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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-39376

Poseida Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	47-2846548
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
9390 Towne Centre Drive, Suite 200, San Diego, California	92121
(Address of Principal Executive Offices)	(Zip Code)

(858) 779-3100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	PSTX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024, the registrant had 97,465,024 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

POSEIDA THERAPEUTICS, INC.

Index


PART I. FINANCIAL INFORMATION		Page

Item 1. Financial Statements (Unaudited)		4
Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023		4
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023		5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023		6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023		7
Notes to Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures about Market Risk		38
Item 4. Controls and Procedures		38

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		40
Item 1A. Risk Factors		40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		90
Item 3. Defaults Upon Senior Securities		90
Item 4. Mine Safety Disclosures		90
Item 5. Other Information		90
Item 6. Exhibits		91
Signatures		92

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q including statements regarding our future results of operations or financial condition, business strategy, plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

•

our expectations regarding the timing, scope and results of our development activities, including our ongoing and planned clinical trials;

•

the timing of and plans for regulatory filings;

•

our plans to obtain and maintain regulatory approvals of our product candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

•

the potential benefits of our product candidates and technologies;

•

our expectations regarding the use of our platform technologies to generate novel product candidates;

•

the market opportunities for our product candidates and our ability to maximize those opportunities;

•

our business strategies and goals;

•

estimates of our expenses, capital requirements, any future revenue, and need for additional financing;

•

our expectations regarding manufacturing capabilities and plans, including the operation of our clinical manufacturing facility;

•

the performance of our third-party suppliers and manufacturers;

•

our ability to attract and/or retain new and existing collaborators with development, regulatory, manufacturing and commercialization expertise and our expectations regarding the potential benefits to be derived from such collaborations;

•

our expectations regarding our ability to obtain and maintain intellectual property protection for our platform technologies and product candidates and our ability to operate our business without infringing on the intellectual property rights of others;

•

our expectations regarding developments and projections relating to our competitors, competing therapies that are or become available, and our industry;

•

acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict, and the conflict in the Middle East, and the potential impact they may have on supply chains, the availability, and prices, of commodities, inflationary pressure and the overall U.S. and global financial markets;

•

financial conditions within the banking industry, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;

•

future changes in or impact of law and regulations in the United States and foreign countries; and

•

the sufficiency of our existing cash, cash equivalents and short-term investments to fund our operations.

We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Table of Contents

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, advancements, discoveries, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Poseida”, “the Company,” “we,” “our” and “us” refer to Poseida Therapeutics, Inc.

We regularly make material business and financial information available to our investors using our investor relations website (https://investors.poseida.com). We therefore encourage investors and others interested in Poseida to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission, or the SEC, press releases and conference calls.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and par value amounts)


	September 30,			December 31,
	2024			2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	49,340		$	44,472
Short-term investments		181,512			167,730
Accounts receivable		14,749			9,010
Prepaid expenses and other current assets		5,103			5,263
Total current assets		250,704			226,475
Property and equipment, net		17,366			19,055
Operating lease right-of-use assets		19,054			21,726
Intangible assets, net		1,320			1,320
Goodwill		4,228			4,228
Other long-term assets		905			1,081
Total assets	$	293,577		$	273,885
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,197		$	3,267
Accrued expenses and other liabilities		29,714			31,092
Operating lease liabilities, current		6,085			5,951
Deferred revenue, current		37,273			31,008
Total current liabilities		78,269			71,318
Term debt		58,908			58,590
Deferred revenue, non-current		48,402			16,780
Operating lease liabilities, non-current		17,734			20,882
Other long-term liabilities		3,053			2,614
Total liabilities		206,366			170,184
Commitments and Contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.0001 par value: 250,000,000 shares authorized at September 30, 2024 and December 31, 2023; 97,411,571 and 95,636,553 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		10			10
Additional paid-in capital		716,526			697,856
Accumulated other comprehensive income		376			126
Accumulated deficit		(629,701	)		(594,291	)
Total stockholders’ equity		87,211			103,701
Total liabilities and stockholders’ equity	$	293,577		$	273,885

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

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POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue:
Collaboration revenue	$	71,748		$	9,352		$	125,863		$	39,708
Total revenue		71,748			9,352			125,863			39,708
Operating expenses:
Research and development		41,914			37,482			130,382			114,727
General and administrative		10,092			8,092			32,072			28,576
Total operating expenses		52,006			45,574			162,454			143,303
Income (loss) from operations		19,742			(36,222	)		(36,591	)		(103,595	)
Other income (expense):
Interest expense		(2,295	)		(2,236	)		(6,807	)		(6,404	)
Other income, net		2,831			6,787			8,031			12,025
Net income (loss) before income tax	$	20,278			(31,671	)		(35,367	)		(97,974	)
Income tax expense		(43	)		(107	)		(43	)		(107	)
Net income (loss)	$	20,235		$	(31,778	)	$	(35,410	)	$	(98,081	)

Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments		458			80			250			(51	)
Comprehensive income (loss)	$	20,693		$	(31,698	)	$	(35,160	)	$	(98,132	)

Net income (loss) per share attributable to common stockholders, basic and diluted	$	0.21		$	(0.35	)	$	(0.37	)	$	(1.11	)
Weighted-average number of shares outstanding, basic		97,160,467			91,898,347			96,716,649			88,321,943
Weighted-average number of shares outstanding, diluted		98,219,947			91,898,347			96,716,649			88,321,943

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

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POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance at December 31, 2023		95,636,553	$	10	$	697,856		$	126		$	(594,291	)	$	103,701
Issuance of common stock under employee stock compensation plans, net of tax withholdings		1,161,456		—		(43	)		—			—			(43	)
Stock-based compensation expense		—		—		5,383			—			—			5,383
Unrealized loss on available-for-sale securities		—		—		—			(173	)		—			(173	)
Net loss		—		—		—			—			(24,274	)		(24,274	)
Balance at March 31, 2024		96,798,009	$	10	$	703,196		$	(47	)	$	(618,565	)	$	84,594
Issuance of common stock under employee stock compensation plans, net of tax withholdings		282,808		—		—			—			—			—
Stock-based compensation expense		—		—		7,629			—			—			7,629
Unrealized loss on available-for-sale securities		—		—		—			(35	)		—			(35	)
Net loss		—		—		—			—			(31,371	)		(31,371	)
Balance at June 30, 2024		97,080,817	$	10	$	710,825		$	(82	)	$	(649,936	)	$	60,817
Issuance of common stock under employee stock compensation plans, net of tax withholdings		330,754		—		742			—			—			742
Stock-based compensation expense		—		—		4,959			—			—			4,959
Unrealized gain on available-for-sale securities		—		—		—			458			—			458
Net income		—		—		—			—			20,235			20,235
Balance at September 30, 2024		97,411,571	$	10	$	716,526		$	376		$	(629,701	)	$	87,211


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance at December 31, 2022		85,964,161	$	9	$	658,596	$	(149	)	$	(470,861	)	$	187,595
Issuance of common stock under employee stock compensation plans, net of tax withholdings		675,726		—		258		—			—			258
Issuance of common stock through ATM, net of issuance costs		119,000		—		928		—			—			928
Stock-based compensation expense		—		—		7,480		—			—			7,480
Unrealized gain on available-for-sale securities		—		—		—		151			—			151
Net loss		—		—		—		—			(38,847	)		(38,847	)
Balance at March 31, 2023		86,758,887	$	9	$	667,262	$	2		$	(509,708	)	$	157,565
Issuance of common stock under employee stock compensation plans, net of tax withholdings		119,454		—		—		—			—			—
Stock-based compensation expense		—		—		5,474		—			—			5,474
Unrealized loss on available-for-sale securities		—		—		—		(282	)		—			(282	)
Net loss		—		—		—		—			(27,456	)		(27,456	)
Balance at June 30, 2023		86,878,341	$	9	$	672,736	$	(280	)	$	(537,164	)	$	135,301
Issuance of common stock under employee stock compensation plans, net of tax withholdings		361,852		—		523		—			—			523
Issuance of common stock through private placement		8,333,333		1		14,416		—			—			14,417
Stock-based compensation expense		—		—		5,117		—			—			5,117
Unrealized gain on available-for-sale securities		—		—		—		80			—			80
Net loss		—		—		—		—			(31,778	)		(31,778	)
Balance at September 30, 2023		95,573,526	$	10	$	692,792	$	(200	)	$	(568,942	)	$	123,660

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

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POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024			2023
Operating Activities:
Net loss	$	(35,410	)	$	(98,081	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		4,048			4,179
Stock-based compensation		17,971			18,071
Accretion of discount on issued term debt		757			575
Accretion of discount on short-term investments, net		(5,455	)		(6,218	)
Write off of deferred CIRM grant liability		—			(3,992	)
Changes in operating assets and liabilities:
Accounts receivable		(5,739	)		415
Prepaid expenses and other current assets		(159	)		1,596
Operating lease right-of-use assets		2,672			2,514
Other long-term assets		176			(30	)
Accounts payable		1,930			302
Accrued expenses and other liabilities		(1,943	)		(2,563	)
Operating lease liabilities		(3,014	)		(2,732	)
Deferred revenue		37,887			22,541
Net cash provided by (used in) operating activities		13,721			(63,423	)
Investing Activities:
Purchases of property and equipment		(1,794	)		(2,757	)
Purchases of short-term investments		(187,758	)		(215,822	)
Proceeds from maturities of short-term investments		180,000			210,000
Net cash used in investing activities		(9,552	)		(8,579	)
Financing Activities:
Proceeds from issuance of common stock under employee stock compensation plans		1,291			1,276
Payment of taxes related to net share settlement of equity awards		(592	)		(494	)
Proceeds from issuance of common stock through ATM offering, net of issuance costs		—			928
Proceeds from private placement of common stock		—			14,417
Net cash provided by financing activities		699			16,127
Net increase (decrease) in cash and cash equivalents		4,868			(55,875	)
Cash and cash equivalents at beginning of period		44,472			81,378
Cash and cash equivalents at end of period	$	49,340		$	25,503

Non-cash operating, investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities	$	585		$	220

Supplemental disclosure of cash flow information:
Interest paid	$	6,079		$	5,786

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

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Note 1. Nature of Business and Basis of Presentation

Nature of Operations

Poseida Therapeutics, Inc. (the “Company” or “Poseida”) is a clinical-stage cell therapy and genetic medicines company advancing a new class of treatments for patients with cancer and rare diseases. The Company has discovered and is developing a broad portfolio of product candidates in a variety of indications based on its core proprietary platforms, including its non-viral, transposon-based DNA delivery system, Cas-CLOVER Site-specific Gene Editing System and nanoparticle-based gene delivery technologies.

The Company is subject to risks and uncertainties common to development-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s therapeutic development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Liquidity and Capital Resources

The Company has experienced net losses and negative cash flows from operations since its inception and has relied on its ability to fund its operations primarily through equity and debt financings and strategic collaborations. For the nine months ended September 30, 2024, the Company incurred a net loss of $35.4 million and positive cash flows from operations of $13.7 million. The Company expects it will continue to incur net losses and will incur negative cash flows from operations for at least the next several years. As of September 30, 2024, the Company had an accumulated deficit of $629.7 million.

The Company expects that its cash, cash equivalents and short-term investments as of September 30, 2024 of $230.9 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements. In the long term, the Company will need additional financing to support its continuing operations and pursue its business strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements reflect the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles in the United States of America (“GAAP”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated financial statements include the accounts of Poseida Therapeutics, Inc. and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated. These unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly state the financial position and the results of its operations and cash flows for interim periods presented. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on March 7, 2024 from which the Company derived its condensed consolidated balance sheet as of December 31, 2023. We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation.

Risk and Uncertainties

Global events such as the conflict in the Middle East, Russia’s invasion of Ukraine and the retaliatory measures that have been taken, or could be taken in the future, by the United States, NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could disrupt the Company’s supply chain and adversely affect its ability to conduct ongoing and future clinical trials of the Company’s product candidates. The extent to which any such ongoing or future conflict ultimately impacts the Company’s business is highly uncertain and cannot be predicted with confidence at this time.

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Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, which include, but are not limited to, estimates related to revenue, accrued expenses, research and development expenses, stock-based compensation expense and deferred tax valuation allowances. The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Cash, Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments purchased with original final maturities of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with financial institutions and marketable securities. Investments with a remaining maturity when purchased of greater than three months are classified as short-term investments in the consolidated balance sheet and consist primarily of U.S. Treasury and other government agency obligations. As the Company’s entire investment portfolio is considered available for use in current operations, the Company classifies all investments as available-for-sale and as current assets, even though the stated maturity date may be one year or more beyond the current consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.

Concentration of Business Risk

The Company operates in one reportable business segment and has two customers. The Company relies, and expects to continue to rely, on a small number of vendors to manufacture supplies and materials for its development programs. These programs could be adversely affected by a significant interruption in these manufacturing services.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to a significant concentration of credit risk, consist primarily of cash and cash equivalents and short-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits and investments are held. The Company invests exclusively in securities issued by the U.S. government or U.S. government agencies, or in money-market funds. The Company maintains an investment policy with investment objectives to preserve principal, achieve liquidity requirements, and safeguard funds. For these reasons, management believes that the Company is not exposed to significant credit risk.

Revenue Recognition

The Company’s revenues to date have been generated primarily through collaboration and license agreements. The Company’s collaboration and license agreements may contain multiple elements including intellectual property licenses and research, and development services. Consideration the Company receives under these arrangements may include upfront payments, research and development funding, cost reimbursements, research, development, regulatory and commercial milestone payments, and royalty payments.

The Company applies Accounting Standard Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), issued by the Financial Accounting Standards Board (“FASB”) to account for its contracts with customers. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these services. The Company analyzes the nature of these performance obligations in the context of individual collaboration and license agreements in order to assess the distinct performance obligations. The Company evaluates its contracts with customers for proper classification in the consolidated statements of operations and comprehensive loss based on the nature of the underlying activity. Transactions with customers recorded in the Company’s consolidated statements of operations and comprehensive loss are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship.

To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v)

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recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. The Company allocates the transaction price to individual performance obligations on their relative standalone selling price basis. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services.

For each agreement entered into, including licenses granted upon the exercise of license options, the Company determines the contract term for purposes of applying the requirements of ASC 606. Generally, the Company’s agreements are terminable at the option of the licensee with advance notice. The Company evaluates these termination rights to determine the contract term and whether a substantive termination penalty would be incurred by the licensee upon termination. If the licensee incurs a substantive termination penalty upon termination, the contract term for revenue recognition purposes is generally equal to the stated term of the agreement, which many times is equal to the research term. Alternatively, if the licensee does not incur a substantive termination penalty upon termination, the contract term for revenue recognition purposes may be shorter than the stated term of the agreement, in which case the termination rights may be accounted for as contract renewal options. The determination of whether a substantive termination penalty is associated with the termination rights requires significant judgment. In making this determination, the Company considers, among other things, the nature of the rights that would be returned to the Company upon termination, exclusivity rights, stage of development of the licensed products, payment terms, including the amount and timing of non-refundable or guaranteed payments, and the business purpose of the termination rights granted.

If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the standalone selling price. As a practical alternative to estimating the standalone selling price when the goods or services are both (i) similar to the original goods and services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocates the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.

The Company receives payments from its collaborators based on terms established in each contract. Upfront payments and other payments may require deferral of revenue recognition to a future period until the Company satisfies its performance obligations under the contract.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on short-term investments. Comprehensive gains (losses) have been reflected in the unaudited condensed consolidated statements of operations and comprehensive income (loss) for all periods presented.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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Note 3. Composition of Certain Balance Sheet Components

Property and equipment, net

Property and equipment, net consisted of the following (in thousands):


	September 30,			December 31,
	2024			2023
Laboratory equipment	$	23,487		$	21,271
Leasehold improvements		14,172			14,113
Computer equipment and software		1,355			1,355
Furniture and fixtures		1,204			1,125
Total property and equipment		40,218			37,864
Less: Accumulated depreciation and amortization		(22,852	)		(18,809	)
Total property and equipment, net	$	17,366		$	19,055

Depreciation and amortization expense associated with property and equipment was $1.3 million and $4.0 million for the three and nine months ended September 30, 2024, respectively, and $1.4 million and $4.2 million for the three and nine months ended September 30, 2023, respectively.

Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Contract research services	$	16,054	$	14,621
Payroll and related expense		9,320		13,076
Other		4,340		3,395
Total accrued expenses and other liabilities	$	29,714	$	31,092

Note 4. Financial Instruments

The following table summarizes the amortized cost and fair value of available-for-sale securities (in thousands):


	Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
At September 30, 2024:
Money market funds	1 year or less	$	46,605	$	—	$	—		$	46,605
U.S. government agency securities and treasuries	1 year or less		181,136		377		(1	)		181,512
Total		$	227,741	$	377	$	(1	)	$	228,117

At December 31, 2023:
Money market funds	1 year or less	$	37,590	$	—	$	—		$	37,590
U.S. government agency securities and treasuries	1 year or less		167,604		158		(32	)		167,730
Total		$	205,194	$	158	$	(32	)	$	205,320

The Company has classified all of its short-term investments as available-for-sale as the sale of such securities may be required prior to maturity to implement management strategies, and therefore, they are carried at fair value. No available-for-sale debt securities held as of September 30, 2024 and December 31, 2023, had remaining maturities greater than one year. Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. As of September 30, 2024, none of the Company’s securities were in material unrealized loss positions.

The Company reviews its investment holdings at the end of each reporting period and evaluates any unrealized losses using the expected credit loss model to determine if the unrealized loss is a result of a credit loss or other factors. The Company also evaluates its investment holdings for impairment using a variety of factors including the Company’s intent to sell the underlying securities prior to maturity and whether it is more likely than not that the Company would be required to sell the securities before the recovery of their

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amortized basis. As of September 30, 2024, none of the available-for-sale securities have been in an unrealized loss position for greater than 12 months. During the nine months ended September 30, 2024 and 2023, the Company did not recognize any impairment or realized gains or losses on sales of investments, and the Company did not record an allowance for, or recognize, any expected credit losses.

Note 5. Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

•

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

•

Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability

•

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity)

The Company classifies its money market funds and U.S. treasury securities, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

The following table summarizes the Company’s valuation hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	Level 1		Level 2		Level 3
At September 30, 2024:
Assets:
Money market funds	$	46,605	$	—	$	—
U.S. government agency securities and treasuries		181,512		—		—
Total	$	228,117	$	—	$	—

At December 31, 2023:
Assets:
Money market funds	$	37,590	$	—	$	—
U.S. government agency securities and treasuries		167,730		—		—
Total	$	205,320	$	—	$	—

Note 6. Strategic Investment

Astellas

Terms of the Agreement

On August 4, 2023 (the “Signing Date”), the Company entered into a series of agreements (collectively, the “Astellas Strategic Agreements”) with Astellas US, LLC (“Astellas”) as described below.

Securities Purchase and Registration Rights Agreement

Pursuant to a securities purchase agreement (the “Securities Purchase Agreement”), the Company agreed to issue and sell to Astellas in a private placement (the “Private Placement”) an aggregate of 8,333,333 shares (the “Shares”) of common stock, par value $0.0001 per share, of the Company, at a purchase price of $3.00 per Share, for aggregate gross proceeds of $25.0 million. The Private Placement closed on August 7, 2023 (the “Closing Date”).

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The Company also entered into a registration rights agreement with Astellas (the “Registration Rights Agreement”), pursuant to which the Company agreed to register the resale by Astellas of the Shares no later than the 250th day after the Closing Date.

Strategic Rights Letter Agreement

On the Signing Date, the Company also entered into a strategic rights letter agreement (the “Astellas Strategic Rights Letter”) with Astellas, pursuant to which, the Company agreed to the following: (i) grant Astellas the right to an observer seat on the Company’s board of directors, any committee of the Company’s board of directors, and the Company’s scientific advisory board; (ii) for a period of 18 months, grant Astellas a right of notification with respect to a Change in Control (as defined in the Astellas Strategic Rights Letter); (iii) during the period beginning on the Closing Date and ending on the 12-month anniversary of the Closing Date (the “Exclusivity Period”), not to (1) solicit, knowingly encourage, negotiate or otherwise enter into bona fide discussions about a Program Transaction (as defined below) with any third party, (2) provide access to any confidential information of the Company relating to P-MUC1C-ALLO1, the Company’s fully allogeneic CAR-T product candidate for multiple solid tumor indications (the “Program”), for purposes of knowingly facilitating a Program Transaction, or (3) enter into any letter of intent, contract or other commitment for a Program Transaction (a “Program Transaction” being an exclusive or co-exclusive license or co-promote or co-marketing arrangement or granting of commercial rights to sell, promote or market one or more products of the Program for any indication in the world); (iv) provide notice to Astellas (1) if the Company receives a bona fide proposal for a Change in Control transaction from a third party, unless such proposal is rejected by the Company’s board of directors, or (2) of the commencement of a process approved by the Company’s board of directors for a Change in Control, (3) if the Company receives a bona fide proposal for a Program Transaction from a third party unless the proposal is rejected by the Company’s board of directors (a “Program Transaction Proposal”) or, (4) following the Exclusivity Period, the commencement of substantive discussions for a Program Transaction with a third party in connection with a process approved by the Company’s board of directors for a Program Transaction (a “Program Process”). In connection with a notice related to (x) a Program Transaction Proposal, Astellas shall have a right of first refusal to provide a competing proposal that is in aggregate more favorable to the Company than the Program Transaction Proposal, and thereby have a right to negotiate exclusively a possible Program Transaction for a specified period and (y) a Program Process, Astellas shall have a right of first offer to negotiate a Program Transaction for a specified period before the Company engages with any third party in meaningful substantive discussions, in each case, in accordance with the procedures and subject to the conditions set forth in the Astellas Strategic Rights Letter.

As partial consideration for the rights granted to Astellas under the Astellas Strategic Rights Letter, Astellas paid the Company a one-time payment in the amount of $25.0 million (the “Upfront Payment”). In connection with a Change in Control transaction or Program Transaction between the Company and Astellas, some, all or none of the Upfront Payment may be offset against payments owed by Astellas in a tiered basis to the Company dependent on certain factors set forth in the Astellas Strategic Rights Letter.

The Astellas Strategic Rights Letter shall terminate upon the earliest to occur of (i) the 18-month anniversary of the Closing Date, (ii) such time that Astellas owns fewer than 8,000,000 shares of common stock (subject to adjustment for any stock splits, stock dividends or recapitalizations) and (iii) the consummation of a Change in Control.

Revenue Recognition

The Securities Purchase Agreement and the Registration Rights Agreement are not within the scope of ASC 606 and were accounted for as an equity issuance with the deemed fair value of the shares issued scoped out of the transaction price. See Note 10 for further detail of the equity issuance. The rights granted under the Astellas Strategic Rights Letter were assessed under ASC 606, as the agreement represents a contract with a customer. The rights were deemed to not transfer any control to Astellas but give Astellas a right in the future, as all or a portion of the Upfront Payment of $25.0 million is creditable to Astellas towards a future potential transaction within the restrictions and time frames specified in the letter. Therefore, the full amount allocated to the rights is treated as a non-refundable payment.

The Company recorded the issuance of common stock at its estimated fair value on the date of issuance of $14.4 million, which reflects a discount for the lack of marketability (“DLOM”) of the shares. The DLOM was applied due to the inability to trade the shares until they are registered. The $10.6 million difference between the $25.0 million paid by Astellas for the Securities Purchase Agreement and the fair market value of shares issued was allocated to the rights granted under the Astellas Strategic Rights Letter for a total amount allocable of $35.6 million. The amount will be recognized when the likelihood of Astellas exercising its remaining rights becomes remote, or when the proportionate amount of the tiered creditable amounts expire.

The Company recognized $11.9 million and $23.7 million of revenue from the Astellas Strategic Agreements for the three and nine months ended September 30, 2024, respectively. The Company has $11.9 million of deferred revenue on its condensed consolidated balance sheet as of September 30, 2024, expected to be recognized by February 2025.

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Note 7. Collaboration and License Agreements

Roche

Terms of the Agreement

In July 2022, the Company entered into a collaboration and license agreement (the “Roche Collaboration Agreement”) with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively, “Roche”), pursuant to which the Company granted to Roche: (i) an exclusive, worldwide license under certain Company intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from each of the Company’s existing P-BCMA-ALLO1 and P-CD19CD20-ALLO1 programs (each a “Tier 1 Program”); (ii) an exclusive option to acquire an exclusive, worldwide license under certain Company intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from each of the Company’s existing P-BCMACD19-ALLO1 and P-CD70-ALLO1 programs (each, a “Tier 2 Program”); (iii) an exclusive license under certain Company intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from the up to six Collaboration Programs (as defined below) designated by Roche; (iv) an option for a non-exclusive, commercial license under certain limited Company intellectual property to develop, manufacture and commercialize certain Roche proprietary cell therapy products for up to three solid tumor targets to be identified by Roche (“Licensed Products”); and (v) the right of first offer for two (2) early-stage existing programs within hematologic malignancies. The Roche Collaboration Agreement became effective in September 2022 upon expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

For each Tier 1 Program, the Company will perform development activities through a Phase 1 dose escalation clinical trial, and Roche is obligated to reimburse a specified percentage of certain costs incurred by the Company in its performance of such activities, up to a specified reimbursement cap for each Tier 1 Program. For Tier 1 Program activities beyond the specified reimbursement cap, Roche is obligated to reimburse all costs incurred for the program. For each Tier 2 Program, the Company will perform research and development activities either through selection of a development candidate for Investigational New Drug Application (“IND”)-enabling studies or, subject to Roche’s election and payment of an option maintenance fee, through completion of a Phase 1 dose escalation clinical trial. In addition, for each Tier 2 Program for which Roche exercises its option for an exclusive license, Roche is obligated to pay an option exercise fee. For each Tier 1 Program and Tier 2 Program, the Company will perform manufacturing activities until the completion of a technology transfer to Roche.

The parties are conducting an initial two-year research program to explore and preclinically test a specified number of agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T cell therapies. Subject to Roche’s election and payment of a specified fee, the parties would subsequently conduct a second research program of 18 months under which the parties could extend the existing work being performed under the initial term, and/or would explore and preclinically test a specified number of additional agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T therapies. Roche may designate up to six heme malignancy-directed, allogeneic CAR-T programs from the two research programs, for each of which the Company will perform research and development activities through selection of a development candidate for IND-enabling activities (each, a “Collaboration Program”). Upon its designation of each Collaboration Program, Roche is obligated to pay a designation fee. After the Company’s completion of lead optimization activities for a Collaboration Program, Roche may elect to transition such program to Roche with a payment to the Company or terminate it. Alternatively, Roche may elect, for a limited number of Collaboration Programs, to have the Company conduct certain additional development and manufacturing activities through the completion of a Phase 1 dose escalation clinical trial, in which case Roche will pay certain milestones and reimburse a specified percentage of the Company’s costs incurred in connection with such development and manufacturing activities. For each Collaboration Program, the Company will perform manufacturing activities until the completion of a technology transfer to Roche.

In consideration for the rights granted to Roche under the Roche Collaboration Agreement, the Company received an upfront payment of $110.0 million. In addition, subject to Roche exercising its Tier 2 Program options, designating Collaboration Programs, and exercising its option for the Licensed Products commercial license and further contingent on, among other things, achieving specified objectives, the Company is eligible to receive up to (i) $1.5 billion in aggregate payments for Tier 1 Programs comprised of research funding, feasibility fees and $1.4 billion in development, regulatory and net sales milestones, (ii) $1.1 billion in aggregate payments for Tier 2 Programs comprised of option exercise and maintenance fees and $1.0 billion in development, regulatory and net sales milestones, (iii) $2.9 billion in aggregate payments for the Collaboration Programs comprised of certain reimbursements, fees and milestone payments; and (iv) $415.0 million in payments for the Licensed Products comprised of certain reimbursements, fees and milestone payments.

The Company is further entitled to receive, on a product-by-product basis, tiered royalty payments in the mid-single to low double digits on net sales of products from the Tier 1 Programs, optioned Tier 2 Programs and Collaboration Programs and in the low to mid-single digits for Licensed Products, in each case, subject to certain customary reductions and offsets. Royalties will be payable, on a product-by-product and country-by-country basis, until the latest of the expiration of the licensed patents covering such product in such country or ten years from first commercial sale of such product in such country.

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The Roche Collaboration Agreement will continue in effect on a product-by-product and country-to-country basis until there is no remaining royalty or other payment obligations. The Roche Collaboration Agreement includes standard termination provisions, including for material breach or insolvency and for Roche’s convenience. Certain of these termination rights can be exercised with respect to a particular product or license, as well as with respect to the entire Roche Collaboration Agreement.

Effective November 7, 2023, the Roche Collaboration Agreement was amended to, among other things: (i) reallocate certain existing manufacturing-related fees payable to the Company by Roche to add new manufacturing process development and implementation transfer fees for each of our existing Tier 1 Programs; and (ii) reallocate amounts in certain development milestone payments payable to us by Roche at market rates for each Tier 1 Program. The amendment also provided for the ability for the existing two-year research program to be extended for an additional 18 months with the payment of a $15.0 million milestone.

Effective August 14, 2024, the Roche Collaboration Agreement was amended to include additional activities to be conducted by the Company. The additional activities will be funded by Roche with an initial scope that covers expanded Tier 1 Program activities. In addition, the consideration of certain of the Company’s existing performance obligations related to the Tier 1 Programs were modified.

Revenue Recognition

At contract inception, the Company has identified six performance obligations under the Roche Collaboration Agreement: (i) licenses associated with the Tier 1 Programs, (ii) research and development efforts for the Tier 1 Programs, (iii) clinical drug supply for the Tier 1 Programs, (iv) manufacturing process development program for the Tier 1 Programs, (v) research and development efforts for the Tier 2 Programs, and (vi) research and development efforts for the Collaboration Programs. The Company concluded that Roche’s options within the Roche Collaboration Agreement do not represent material rights and are not considered performance obligations as they do not contain a significant and incremental discount. The licenses associated with the Tier 1 Programs were delivered at the beginning of the agreement term and deemed capable of being distinct as the Company concluded that Roche has the knowledge and capabilities to continue development work and fully utilize the licenses without the Company’s involvement.

In order to determine the transaction price, the Company evaluated all the payments to be received during the term of the Roche Collaboration Agreement. Certain milestones and additional fees were considered variable consideration, which were not included in the initial transaction price based on the most likely amount method. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. The Company determined that the transaction price at the inception of the Roche Collaboration Agreement was $185.0 million, which consists of the upfront payment of $110.0 million, future research funding for the Tier 1 Programs of $40.0 million and a $35.0 million milestone achieved in September 2022 for the Tier 1 Programs. In addition, the Company achieved incremental developmental milestones aggregating to $65.0 million through September 30, 2024, of which, $20.0 million was achieved in the third quarter of 2024. In accordance with ASC 606, the Company determined that the achieved milestones represented an increase in the initial transaction price in the form of the receipt of variable consideration that was previously constrained. The Company recognized revenue associated with these milestones in an amount equal to the proportional percentage of the actual costs incurred under the related program since its inception as a percentage of the total costs expected to be incurred over the expected term of the program. The remaining unrecognized revenue associated with these milestones is included within deferred revenue and is being recognized as revenue over the expected term of the related program. All other future potential milestone payments were excluded from the estimated total transaction price as they were considered constrained until the underlying event is attained. The Company also earns variable consideration attributed to development cost reimbursement associated with some of the Company’s research and development efforts. Variable consideration related to development cost reimbursement increases the transaction price for the associated performance obligations and is recognized as the underlying services are provided.

The performance obligation associated with the licenses for the Tier 1 Programs was satisfied as of the effective date of the Roche Collaboration Agreement. All other performance obligations will be recognized on a proportional basis as the underlying services are provided based on actual costs incurred as a percentage of total estimated costs. The Company determined that the cost-based input method most faithfully depicts the pattern in which these performance obligations are satisfied. Any cumulative effect of revisions to estimated costs to complete the Company’s performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. This approach requires the Company to use significant judgment and make estimates of future expenditures. If the Company’s estimates or judgments change over the course of the collaboration, they may affect the timing and amount of revenue that it recognizes in the current and future periods. In connection with the August 14, 2024 amendment to the Roche Collaboration Agreement, the Company adjusted the transaction price based on estimated variable consideration of the performance obligations to account for a change in pricing associated with one component of the Tier 1 Program activities. This resulted in an increase in proportional cumulative performance of the underlying performance obligation and recognition of an additional $15.2 million in revenue in the third quarter of 2024.

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Astellas

Terms of the Agreement

In April 2024, the Company and Xyphos Biosciences, Inc. (“Xyphos”), a wholly-owned subsidiary of Astellas Pharma Inc., entered into a collaboration and license agreement (the “Astellas Collaboration Agreement”), pursuant to which the Company granted to Xyphos (i) an exclusive license under certain Company intellectual property to conduct activities under two research plans, to create one Company-developed CAR-T construct to form the basis of two convertibleCAR® product candidates targeting solid tumors, which will be generated by using both parties’ platform technology (each a “Research Product”), where each Research Product will bind to a human tumor-associated antigen, and may also bind to a human antigen associated with a tumor microenvironment, (ii) an exclusive license under certain Company intellectual property after certain conditions are satisfied to develop, and commercialize up to two Research Products that have been designated as licensed products following receipt of the applicable IND-enabling data package, and (iii) after certain conditions are satisfied, an exclusive license under certain Company intellectual property to manufacture the products once manufacturing technology transfer has been completed.

For each research plan, the Company will perform research and development activities through the generation of an IND-enabling data package and Xyphos is obligated to fully reimburse the Company for full-time equivalent costs and expenses incurred by the Company in its performance of certain activities, up to an agreed annual cap. Xyphos may request that the Company transfer the manufacturing process for a product to Xyphos, or that, subject to the payment of a fee, the Company manufacture the Allo-T Cells forming part of such product for use in the first Phase 1 trial of such product.

In consideration for the rights granted to Xyphos under the Astellas Collaboration Agreement, the Company received an upfront payment of $50.0 million, $6.0 million of which was advanced for the Company’s costs and expenses for its research and development activities. In addition, the Company could also receive up to $550.0 million in potential development and sales milestone payments and contingency payments. The Company is further entitled to receive, on a product-by-product basis, tiered royalty payments up to the low teens as a percentage of net sales of licensed products. Royalties will be payable, on a product-by-product basis, during the period commencing on the first commercial sale of a product in a country until the latest of (a) the expiration of the licensed patents covering such product in such country, (b) the expiration of regulatory exclusivity for such product in such country and (c) a certain period of time following such first commercial sale of such product in such country.

The Astellas Collaboration Agreement will continue in effect on a product-by-product basis until there are no remaining royalty or other payment obligations for each such product. The Astellas Collaboration Agreement includes standard termination provisions, including for material breach or insolvency and for Xyphos’s convenience. Certain of these termination rights can be exercised with respect to a particular country, licensed product, or research program, as well as with respect to the entire Astellas Collaboration Agreement.

Revenue Recognition

At contract inception, the Company has identified six distinct performance obligations under the Astellas Collaboration Agreement: (i) a material right for the option to obtain a commercial license for the first product candidate, (ii) a material right for the option to obtain a commercial license for the second product candidate, (iii) research and development efforts for the first product candidate, (iv) research and development efforts for the second product candidate, (v) process development and other target agnostic activities to support production of cell manufacturing, and (vi) manufacturing of both product candidates during the research term.

In order to determine the transaction price, the Company evaluated all the payments to be received during the term of the Astellas Collaboration Agreement. The development and sales milestone payments and certain payments were considered variable consideration and were not included in the initial transaction price based on the most likely amount method. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. The Company determined that the transaction price at the inception of the Astellas Collaboration Agreement was $63.8 million, which consists of the upfront payment of $50.0 million, which includes the $6.0 million advanced for the Company's costs and expenses for its research and development activities, as well as estimated incremental research and development costs over the duration of the research term of $13.8 million to be reimbursed by Astellas. As a practical alternative to estimating the standalone selling price when the goods or services are both (i) similar to the original goods and services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocated the total amount of variable consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.

In assessing whether the options under the Astellas Collaboration Agreement represent material rights, the Company considered if there was additional consideration the Company would be entitled to upon the option exercise and the standalone selling price of the underlying goods and services. For the material rights identified as performance obligations above, the Company concluded that each

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of the options to obtain commercial licenses provided Astellas with a discount that it otherwise would not have received without entering into the Astellas Collaboration Agreement.

The material rights for the commercial licenses will be recognized upon the first to occur: once the licenses are exercised or once the rights expire, which is estimated to occur at the end of the research term. The remaining performance obligations will be recognized on a proportionate basis as the underlying services are provided based on actual costs incurred as a percentage of total estimated costs. The Company determined that the cost-based input method for these performance obligations most faithfully depicts the pattern in which these performance obligations are satisfied. Any cumulative effect of revisions to estimated costs to complete the Company’s performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. This approach requires the Company to use significant judgment and make estimates of future expenditures. If the Company’s estimates or judgments change over the course of the collaboration, they may affect the timing and amount of revenue that it recognizes in the current and future periods.

Takeda

In October 2021, the Company entered into a collaboration and license agreement (the “Takeda Collaboration Agreement”) with Takeda Pharmaceuticals USA, Inc. (“Takeda”), pursuant to which the Company granted to Takeda a worldwide exclusive license under the Company’s certain platform technologies including transposon-based, Cas-CLOVER, biodegradable DNA and RNA nanoparticle delivery technology and other proprietary genetic engineering platforms to research, develop, manufacture and commercialize gene therapy products for certain indications. Under the Takeda Collaboration Agreement, the Company received an upfront payment of $45.0 million and R&D reimbursement payments during the term of the agreement.

On May 31, 2023, the Company received written notice from Takeda of its election to terminate the Takeda Collaboration Agreement, effective July 30, 2023 (the “Termination Date”). Until the Termination Date, the parties performed their respective obligations under the Collaboration Agreement and upon the Termination Date, the Company’s exclusivity obligations under the Collaboration Agreement terminated. In addition, the licenses granted to Takeda by the Company, and the licenses granted to the Company by Takeda to perform research activities under the Collaboration Agreement terminated.

Deferred Revenue Reconciliation

While the Company’s entry into the Astellas Strategic Rights Letter was a strategic investment, for purposes of recognizing the remaining amount, it has been determined to be revenue, and as such, reference to remaining deferred revenue for these agreements is included in the following table. There were no contract assets as of September 30, 2024 related to the Roche Collaboration Agreement, Takeda Collaboration Agreement, Astellas Strategic Rights Letter, or Astellas Collaboration Agreement. A contract asset of $30.0 million for the Roche Collaboration Agreement was netted against deferred revenue for the year ended December 31, 2023. There were no contract assets as of December 31, 2023 related to the Takeda Collaboration Agreement or Astellas Strategic Rights Letter.

A reconciliation of the closing balance of deferred revenue related to the agreements is as follows (in thousands):


	Roche Collaboration Agreement			Takeda Collaboration Agreement			Astellas Strategic Rights Letter			Astellas Collaboration Agreement			Total
Balance as of December 31, 2022	$	31,749		$	9,307		$	—		$	—		$	41,056
Amounts received/invoiced		30,741			5,111			35,583			—			71,435
Revenue recognized		(50,285	)		(14,418	)		—			—			(64,703	)
Balance as of December 31, 2023	$	12,205		$	—		$	35,583		$	—		$	47,788
Amounts received/invoiced		113,750			—			—			50,000			163,750
Revenue recognized		(100,975	)		—			(23,722	)		(1,166	)		(125,863	)
Balance as of September 30, 2024	$	24,980		$	—		$	11,861		$	48,834		$	85,675

Note 8. California Institute of Regenerative Medicine Award

The Company has been awarded funding from the California Institute of Regenerative Medicine (“CIRM”) to develop certain internal programs. Under the terms of the funding, both CIRM and the Company have co-funded specified programs, under which funding is provided in developmental milestones determined as a part of the award. The Company is obligated to share potential future revenues for the related programs with CIRM. The percentage of revenues due to CIRM in the future is dependent on the amount of

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the award received and whether revenue is generated from product sales or through license fees. The maximum revenue sharing amount the Company may be required to pay to CIRM is equal to nine times the total amount awarded and paid to the Company. As an alternative to revenue sharing, the Company has the option to convert any award to a loan, which such option the Company must exercise on or before ten business days after the U.S. Food and Drug Administration (“FDA”) notifies the Company that it has accepted the Company’s application for marketing authorization. In the event the Company exercises its right to convert any award to a loan, it would be obligated to repay the loan within ten business days of making such election. Repayment amounts due to CIRM vary dependent on when the award is converted to a loan, ranging from 60% of the award granted to the full amount received plus interest at the rate of the three-month LIBOR rate plus 10% per annum. Since the Company may be required to repay some or all of the amounts awarded by CIRM, the Company accounts for this award as a liability as the Company’s intention is to convert the award into a loan. Given the uncertainty in amounts due upon repayment, the Company has recorded amounts received without any discount or interest recorded, upon determination of amounts that would become due, the Company will adjust accordingly.

In September 2018, the Company was granted an award in the amount of $4.0 million from CIRM to support the Company’s preclinical studies for its P-PSMA-101 program. The Company received the full amount of the award based on achievement of specific developmental milestones. In the third quarter of 2023, the Company decided not to pursue additional clinical or other development activities of the P-PSMA-101 program, which resulted in write off of the amount previously included in the deferred CIRM grant liability as the Company no longer intends to repay the award and which amount is included in other income in the accompanying consolidated statement of operations and comprehensive loss.

Note 9. Term Debt

In 2017, the Company entered into a loan and security agreement with Oxford Finance LLC (“Oxford”), which was subsequently amended (“Amended Loan Agreement”), pursuant to which the Company borrowed a total amount of $30.0 million.

In February 2022, the Company entered into a new Loan and Security Agreement (“2022 Loan Agreement”) with Oxford. Pursuant to the terms of the 2022 Loan Agreement, the Company borrowed $60.0 million in term loans (the “Term Loans”), of which $31.6 million was used to repay the balance outstanding under the Amended Loan Agreement, including $0.2 million of accrued interest. Under the 2022 Loan Agreement the initial interest-only period was through April 1, 2025, followed by 23 equal monthly payments of principal and applicable interest. In September 2022, a qualifying equity event, as defined in the 2022 Loan Agreement, was achieved which extended the interest-only period through April 1, 2026, followed by 11 equal monthly payments of principal and applicable interest. As a result, all amounts outstanding under the 2022 Loan Agreement will mature on February 1, 2027 (the “Maturity Date”). In connection with the repayment of the balance outstanding under the Amended Loan Agreement, the Company incurred amendment and final payment fees of $1.5 million previously due on the earlier of (i) the maturity date, (ii) acceleration of any Amended Loan Agreement loans, or (iii) the prepayment of any Amended Loan Agreement loans.

The Company accounted for this amendment as debt modification in accordance with ASC Topic 470, Debt because the modification was not considered substantial.

The balance outstanding under the 2022 Loan Agreement initially bore interest at a floating per annum rate equal to 7.83% plus the greater of (a) the 30-day U.S. Dollar (USD) LIBOR rate and (b) 0.11%. The 2022 Loan Agreement included a provision addressing replacement of LIBOR with an alternate benchmark rate, when LIBOR was phased out in June 2023. Effective July 1, 2023, the balance outstanding under the 2022 Loan Agreement bears interest at a floating per annum rate equal to the greater of (a) 7.94% and (b) the sum of (i) the 1-Month CME Term Secured Overnight Financing Rate (“SOFR”) on the last business day of the month that immediately precedes the month in which the interest will accrue, (ii) 0.10% and (iii) 7.83%. The interest rate applicable to the Term Loans as of September 30, 2024 was 13.13% per annum. The Company is required to make a final payment fee of 7.5% of the principal balance outstanding, payable on the earlier of (i) the Maturity Date, (ii) acceleration of any Term Loan, or (iii) the prepayment of the Term Loan. As of September 30, 2024, there was $60.0 million of the principal balance outstanding under the Term Loans. In connection with the Amended Loan Agreement, the Company previously incurred debt issuance costs of $1.5 million, which have been recorded as a debt discount and are being accreted to interest expense over the term of the Term Loans. Interest on the Term Loans, consisting of the stated interest rate, final payment fee and amortization of the discount, is being recognized under the effective interest method using a rate of 14.61%. As of September 30, 2024, the balance of the unamortized debt discount was $1.1 million. The balance of the accrued final payment fee was $3.0 million as of September 30, 2024 and is presented within other long-term liabilities in the accompanying condensed consolidated balance sheet.

The Company has an option to repay the outstanding debt under the 2022 Loan Agreement at any time in increments of $5.0 million, with no prepayment penalty.

The Company may use the proceeds from the Term Loans solely for its working capital requirements and to fund its general business operations. The Company’s obligations under the 2022 Loan Agreement are secured by a first priority security interest in

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substantially all of its current and future assets, other than its intellectual property. In addition, the Company has also agreed not to encumber its intellectual property assets, except as permitted by the 2022 Loan Agreement. While any amounts are outstanding under the 2022 Loan Agreement, the Company is subject to a number of affirmative and restrictive covenants, including covenants regarding dispositions of property, business combinations or acquisitions, among other customary covenants. The Company is also restricted from declaring dividends or making other distributions or payments on its capital stock in excess of $0.3 million per calendar year, subject to limited exceptions. As of September 30, 2024, the Company was in compliance with all covenants under the 2022 Loan Agreement.

Note 10. Stockholders’ Equity

Authorized Shares

In connection with the completion of the Company’s initial public offering in July 2020, the Company amended its certificate of incorporation to authorize 250,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.0001 per share, that may be issued from time to time by the Company’s board of directors in one or more series. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors. Since the Company’s inception, there have been no dividends declared.

Warrants

Pursuant to the Amended Loan Agreement, the Company issued Oxford (i) in 2017, a warrant to purchase 93,518 shares of common stock at an exercise price of $4.28 per share, which will expire in 2027 unless earlier exercised and (ii) in 2018 and 2019, warrants to purchase an aggregate of 27,604 shares of common stock at an exercise price of $7.25 per share, which will expire in 2028 and 2029, respectively, unless earlier exercised.

Sale of Common Stock

On August 4, 2023, the Company entered into the Securities Purchase Agreement with Astellas, pursuant to which the Company agreed to issue and sell to Astellas in the Private Placement an aggregate of 8,333,333 shares of common stock at a purchase price of $3.00 per Share, for aggregate gross proceeds of $25.0 million. The Private Placement closed on August 7, 2023. The Company recorded the issuance of common stock at its estimated fair value on the date of issuance of $14.4 million, which reflects a DLOM of the shares. The DLOM was applied due to the inability to trade the shares until they are registered. The issuance of the equity shares was recorded upon the delivery of the underlying shares, with the associated fair value recorded within equity on the Company’s condensed consolidated balance sheets.

At the Market Facility

In August 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement, which was amended and restated in August 2024 (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) to sell shares of common stock, from time to time, through an “at the market offering” program having an aggregate offering price of up to $85.0 million through which Cantor would act as sales agent. During the nine months ended September 30, 2024, the Company did not issue any shares of common stock under the “at the market offering” program. During the nine months ended September 30, 2023, the Company issued and sold an aggregate of 119,000 shares of common stock under the “at the market offering” program at a weighted average price of $8.04 per share for net proceeds of approximately $0.9 million.

Note 11. Stock-Based Compensation

In July 2020, the Company’s board of directors and stockholders approved and adopted the Company’s 2020 Equity Incentive Plan (the “2020 Plan”). Under the 2020 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other stock or cash-based awards to individuals who are current employees, officers, directors or consultants of the Company. A total of 11,183,476 shares of common stock were approved to be initially reserved for issuance under the 2020 Plan. The number of shares that remained available for issuance under the Company’s previous equity incentive plan as of the effective date of the 2020 Plan and shares subject to outstanding awards under the Company’s previous equity incentive plan as of the effective date of the 2020 Plan that are subsequently canceled, forfeited or repurchased by the Company are added to the shares reserved under the 2020 Plan. The number of shares of common stock available for issuance under the 2020 Plan is automatically increased on the first day of each calendar year during the ten-year term of the 2020 Plan, beginning with January 1, 2021 and ending with January 1, 2030, by an amount equal to 5% of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors.

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In February 2022, the Company’s board of directors approved and adopted the 2022 Inducement Plan (the “Inducement Plan”). Under the Inducement Plan, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other awards to individuals not previously employees or non-employee directors of the Company, as an inducement toward entering into employment with the Company. Under the Inducement Plan approved in February 2022, the maximum number of shares of common stock initially approved to be issued was 2,000,000 shares. In December 2023, the Compensation Committee of the Company’s board of directors approved an amendment to the Inducement Plan which increased the pool to a maximum of 3,517,105 shares.

Stock Options

The following is a summary of the Company’s stock option activity for the nine months ended September 30, 2024:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (thousands)
Balance at January 1, 2024		14,909,912		$	6.84
Granted		3,910,132			3.80
Exercised		(39,476	)		2.74
Forfeited/Cancelled		(1,259,350	)		5.46
Balance at September 30, 2024		17,521,218		$	6.27		7.12	$	696
Options vested and expected to vest as of September 30, 2024		17,521,218		$	6.27		7.12	$	696
Options vested and exercisable as of September 30, 2024		10,312,322		$	7.55		6.08	$	500

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2024 and 2023 was $2.75 and $3.42, respectively. The aggregate intrinsic value of options exercised was $35 thousand and $0.1 million during each of the nine months ended September 30, 2024 and 2023, respectively, determined as of the date of exercise. The Company received $0.1 million in cash from options exercised during each of the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, total unrecognized compensation cost related to stock options was $20.1 million, and the weighted-average period over which this cost is expected to be recognized was approximately 2.5 years.

The fair value of options granted is estimated at the date of grant using the Black-Scholes option pricing model. Forfeitures are accounted for as incurred as a reversal of any share-based compensation expense related to options that will not vest. The assumptions that the Company used to determine the fair value of options granted to employees, non-employees and directors were as follows:


	Nine Months Ended September 30,
	2024	2023
Risk-free interest rate	4.0%	4.0%
Expected volatility	80.8%	82.6%
Expected term (years)	5.7	6.0
Dividend yield	—	—

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Restricted Stock Units

The following is a summary of the Company’s restricted stock unit (“RSU”) activity for the nine months ended September 30, 2024:


	Shares			Weighted Average Grant Date Fair Value
Balance at January 1, 2024		4,555,099		$	4.35
Granted		2,808,838			3.51
Vested		(1,318,974	)		4.30
Forfeited/Cancelled		(471,434	)		4.11
Balance at September 30, 2024		5,573,529		$	3.96

RSU awards are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. The RSUs granted to employees and non-employee directors vest up to four years from the grant date. The grant-date fair value is recognized as compensation expense over the vesting period. As of September 30, 2024, total unrecognized compensation cost related to RSUs was $16.8 million, and the weighted-average period over which this cost is expected to be recognized was approximately 2.7 years.

2020 Employee Stock Purchase Plan

In July 2020, the Company’s board of directors and stockholders approved and adopted the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective as of the pricing of the Company’s initial public offering. A total of 615,000 shares of common stock were approved to be initially reserved for issuance under the ESPP. The number of shares of common stock available for issuance under the ESPP is automatically increased on the first day of each calendar year during the first ten-years of the term of the ESPP, beginning with January 1, 2021 and ending with January 1, 2030, by an amount equal to the lessor of (i) 1% of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year, (ii) 1,230,000 shares of common stock or (iii) such lesser amount as determined by the Company’s board of directors. Under the 2020 ESPP, substantially all employees can elect to have up to 15% of their annual compensation withheld to purchase up to 3,000 shares of common stock per purchase period, subject to certain limitations. The shares of common stock can be purchased over an offering period of six months and at a price of 85% of the fair market value per share of common stock on the first trading day of the applicable offering period or on the exercise date of the applicable offering period, whichever is less. Under applicable accounting guidance, the 2020 ESPP is classified as a compensatory plan. During the nine months ended September 30, 2024, a total of 568,023 shares were purchased by the Company’s employees under the 2020 ESPP resulting in net proceeds of $1.2 million.

The Company uses the Black-Scholes pricing model to estimate the fair value of the purchase rights issued under the ESPP on each offering date. The assumptions that the Company used to determine the fair value of the purchase rights issued to employees were as follows:


	Nine Months Ended September 30,
	2024	2023
Risk-free interest rate	4.9%	5.3%
Expected volatility	91.0%	87.1%
Expected term (years)	0.5	0.5
Dividend yield	—	—

The Company recorded total stock-based compensation expense related to stock options, RSUs and the ESPP in the following expense categories of the accompanying condensed consolidated statements of operations and comprehensive income (loss) (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	3,160	$	3,097	$	9,327	$	9,258
General and administrative		1,799		2,020		8,644		8,813
Total stock-based compensation expense	$	4,959	$	5,117	$	17,971	$	18,071

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Note 12. Commitments and Contingencies

Operating Leases

As of September 30, 2024, the Company had operating leases consisting of approximately 110,000 square feet of manufacturing, laboratory and office space in San Diego, California, including 87,000 square feet under a lease that expires on December 31, 2029, which contains a clinical manufacturing facility adjacent to office and laboratory space. The lease agreements include two options to extend the term for a period of 5 years each.

In October 2021, the Company entered into a sublease agreement for a facility in San Diego, California consisting of approximately 23,000 square feet to be used for research and administrative activities. The lease term commenced in March 2022 and will expire on December 31, 2025.

During the nine months ended September 30, 2024 and 2023, the Company recognized $4.3 million and $4.4 million, respectively, of operating lease expense. During the nine months ended September 30, 2024, the Company paid $4.6 million for its operating leases. As of September 30, 2024, the weighted-average remaining lease term and weighted-average discount rate for operating leases were 5.0 years and 8.9%, respectively.

As of September 30, 2024, maturities of lease liabilities were as follows (in thousands):


Year ending December 31,
2024 (remaining three months)	$	1,564
2025		6,374
2026		5,107
2027		5,260
2028		5,418
Thereafter		5,581
Total future lease payments		29,304
Imputed interest		(5,485	)
Total lease liability balance		23,819
Less current portion of lease liability		6,085
Lease liability, net of current portion	$	17,734

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and certain of its executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Legal Contingencies

In the ordinary course of business, the Company may face claims brought by third parties against the Company. The Company believes that there are currently no lawsuits, threats of litigation, or asserted or unasserted claims pending that could, individually or in the aggregate, have a material adverse effect on the Company’s results of operations or financial condition.

Note 13. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options and from purchases under the ESPP, as well as from the possible exercise of the outstanding warrants.

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The Company’s potentially dilutive securities, which include warrants to purchase common stock, common stock options, restricted stock units and common stock from the ESPP, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net income (loss) per share attributable to common stockholders is the same.

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023			2024			2023
Numerator:
Net income (loss)	$	20,235	$	(31,778	)	$	(35,410	)	$	(98,081	)
Net income (loss) attributable to common stockholders	$	20,235	$	(31,778	)	$	(35,410	)	$	(98,081	)
Denominator:
Denominator for basic net income (loss) per share - weighted-average common stock outstanding		97,160,467		91,898,347			96,716,649			88,321,943
Effect of dilutive securities:
Common stock options		194,627		—			—			—
RSUs		847,279		—			—			—
ESPP shares		17,574		—			—			—
Denominator for diluted net income (loss) per share - adjusted weighted-average common stock outstanding		98,219,947		91,898,347			96,716,649			88,321,943
Basic net income (loss) per share	$	0.21	$	(0.35	)	$	(0.37	)	$	(1.11	)
Diluted net income (loss) per share	$	0.21	$	(0.35	)	$	(0.37	)	$	(1.11	)

The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:


	Nine Months Ended September 30,
	2024		2023
Outstanding stock options and RSUs		23,094,747		19,837,783
Warrants to purchase common stock		121,122		121,122
ESPP Shares		32,883		3,583
		23,248,752		19,962,488

Note 14. Income Taxes

The Company follows guidance under ASC Topic 740-270 Income Taxes, which requires that an estimated annual effective tax rate is applied to year-to-date ordinary income (loss). At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year. The tax effect of discrete items is recorded in the quarter in which the discrete events occur.

The Company recorded income tax expense of $43 thousand for the three and nine months ended September 30, 2024, yielding an effective tax rate of 0.2% and (0.1)% for the three and nine months ended September 30, 2024, respectively. These rates differed from the federal tax rate of 21% primarily due to the Company’s inability to benefit from its financial reporting loss for income tax purposes, as well as the limitation on the Company’s use of previously unbenefited tax losses and credits carried forward from prior years to fully offset current year taxable income resulting from the requirement to capitalize research and development costs for federal income tax purposes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, or 2023 Annual Report, as filed with the Securities and Exchange Commission, or SEC. Operating results are not necessarily indicative of results that may occur in future periods. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

We are a clinical-stage allogeneic cell therapy and genetic medicines company advancing differentiated non-viral treatments for patients with cancer, autoimmune and rare diseases. Since our inception, our operations have focused on organizing and staffing our company, business planning, raising capital, in-licensing, developing and acquiring intellectual property rights and establishing and protecting our intellectual property portfolio, developing our genetic engineering technologies, identifying potential product candidates and undertaking research and development and manufacturing activities, including preclinical studies and clinical trials of our product candidates, and engaging in strategic transactions. We do not have any product candidates approved for sale and have not generated any revenue from product sales.

We have discovered and are developing a broad portfolio of product candidates in a variety of indications based on our core proprietary platforms, including our non-viral, transposon-based DNA delivery system, Cas-CLOVER Site-specific Gene Editing System and nanoparticle-based gene delivery technologies. Our core platform technologies have utility, either alone or in combination, across many cell and gene therapeutic modalities and enable us to engineer our portfolio of product candidates that are designed to overcome the primary limitations of current generation cell and gene therapeutics.

Within cell therapy, we believe our technologies allow us to create product candidates with engineered cells that engraft in the patient’s body and drive lasting durable responses that may have the capacity to result in single treatment cures. Our CAR-T therapy portfolio consists of allogeneic, or off-the-shelf, product candidates. We are advancing a broad pipeline and have multiple CAR-T product candidates in the clinical phase in both solid tumor and hematological oncology indications. Within genetic medicines, we believe our technologies have the potential to create a new class of therapies that can deliver long-term, stable gene expression that does not diminish over time and that may have the capacity to result in single treatment cures.

We manufacture these product candidates using our non-viral, transposon-based DNA delivery system. Our fully allogeneic CAR-T product candidates are developed using well-characterized cells derived from a healthy donor as starting material with the goal of enabling treatment of potentially hundreds of patients from a single manufacturing run. Doses are cryopreserved and stored at treatment centers for future off-the-shelf use. In addition, our allogeneic product candidates use our proprietary Cas-CLOVER site-Specific Gene Editing System to reduce or eliminate alloreactivity, as well as our booster molecule technology for manufacturing scalability.

Our most advanced internal solid tumor programs are:

•

P-MUC1C-ALLO1, which is a fully allogeneic CAR-T product candidate for multiple solid tumor indications. We believe P-MUC1C-ALLO1 has the potential to treat a wide range of solid tumors derived from epithelial cells, such as breast, colorectal, lung, ovarian, pancreatic and renal cancers, as well as other cancers expressing a cancer-specific form of the Mucin 1 protein, or MUC1-C. We are currently evaluating P-MUC1C-ALLO1 in a Phase 1 clinical trial, and we shared an initial clinical data update at the European Society for Medical Oncology Immuno-Oncology 2022 Annual Congress, or ESMO I-O, in December 2022. We recently presented a poster at American Association for Cancer Research, or AACR, Annual Meeting in April 2024, focused on the correlation of higher lymphodepletion and cell expansion. We anticipate sharing a clinical update at an appropriate forum in the fourth quarter of 2024.

•

P-PSMA-ALLO1, which is a fully allogeneic CAR-T product candidate targeting prostate-specific membrane antigen, or PSMA, being developed to treat patients with metastatic castrate-resistant prostate cancer, or mCRPC. We previously evaluated P-PSMA-101, a first generation autologous program, in a Phase 1 trial, however we made the strategic decision to stop further enrollment on that program and are using findings from the clinical trial to inform the next generation allogeneic version.

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Our most advanced hematological programs are:

•

P-BCMA-ALLO1, which is a fully allogeneic CAR-T product candidate targeting B-cell maturation antigen, or BCMA, being developed to treat relapsed/refractory multiple myeloma patients. In July 2022, we entered into a collaboration and license agreement, or the Roche Collaboration Agreement, with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., or, collectively Roche, pursuant to which P-BCMA-ALLO1 was exclusively licensed to Roche. Roche is responsible for all future development costs for P-BCMA-ALLO1 and will assume future development activities following the completion of the Phase 1 clinical trial. In March 2024, we announced that P-BCMA-ALLO1 received orphan drug designation from the U.S. Food and Drug Administration, or FDA. In addition, in September 2024 we announced that P-BCMA-ALLO1 received Regenerative Medicine Advanced Therapy, or RMAT, designation by the FDA. We shared an additional clinical update on this program at the International Myeloma Society, or IMS, 21st Annual Meeting in September 2024.

•

P-CD19CD20-ALLO1, which is a fully allogeneic CAR-T product candidate for B-cell hematological indications. This is our first Dual CAR program, which contains two fully functional CAR molecules to target cells that express at least one of the two intended targets. We believe that our ability to include two fully functional CAR molecules in a T cell could provide a competitive advantage compared to current therapies, including in B-cell malignancies that may have heterogeneous antigen expression, and that targeting both CD19 and CD20 has the potential to overcome the limitations of currently available CD19-directed CAR-T products where antigen escape has been observed as an important resistance mechanism. We recently initiated the Phase 1 trial for P-CD19CD20-ALLO1 in late 2023. P-CD19CD20-ALLO1 was exclusively licensed to Roche pursuant to the Roche Collaboration Agreement and Roche will be responsible for a majority of future development costs for P-CD19CD20-ALLO1 and will assume future development activities following the completion of the Phase 1 clinical trial. We plan to share a preclinical update in the fourth quarter of 2024 and initial clinical data from the trial in 2025, subject to coordination with Roche.

•

P-BCMACD19-ALLO1, which is a fully allogeneic, dual CAR-T product candidate targeting BCMA and CD19. It expresses two full length CAR molecules, as well as other genetic engineering improvements, to target cells that contain at least one of the two intended targets. We believe that our ability to include two fully functional CAR molecules in an early memory T cell could provide a competitive advantage in both safety and potency when compared to current therapies, including in hematological malignancies that may have heterogeneous antigen expression, and that targeting both BCMA and CD19 has the potential to improve depth and durability of response by eliminating any CD19-positive BCMA-negative myeloma precursor tumor B-cells. We believe that P-BCMACD19-ALLO1 also has potential for the treatment of autoimmune diseases. We are currently conducting IND-enabling activities for this program.

Our investigational genetic medicines were initially developed by utilizing our non-viral, transposon-based technology together with adeno-associated virus, or AAV, to overcome the major limitations of traditional AAV gene therapy. Given recent developments in our non-viral nanoparticle technology, we have transitioned our portfolio to a fully non-viral approach, freeing future product development in genetic medicines of AAV limitations. We believe that our approach can result in integration and long-term stable expression at potentially much lower doses than AAV technology, thus also conferring cost and tolerability benefits.

Our most advanced genetic medicines programs are:

•

P-KLKB1-101, which is an investigational liver-directed non-viral gene editing approach for the treatment of hereditary angioedema, or HAE. HAE is a rare, inherited disorder that results in the swelling of the limbs, intestinal tract, and airways, which can be both debilitating and life-threatening. We shared data highlighting durable disease correction and high fidelity in preclinical studies using our enhanced gene-relevant editing technology, Cas-CLOVER, at the American College of Allergy, Asthma & Immunology, or ACAAI, 2024 Annual Scientific Meeting in October 2024.

•

P-FVIII-101, which is a liver-directed gene insertion program combining transposon-based technology with our non-viral nanoparticle technology for the in vivo treatment of Hemophilia A. Hemophilia A is a hereditary disorder caused by a deficiency in Factor VIII, or FVIII, production resulting in excessive bleeding occurring either spontaneously or due to trauma. We shared preclinical data on this program demonstrating the potential to correct FVIII deficiency to near-normal levels in both juvenile and adult mouse models using our fully non-viral, whole gene insertion system at the ASGCT Annual Meeting in May 2024. We completed an INTERACT meeting for P-FVIII-101 with the FDA in September 2024, providing us with early engagement and communication with the FDA on the program, which we believe will support efficient development designed to be aligned with FDA standards.

We expect our expenses and losses to increase substantially for the foreseeable future as we continue our development of, and seek regulatory approvals for, our product candidates, including P-MUC1C-ALLO1, and begin to commercialize any approved products. We anticipate an overall increase in development costs as we continue to expand the number of product candidates in our pipeline and pursue clinical development of those candidates. To offset some of these increased development costs, the collaborations

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with Roche and Astellas include program reimbursements. We anticipate that our general and administrative expenses will increase as we increase our research and development activities, increase headcount, maintain compliance with Nasdaq listing rules and SEC requirements and continue to operate as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

We currently source our product candidates from our internal clinical good manufacturing practices, or GMP, manufacturing facility. We also work with a variety of suppliers to provide our manufacturing raw materials including media, DNA and RNA components. In the future, we may also build one or more commercial manufacturing facilities for any FDA approved product candidates.

Collaboration Agreements

Roche Collaboration Agreement

In July 2022, we entered into the Roche Collaboration Agreement with Roche, pursuant to which we granted to Roche: (i) an exclusive, worldwide license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from each of our existing P-BCMA-ALLO1 and P-CD19CD20-ALLO1 programs, or each, a Tier 1 Program; (ii) an exclusive option to acquire an exclusive, worldwide license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from our existing P-BCMACD19-ALLO1 and P-CD70-ALLO1 programs, or each, a Tier 2 Program; (iii) an exclusive license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from the up to six Collaboration Programs, as defined below, designated by Roche; (iv) an option for a non-exclusive, commercial license under certain limited intellectual property to develop, manufacture and commercialize certain Roche proprietary cell therapy products for up to three solid tumor targets to be identified by Roche, or Licensed Products; and (v) the right of first offer for two of our early-stage existing programs within hematologic malignancies.

For each Tier 1 Program, we will perform development activities through a Phase 1 dose escalation clinical trial, and Roche is obligated to reimburse a specified percentage of certain costs incurred by us in our performance of such activities, up to a specified reimbursement cap for each Tier 1 Program. For Tier 1 Program activities beyond the specified reimbursement cap, Roche is obligated to reimburse all costs incurred for the program. For each Tier 2 Program, we will perform research and development activities either through selection of a development candidate for IND-enabling studies or, subject to Roche’s election and payment of an option maintenance fee, through completion of a Phase 1 dose escalation clinical trial. In addition, for each Tier 2 Program for which Roche exercises its option for an exclusive license, Roche is obligated to pay us an option exercise fee. For each Tier 1 Program and Tier 2 Program, we will perform manufacturing activities until the completion of a technology transfer to Roche.

The parties are conducting an initial two-year research program to explore and preclinically test a specified number of agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T cell therapies. Subject to Roche’s election and payment of a fee, the parties would subsequently conduct a second research program of 18 months under which the parties could extend the existing work being performed under the initial term, and/or would explore and preclinically test a specified number of additional agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T therapies. Roche may designate up to six heme malignancy-directed, allogeneic CAR-T programs from the two research programs, for each of which we will perform research and development activities through selection of a development candidate for IND-enabling activities, or each, a Collaboration Program. Upon its designation of each Collaboration Program, Roche is obligated to pay a designation fee. After we complete lead optimization activities for a Collaboration Program, Roche may elect to transition such program to Roche with a payment to us or terminate it. Alternatively, Roche may elect, for a limited number of Collaboration Programs, to have us conduct certain additional development and manufacturing activities through the completion of a Phase 1 dose escalation clinical trial, in which case Roche will pay certain milestones and reimburse a specified percentage of our costs incurred in connection with such development and manufacturing activities. For each Collaboration Program, we will perform manufacturing activities until the completion of a technology transfer to Roche. In October 2024, Roche nominated a new allogeneic dual CAR-T candidate under the Collaboration Program, targeting known antigens expressed in hematologic malignancies, including multiple myeloma.

Under the Roche Collaboration Agreement, Roche paid an upfront payment to us of $110.0 million. Subject to Roche exercising its Tier 2 Program options, designating Collaboration Programs, and exercising its option for the Licensed Products commercial license and contingent on, among other things, the products from the Tier 1 Programs, optioned Tier 2 Programs and Collaboration Programs achieving specified development, regulatory, and net sales milestone events, we are eligible to receive certain reimbursements, fees and milestone payments, in the aggregate up to $6.0 billion, comprised of (i) $1.5 billion for the Tier 1 Programs; (ii) $1.1 billion for the Tier 2 Programs, (iii) $2.9 billion for the Collaboration Programs; and (iv) $415.0 million for the Licensed Products.

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We are further entitled to receive, on a product-by-product basis, tiered royalty payments in the mid-single to low double digits on net sales of products from the Tier 1 Programs, optioned Tier 2 Programs and Collaboration Programs and in the low to mid-single digits for Licensed Products, in each case, subject to certain customary reductions and offsets. Royalties will be payable, on a product-by-product and country-by-country basis, until the latest of the expiration of the licensed patents covering such product in such country or ten years from first commercial sale of such product in such country.

The Roche Collaboration Agreement became effective in September 2022 upon the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and will continue on a product-by-product and country-to-country basis until there is no remaining royalty or other payment obligations. The Roche Collaboration Agreement includes standard termination provisions, including for material breach or insolvency and for Roche’s convenience. Certain of these termination rights can be exercised with respect to a particular product or license, as well as with respect to the entire Roche Collaboration Agreement.

Effective November 7, 2023, the Roche Collaboration Agreement was amended to, among other things: (i) reallocate certain existing manufacturing-related fees payable to us by Roche to add new manufacturing process development and implementation transfer fees for each of our existing Tier 1 Programs; and (ii) reallocate amounts in certain development milestone payments payable to us by Roche at market rates for each Tier 1 Program. The amendment also provided for the ability for the existing two-year research program to be extended for an additional 18 months with the payment of a $15.0 million milestone.

Effective August 14, 2024, the Roche Collaboration Agreement was amended to include additional activities to be conducted by us. The additional activities will be funded by Roche with an initial scope that covers expanded Tier 1 Program activities. In addition, the consideration of certain of our existing performance obligations related to the Tier 1 Programs were modified.

Astellas Collaboration Agreement

In April 2024, we entered into a Collaboration and License Agreement, or the Astellas Collaboration Agreement, with Xyphos Biosciences, Inc., or Xyphos, a wholly-owned subsidiary of Astellas Pharma Inc., pursuant to which we granted to Xyphos (i) an exclusive license under certain of our intellectual property to conduct activities under two research plans, to create one CAR-T construct developed by us to form the basis of two convertibleCAR® product candidates targeting solid tumors, which will be generated by using both parties’ platform technology, each a Research Product, where each Research Product will bind to a human tumor-associated antigen, and may also bind to a human antigen associated with a tumor microenvironment, (ii) an exclusive license under certain of our intellectual property after certain conditions are satisfied to develop, and commercialize up to two Research Products that have been designated as licensed products following receipt of the applicable IND-enabling data package, and (iii) an exclusive license under certain of our intellectual property after certain conditions are satisfied to manufacture the products once manufacturing technology transfer has been completed.

For each research plan, we will perform research and development activities through the generation of an IND-enabling data package and Xyphos is obligated to fully reimburse us for full-time equivalent costs and expenses incurred by us in our performance of certain activities, up to an agreed annual cap. Xyphos may request that we transfer the manufacturing process for a product to Xyphos, or that, subject to the payment of a fee, we manufacture the Allo-T Cells forming part of such product for use in the first Phase 1 trial of such product.

In consideration for the rights granted to Xyphos under the Astellas Collaboration Agreement, we received an upfront payment of $50.0 million, $6.0 million of which was advanced for our costs and expenses for our research and development activities. In addition, we are eligible to receive up to $550.0 million in potential development and sales milestone payments and contingency payments. We are further entitled to receive, on a product-by-product basis, tiered royalty payments up to the low teens as a percentage of net sales of licensed products. Royalties will be payable, on a product-by-product, during the period commencing on the first commercial sale of a product in a country until the latest of (a) the expiration of the licensed patents covering such product in such country, (b) the expiration of regulatory exclusivity for such product in such country and (c) a certain period of time following such first commercial sale of such product in such country.

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Takeda Collaboration Agreement

In October 2021, we entered into a collaboration and license agreement, or the Takeda Collaboration Agreement, with Takeda Pharmaceuticals USA, Inc., or Takeda, under which we received an upfront payment of $45.0 million and R&D reimbursement payments throughout the agreement.

On May 31, 2023, we received written notice from Takeda of its election to terminate the Takeda Collaboration Agreement, effective July 30, 2023, or the Termination Date. Until the Termination Date, the parties performed their respective obligations under the Takeda Collaboration Agreement and upon the Termination Date, our exclusivity obligations under the Takeda Collaboration Agreement terminated. In addition, the licenses granted to Takeda by us, and the licenses granted to us by Takeda to perform research activities under the Takeda Collaboration Agreement terminated. We recognized $8.9 million of previously deferred revenue during the year ended December 31, 2023 in acknowledgement that these performance obligations are no longer required to be performed. Upon termination we were granted full rights to develop all previously licensed programs, including P-FVIII-101 and P-PAH-101. We may seek new strategic collaborations in genetic medicines that could include some or all of the programs previously included in the Takeda Collaboration Agreement and potentially additional internal programs, although we have no present commitments or agreements to enter into any such strategic collaborations.

Strategic Agreement

Astellas Strategic Agreement

In August 2023, we entered into a series of agreements with Astellas US, LLC, or Astellas. Pursuant to a Securities Purchase Agreement between us and Astellas, or the Securities Purchase Agreement, we agreed to issue and sell to Astellas in a private placement, or the Private Placement, an aggregate of 8,333,333 shares of common stock, par value $0.0001 per share, or the Shares, at a purchase price of $3.00 per Share, for aggregate gross proceeds of $25.0 million. We also entered into a Registration Rights Agreement with Astellas, or the Registration Rights Agreement, pursuant to which we registered the resale by Astellas of the Shares and granted Astellas certain other registration rights, including piggyback registration rights.

We also entered into a Strategic Rights Letter with Astellas, or the Astellas Strategic Rights Letter, pursuant to which we agreed to the following: (i) grant Astellas the right to an observer seat on our board of directors, any committee of our board of directors, and our scientific advisory board; (ii) for a period of 18 months, grant Astellas a right of notification with respect to a Change in Control (as defined in the Astellas Strategic Rights Letter); (iii) during the period beginning on August 7, 2023, the closing date of the Private Placement, or the Closing Date, and ending on the 12-month anniversary of the Closing Date, or the Exclusivity Period, not to (1) solicit, knowingly encourage, negotiate or otherwise enter into bona fide discussions about a Program Transaction (as defined below) with any third party, (2) provide access to any of our confidential information relating to P-MUC1C-ALLO1, our fully allogeneic CAR-T product candidate for multiple solid tumor indications, or the Program, for purposes of knowingly facilitating a Program Transaction, or (3) enter into any letter of intent, contract or other commitment for an exclusive or co-exclusive license or co-promote or co-marketing arrangement or granting of commercial rights to sell, promote or market one or more products of the Program for any indication in the world, or a Program Transaction; (iv) provide notice to Astellas (1) if we receive a bona fide proposal for a Change in Control transaction from a third party, unless such proposal is rejected by our board of directors, or (2) of the commencement of a process approved by our board of directors for a Change in Control, (3) if we receive a bona fide proposal for a Program Transaction from a third party unless the proposal is rejected by our board of directors, or a Program Transaction Proposal, or, (4) following the Exclusivity Period, the commencement of substantive discussions for a Program Transaction with a third party in connection with a process approved by our board of directors for a Program Transaction, or a Program Process. In connection with a notice related to (x) a Program Transaction Proposal, Astellas shall have a right of first refusal to provide a competing proposal that is in aggregate more favorable to us than the Program Transaction Proposal, and thereby have a right to negotiate exclusively a possible Program Transaction for a specified period and (y) a Program Process, Astellas shall have a right of first offer to negotiate a Program Transaction for a specified period before we engage with any third party in meaningful substantive discussions, in each case, in accordance with the procedures and subject to the conditions set forth in the Astellas Strategic Rights Letter.

As partial consideration for the rights granted to Astellas under the Astellas Strategic Rights Letter, Astellas paid us a one-time payment in the amount of $25.0 million, or the Upfront Payment. In connection with a Change in Control transaction or Program Transaction between us and Astellas, some, all or none of the Upfront Payment may be offset against payments owed by Astellas in a tiered basis to us dependent on certain factors set forth in the Astellas Strategic Rights Letter.

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In-License Agreements

Below is a summary of our key license agreements. For a more detailed description of these and our other license agreements, see the section titled “Business—In-License Agreements” and Note 12 to our annual consolidated financial statements included in our 2023 Annual Report.

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2017 Commercial License Agreement with TeneoBio, Inc. (a subsidiary of Amgen Inc.), or the 2017 TeneoBio Agreement, pursuant to which we obtained exclusive worldwide rights to use and develop pharmaceutical products comprising allogeneic T-cells expressing a CAR molecule containing certain heavy chain sequences provided by TeneoBio for the treatment of human disease. We use this heavy-chain-only binder in our P-BCMA-ALLO1 product candidate.

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2018 Commercial License Agreement with TeneoBio, Inc. (a subsidiary of Amgen Inc.), or the 2018 TeneoBio Agreement, for the development and use of TeneoBio’s human heavy-chain-only antibodies in CAR-T cell therapies. Under the terms of the 2018 TeneoBio Agreement, we have the option to obtain exclusive rights to research, develop and commercialize up to a certain number of targets, including but not limited to the binders used in our P-CD19CD20-ALLO1 and P-PSMA-ALLO1 product candidates.

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License Agreement with Xyone Therapeutics, Inc. (as successor-in-interest to Genus Oncology, LLC), or the Xyone Agreement, pursuant to which we obtained an exclusive worldwide license under certain patents and a non-exclusive worldwide license under certain know-how controlled by Xyone to research, develop and commercialize pharmaceutical products incorporating CAR cells expressing antibodies and derivatives thereof targeting MUC1-C, or a Xyone licensed product, and a non-exclusive worldwide license under certain patents and know-how controlled by Xyone to research, develop and commercialize companion diagnostics for the treatment, prevention and palliation of human diseases and conditions. We use a Xyone antibody or derivative thereof targeting MUC1-C as a binder in our P-MUC1C-ALLO1 product candidate.

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Amended and Restated License Agreement with HMGU, or the HMGU License Agreement, pursuant to which we obtained exclusive worldwide rights to research, develop, manufacture and commercialize products and services claimed by certain patent applications and patents owned by Helmholtz-Zentrum München—Deutsches Forschungszentrum für Gesundheit und Umwelt GmbH, or HMGU, covering the nuclease Clo051 in certain fields of use, including human pharmaceutical products. We utilize these license rights in our Cas-CLOVER gene editing technology including P-BCMA-ALLO1, P-MUC1C-ALLO1, P-CD19CD20-ALLO1 and our other planned allogeneic programs.

CIRM Grant Funding

In 2018, we were granted an award in the amount of $4.0 million from California Institute of Regenerative Medicine, or CIRM, of which we have received all proceeds, to support our preclinical studies for P-PSMA-101. The terms of this award include an option to repay the grant or convert it to a royalty obligation upon commercialization of the program. Based upon the terms of the grant agreement, we recorded the proceeds as a liability when received. In the third quarter of 2023, we made the decision to not pursue additional clinical or other development activities related to the P-PSMA-101 program, however there is no obligation to repay the amounts associated with the P-PSMA-101 program, and we derecognized the respective liability and recorded such amount in other income during the year ended December 31, 2023.

Components of Our Results of Operations

Revenues

Collaboration Revenue

Collaboration revenue consists of revenue recognized from our strategic, collaboration and license agreements with Roche, Astellas, Xyphos (an affiliate of Astellas), and Takeda and reflects the timing and pattern in which we deliver the contractual deliverables to such partners.

Operating Expenses

Research and Development

Research and development expenses consist primarily of external and internal costs incurred for our research and development activities, including development of our platform technologies, our drug discovery efforts and the development of our product candidates.

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External costs include:

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expenses incurred in connection with the preclinical and clinical development of our product candidates and research programs, including under agreements with third parties, such as consultants, contractors and contract research organizations, or CROs;

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the cost of developing and scaling our manufacturing process and manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and contract manufacturing organizations, or CMOs;

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payments made under third-party licensing agreements;

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the cost of manufacturing clinical materials for use in our preclinical studies and clinical trials; and

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laboratory supplies and research materials.

Internal costs include:

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personnel-related expenses, consisting of employee salaries, related benefits and stock-based compensation expense for employees engaged in research, development and manufacturing functions;

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the cost to develop and maintain manufacturing capabilities at our San Diego facility for manufacturing of cell therapies for use in clinical trials; and

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facilities, depreciation and other expenses, consisting of direct and allocated expenses for rent and maintenance of facilities and insurance.

We expense research and development costs as incurred. External expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the volume of service that has been performed at each reporting date. Upfront payments and milestone payments made for the licensing of technology are related to clinical stage programs and expensed as research and development in the period in which they are incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses or other long-term assets. These amounts are expensed as the related goods are delivered or the services are performed.

At any one time, we are working on multiple research programs. We track external costs by the stage of program, for clinical stage programs, we track costs on a program-by-program basis, and for earlier stage work, including preclinical programs, we track these costs in the aggregate. However, as we continue advancing our allogeneic programs and wind-down our autologous programs and the aggregate amount of expenses for such autologous programs becomes immaterial, we plan to present research and development expenses attributable to such autologous programs on a consolidated basis. Our internal resources, employees and infrastructure, including our clinical manufacturing facility, are not directly tied to any one program and are typically deployed across multiple programs. As such, we do not track internal costs on a specific program basis.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to CRO activity and manufacturing expenses. We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and in the future, including in connection with our ongoing Phase 1 trial of P-MUCIC-ALLO1 for the treatment of patients with epithelial derived solid tumor cancers, Phase 1 trial of P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma, Phase 1 trial of P-CD19CD20-ALLO1 for the treatment of patients with B-cell malignancies and additional clinical programs expected to commence as we expand our pipeline of drug candidates. We cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. Our development costs may vary significantly based on factors such as:

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the number and scope of preclinical and IND-enabling studies;

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per patient trial costs;

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the number of trials required for approval;

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the number of sites included in the trials;

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the countries in which the trials are conducted;

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the length of time required to enroll eligible patients;

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the number of patients that participate in the trials;

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the drop-out or discontinuation rates of patients;

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potential additional safety monitoring requested by regulatory agencies;

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

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the cost and timing of manufacturing our product candidates;

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the phase of development of our product candidates;

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the efficacy and safety profile of our product candidates;

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the extent to which we establish additional licensing agreements; and

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whether we choose to partner any of our additional 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 cost structure and timing associated with the development of respective product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials and preclinical studies.

General and Administrative

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, of personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, and accounting and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates, including P-MUC1C-ALLO1, P-BCMA-ALLO1 and P-CD19CD20-ALLO1, and begin to commercialize any approved products.

Other Income (Expense)

Interest Expense

Interest expense consists of interest expense on outstanding borrowings under our loan agreement and amortization of debt discount and debt issuance costs.

Other Income, Net

Other income, net consists of interest income and miscellaneous income and expense unrelated to our core operations. Interest income is comprised of interest earned on our available-for-sale securities.

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Results of Operations

Comparison of the Three Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):


	Three Months Ended September 30,
	2024			2023			Change
Revenues:
Collaboration revenue	$	71,748		$	9,352		$	62,396
Total revenue		71,748			9,352			62,396
Operating expenses:
Research and development		41,914			37,482			4,432
General and administrative		10,092			8,092			2,000
Total operating expenses		52,006			45,574			6,432
Income (loss) from operations		19,742			(36,222	)		55,964
Other income (expense):
Interest expense		(2,295	)		(2,236	)		(59	)
Other income, net		2,831			6,787			(3,956	)
Net income (loss) before income tax		20,278			(31,671	)		51,949
Income tax expense		(43	)		(107	)		64
Net income (loss)	$	20,235		$	(31,778	)	$	52,013

Collaboration Revenue

Collaboration revenue was $71.7 million for the three months ended September 30, 2024 compared to $9.4 million for the same period in 2023. The increase of $62.4 million was primarily due to a $50.1 million increase in revenue recognized from the license and research services performed under the Roche Collaboration Agreement driven by milestone recognition and an increase in reimbursed research and development expenses, $11.9 million of revenue recognized from the Astellas Strategic Agreements, and $1.2 million in revenue recognized from the Astellas Collaboration Agreement which commenced in the second quarter of 2024, offset by a decrease in revenue recognized under the Takeda Collaboration Agreement of $0.7 million due to the agreement terminating in 2023 and no remaining activity performed during the three months ended September 30, 2024.

Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
External costs:
Clinical stage programs:
Allogeneic programs:
P-BCMA-ALLO1	$	6,730	$	3,176	$	3,554
P-MUC1C-ALLO1		2,134		1,518		616
P-CD19CD20-ALLO1		708		990		(282	)
Total allogeneic programs		9,572		5,684		3,888
Autologous programs		236		362		(126	)
Total clinical stage programs		9,808		6,046		3,762
Preclinical stage programs and other unallocated expenses		9,556		9,074		482
Internal costs:
Personnel		18,387		18,372		15
Facilities and other		4,163		3,990		173
Total research and development expenses	$	41,914	$	37,482	$	4,432

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Research and development expenses were $41.9 million for the three months ended September 30, 2024, compared to $37.5 million for the three months ended September 30, 2023. The increase in research and development expenses of $4.4 million was primarily due to an increase of $3.9 million in allogeneic clinical stage programs, driven mainly by an increase in overall enrollment of our allogeneic programs, and an increase in preclinical stage programs and other unallocated expenses of $0.5 million.

General and Administrative Expenses

General and administrative expenses were $10.1 million for the three months ended September 30, 2024, compared to $8.1 million for the three months ended September 30, 2023. The increase in general and administrative expenses of $2.0 million was primarily due to an increase of $1.4 million in legal and professional fees as a result of higher patent-related and other consulting costs, and an increase of $0.5 million in personnel costs.

Interest Expense

Interest expense was $2.3 million for the three months ended September 30, 2024, compared to $2.2 million for the three months ended September 30, 2023 and consisted of interest on the principal balance outstanding under our term loans with Oxford Finance LLC, or Oxford. The increase in interest expense of $0.1 million was primarily due to higher interest rates.

Other Income, Net

Other income, net was $2.8 million for the three months ended September 30, 2024, compared to $6.8 million for the three months ended September 30, 2023. The decrease of $4.0 million was primarily due to the write off of deferred CIRM grant liability of $4.0 million during the three months ended September 30, 2023 related to the grant awards that we no longer intend to repay as a result of our decision to not pursue additional clinical or other development activities for the P-PSMA-101 program.

Comparison of the Nine Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):


	Nine Months Ended September 30,
	2024			2023			Change
Revenues:
Collaboration revenue	$	125,863		$	39,708		$	86,155
Total revenue		125,863			39,708			86,155
Operating expenses:
Research and development		130,382			114,727			15,655
General and administrative		32,072			28,576			3,496
Total operating expenses		162,454			143,303			19,151
Loss from operations		(36,591	)		(103,595	)		67,004
Other income (expense):
Interest expense		(6,807	)		(6,404	)		(403	)
Other income, net		8,031			12,025			(3,994	)
Net loss before income tax		(35,367	)		(97,974	)		62,607
Income tax expense		(43	)		(107	)		64
Net loss	$	(35,410	)	$	(98,081	)	$	62,671

Collaboration Revenue

Collaboration revenue was $125.9 million for the nine months ended September 30, 2024 compared to $39.7 million for the same period in 2023. The increase of $86.2 million was primarily due to a $75.7 million increase in revenue recognized from the license and research services performed under the Roche Collaboration Agreement driven by milestone recognition and an increase in reimbursed research and development expenses, $23.7 million of revenue recognized from the Astellas Strategic Agreements, and $1.2 million in revenue recognized from the Astellas Collaboration Agreement which commenced in the second quarter of 2024, offset by a decrease in revenue recognized under the Takeda Collaboration Agreement of $14.4 million due to the agreement terminating in 2023 and no remaining activity performed during the nine months ended September 30, 2024.

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Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):


	Nine Months Ended September 30,
	2024		2023		Change
External costs:
Clinical stage programs:
Allogeneic programs:
P-BCMA-ALLO1	$	17,095	$	8,227	$	8,868
P-MUC1C-ALLO1		6,401		4,438		1,963
P-CD19CD20-ALLO1		2,967		990		1,977
Total allogeneic programs		26,463		13,655		12,808
Autologous programs		747		1,607		(860	)
Total clinical stage programs		27,210		15,262		11,948
Preclinical stage programs and other unallocated expenses		36,050		33,043		3,007
Internal costs:
Personnel		54,779		54,244		535
Facilities and other		12,343		12,178		165
Total research and development expenses	$	130,382	$	114,727	$	15,655

Research and development expenses were $130.4 million for the nine months ended September 30, 2024, compared to $114.7 million for the nine months ended September 30, 2023. The increase in research and development expenses of $15.7 million was primarily due to an increase of $12.8 million in allogeneic clinical stage programs, driven mainly by an increase in overall enrollment of our allogeneic programs and the initiation of our third allogeneic clinical trial, P-CD19CD20-ALLO1, an increase in preclinical stage programs and other unallocated expenses of $3.0 million, and an increase of $0.5 million in personnel expenses as a result of annual compensation adjustments and equity grants, offset by a $0.9 million decrease driven by the wind-down of our autologous clinical development activities.

General and Administrative Expenses

General and administrative expenses were $32.1 million for the nine months ended September 30, 2024, compared to $28.6 million for the nine months ended September 30, 2023. The increase in general and administrative expenses of $3.5 million was primarily due to an increase of $2.6 million in legal and professional fees as a result of higher patent-related and other consulting costs, an increase of $1.4 million in personnel costs, mainly caused by an increase in headcount, offset by a decrease of $0.6 million in insurance costs.

Interest Expense

Interest expense was $6.8 million for the nine months ended September 30, 2024, compared to $6.4 million for the nine months ended September 30, 2023. The increase in interest expense of $0.4 million was primarily due to higher interest rates.

Other Income, Net

Other income, net was $8.0 million for the nine months ended September 30, 2024, compared to $12.0 million for the nine months ended September 30, 2023. The decrease of $4.0 million was primarily driven by a write off of deferred CIRM grant liability of $4.0 million during the nine months ended September 30, 2023 related to the grant awards that we no longer intend to repay as a result of our decision to not pursue additional clinical or other development activities for the P-PSMA-101 program.

Liquidity and Capital Resources

Since our inception in 2014, we have incurred significant operating losses and negative cash flows from operations and have relied on our ability to fund our operations primarily through equity and debt financings and strategic collaborations. For the nine months ended September 30, 2024 we have incurred a net loss of $35.4 million, and positive cash flows from operations of $13.7 million. We expect to continue to incur net losses and that we will incur negative cash flows from operations for at least the next several years. As of September 30, 2024, we had an accumulated deficit of $629.7 million.

Our operations to date have focused on organizing and staffing our company, business planning, raising capital, in-licensing and acquiring intellectual property rights and establishing and protecting our intellectual property portfolio, developing our genetic

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engineering technologies, identifying potential product candidates and undertaking research and development and manufacturing activities, including preclinical studies and clinical trials of our product candidates, and engaging in strategic transactions.

Our primary use of cash is to fund our operating expenses, which consist primarily of research and development expenditures including payroll and external costs associated with our preclinical and clinical stage programs, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. We have funded our operations primarily through the sale of equity, debt financings and strategic collaborations. Since our inception, we have raised $305.4 million of gross proceeds from the sale of our common stock in our public offerings, $334.3 million of gross proceeds from the sale of shares of our redeemable convertible preferred stock, received $60.0 million of gross proceeds from borrowings under our loan agreement and received an aggregate of $23.8 million in grant funding from CIRM. In the fourth quarter of 2021, we entered into the Takeda Collaboration Agreement and received an upfront payment of $45.0 million. In the third quarter of 2022, we entered into the Roche Collaboration Agreement and received an upfront payment of $110.0 million. In the third quarter of 2023, we entered into the Securities Purchase Agreement and the Astellas Strategic Rights Letter, receiving a one-time payment of $50.0 million. In the second quarter of 2024, we entered into the Astellas Collaboration Agreement, receiving an upfront payment of $50.0 million.

We expect that our cash, cash equivalents and short-term investments as of September 30, 2024, of $230.9 million will be sufficient to fund our operations for at least the next twelve months from the date of issuance of the financial statements included in this Quarterly Report on Form 10-Q. In the long term, we will need additional financing to support our continuing operations and pursue our growth strategy.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for P-MUC1C-ALLO1 or any other product candidates, which will not be for at least the next several years, if ever. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution activities. Accordingly, until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through equity offerings, debt financings or other capital sources, including potential grants, collaborations, licenses or other similar arrangements. However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all. Especially in light of public health crises, current financial conditions within the banking industry, liquidity levels as well as recent or anticipated changes in interest rates and economic inflation, there can be no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Loan Agreement

In 2017, we entered into a loan and security agreement with Oxford, as subsequently amended, or the Amended Loan Agreement, for a total outstanding balance of $30.0 million.

In February 2022, we entered into a new Loan and Security Agreement, or the 2022 Loan Agreement, with Oxford. Pursuant to the terms of the 2022 Loan Agreement, we borrowed $60.0 million in term loans, a portion of which was used to repay the balance outstanding under the Amended Loan Agreement. Under the 2022 Loan Agreement the initial interest-only period is through April 1, 2025, followed by 23 equal monthly payments of principal and applicable interest. In September 2022, a qualifying equity event, as defined in the 2022 Loan Agreement, was achieved which extended the interest-only period through April 1, 2026, followed by 11 equal monthly payments of principal and applicable interest. As a result, all amounts outstanding under the 2022 Loan Agreement will mature on February 1, 2027.

As the London Interbank Offered Rate (“LIBOR”) ceased publication on June 30, 2023, we now utilize the Secured Overnight Financing Rate (“SOFR”) to calculate the amount of accrued interest on our borrowings. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions.

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