II, Item 1A of this Quarterly Report on Form 10-Q.

Components of Results of Operations

Revenue

We have no products approved for sale and have never generated any revenue from product sales.



We have generated revenue primarily from the recognition of the upfront payment
under the Collaboration and License Agreement, entered into in 2019 and amended
in June 2020 and December 2021 (GSK Agreement) with GlaxoSmithKline Intellectual
Property (No. 5) Limited and Glaxo Group Limited (together, GSK). GSK terminated
the GSK Agreement effective December 2022, and we do not expect further revenue
from the collaboration. See Note 3, License, Collaboration and Success Payment
Agreements, in the accompanying notes to the unaudited Condensed Consolidated
Financial Statements included in Part I, Item 1 of this Quarterly Report on Form
10­Q, for additional details regarding termination of the GSK Agreement.

In the future, we may generate additional revenue from other collaborations,
strategic alliances, licensing agreements, product sales, or a combination of
these.

Operating Expenses

Research and Development

To date, research and development expenses consist of costs incurred by us for
the discovery and development of our technology platforms and product candidates
and include costs incurred in connection with strategic collaborations, costs to
license technology, personnel-related costs, including stock-based compensation
expense, facility and technology related costs, research and laboratory
expenses, as well as other expenses, which include consulting fees and other
costs. Upfront payments and milestones paid to third parties in connection with
technology platforms that have not reached technological feasibility and do not
have an alternative future use are expensed as incurred.
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Research and development expenses also include non-cash expenses related to the
change in the estimated fair value of the success payment obligations over their
respective requisite service terms granted to Fred Hutchinson Cancer Center
(Fred Hutch) and The Board of Trustees of the Leland Stanford Junior University
(Stanford). As of December 31, 2022, Fred Hutch had provided the requisite
service obligation to earn the potential success payment consideration under the
continued collaboration. For the three months ended March 31, 2023 and future
periods, the change in the Fred Hutch success payment liability fair value is
recognized in other income, net, as the requisite service obligation had been
met. See Note 3, License, Collaboration and Success Payment Agreements, in the
accompanying notes to the unaudited Condensed Consolidated Financial Statements
included in Part I, Item 1 of this Quarterly Report on Form 10­Q. Research and
development expenses related to our success payment liabilities are
unpredictable and may vary significantly from quarter­to­quarter and
year­to­year due to changes in our assumptions used in the calculation.

We deploy our employee and infrastructure resources across multiple research and
development programs for identifying and developing product candidates and
establishing manufacturing capabilities. Due to the stage of development and
number of ongoing programs and our ability to use resources across several
programs, most of our research and development costs are not recorded on a
program-specific basis. These include costs for personnel, laboratory and other
indirect facility and operating costs.

Research and development activities account for a significant portion of our
operating expenses. We anticipate that our research and development expenses
will increase over the foreseeable future as we expand our research and
development efforts including completing nonclinical studies, commencing planned
clinical trials, conducting and completing current and planned clinical trials,
seeking regulatory approval of our product candidates, identifying new product
candidates and incurring costs to acquire and license technology platforms. A
change in the outcome of any of these variables could mean a significant change
in the costs and timing associated with the development of our product
candidates. Because we are early in our research and clinical development
efforts of our product candidates, and the outcome of these efforts is
uncertain, we cannot estimate the actual amounts necessary to successfully
complete the nonclinical development, clinical development and commercialization
of product candidates or whether, or when, we may achieve profitability.

Our research and development expenses may vary significantly based on factors such as:

•the number and scope of nonclinical and IND-enabling studies;

•per patient trial costs;

•the number of trials required for approval;

•the number of sites included in the trials;

•the countries in which the trials are conducted;

•the length of time required to enroll eligible patients;

•the number of patients that participate in the trials;

•the drop-out or discontinuation rates of patients;

•potential additional safety monitoring requested by regulatory agencies;

•the duration of patient participation in the trials and follow-up;

•the cost and timing of manufacturing our product candidates;

•the phase of development of our product candidates;

•the efficacy and safety profile of our product candidates;

•the extent to which we establish additional collaboration or license agreements; and

•whether we choose to partner any of our product candidates and the terms of such partnership.



A change in the outcome of any of these variables with respect to the
development of any of our product candidates could significantly change the
costs and timing associated with the development of that product candidate. We
may never succeed in obtaining regulatory approval for any of our product
candidates. We may obtain unexpected results from our nonclinical studies and
clinical trials.

General and Administrative

General and administrative costs include personnel-related expenses, including
stock-based compensation expense for personnel in executive, legal, finance and
other administrative functions, legal costs, transaction costs related to
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collaboration and licensing agreements, as well as fees paid for accounting and
tax services, consulting fees and facilities costs not otherwise included in
research and development expenses. Legal costs include those related to
corporate, dispute and patent matters.

We anticipate that our general and administrative expenses will increase over
the foreseeable future to support our continued research and development
activities, operations generally, future business development opportunities,
consulting fees, as well as due to the increased costs of operating as a public
company such as costs related to accounting, audit, legal, regulatory and
tax-related services associated with maintaining compliance with exchange
listing and Securities and Exchange Commission (SEC) requirements, director and
officer insurance costs and investor and public relations costs.

Other Operating Income, Net

Other operating income, net consists primarily of service and occupancy fees received associated with subleases as well as losses on the retirement of property and equipment.

Interest Income, Net

Interest income, net consists primarily of interest earned on our cash, cash equivalents and marketable securities balances.

Other Income, Net



Other income, net consists primarily of the change in fair value associated with
our success payment liabilities to Fred Hutch for three months ended March 31,
2023 and primarily of changes in the fair value of an equity warrant investment
held for the three months ended March 31, 2022.

Impairment of Other Investments

Impairment of other investments consists of a reduction in the value of certain other investments.



Results of Operations

Three Months Ended March 31, 2023 and 2022



The following table summarizes our results of operations for the periods
presented (in thousands):

                                      Three Months Ended
                                          March 31,
                                     2023           2022          Change
Revenue                           $      65      $     553      $   (488)
Operating expenses:
Research and development             44,630         35,830         8,800
General and administrative           19,279         34,421       (15,142)
Other operating income, net          (1,288)        (1,122)         (166)
Total operating expenses             62,621         69,129        (6,508)
Loss from operations                (62,556)       (68,576)        6,020
Interest income, net                  4,497            397         4,100
Other income, net                     1,100             35         1,065
Impairment of other investments     (10,000)             -       (10,000)
Total other (loss) income, net       (4,403)           432        (4,835)
Net loss                          $ (66,959)     $ (68,144)     $  1,185


Revenue

Revenue was $0.1 million and $0.6 million for the three months ended March 31,
2023 and 2022, respectively. The GSK Agreement was terminated in December 2022
and, therefore, no further research and development pursuant to the GSK
Agreement was performed in the first quarter of 2023, which drove the decrease
in revenue of $0.5 million. See Note 3, License, Collaboration and Success
Payment Agreements - GSK, in the accompanying notes to the unaudited Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q for additional information about the termination of the GSK
Agreement.
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Research and Development Expenses

The following table summarizes the components of our research and development expenses for the periods presented (in thousands):



                                                          Three Months Ended March 31,
                                                             2023              2022             Change
Personnel                                                $  19,644          $ 16,541          $  3,103
Facilities and technology                                   13,138            12,830               308

Research activities, collaborations and outside services 12,456 

   10,310             2,146
Success payments                                              (608)           (3,851)            3,243
Total research and development expenses                  $  44,630

$ 35,830 $ 8,800




Research and development expenses were $44.6 million and $35.8 million for the
three months ended March 31, 2023 and 2022, respectively. The increase of
$8.8 million was primarily due to a $3.2 million increase associated with our
success payment liabilities, noting $2.8 million of the change was due to
recognizing the Fred Hutch success payment liability fair value change in other
income, net for the three months ended March 31, 2023 and the remaining
$0.4 million was due to the change in the Stanford success payment liability; an
increase of $3.1 million in personnel-related expenses primarily related to an
increase in headcount to expand our research, development and manufacturing
capabilities; an increase of $2.1 million in research activities, collaborations
and outside services primarily driven by an increase in research and laboratory
costs principally due to clinical trials, partially offset by a reduction in
collaboration and license fees and expenses, including research and development
expenses attributable to the termination of the GSK Agreement; and an increase
of $0.3 million in facilities and technology costs.

General and Administrative Expenses



General and administrative expenses were $19.3 million and $34.4 million for the
three months ended March 31, 2023 and 2022, respectively. The decrease of
$15.1 million was primarily due to a decrease of $9.0 million in stock-based
compensation expense, primarily related to significant awards being previously
fully expensed. Additionally, outside services decreased by $5.6 million
primarily due to a decrease in legal expenses.

Other Operating Income, Net

Other operating income, net was $1.3 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively.

Interest Income, Net

Interest income, net was $4.5 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively. The increase in interest income, net of $4.1 million was primarily driven by higher interest rates in 2023.

Other Income, Net



Other income, net was $1.1 million and $0.0 million for the three months ended
March 31, 2023 and 2022, respectively. The increase of $1.1 million was
primarily due to the change in fair value associated with our success payment
liabilities to Fred Hutch for the three months ended March 31, 2023; the fair
value change of Fred Hutch success payment liabilities is recognized in other
income, net for the three months ended March 31, 2023 as Fred Hutch had provided
the requisite service obligation to earn the potential success payment
consideration under the continued collaboration as of December 2022.

Impairment of Other Investments

For the three months ended March 31, 2023, the $10.0 million impairment of other investments consisted of the full impairment of one of our other investments.

Liquidity and Capital Resources

Sources of Liquidity



Since our inception, we have funded our operations primarily through the sale
and issuance of convertible preferred stock, the sale of common stock in
connection with our initial public offering (IPO) and business development
activities. As of March 31, 2023, we had $668.0 million in cash, cash
equivalents and marketable securities. Since our inception, we have incurred
significant operating losses. We have not yet commercialized any product
candidates, and we do not expect to generate revenue from sales of any product
candidates for a number of years, if ever. We had an
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accumulated deficit of $834.4 million as of March 31, 2023. From June 29, 2018
(inception) through March 31, 2023, we raised an aggregate of $1,405.7 million
in gross proceeds from the sales of our convertible preferred stock prior to the
IPO and sales of our common stock in the IPO.

On August 4, 2022, we entered into an Equity Distribution Agreement (the Equity
Distribution Agreement) with Goldman Sachs & Co. LLC (Goldman Sachs) and BofA
Securities, Inc. (BofA, and together with Goldman Sachs, the Agents) with
respect to an at-the-market offering program. In accordance with the terms of
the Equity Distribution Agreement, we may offer and sell from time to time,
through the Agents, shares of our common stock having an aggregate offering
amount of up to $200.0 million (the Placement Shares). Sales of the Placement
Shares, if any, will be made at prevailing market prices on Nasdaq at the time
of sale, or as otherwise agreed with the Agents, by any method permitted by law
deemed to be an "at-the-market offering" as defined in Rule 415 of the
Securities Act of 1933, as amended (the Securities Act). We will pay commissions
to the Agents of up to 3.0% of the gross proceeds of the sale of the Placement
Shares sold under the Equity Distribution Agreement and reimburse the Agents for
certain expenses. Neither us nor the Agents are obligated to sell any shares
and, to date, we have not made any sales under the Equity Distribution
Agreement.

Future Funding Requirements



We expect to incur additional losses in the foreseeable future as we conduct and
expand our research and development efforts, including conducting nonclinical
studies and clinical trials, developing new product candidates, establishing
internal manufacturing capabilities and funding our operations generally. Based
on our current operating plan, we believe that our existing cash, cash
equivalents and marketable securities will be sufficient to meet our working
capital and capital expenditure needs into 2026. However, we anticipate that we
will need to raise additional capital in the future to fund our operations,
including further development of our product candidates and the
commercialization of any approved product candidates. In addition, we regularly
consider fund-raising opportunities and may decide, from time to time, to raise
additional capital, including pursuant to the Equity Distribution Agreement,
based on various factors, including market conditions and our plans of
operation. We are subject to the risks typically related to the development of
new products, and we may encounter unforeseen expenses, difficulties,
complications, delays and other unknown factors that may adversely affect our
business.

Our future capital requirements will depend on many factors, including:

•the scope, timing, progress, costs and results of discovery, nonclinical development and clinical trials for our current and future product candidates;

•the number of clinical trials required for regulatory approval of our current and future product candidates;

•the costs, timing and outcome of regulatory review of any of our current and future product candidates;

•the cost of manufacturing clinical and commercial supplies of our current and future product candidates;

•the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

•further investment to build additional manufacturing facilities or expand the capacity of our existing ones;



•the costs and timing of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending any
intellectual property-related claims;

•our ability to maintain existing, and establish new, collaborations, licenses,
product acquisitions or other strategic transactions and the fulfillment of our
financial obligations under any such agreements, including the timing and amount
of any success payment, future contingent payments, milestone, royalty or other
payments due under any such agreement;

•the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•expenses to attract, hire and retain skilled personnel;

•the costs of operating as a public company;

•addressing any potential interruptions or delays resulting from factors related to the effects of the COVID-19 pandemic;

•addressing or responding to any potential disputes or litigation; and

•the extent to which we acquire or invest in businesses, products and technology platforms.


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Until such time as we complete nonclinical and clinical development and receive
regulatory approval of our product candidates and can generate significant
revenue from product sales, if ever, we expect to finance our operations from
the sale of additional equity or debt financings, or other capital which come in
the form of strategic collaborations, licensing, or other arrangements. In the
event that additional capital is required, we may not be able to raise it on
terms acceptable to us, or at all. If we raise additional funds through the
issuance of equity or convertible debt securities, including pursuant to the
Equity Distribution Agreement, it may result in dilution to our existing
stockholders. Debt financing or preferred equity financing, if available, may
result in increased fixed payment obligations, and the existence of securities
with rights that may be senior to those of our common stock. If we incur
indebtedness, we could become subject to covenants that would restrict our
operations. If we raise funds through strategic collaboration, licensing, or
other arrangements, we may relinquish significant rights or grant licenses on
terms that are not favorable to us. Our ability to raise additional funds may be
adversely impacted by potential worsening global economic conditions and the
recent disruptions to, and volatility in, the credit and financial markets in
the United States and worldwide resulting from the ongoing effects of the
COVID-19 pandemic, actual or perceived changes in interest rates and economic
inflation and otherwise. If we are unable to raise additional capital when
desired, our business, results of operations and financial condition would be
adversely affected.

Material Cash Requirements

We continually evaluate our liquidity and capital resources to ensure that we
can adequately and efficiently finance our operations. As of March 31, 2023, our
material cash requirements consisted primarily of paying salaries and benefits,
administering clinical trials, conducting research, improving our manufacturing
capabilities, providing the technology and facilities necessary to support our
operations, funding operating lease obligations and other payments related to
our collaborative agreements, including anticipated success payments and license
fees. See Note 3, License, Collaboration and Success Payment Agreements, and
Note 7, Leases, in the accompanying notes to the unaudited Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q for additional information.

Cash Flows



The following table summarizes our cash flows for the periods indicated (in
thousands):

                                                                   Three Months Ended
                                                                       March 31,
                                                                  2023           2022
Net cash (used in) provided by:
Operating activities                                           $ (46,212)     $ (47,852)
Investing activities                                              32,154        (26,122)
Financing activities                                                 (69)         2,555

Net decrease in cash, cash equivalents and restricted cash $ (14,127)

  $ (71,419)


Operating Activities

During the three months ended March 31, 2023, net cash used in operating
activities was $46.2 million, reflecting our net loss of $67.0 million,
partially offset by $25.1 million of non-cash items primarily related to
stock-based compensation of $13.9 million, impairment of other investments of
$10.0 million and depreciation and amortization of $5.0 million, partially
offset by net amortization and accretion on marketable securities of
$1.9 million and the change in fair value of the success payment liabilities of
$1.7 million. Additionally, net operating assets and liabilities decreased
$4.3 million primarily driven by a $5.9 million decrease in accrued liabilities
and other current liabilities partially offset by a $2.1 million increase in
accounts payable.

During the three months ended March 31, 2022, net cash used in operating
activities was $47.9 million, reflecting our net loss of $68.1 million,
partially offset by non-cash items such as stock-based compensation expense of
$22.0 million and depreciation and amortization expense of $4.2 million.
Additionally, net operating assets and liabilities decreased $2.4 million, which
included a $6.4 million decrease of accrued liabilities and other current
liabilities due primarily to annual employee bonus payments, offset by a $2.9
million increase in accounts payable and a $2.1 million increase in operating
lease liabilities primarily due to tenant improvement allowances received during
the three months ended March 31, 2022.

Investing Activities



During the three months ended March 31, 2023, cash provided by investing
activities was $32.2 million, consisting of net maturities, sales and purchases
of marketable securities of $33.7 million offset by purchases of property and
equipment of $1.5 million.
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During the three months ended March 31, 2022, cash used in investing activities
was $26.1 million, consisting of net purchases of marketable securities of $16.4
million and purchases of property and equipment of $9.7 million.

Financing Activities



During the three months ended March 31, 2023, cash used in financing activities
was $0.1 million, consisting of taxes paid related to the net share settlement
of equity awards.

During the three months ended March 31, 2022, cash provided by financing activities was $2.6 million, consisting of proceeds from the exercise of stock options.

Off-Balance Sheet Arrangements

Since our inception, we did not have, and we do not currently have, any off-balance sheet arrangements as defined under the applicable rules and regulations of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates



Our unaudited Condensed Consolidated Financial Statements are prepared in
accordance with U.S. generally accepted accounting principles (GAAP). The
preparation of these unaudited Condensed Consolidated Financial Statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the unaudited Condensed Consolidated Financial
Statements, as well as the reported revenue and expenses incurred during the
reporting periods. Our estimates are based on our historical experience and on
various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates as compared to those described in our Annual Report on Form 10­K for the year ended December 31, 2022 (Annual Report).

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