This Annual Report on Form 10-K contains forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” ~~"on~~“on track,"” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the “Risk factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, ~~while we expect that~~ the COVID-19 pandemic ~~might~~could adversely affect our preclinical and clinical development efforts, business operations and financial ~~results, the~~results. The extent of the impact and the value of and market for our common stock will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, the emergence of new variants of the virus, travel restrictions, quarantines, physical distancing and business closure requirements in the ~~U.S.~~United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease.

We are a clinical-stage biopharmaceutical company focused on developing antibody drug conjugates, or ADCs, that offer a clinically meaningful benefit for cancer patients with significant unmet need. We have leveraged over 20 years of industry learning in the ADC field to develop proprietary and differentiated technology platforms that enable us to ~~design~~develop ADCs ~~that~~designed to have improved efficacy, safety and tolerability relative to existing ADC therapies.

Our goal is to become a leading oncology company by leveraging the potential of our innovative and differentiated ADC technologies and the experience and competencies of our management team to discover and develop promising ADC product candidates and to commercialize cancer therapeutics that address unmet medical needs or provide significant benefit to patients. Key components of our strategy to achieve this goal are as follows:

Our current ~~partnerships~~pipeline is summarized in the chart below:

The development of ADCs is not a one-size-fits-all approach. In fact, a number of diverse factors impact the properties of an ADC, including payload, ~~drug-to-antibody ratio,~~DAR, site of conjugation and homogeneity. For each target antigen, there ismay be an optimal combination of these factors. Our novel and highly differentiated platforms are designed to allow us to optimize these properties for a given target and develop ADCs that are designed to best address patient needs.

The Dolaflexin platform was designed to increase the efficacy, safety and tolerability of ADCs. Dolaflexin utilizes our proprietary Fleximer polymer, a biodegradable, highly biocompatible, water-soluble polymer that is able to carry multiple ~~drug molecules.~~payloads. Instead of direct conjugation to an antibody, ~~drug molecules~~payloads are attached through an optimized, cleavable linker to the Fleximer scaffold, which is then conjugated to the antibody through a non-cleavable linker. Our Fleximer polymer has demonstrated dramatically improved drug solubility, pharmacokinetics and immunogenicity, and an increased number of ~~drug molecules~~payloads carried by each ADC as compared ~~with traditional~~to other ADC therapies.

As a result, we believe Dolaflexin has the potential to offer the following benefits relative to ~~traditional~~first generation ADCs:

Immunosynthen ADCs have been designed to overcome the limitations of free STING agonists and to offer a highly differentiated approach from other innate immune activators due to the following:

With targeted agents approved in platinum-resistant disease increasingly being prescribed in earlier lines of therapy, the unmet need is expected to remain severe. Bevacizumab in combination with chemotherapy is indicated to treat a subset of platinum-resistant ovarian cancer patients with no more than two prior therapies but it is not always well-tolerated and has shown no overall survival benefit. Use of bevacizumab in combination with platinum-containing chemotherapy in the frontline and platinum-sensitive recurrent settings mean an increasing number of platinum-resistant patients are pre-treated with bevacizumab and are not candidates for additional bevacizumab combination treatment. More recently, PARP inhibitors have been approved for heavily-pretreated ovarian cancer including platinum-resistant disease. However, they are predominantly used in a subset of patients with cancers harboring BRCA1 and BRCA2 mutations. Similarly, use of PARP inhibitors in earlier lines of recurrent platinum-sensitive maintenance and more recently frontline maintenance therapy following platinum-based chemotherapy means an increasing number of platinum-resistant patients are pre-treated with PARP inhibitors and are not candidates for additional PARP inhibitor therapy.

Worldwide, lung cancer had an incidence of approximately ~~2.1~~2.2 million and caused an estimated ~~1.7~~1.8 million deaths in ~~2018.~~2020. With a U.S. incidence of approximately ~~230,000~~236,000 new cases and over 130,000 deaths in ~~2020,~~2021, lung cancer was the ~~most deadly~~deadliest form of cancer in the United States. The five year survival rate is less than 20% on average. Approximately 95% of all lung cancers are classified as either small cell lung cancer or NSCLC. NSCLC can be further divided into squamous or non-squamous. The majority of non-squamous NSCLC is classified as adenocarcinoma. These histological distinctions are important for proper staging, treatment and prognosis. For patients with NSCLC, initial treatment is largely determined by the stage of disease. Surgical resection offers the best opportunity for long-term survival and cure in patients with resectable early-stage NSCLC. Locally-advanced NSCLC is treated by combinations of radiotherapy, immunotherapy, chemotherapy and surgery. The majority of patients present with inoperable disease. Metastatic NSCLC is managed with systemic chemotherapy and immunotherapy.

The standard of care is evolving for NSCLC with the introduction of immunotherapies for patients without oncogenic driver mutations and new targeted therapies for patients with EGFR, ALK, ROS-1, NTRK or BRAF mutations. For patients with metastatic disease without oncogenic driver mutations, frontline platinum-based chemotherapy is combined with or, depending on PD-L1 expression status, replaced by, immunotherapy using anti-PD-1 or anti-PD-L1 monoclonal antibodies. For patients with metastatic disease harboring oncogenic driver mutations, several generations of targeted agents are available with different resistance profiles. Frontline therapy is often followed by relapse and recurrence and treatment options for these patients are substantially more limited. The standard of care of docetaxel alone or in combination with targeted agents has an overall response rate of 14-23%, median progression-free survival of 3-4 months and median overall survival of 9-12 months.

With PD-1 and PD-L1 inhibitors and next generation targeted therapies moving into frontline, the unmet need in recurrent lung cancer is expected to remain severe.

Worldwide, breast cancer was the most common cancer with an incidence of approximately 2.3 million and estimated 685,000 deaths in 2020. The U.S. incidence was approximately 282,000 new cases with over 43,600 deaths in 2021. While patients with localized disease typically have a relatively good prognosis, the 5-year survival of patients with distant metastasis is only 29%. There are four main female breast cancer subtypes, which are, in order of prevalence: Hormone Receptor positive (HR+)/ Human Epidermal Growth Factor Receptor 2 negative (HER2-) (“Luminal A”), HR-/HER2- (“Triple Negative”), HR+/HER2+ (“Luminal B”), and HR-/HER2+ (“HER2-enriched”). Treatment choice is driven by both subtype and stage of disease. Surgical resection offers the best opportunity for long-term survival and cure in patients with resectable early-stage disease. Some patients receive radiation therapy and/or systemic therapy post-surgery, with treatment choice driven by cancer subtype.

Systemic therapy is the mainstay of treatment for metastatic breast cancer. Once again, the treatment choice is determined by cancer subtype and by what treatments patients have received previously. The primary treatment option for patients who are HR+ is endocrine therapy, including aromatase inhibitors. Patients who are HER2+ are usually treated with HER2 targeting agents such as trastuzumab and pertuzumab, among others. Other targeted agents that are used in metastatic breast cancer include CDK4/6 inhibitors, mTOR inhibitors, PARP inhibitors, PIK3CA inhibitor, immunotherapy and ADCs. Patients can also receive chemotherapies, alone or in combination with other agents. In addition, a number of new therapeutic options are under clinical investigation. Despite the availability of these treatment options, outcomes in metastatic breast cancer continue to be poor, and new treatments that improve survival and quality of life are urgently needed.

Our focus is to progress our proprietary pipeline of ADCs. For this reason, we have partnered with biotechnology companies that have the capability to generate high quality antibodies or that have existing antibodies that we can license for inclusion in our ADCs. We have also entered into license agreements with biotechnology companies that own certain patent rights and related know-how that enable us to develop new ADC platforms. These strategic partnerships have facilitated the acceleration of our proprietary pipeline.

Upon commencement of commercial sales of any ADC product directed to a ~~product,~~licensed target, if any, we are required to pay to Synaffix tiered royalties in the low-single digit percentages on net sales of the respective products.

We do not own or operate and currently have no plans to establish any current good manufacturing practices, or cGMP, compliant manufacturing facilities. We currently rely, and expect to continue to rely, on external Contract Manufacturing Organizations, or CMOs, for the manufacture of product to support our activities through regulatory approval and commercial manufacturing. We have personnel with pharmaceutical development and manufacturing experience who are responsible for the relationships with our CMOs. In the future, we expect to use these CMOs to manufacture commercial supply of our products, which will require these CMOs to increase scale of production.We do not currently have qualified alternate suppliers in the event the current CMOs that we utilize are unable to scale production for commercial manufacturing. The Dolaflexin, Dolasynthen and ~~Dolasynthen~~Immunosynthen manufacturing processes involve readily available starting materials and use unit operations that are well-precedented in the field of chemical/pharmaceutical production. The current UpRi supply chain utilizes the same vendors that we could use for commercialization. The current XMT-1592 supply chain utilizes the same vendors that we could use for commercialization with the exception of components necessary for the Synaffix bioconjugation technology, where the identification of a commercially capable vendor is ongoing. The current supply chains for XMT-1660 and XMT-2056 have several vendors in common, and based on what we know today, we believe we could use these vendors for commercialization purposes.

~~Government~~The research, development, testing, manufacture, quality control, packaging, labeling, storage, record-keeping, distribution, import, export, promotion, advertising, marketing, sale, pricing and reimbursement of drug and biologic products are extensively regulated by governmental authorities in the United States ~~at the federal, state~~ and ~~local level, and in~~ other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, clinical and preclinical studies, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing and import and export of pharmaceutical products.countries. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with ~~subsequent~~ compliance with applicable statutes and regulations and other regulatory ~~authorities,~~requirements, both pre-approval and post-approval, require the expenditure of substantial time and financial resources. Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including imposition of a clinical hold, refusal to approve marketing applications, withdrawal of an approval, import/export delays, issuance of warning letters and other types of

~~enforcement letters,~~substantial time and financial resources. The regulatory requirements applicable to biological product ~~recalls, product seizures, total~~development, approval and marketing are subject to change, and regulations and administrative guidance often are revised or ~~partial suspension~~reinterpreted by the agencies in ways that may have a significant impact on our business.

An IND is an exemption from the ~~administration of the~~FDCA that allows an unapproved product candidate to ~~human subjects under~~be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans. An IND must be secured prior to interstate shipment and administration of any product candidate that is not the ~~supervision~~subject of ~~qualified investigators in accordance with GCP requirements. GCP requirements include, among other things, conducting the study in accordance with~~an approved BLA. In support of a ~~written protocol, maintaining the integrity of study data, obtaining informed consent from study subjects and approval and ongoing review of the study by~~request for an ~~IRB.~~

Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. For example, a partial clinical hold might state that a specific protocol or part of a protocol may not proceed, while other parts of a protocol or other protocols may do so. No more than 30 days after the imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis for the hold. Following the issuance of a clinical hold or partial clinical hold, a clinical investigation may only resume once the FDA has notified the sponsor that the investigation may proceed. The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the investigation can ~~begin.~~proceed or recommence. Occasionally, clinical holds are imposed due to manufacturing issues that may present safety issues for the clinical trial subjects.

A sponsor may choose, but is not required, to conduct a foreign clinical trial under an IND. When a foreign clinical trial is conducted under an IND, all IND requirements must be met unless waived by the FDA. When a foreign clinical trial is not conducted under an IND, the sponsor must ensure that the trial complies with certain regulatory requirements of the FDA in order to use the trial data as support for an IND or application for marketing approval. Specifically, the trials must be conducted in accordance with GCP, including undergoing review and receiving approval by an independent ethics committee, or IEC, and seeking and receiving informed consent from subjects. GCP requirements encompass both ethical and data integrity standards for clinical trials. The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data.

In addition to the foregoing IND requirements, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and re-approve the trial at least annually. The IRB, which must operate in compliance with FDA regulations, must review and approve, among other things, the clinical trial protocol and informed consent information to be provided to trial subjects and must monitor the trial until completed. An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board, or DSMB. This group provides authorization as to whether or not a trial may move forward at designated checkpoints based on review of available data from the trial, to which only the DSMB maintains access. Suspension or termination of development during any phase of a clinical trial can occur if the DSMB determines that the participants or patients are being exposed to an unacceptable health risk.

Expanded access, sometimes called “compassionate use,” is the use of investigational new products outside of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment options. The rules and regulations related to expanded access are intended to improve access to investigational products for patients who may benefit from investigational therapies. FDA regulations allow access to investigational products under an IND by the company or the treating physician for treatment purposes on a case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-emergency settings);

intermediate-size patient populations; and larger populations for use of the investigational product under a treatment protocol or Treatment IND Application.

When considering an IND application for expanded access to an investigational product with the purpose of treating a patient or a group of patients, the sponsor and treating physicians or investigators will determine suitability when all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there is no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or condition to be treated; and the expanded use of the investigational product for the requested treatment will not interfere with the initiation, conduct or completion of clinical investigations that could support marketing approval of the product or otherwise compromise the potential development of the product.

There is no obligation for a sponsor to make its investigational products available for expanded access; however, as required by amendments to the FDCA included in the 21st Century Cures Act, or the Cures Act, passed in 2016, if a sponsor has a policy regarding how it responds to expanded access requests with respect to product candidates in development to treat serious diseases or conditions, it must make that policy publicly available. Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 trial for a covered investigational product; or 15 days after the investigational product receives designation from the FDA as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.

In addition, on May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational new products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a manufacturer to make its products available to eligible patients as a result of the Right to Try Act, but the manufacturer must develop an internal policy and respond to patient requests according to that policy.

Clinical ~~studies~~trials involve the administration of the investigational product candidate to human subjects under the supervision of a qualified investigator in accordance with GCP requirements which include, among other things, the requirement that all research subjects provide their informed consent in writing before they participate in any clinical trial. Clinical trials are conducted under written clinical trial protocols detailing, among other things, the objectives of the trial, inclusion and exclusion criteria, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol, and any subsequent material amendment to the protocol, must be submitted to the FDA as part of the IND, and progress reports detailing the status of the clinical trials must be submitted to the FDA annually. The FDA has issued regulations authorizing a sponsor to transfer certain responsibilities for the conduct of a clinical trial to a contract research organization, or CRO.

Human clinical trials are typically conducted in three sequential phases, ~~prior to approval, which~~but the phases may overlap or be ~~combined:~~combined. Additional trials may also be required after approval.

A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate. A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the trial will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA. Moreover, as noted above, a pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in ~~well-controlled~~an area of unmet medical need.

In some cases, the FDA may approve a BLA for a product candidate but require the sponsor to conduct additional clinical ~~studies~~trials to ~~generate enough data to statistically evaluate the efficacy and safety of~~further assess the product ~~for approval,~~candidate’s safety and effectiveness after approval. Such post-approval trials, typically referred to ~~establish the overall risk-benefit profile of the product and to provide adequate information for the labeling of the product.~~

In August 2018, the FDA released a draft guidance entitled “Expansion Cohorts: Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,” which outlines how developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology biological product development (i.e., the first-in-human clinical trial) to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial. Information to support the design of individual expansion cohorts are included in IND applications and assessed by FDA. Expansion cohort trials can potentially bring efficiency to product development and reduce developmental costs and time.

Finally, sponsors of clinical trials are required to register and disclose certain clinical trial information on a public registry (clinicaltrials.gov) maintained by the U.S. National Institutes of Health, or NIH. In particular, information related to the product, patient population, phase of investigation, clinical trial sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. The NIH’s Final Rule on registration and reporting requirements for clinical trials became effective in 2017, and both NIH and the FDA have recently signaled the government’s willingness to begin enforcing those requirements against non-compliant clinical trial sponsors.

~~Submission~~In addition, sponsors are given opportunities to meet with the FDA at certain points in the clinical development program. Specifically, sponsors may meet with the FDA prior to the submission of an IND (Pre-IND meeting), at the end of Phase 2 clinical trial (EOP2 meeting) and before a BLA is submitted (Pre-BLA meeting). Meetings at other times may also be requested. There are three types of meetings that occur between sponsors and the FDA. Type A meetings are those that are necessary for an otherwise stalled product development program to proceed or to address an important safety issue. Type B meetings include pre-IND and pre-BLA meetings, as well as end of phase meetings such as EOP2 meetings. A Type C meeting is any meeting other than a Type A or Type B meeting regarding the development and review of a ~~marketing~~product, including for example meetings to facilitate early consultations on the use of a biomarker as a new surrogate endpoint that has never been previously used as the primary basis for product approval in the proposed context of use.

Concurrent with clinical trials, sponsors usually complete additional animal safety studies, develop additional information about the chemistry and physical characteristics of the product candidate and finalize a process for manufacturing commercial quantities of the product candidate in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other criteria, the sponsor must develop methods

for testing the identity, strength, quality, and purity of the finished product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Specifically, the FDA’s regulations require that pharmaceutical products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. Manufacturers and other entities involved in the manufacture and distribution of approved pharmaceuticals are required to register their establishments with the FDA and some state agencies, and they are subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements. Inspections must follow a “risk-based schedule” that may result in certain establishments being inspected more frequently. Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments. Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated. Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented. The FDA’s regulations also require, among other things, the investigation and correction of any deviations from cGMP and the imposition of reporting and documentation requirements upon the sponsor and any third-party manufacturers involved in producing the approved product.

Under the Pediatric Research Equity Act, or PREA, applications and certain types of supplements to applications must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor must submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-phase 2 meeting or as may be agreed between the sponsor and the FDA. Those plans must contain an outline of the proposed pediatric clinical trial or trials that the sponsor plans to conduct, including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric trials along with supporting information. The sponsor and the FDA must reach agreement on a final plan. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs.

For investigational products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of a sponsor, meet to discuss preparation of the initial PSP or to discuss deferral or waiver of pediatric assessments. In addition, the FDA will meet early in the development process to discuss pediatric study plans with sponsors, and the FDA must meet with sponsors by no later than the end-of-phase 1 meeting for serious or life-threatening diseases and by no later than ninety days after the FDA’s receipt of the PSP.

The FDA may, on its own initiative or at the request of the sponsor, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin. The law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA. The FDA also maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.

The FDA is authorized to expedite the review of applications in several ways. Under the Fast Track program, the sponsor of a product candidate may request the FDA to designate the product for a specific indication as a Fast Track product concurrent with or after the filing of the IND. Candidate products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied. In

addition to other benefits, such as the ability to have greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track application before the application is complete, a process known as rolling review.

Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as breakthrough therapy designation, priority review and accelerated approval.

None of these expedited programs changes the standards for approval but each may help expedite the development or approval process governing product candidates.

Assuming successful completion of the required clinical testing, ~~and other requirements,~~ the results of the preclinical studies and clinical ~~studies, together~~trials, along with ~~detailed~~ information relating to the product’s chemistry, ~~manufacture,~~manufacturing, controls, safety updates, patent information, abuse information and proposed labeling, ~~among other things,~~ are submitted to the FDA as part of ~~a BLA~~an application requesting approval to market the product candidate for one or more indications.

The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or before whether an application is sufficiently complete to permit substantive review. In pertinent part, FDA’s regulations state that an application “shall not be considered as filed until all pertinent information and data have been received” by the FDA. In the event that FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF,

determination to the applicant. Typically, an RTF will be based on administrative incompleteness, such as clear omission of information or sections of required information such that substantive and meaningful review is precluded. The FDA may request additional information rather than accept an application for filing. In this event, the ~~basis of a demonstration that~~application must be resubmitted with the ~~product~~additional information. The resubmitted application is ~~safe, pure and potent. Once a BLA has been~~also subject to review before the FDA accepts it for filing.

After the submission is accepted for filing, the ~~FDA’s goal~~FDA begins an in-depth substantive review of the application. The FDA reviews the application to determine, among other things, whether the proposed product is safe and effective for its intended use, whether it has an acceptable purity profile and whether the product is being manufactured in accordance with cGMP. Under the goals and policies agreed to ~~review BLAs within~~by the FDA under PDUFA, the FDA has ten months from the filing date in which to complete its initial review of a standard application that is a new molecular entity, and six months from the filing date for ~~standard review or six months of the filing date for priority~~an application with “priority review.” The review process ~~is often significantly~~may be extended by the FDA ~~requests~~ for three additional months to consider new information or ~~clarification.~~in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission. Despite these review goals, it is not uncommon for FDA review of an application to extend beyond the PDUFA goal date.

In connection with its review of an application, the FDA will typically submit information requests to the applicant and set deadlines for responses thereto. The FDA will also conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the manufacturing processes and facilities comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications. The FDA also may inspect the sponsor and one or more clinical trial sites to assure compliance with IND and GCP requirements and the integrity of the clinical data submitted to the FDA.

Additionally, the FDA may refer ~~the~~an application, including applications for novel product candidates which present difficult questions of safety or efficacy, to an advisory committee for review, evaluation and recommendation as to whether the application should be ~~approved.~~approved and under what conditions. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it ~~generally follows~~considers such ~~recommendations.~~recommendations when making final decisions on approval.

Before approving the BLA, the FDA will inspect the facilities at which the biological product is manufactured and will not approve the product unless the facility is compliant with cGMPs. Additionally, the FDA will typically inspect one or more clinical study sites for compliance with GCP and integrity of the data supporting safety and efficacy.

After evaluating the application and ~~accompanying~~all related information, including the ~~results~~advisory committee recommendations, if any, and inspection reports of ~~the inspection of the~~ manufacturing facilities and clinical trial sites, the FDA will issue either ~~an approval of the BLA or~~ a Complete Response Letter, ~~detailing~~or CRL, or an approval letter. To reach this determination, the FDA must determine that the expected benefits of the proposed product outweigh its potential risks to patients. This assessment is informed by the severity of the underlying condition and how well patients’ medical needs are addressed by currently available therapies; uncertainty about how the premarket clinical trial evidence will extrapolate to real-world use of the product in the post-market setting; and whether risk management tools are necessary to manage specific risks.

A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL generally outlines the deficiencies in the submission and ~~the~~may require substantial additional testing or information ~~required~~in order for ~~reconsideration of~~the FDA to reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant and time- consuming requirements related to clinical trials, preclinical studies or manufacturing. If a CRL is issued, the applicant will have one year to respond to the deficiencies identified by the FDA, at which time the FDA can deem the application withdrawn or, in its discretion, grant the applicant an additional six month extension to respond. The FDA has committed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

IfAn approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for specific indications. That is, the approval will be limited to the conditions of use (e.g., patient population, indication) described

in the FDA-approved labeling. Further, depending on the specific risk(s) to be addressed, the FDA ~~approves a product, it~~ may ~~limit the approved indications for use for the product,~~ require that contraindications, warnings or precautions be included in the product labeling, require that post-approval ~~studies,~~trials, including Phase 4 clinical ~~studies,~~trials, be conducted to further assess ~~the~~a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of ~~post-market studies~~post-marketing trials or surveillance programs. After approval, ~~many~~some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

~~The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment~~Following approval of a ~~serious or life-threatening disease or condition. These programs are fast track designation, breakthrough therapy designation and priority review designation.~~

If a company is found to have promoted off-label uses, it may become subject to administrative and judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General of the Department of Health and Human Services, as ~~adding~~well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes products, as well as adverse public relations and reputational harm. The federal government has levied large civil and criminal fines against companies for alleged improper promotion, and has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

Further, if there are any modifications to the product, including changes in indications, labeling or manufacturing processes or facilities, the sponsor may be required to submit and obtain FDA approval of a new application or supplement, which may require the sponsor to develop additional data or conduct additional preclinical studies and clinical trials. Securing FDA approval for new indications is similar to the process for approval of the original indication and requires, among other things, submitting data from adequate and well-controlled clinical trials to demonstrate the product’s safety and efficacy in the new indication. Even if such trials are conducted, the FDA may not approve any expansion of the labeled indications for use in a timely fashion, or ~~other labeling claims, are subject to prior FDA review and approval.~~at all. There also are continuing, annual user fee requirements ~~for any marketed products and the establishments at which such products~~that are ~~manufactured,~~now assessed as ~~well as new application~~program fees for certain ~~supplemental applications.~~products.

In addition, manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

Other potential consequences ~~of regulatory non-compliance or post-market problems with a product~~ include, among other things:

When a biological product is licensed for marketing by FDA ~~strictly regulates marketing, labeling, advertising and promotion~~with approval of ~~products that are placed on~~a BLA, the ~~market. Such products~~product may be ~~promoted only~~entitled to certain types of market and data exclusivity barring FDA from approving competing products for ~~the approved indications and consistent with the provisions~~certain periods of time. In March 2010, the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

Under the BPCIA, a manufacturer may submit an application for a product that is “biosimilar to” a previously approved biological product, which the statute refers to as a “reference product.” In order for the FDA to approve a biosimilar product, ~~is “highly similar” to the reference product notwithstanding minor differences in clinically inactive components and~~it must find that there are no clinically meaningful differences between the ~~biological~~reference product and the ~~reference~~proposed biosimilar product in terms of safety, purity and potency. ~~Interchangeability requires~~The biosimilar sponsor may demonstrate that aits product is biosimilar to the reference product on the basis of data from analytical studies, animal studies and one or more clinical trials to demonstrate safety, purity and potency in one or more appropriate conditions of use for which the reference product is approved.

For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find not only that the product ~~must demonstrate~~is biosimilar to the reference product but also that it can be expected to produce the same clinical results as the reference product ~~in any given patient and, for~~such that the two products ~~administered multiple times, the biologic and the reference biologic~~ may be switched ~~after one has been previously administered~~ without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Upon licensure by the FDA, an interchangeable biosimilar may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product. Following approval of the interchangeable biosimilar product, the FDA may not grant interchangeability status for any second biosimilar until one year after the first commercial marketing of the first interchangeable biosimilar product.

~~Under~~Orphan drug designation in the ~~Orphan Drug Act,~~United States is designed to encourage sponsors to develop products intended for treatment of rare diseases or conditions. In the ~~FDA may designate a product, including a biological product, as an “orphan drug” if it is intended to treat~~United States, a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000 individuals in the United States or ~~if it~~that affects more than 200,000 individuals in the United States ~~a disease~~and for which there is no reasonable expectation that the cost of developing and making available the product for ~~this type of~~the disease or condition will be recovered from sales of the product in the United States.

Orphan drug designation qualifies a company for tax credits and potentially market exclusivity for seven years following the date of the product’s approval if granted by the FDA. An application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product. A product becomes an orphan when it receives orphan drug designation from the Office of Orphan Products Development at the FDA based on acceptable confidential requests. The product must then go through the review and approval process like any other product.

A sponsor may request orphan drug designation of a previously unapproved product or new orphan indication for an already marketed product. In addition, a sponsor of a product that is otherwise the same product as an already approved orphan drug

may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition if it can present a plausible hypothesis that its product may be clinically superior to the first approved product. More than one sponsor may receive orphan drug designation for the same product for the same rare disease or condition, but each sponsor seeking orphan drug designation must file a complete request for designation.

If a product with orphan designation receives the first FDA approval for ~~a product for~~ the ~~indication~~disease or condition for which it has ~~orphan~~such designation ~~is entitled to~~or for a select indication or use within the rare disease or condition for which it was designated, the product generally will receive orphan drug exclusivity. Orphan drug exclusivity ~~which~~ means that the FDA may not approve ~~any other~~another sponsor’s marketing application ~~to market~~for the same product for the same ~~indication~~disease or condition for ~~a period of~~ seven years, except in certain limited circumstances. If a product designated as an orphan drug ultimately receives marketing approval for an indication broader than what was designated in its orphan drug application, it may not be entitled to exclusivity.

The period of market exclusivity begins on the date that the marketing application is approved by the FDA and applies only to the disease or condition for which the product has been designated. Orphan drug exclusivity will not bar approval of another product under certain circumstances, ~~such as~~including if the company with orphan drug exclusivity is not able to meet market demand or the subsequent product is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a ~~showing of~~major contribution to patient care. Under Omnibus legislation signed by President Trump on December 27, 2020, the requirement for a product to show clinical superiority ~~over~~applies to drug products that received orphan drug designation before enactment of amendments to the FDCA in 2017 but have not yet been approved by FDA.

In September 2021, the Court of Appeals for the 11th Circuit held that, for the purpose of determining the scope of market exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” It is unclear how this court decision will be implemented by the FDA.

Pediatric exclusivity is a type of non‑patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of exclusivity. For biologic products, the six month period may be attached to any existing regulatory exclusivities but not to any patent terms. The conditions for pediatric exclusivity include the FDA’s determination that information relating to the use of a new product in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric clinical trials, and the sponsor agreeing to perform, and reporting on, the requested clinical trials within the statutory timeframe. This six‑month exclusivity may be granted if a sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product ~~with orphan exclusivity.~~to be effective in the pediatric population studied. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patents that cover the product are extended by six months. Although this is not a patent term extension, it effectively extends the regulatory period during which the FDA cannot approve another application.

AIn the United States, a patent claiming a new product, its method of use or its method of manufacture may be eligible for a limited patent term extension under the ~~Hatch-Waxman Amendments,~~Hatch‑Waxman Act, which permits a patent ~~restoration~~extension of up to five years for patent term lost during product development and ~~the~~ FDA regulatory review. ~~The~~Assuming grant of the patent for which the extension is sought, the restoration period ~~granted~~for a patent covering a product is typically ~~one-half~~one‑half the time between the effective date of anthe IND involving human beings and the submission date of athe BLA, plus the time between the submission date of ~~a BLA~~the application and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval ~~date.~~date in the United States. Only one patent applicable to an approved ~~drug~~ product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent for which extension is sought. A patent that covers multiple products for which approval is sought can only be extended in ~~question.~~connection with one of the approvals. The ~~United States Patent and Trademark Office, or~~ USPTO reviews and approves the application for any patent term extension ~~or restoration~~ in consultation with the FDA.

The 2014 guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a biologic product candidate generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared. If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption, or IDE, regulations. Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations. According to the guidance, if a diagnostic device and a product are to be studied together to support their respective approvals, both products can be studied in the same investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND application alone, or both an IND- and IDE-application.

In April 2020, the FDA issued additional guidance which describes considerations for the development and labeling of companion diagnostic devices to support the indicated uses of multiple biological oncology products, when appropriate. This guidance builds upon existing policy regarding the labeling of companion diagnostics. In its 2014 guidance, the FDA stated that if evidence is sufficient to conclude that the companion diagnostic is appropriate for use with a specific group of therapeutic products, the companion diagnostic’s intended use/indications for use should name the specific group of therapeutic products, rather than specific products. The 2020 guidance expands on the policy statement in the 2014 guidance by recommending that companion diagnostic developers consider a number of factors when determining whether their test could be developed, or the labeling for approved companion diagnostics could be revised through a supplement, to support a broader labeling claim such as use with a specific group of oncology therapeutic products (rather than listing an individual therapeutic product(s)).

In the United States, ~~device~~biopharmaceutical manufacturers are also subject to FDA’s medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur, and FDA’s correction and removal reporting regulations, which require that manufacturers report to the FDA corrections or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health. A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the Quality System Regulation, which covers the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices. Domestic facility records and manufacturing processestheir products are subject to ~~periodic unscheduled inspections by~~extensive regulation at the ~~FDA. The FDA also~~federal and state level, such as laws intended to prevent fraud and abuse in the healthcare industry. Healthcare providers and third-party payors play a primary role in the recommendation and prescription of pharmaceutical products that are granted marketing approval. Arrangements with providers, consultants, third-party payors, and customers are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, reporting of payments to healthcare providers and patient privacy laws and regulations and other healthcare laws and regulations that may ~~inspect foreign facilities that export~~constrain our business and/or financial arrangements. Restrictions under applicable federal and state healthcare laws and regulations, including certain laws and regulations applicable only if we have marketed products, toinclude the ~~United States.~~following:

On January 31, 2022, the new Clinical Trials Regulation (EU) No 536/2014 became effective in the European Union and replaced the prior Clinical Trials Directive 2001/20/EC. The new regulation aims at simplifying and streamlining the authorization, conduct and transparency of clinical trials in the ~~United States have a process that requires~~European Union. Under the ~~submission~~new coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial ~~application, or CTA, much like the IND prior~~ to ~~the commencement~~be conducted in more than one Member State of ~~human clinical studies. In~~ the European Union, or EU Member State, will only be required to submit a single application for ~~example,~~approval. The submission will be made through the Clinical Trials Information System, a ~~CTA must be submitted for each~~new clinical trials portal overseen by the EMA and available to clinical trial tosponsors, competent authorities of the EU Member States and the public.

The new regulation did not change the preexisting requirement that a sponsor must obtain prior approval from the competent national ~~health~~ authority ~~and an independent ethics committee in each country~~of the EU Member State in which the ~~company intends~~clinical trial is to ~~conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements,~~be conducted. If the clinical trial is conducted in different EU Member States, the competent authorities in each of these EU Member States must provide their approval for the conduct of the clinical trial. Furthermore, the sponsor may ~~proceed. In all cases,~~only start a clinical trial at a specific clinical site after the applicable ethics committee has issued a favorable opinion.

Parties conducting certain clinical trials must, ~~be conducted~~as in ~~accordance with GCPs and other applicable regulatory requirements and ethical principles.~~

Marketing authorization applications, or MAAs, can be filed either under the so-called centralized or national authorization procedures, albeit through the mutual recognition or decentralized procedure for a product to be authorized in more than one EU Member State.

The centralized procedure provides for the grant of a single marketing authorization ~~application under either~~following a ~~centralized~~favorable opinion by the European Medicines Agency, or ~~decentralized procedure.~~EMA, that is valid in all EU Member States, as well as Iceland, Liechtenstein and Norway, which are part of the EEA. The centralized procedure is compulsory for medicines produced by specified biotechnological processes, products designated as orphan medicinal products, advanced-therapy medicines (such as gene-therapy, somatic cell-therapy or tissue-engineered medicines) and products with a new active substance indicated for the treatment of specified diseases, such as HIV/ AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions and viral diseases. The centralized procedure is optional for products that represent a significant therapeutic, scientific or technical innovation, or whose authorization would be in the interest of public health. Under the centralized procedure the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the sponsor in response to questions asked by the Committee for Medicinal Products for Human Use, or the CHMP. Accelerated assessment might be granted by the CHMP in exceptional

cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation. The timeframe for the evaluation of an MAA under the accelerated assessment procedure is of 150 days, excluding stop-clocks.

There are also two other possible routes to authorize medicinal products in several EU countries, which are available for investigational medicinal products that fall outside the scope of the centralized procedure:

Under the above-described procedures, before granting the marketing authorization, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

In particular circumstances, EU legislation (Article 14–a Regulation (EC) No 726/2004 (as amended by Regulation (EU) 2019/5 and Regulation (EC) No 507/2006 on Conditional Marketing Authorizations for Medicinal Products for Human Use) enables sponsors to obtain a conditional marketing authorization prior to obtaining the comprehensive clinical data required for an application for a full marketing authorization. Such conditional approvals may be granted for product candidates (including medicines designated as orphan medicinal products) if (1) the product candidate is intended for the treatment, prevention or medical diagnosis of seriously debilitating or life-threatening diseases; (2) the product candidate is intended to meet unmet medical needs of patients; (3) a marketing authorization may be granted prior to submission of comprehensive clinical data provided that the benefit of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required; (4) the risk-benefit balance of the product candidate is positive, and (5) it is likely that the sponsor will be in a position to provide the required comprehensive clinical trial data. A conditional marketing authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with respect to the completion of ongoing or new clinical trials and with respect to the collection of pharmacovigilance data. Conditional marketing authorizations are valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified conditions or specific obligations. The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization.

Prior to obtaining a marketing authorization in the European Union, sponsors have to demonstrate compliance with all measures included in an EMA-approved Pediatric Investigation Plan, or PIP, covering all subsets of the pediatric population, unless the EMA has granted a product-specific waiver, a class waiver or a deferral for one or more of the measures included in the PIP. The respective requirements for all marketing authorization procedures are set forth in Regulation (EC) No 1901/2006, which is referred to as the Pediatric Regulation. This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already authorized. The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults. The PDCO may also grant waivers when development of a medicine in children is not needed or is not appropriate because (a) the product is likely to be ineffective or unsafe in part or all of the pediatric population; (b) the disease or condition occurs only in adult population; or (c) the product does not represent a significant therapeutic benefit over existing treatments for pediatric population. Before a marketing authorization application ~~used~~can be filed, or an existing marketing authorization can be amended, the EMA determines that companies actually comply with the agreed studies and measures listed in each relevant PIP.

In March 2016, the EMA launched an initiative to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist. The PRIority MEdicines, or PRIME, scheme is intended to encourage product development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure. Products from small- and medium-sized enterprises, or SMEs, may qualify for earlier entry into the PRIME scheme than larger companies. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marketing authorization application assessment once a dossier has been submitted. Importantly, a dedicated agency contact and rapporteur from the CHMP or Committee for Advanced Therapies are appointed early in the PRIME scheme, facilitating increased understanding of the product at EMA’s Committee level. A kick-off meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance to the sponsor on the overall development and regulatory strategies.

A marketing authorization is valid for five years in principle and the marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the ~~BLA~~marketing authorization was granted, at least nine months before the marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited period, unless the European Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal. Any authorization which is not followed by the actual placing of the product on the EU market (in case of centralized procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid (the so-called sunset clause).

As in the United States, ~~is similar~~both marketing authorization holders and manufacturers of medicinal products are subject to ~~that required~~comprehensive regulatory oversight by the EMA and the competent authorities of the individual EU Member States both before and after grant of the manufacturing and marketing authorizations. The holder of an EU marketing authorization for a medicinal product must, for example, comply with EU pharmacovigilance legislation and its related regulations and guidelines which entail many requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of medicinal products. The manufacturing process for medicinal products in the European Union is also highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations. Manufacturing requires a manufacturing authorization, and the manufacturing authorization holder must comply with various requirements set out in the applicable EU laws, including compliance with EU cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients.

In the European Union, the advertising and promotion of approved products are subject to EU Member States’ laws governing promotion of medicinal products, interactions with clinicians, misleading and comparative advertising and unfair commercial practices. In addition, other legislation adopted by individual EU Member States may apply to the advertising and promotion of medicinal products. These laws require that promotional materials and advertising in relation to medicinal products comply with the ~~exception~~product’s Summary of ~~among other things, region-specific document requirements.~~Product Characteristics, or SmPC, as approved by the competent authorities. Promotion of a medicinal product that does not comply with the SmPC is considered to constitute off-label promotion, which is prohibited in the European Union.

In the European Union, ~~also provides opportunities~~new products authorized for ~~market exclusivity. For example, upon receiving~~ marketing ~~authorization, innovative medicinal products generally receive~~(i.e., reference products) qualify for eight years of data exclusivity and an additional two years of market ~~exclusivity. If granted,~~exclusivity upon marketing authorization. The data exclusivity period prevents generic sponsors from relying on the preclinical and clinical trial data contained in the dossier of the reference product when applying for a generic marketing authorization in the European Union during a period of eight years from the date on which the reference product was first authorized in the European Union. The market exclusivity period prevents a successful generic sponsor from commercializing its product in the European Union until ten years have elapsed from the initial authorization of the reference product in the European Union. The ten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

The criteria for designating an orphan medicinal product in the European Union are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life- threatening or chronically debilitating condition, (2) either (a) such condition affects no more than five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition. The term ‘significant benefit’ is defined in Regulation (EC) 847/2000 to mean a clinically relevant advantage or a major contribution to patient care.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. During this ten year market exclusivity period, the EMA or the competent authorities of the Member States of the EEA, cannot accept an application for a marketing authorization for a similar medicinal product for the same indication. A similar medicinal product is defined as a medicinal product containing a similar active substance or substances as contained in an authorized orphan medicinal product, and which is intended for the same therapeutic indication. The application for orphan designation must be submitted before the application for marketing authorization. The sponsor will receive a fee reduction for the marketing authorization application if the orphan designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

The ten-year market exclusivity in the European Union may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if: (1) the second sponsor can establish that its product, although similar, is safer, more effective or otherwise clinically superior; (2) the sponsor consents to a second orphan medicinal product application; or (3) the sponsor cannot supply enough orphan medicinal product.

If a sponsor obtains a marketing authorization in all EU Member States, or a marketing authorization granted in the centralized procedure by the European Commission, and the trial results for the pediatric population are included in the product information, even when negative, the medicine is then eligible for an additional six-month period of qualifying patent protection through extension of the term of the Supplementary Protection Certificate, or SPC, or alternatively a one year extension of the regulatory market exclusivity from ten to eleven years, as selected by the marketing authorization holder.

The European Union also provides for patent term extension through Supplementary Protection Certificates, or SPCs. The rules and requirements for obtaining a SPC are similar to those in the United States. An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of marketing exclusivity for a product. In certain circumstances, these periods may be extended for six additional months if pediatric exclusivity is obtained. Although SPCs are available throughout the European Union, sponsors must apply on a country‑by‑country basis. Similar patent term extension rights exist in certain other foreign jurisdictions outside the European Union.

In the European Union, similar political, economic and regulatory developments to those in the United States may affect our ability to profitably commercialize our product candidates, if approved. In markets outside of the United States and the European Union, reimbursement and healthcare payment systems vary significantly by country and many countries have instituted price ceilings on specific products and therapies. In many countries, including those of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control and access. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, pharmaceutical firms may be required to conduct a clinical trial that compares the cost-effectiveness of the product to other available therapies.

In the European Union, medical devices such as companion diagnostics must comply with the General Safety and Performance Requirements, or SPRs, detailed in Annex I of the EU Medical Devices Regulation (Regulation (EU) 2017/745), or MDR which came into force on May 26, 2021 and replaced the previously applicable EU Medical Devices Directive (Council Directive 93/42/EEC). Compliance with SPRs and additional requirements applicable to companion medical devices is a prerequisite to be able to affix the CE Mark of Conformity to medical devices, without which they cannot be marketed or sold. To demonstrate compliance with the SPRs, a manufacturer must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification. The MDR is meant to establish a uniform, transparent, predictable, and sustainable regulatory framework across the European Union for medical devices.

Separately, the regulatory authorities in the European Union ~~from referencing~~also adopted a new In Vitro Diagnostic Regulation, or IVDR, (EU) 2017/746, which will become effective in May 2022. The new regulation will replace the ~~innovator’s data~~In Vitro Diagnostics Directive (IVDD) 98/79/EC. Manufacturers wishing to ~~assess~~apply to a ~~generic~~notified body for a conformity assessment of their in vitro diagnostic medical device have until May 2022 to update their Technical Documentation to meet the requirements and comply with the new, more stringent Regulation. Once applicable, the regulation will, among other things: strengthen the rules on placing devices on the market and reinforce surveillance once they are available; establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the market; improve the traceability of medical devices throughout the supply chain to the end-user or ~~biosimilar application. There is no guarantee that~~patient through a ~~product will be considered by~~unique identification number; set up a central database to provide patients, healthcare professionals and the ~~European Union’s regulatory authorities to be an innovative medicinal product, and~~public with comprehensive information on products ~~may not qualify for data exclusivity. Products receiving orphan designation~~available in the European ~~Union can receive ten years of market exclusivity, during which time no similar medicinal product~~Union; and strengthen rules for the ~~same indication~~assessment of certain high-risk devices, such as implants, which may behave to undergo an additional check by experts before they are placed on the market. ~~An orphan product can also obtain an additional two years~~

Many countries outside of ~~market exclusivity in~~ the ~~European Union for pediatric studies. No extension to any supplementary protection certificate can be granted on~~United States maintain rigorous laws governing the ~~basis~~privacy and security of ~~pediatric studies for orphan indications.~~

The GDPR also imposes strict rules on the transfer of personal data to countries outside the ~~European Economic Area,~~EEA, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR ~~will be~~is a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

The United Kingdom’s withdrawal from the European Union took place on January 31, 2020. The European Union and the United Kingdom reached an agreement on their new partnership in the Trade and Cooperation Agreement, or the Agreement, which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021. The Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products. Thereafter, the European Union and the United Kingdom will form two separate markets governed by two distinct regulatory and legal regimes. As such, the Agreement seeks to minimize barriers to trade in goods while accepting that border checks will become inevitable as a consequence that the United Kingdom is no longer part of ~~products approved by~~ the ~~FDA and other government authorities. Sales~~single market. As of pharmaceutical products depend in significant part on the availability and adequacy of third-party payor reimbursement. Third-party payors include government health administrative authorities, including authorities at the U.S. federal and state level, managed care providers, private health insurers and other organizations. Third-party payors are increasingly challenging the prices charged for, examining the medical necessity of and assessing the cost-effectiveness of medical products and services.

~~product, in addition to~~January 1, 2021, the costs required to obtain FDA or other comparable regulatory approvals. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Third-party reimbursement may not be sufficient to maintain price levels high enough to realize an appropriate return on investment in product development.

We actively seek to protect the proprietary technology that we consider important to our business, including pursuing patents that cover our ADC ~~platform,~~platforms, proprietary ~~composition~~compositions of matter, ADC product candidates and methods of using and manufacturing the same, as well as any other relevant inventions and improvements that are considered commercially important to the development of our business. We also rely on trade secrets, ~~know how~~know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a patent that covers a drug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements are met. In the future, if and when our drug candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those drugs, depending upon the length of the clinical ~~studies~~trials for each drug and other factors. There can be no assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or favorable adjustments to the terms of any of our patents.

As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property position for our drug candidates and technologies will depend on our success in obtaining effective patent claims and enforcing those claims if granted. However, our pending patent applications, and any patent applications that we may in the future file or license from third parties, may not result in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents. Any issued patents that we may currently own or license or may receive in the future may be challenged, invalidated, circumvented or have the scope of their claims narrowed. For example, we cannot be certain of the priority of inventions covered by pending third party patent applications. If third parties prepare and file patent applications in the United States that also claim technology or therapeutics to which we have rights, we may have to participate in interference proceedings in the USPTO to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us, which is highly unpredictable. In addition, because of the extensive time required for clinical development and regulatory review of a drug candidate we may develop, it is possible that, before any of our drug candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby limiting the protection such patent would afford the respective product and any competitive advantage such patent may provide. For more information regarding the risks related to our intellectual property, please see “Risk factors—Risks related to our intellectual property.”

The intellectual property portfolio of our ADC ~~platform,~~platforms, our ADC product candidates and components thereof and companion diagnostics are summarized below. Some of these portfolios are in very early stages and prosecution has yet to commence on ~~most~~some of the pending patent applications. Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the USPTO may be narrowed (sometimes significantly) by the time they issue, if they issue at all. We expect this to be the case with respect to our pending patent applications referred to below.

The intellectual property portfolio for our Dolaflexin ADC platform is directed to compositions of matter for the Dolaflexin ADCs, as well as methods of using and making these novel conjugates, compositions of matter for Dolaflexin drug conjugates prior to conjugation with the antibody or antibody fragment and methods of making the same. As of January 31, ~~2021,~~2022, we owned two issued U.S. patents, ~~and one pending non-provisional U.S. patent application, 33~~34 issued foreign patent, and 1211 pending foreign patent applications in a number of foreign jurisdictions, including, but not limited to, Australia, Brazil, Canada, China, Eurasia, Europe, Hong Kong, Israel, India, Japan, South Korea, Mexico, Russia, South Africa and Taiwan. Any U.S. or foreign patent issuing from the pending applications covering Dolaflexin ADC platform is projected to expire in 2034, and any U.S. or foreign patent issuing from the pending applications covering the method of making the Dolaflexin ADC is projected to expire in 2038, excluding any additional term for patent term adjustments or patent term extensions.

In addition, as mentioned above, we have exclusively in licensed four issued U.S. patents and one issued European patent for the novel NaPi2b antibody from Recepta, which Recepta licensed from Ludwig Institute for Cancer Research. These in licensed issued U.S. and European patents are projected to expire in 2029, excluding any additional term for patent term adjustments or patent term extensions. Recepta still owns one pending Brazilian patent application for the NaPi2b antibody, which is not licensed to us. A patent issuing from this Brazilian patent application is projected to expire in 2029.

The biotechnology and biopharmaceutical industries, and the oncology subsector, are characterized by rapid evolution of technologies, fierce competition and strong defense of intellectual property. Any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies that may become available in the future. While we believe that our proprietary ADC platforms and scientific expertise provide us with competitive advantages, a wide variety of institutions, including large biopharmaceutical companies, specialty biotechnology companies, academic research departments and public and private research institutions, are actively developing potentially competitive products and technologies. These competitors generally fall within the following categories:

As of January 31, ~~2021,~~2022, we had ~~110~~169 full time employees, including 7690 with M.D., Ph.D. or other advanced degrees. Of these full time employees, 87128 are engaged in research and development and 2341 are engaged in general and administrative activities. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

We were incorporated in 2001 as a Delaware corporation. Our principal executive offices are located at 840 Memorial Drive, Cambridge, MA 02139, and our telephone number is 617-498-0020. Our internet site is www.mersana.com. We routinely make available important information free of charge, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. We recognize our website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with our disclosure obligations under SEC Regulation FD. Information contained on our website shall not be deemed incorporated into, or to be part of this Annual Report on Form 10-K, and any website references are not intended to be made through active hyperlinks.

Delays, including delays caused by the above factors, can be costly and could negatively affect our ability to complete a clinical ~~study.~~trial. If we or our partners are not able to successfully complete clinical ~~studies,~~trials, we or they will not be able to obtain regulatory approval and will not be able to commercialize our product candidates or our partners’ product candidates based on our technology.

Clinical ~~studies~~trials require sufficient patient enrollment, which is a function of many factors, including:

In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our current and future product candidates. This competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such sites. Moreover, because our current and future product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy, rather than enroll patients in our ongoing or any future clinical trial.

Undesirable side effects caused by our product candidates or ADCs being developed or commercialized by our partners or competitors could cause us or regulatory authorities to interrupt, delay or halt clinical ~~studies~~trials and could result in a more restrictive label or the denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. Further, clinical ~~studies~~trials by their nature utilize a sample of the potential patient population. With a limited number of subjects and limited duration of exposure, rare and severe side effects of our product candidates or those of our competitors may only be uncovered with a significantly larger number of patients exposed to the drug. SAEs, including death, deemed to be caused by our product candidates or those of our competitors, either before or after receipt of marketing approval, could have a material adverse effect on the development of our product candidates and our business as a whole.

~~If we~~Patients in our ongoing clinical trials have experienced SAEs, including without limitation death, pneumonitis, renal impairment, abdominal pain, fatigue, vomiting, sepsis, and pyrexia. We expect that certain patients in ongoing and future trials will experience additional SAEs, including those that may result in death, as our product candidates progress through clinical development. These or ~~others identify~~additional undesirable side effects caused by our product candidates or those of our competitors, either before or after receipt of marketing approval, could result in a number of potentially significant negative consequences, ~~could result,~~ including:

Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and could substantially increase commercialization costs.

Our and our partners’ research programs to identify new product candidates will require substantial technical, financial and human resources, and we or our partners may be unsuccessful in our or their efforts to identify new product candidates. If we or our partners are unable to identify suitable additional product candidates for preclinical and clinical development, our or their ability to develop product candidates and our ability to obtain revenues from commercializing our products or to receive royalties from our partners’ sales of their products in future periods could be compromised, which could result in significant harm to our financial position and adversely impact our stock price.

We have incurred net losses since our inception. Our net loss was ~~$88.0~~$170.1 million for the year ended December 31, ~~2020.~~2021. As of December 31, ~~2020,~~2021, we had an accumulated deficit of ~~$280.4~~$450.5 million. We do not know when or whether we will become profitable. To date, we have not commercialized any products and therefore have never generated any revenues from the sale of products, and we do not expect to generate any product revenues in the foreseeable future. Our losses have resulted principally from costs incurred in our discovery and development activities. Our net losses may fluctuate significantly from quarter to quarter and year to year.

We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, we have financed our operations primarily ~~through~~with the ~~sale~~proceeds from our initial public offering, our follow-on public offerings in 2019 and 2020, the use of our at-the-market, or ATM, equity ~~securities, the receipt of funds through strategic partnerships with third parties~~offering program, and our ~~credit facility.~~strategic partnerships. The amount of our future net losses will depend, in

We expect to continue to incur significant expenses and ~~increasing net~~operating losses ~~for at least~~over the next several years. We ~~expect~~anticipate that our expenses will increase ~~substantially~~significantly in connection with our ongoing activities, as we:

If we are required by the ~~United States Food and Drug Administration, or~~ FDA or any equivalent foreign regulatory authority to perform clinical ~~studies~~trials or preclinical ~~studies~~trials in addition to those we currently expect to conduct, or if there are any delays in completing the clinical ~~studies~~trials of UpRi, XMT-1592, or any other current or future product candidates, our expenses could increase.

To become and remain profitable, we must succeed in developing our product candidates, obtaining regulatory approval for them, and manufacturing, marketing and selling those products for which we may obtain regulatory approval. We may not succeed in these activities, and we may never generate revenue from product sales or strategic partnerships in an amount sufficient to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become or remain profitable would depress our market value and could impair our ability to raise capital, expand our business, discover or develop other product candidates or continue our operations.

In October 2021, we entered into a Loan and Security Agreement, or the New Credit Facility, with Oxford Finance LLC as the collateral agent and a lender, and SVB as a lender, together, the Lenders. Pursuant to the New Credit Facility, as amended in February 2022, we may borrow up to an aggregate of $100 million, which includes $60 million available immediately, $20 million in a tranche that is subject to meeting certain development milestones, and an additional tranche of $20 million, which is subject to conditional approval from the Lenders. The New Credit Facility is secured by substantially all of our personal property owned or later acquired, excluding intellectual property (but including the right to payments and proceeds from intellectual property), and a negative pledge on intellectual property.

The New Credit Facility also includes customary representations and warranties, affirmative and negative covenants and conditions to drawdowns, as well as customary events of default. Certain of the customary negative covenants limit our ability, among other things, to incur future debt, grant liens, make investments, make acquisitions, distribute dividends, make certain restricted payments and sell assets, subject in each case to certain exceptions. Our failure to comply with these covenants would result in an event of default under the Loan Agreement and could result in the acceleration of the obligations we owe pursuant to the New Credit Facility.

Our cash and cash equivalents were ~~$255.1~~$177.9 million as of December 31, ~~2020.~~2021. We have utilized substantial amounts of cash since our inception and expect that we will continue to expend substantial resources for the foreseeable future developing UpRi, ~~our lead product candidate,~~ XMT-1592, and any other current or future product candidates. These expenditures may include costs associated with research and development, conducting preclinical studies and clinical ~~studies,~~trials, potentially obtaining regulatory approvals and manufacturing products, as well as marketing and selling products approved for sale, if any, and potentially acquiring new technologies. In addition, other unanticipated costs may arise. Because the outcome of our planned and anticipated clinical ~~studies~~trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates. Our costs will increase if we experience any delays in our clinical ~~studies~~trials for UpRi, XMT-1592 or any other current or future product candidates, including delays in enrollment of patients. We also incur costs associated with operating as a public company, hiring additional personnel and expanding our facilities.

Our future capital requirements depend on many factors, including:

Because we have limited financial and managerial resources, we focus on specific product candidates. As a result, we may forgo or delay pursuit of opportunities with other product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Failure to properly assess potential product candidates could result in our focus on product candidates with low market potential, which would harm our business and financial condition. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through partnering, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

We rely on third-party contract manufacturers to manufacture our preclinical and clinical ~~study~~trial product supplies, and we lack the internal resources and the capability to manufacture any product candidates on a clinical or commercial scale. The facilities used by our contract manufacturers to manufacture the active pharmaceutical ingredient and final drug product must be acceptable to the FDA and other comparable foreign regulatory agencies pursuant to inspections that would be conducted after we submit our marketing application or relevant foreign regulatory submission to the applicable regulatory agency. There can be no assurance that our preclinical and clinical development product supplies will be sufficient, uninterrupted or of satisfactory quality or continue to be available at acceptable prices. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or applicable foreign regulatory agencies, they will not be able to secure or maintain regulatory approval for their manufacturing facilities. Any replacement of our manufacturers could require significant effort and expertise because there may be a limited number of qualified replacements.

The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as cGMP. We have no direct control over our contract manufacturers’ ability to maintain adequate quality control, quality assurance and qualified personnel. In the event that any of our manufacturers fails to comply with regulatory requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty transferring such skills or technology to another third party and a feasible alternative may not exist. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third-party manufacture our product candidates. If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget. Our reliance on contract manufacturers also exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may appropriate our trade secrets or other proprietary information.

We expect to continue to rely on third-party manufacturers if we receive regulatory approval for any product candidate. To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully. Our or a third party’s failure to execute on our manufacturing requirements and comply with cGMP could adversely affect our business in a number of ways, including:

In order to conduct clinical ~~studies~~trials of our product candidates and commercialize any approved product candidates, we, or our manufacturing partners, will need to manufacture them in large quantities. We, or our manufacturing partners, may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-up activities. If we, or any manufacturing partners, are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing and clinical ~~studies~~trials of that product ~~candidates~~candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. We have evaluated which third-party ~~manufactures~~manufacturers to engage for scale-up to commercial supply of our product candidates, including UpRi ~~our lead product candidate~~ and XMT-1592, and we have begun to transfer and scale-up of certain manufacturing activities. If we are unable to obtain or maintain third-party manufacturing for commercial supply of our product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.

We designed the ~~Phase 1~~ongoing clinical ~~studies~~trials for UpRi ~~our lead product candidate,~~ and XMT-1592, and we intend to design any future clinical ~~studies~~trials for any future unpartnered product candidates that we may develop if preclinical studies are successful. However, we rely on CROs, clinical sites, investigators and other third parties to assist in managing, monitoring and otherwise carrying out many of these ~~studies.~~trials. As a result, we have less direct control over the conduct, timing and completion of these clinical ~~studies~~trials and the management of data developed through clinical ~~studies~~trials than would be the case if we were relying entirely upon our own staff. These CROs, investigators and other third parties are not our employees and we have limited control over the amount of time and resources that they dedicate to our programs. We compete with many other companies for the resources of these third parties. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs. The third parties with whom we contract might not be diligent, careful or timely in conducting our preclinical studies or clinical ~~studies,~~trials, or complying with cGLP or cGCP, as applicable, resulting in the preclinical studies or clinical ~~studies~~trials being delayed or unsuccessful.

The third parties on whom we rely generally may terminate their engagements at any time, and having to enter into alternative arrangements would delay development and commercialization of our product candidates. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may:

The FDA and comparable foreign regulatory authorities require compliance with regulations and standards, including GCP, for designing, conducting, monitoring, recording, analyzing and reporting the results of clinical ~~studies~~trials to assure that the data and

If these third parties do not successfully carry out their duties under their agreements, if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to clinical ~~study~~trial protocols or to regulatory requirements, or if they otherwise fail to comply with clinical ~~study~~trial protocols or meet expected deadlines, the clinical ~~studies~~trials of our product candidates may not meet regulatory requirements. The FDA enforces GCP regulations through periodic inspections of clinical ~~study~~trial sponsors, principal investigators and ~~study~~trial sites. If we or our CROs fail to comply with applicable GCPs or other regulatory requirements, the clinical data generated in our clinical ~~studies~~trials may be deemed unreliable, third parties may need to be replaced, we may be subject to negative publicity, fines and civil or criminal sanctions, and preclinical development activities or clinical ~~studies~~trials may be extended, delayed, suspended or terminated. If any of these events occur, we may not be able to obtain regulatory approval of our product candidates on a timely basis or at all.

Our partners may terminate their agreements with us for cause under certain circumstances or at will in certain cases and discontinue use of our technologies. In addition, we cannot control the amount and timing of resources our partners may devote to products utilizing or incorporating our technology. Moreover, our relationships with our partners may divert significant time and effort of our scientific staff and management team and require effective allocation of our resources to multiple internal and collaborative projects. Our partners may fail to perform their obligations under the collaboration agreements or may not perform their obligations in a timely manner. If conflicts arise between our partners and us, the other party may act in a manner adverse to us and could limit our ability to implement our strategies. If any of our partners terminate or breach our agreements with them, or otherwise fail to complete their obligations in a timely manner, it may have a detrimental effect on our financial position by reducing or eliminating the potential for us to receive technology access and license fees, milestones and royalties, reimbursement of development costs, as well as possibly requiring us to devote additional efforts and incur costs associated with pursuing internal development of product candidates. Furthermore, if our partners do not prioritize and commit sufficient resources to programs associated with our product candidates or collaboration product candidates, we or our partners may be unable to commercialize these product candidates, which would limit our ability to generate revenue and become profitable.

Our partners may separately pursue competing products, therapeutic approaches or technologies to develop treatments for the diseases targeted by us or our partners. Competing products, either developed by the partners or to which the partners have rights, may result in the withdrawal of partner support for our product candidates. Even if our partners continue their contributions to the strategic partnerships, they may nevertheless determine not to actively pursue the development or commercialization of any resulting products. Additionally, if our partners pursue different clinical or regulatory strategies with their product candidates based on our platforms or technologies, adverse events with their product candidates could negatively affect our product candidates utilizing similar technologies. Any of these developments could harm our product development efforts.

We have entered into strategic partnerships with a limited number of companies. To date, a substantial portion of our revenue has resulted from payments made under agreements with our strategic partners, and we expect that a portion of our revenue will continue to come from strategic partnerships. The loss of any of our partners, or the failure of our partners to perform their obligations under their agreements with us, including paying license or technology fees, milestone payments, royalties or reimbursements,

We continue to strategically evaluate our partnerships and, as appropriate, we expect to enter into additional strategic partnerships in the future, including potentially with major biotechnology or biopharmaceutical companies. We face significant competition in seeking appropriate partners for our product candidates, and the negotiation process is time-consuming and complex. In order for us to successfully partner our product candidates, potential partners must view these product candidates as economically valuable in markets they determine to be attractive in light of the terms that we are seeking and other available products for licensing by other companies. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic partnerships if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing. Any delay in entering into strategic partnership agreements related to our product candidates could delay the development and commercialization of such candidates and reduce their competitiveness even if they reach the market. If we are not able to generate revenue under our strategic partnerships when and in accordance with our expectations or the expectations of industry analysts, this failure could harm our business and have an immediate adverse effect on the trading price of our common stock.

If we fail to establish and maintain additional strategic partnerships related to our unpartnered product candidates, we will bear all of the risk and costs related to the development of any such product candidate, and we may need to seek additional financing, hire additional employees and otherwise develop expertise, such as regulatory expertise, for which we have not budgeted. If we were not successful in seeking additional financing, hiring additional employees or developing additional expertise, our cash burn rate would increase or we would need to take steps to reduce our rate of product candidate development. This could negatively affect the development of any unpartnered product candidate.

Even if we obtain regulatory approval for UpRi, ~~our lead product candidate,~~ XMT-1592, or any other current or future product candidates that we may develop or acquire in the future, the product candidate may not gain market acceptance among physicians, health care payors, patients and the broader healthcare community. Market acceptance of any approved products depends on a number of factors, including:

Perceptions of any product are influenced by perceptions of competitors’ products that are in the same class of drugs or have a similar mechanism of action. As a result, adverse public perception of our competitors’ products may negatively impact the market acceptance of our product candidates. Market acceptance is critical to our ability to generate significant revenue and become profitable. Any therapeutic candidate, if approved and commercialized, may be accepted in only limited capacities or

The precise incidence and prevalence of ~~epithelial~~ ovarian cancer and ~~non-squamous NSCLC~~other cancers with NaPi2b expression are unknown. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our ~~drug~~product candidates, are based on estimates. The total addressable market opportunity for UpRi or XMT-1592 for the treatment of ~~epithelial~~ ovarian cancer and non-squamous ~~NSCLC~~non-small cell lung cancer with NaPi2b expression will ultimately depend upon, among other things, the diagnosis criteria included in the final label for UpRi or XMT-1592, if our ~~drug~~product candidates are approved for sale for these indications, acceptance by the medical community and patient access, drug pricing and reimbursement. The number of patients who can be treated with our ~~drug~~product candidates may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our drugs, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.

We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of products. To achieve commercial success for any product for which we have obtained marketing approval, we will need to establish a sales and marketing ~~organization.~~organization or pursue a collaborative arrangement for such sales and marketing.

In the future, we expect to build a focused sales and marketing infrastructure to market UpRi, ~~our lead product candidate,~~ XMT-1592, and any other current or future product candidates in the United States and certain foreign jurisdictions, if and when they are approved. There are risks involved with establishing our own sales, marketing and distribution capabilities.

For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

If we are unable to establish our own sales, marketing and distribution capabilities and enter into arrangements with third parties to perform these services, our product revenues and our profitability, if any, are likely to be lower than if we were to market, sell and distribute any products that we develop ourselves.

In addition, we may not be successful in entering into arrangements with third parties to sell, market and distribute certain of our product candidates outside of the United States or may be unable to do so on terms that are favorable to us. We likely will have limited control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

In both domestic and foreign markets, sales of any of our product candidates, if approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. These third-party payors decide which drugs will be covered and establish reimbursement levels for those drugs. The containment of health care costs has become a priority of foreign and domestic governments as well as private third-party payors. The prices of drugs have been a focus in this effort. Governments and private third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably. Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues.

Reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is:

Adverse pricing limitations may hinder our ability to recoup our investment in UpRi, ~~our lead product candidate,~~ XMT-1592, or any other current or future product candidates, even if such product candidates obtain marketing approval.

Obtaining coverage and reimbursement approval for a product from a government or other third-party payor is a time consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to the payor. Further, there is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will be available for any of our product candidates. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our products. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize certain of our products. In addition, in the United States, third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. As a result, significant uncertainty exists as to whether and how much third-party payors will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs. Manufacturers further may be required to offer price concessions to achieve sales or favorable coverage.

In some countries, including member states of the European Union, the pricing of prescription drugs is subject to governmental control. Additional countries may adopt similar approaches to the pricing of prescription drugs. In such countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we may be required to conduct a clinical ~~study~~trial or other ~~studies~~trials that compare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. We cannot be sure that such prices and reimbursement will be acceptable to us or our strategic partners. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels

within the country of publication and other countries. If pricing is set at unsatisfactory levels or if reimbursement of our products is unavailable or limited in scope or amount, our revenues from sales by us or our strategic partners and the potential profitability of our product candidates in those countries would be negatively affected.

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Many third parties compete with us in developing various approaches to cancer therapy. They include pharmaceutical companies, biotechnology companies, academic institutions and other research organizations. Any treatments developed by our competitors could be superior to our product candidates. It is possible that these competitors will succeed in developing technologies that are more effective than our platforms or product candidates or that would render our platforms obsolete, noncompetitive or ~~noncompetitive.~~not economical. We anticipate that we will face increased competition in the future as additional companies enter our market and scientific developments surrounding other cancer therapies continue to accelerate.

In Europe, the European Medicines Agency has issued guidelines for approving products through an abbreviated pathway, and biosimilars have been approved in Europe. If a biosimilar version of one of our potential products were approved in the United States or Europe, it could have a negative effect on sales and gross profits of the potential product and our financial condition.

With respect to our current and potential future product candidates, we believe that our ability to compete effectively and develop products that can be manufactured cost-effectively and marketed successfully will depend on our ability to:

Our success depends in large part on our ability to obtain and maintain protection with respect to our intellectual property and proprietary technology. We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our platforms and our product candidates, including UpRi and XMT-1592. The patent position of biopharmaceutical companies is generally uncertain because it involves complex legal and factual considerations and has, in recent years, been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights is highly uncertain. The standards applied by the United States Patent and Trademark Office, or USPTO, and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in patents. In addition, changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The patent prosecution process is expensive, complex and time-consuming, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents and patent applications at a reasonable cost or in a timely manner. It is also possible that we fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found. We may be unaware of prior art that could be used to invalidate an issued patent or prevent our pending patent applications from issuing as patents.

The patent applications that we own or in-license may fail to result in issued patents, and even if they do issue as patents, such patents may not cover our platforms and product candidates in the United States or in other countries. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. For example, even if patent applications we license or own do successfully issue as patents and even if such patents cover our platforms and product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not provide adequate protection or exclusivity for our ADC platform or product candidates, prevent others from designing around our claims or otherwise provide us with a competitive advantage. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

If patent applications we own or have in-licensed with respect to our platforms or our product candidates fail to issue as patents, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity, it could dissuade companies from collaborating with us. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful challenge to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful development and commercialization of any product candidate. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by the USPTO or a third-party to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however, the life of a patent and the protection it affords is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, our owned or in-licensed patents protecting such

candidates might expire before or shortly after such candidates are commercialized. If we encounter delays in obtaining regulatory approvals, the period of time during which we could market a drug under patent protection could be further reduced. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from similar or generic products. The launch of a generic version of one of our products in particular would be likely to result in an immediate and substantial reduction in the demand for our product, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law, which could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. These provisions also allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the USPTO administered post grant proceedings. The USPTO developed additional regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and, in particular, the first-to-file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Any loss of patent protection could have a material adverse impact on our business. We may be unable to prevent competitors from entering the market with a product that is similar to or the same as our product candidates.

We rely, in part, on license, collaboration and other agreements. We may need to obtain additional licenses from others to advance our research or allow commercialization of our product candidates and it is possible that we may be unable to obtain additional licenses at a reasonable cost or on reasonable terms, if at all. The licensing or acquisition of third party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to use. We also may be

unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.

In addition, our existing licenses and collaboration agreements, including our license with Recepta Biopharma S.A., or Recepta, for intellectual property covering the NaPi2b antibody in UpRi and XMT-1592, and our license with Synaffix ~~B.V,~~B.V., or Synaffix, for intellectual property covering components included in the Dolasynthen platform, impose, and any future licenses, collaborations or other agreements we enter into are likely to impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent prosecution and enforcement or other obligations on us. If we breach any of these obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license, including, in the case of our agreement with Recepta, the license for the rights covering the NaPi2b antibody in UpRi and XMT-1592, and in the case of our agreement with Synaffix, the license for the rights covering components in the Dolasynthen platform. Any of the foregoing could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology or enable a competitor to gain access to the licensed technology. Disputes may arise regarding intellectual property subject to a licensing, collaboration or other agreements, including:

In addition, the agreements under which we currently license intellectual property or technology to or from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any

In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering the technology that we license from third parties. For example, pursuant to our license agreement with Recepta, Ludwig Institute for Cancer Research Ltd., a co-owner of the intellectual property, retains control of such activities. Therefore, we cannot be certain that these patents and applications will be prosecuted, maintained and enforced in a manner consistent with the best interests of our business. If our licensors fail to obtain or maintain such intellectual property, or lose rights to such intellectual property, the rights we have licensed and our exclusivity may be reduced or eliminated and our right to develop and commercialize any of our products that are subject to such licensed rights could be adversely affected.

Moreover, our rights to our in-licensed patents and patent applications are dependent, in part, on inter-institutional or other operating agreements between the joint owners of such in-licensed patents and patent applications. If one or more of such joint owners breaches such inter-institutional or operating agreements, our rights to such in-licensed patents and patent applications may be adversely affected. In addition, while we cannot currently determine the amount of the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant. The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any. Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.

If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate and our business, financial condition, results of operations and prospects could suffer.

Competitors and other third parties may infringe our patents or misappropriate or otherwise violate our owned and in-licensed intellectual property rights. To counter infringement or unauthorized use, litigation or other intellectual property proceedings may be necessary to enforce or defend our owned and in-licensed intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Such litigation or proceedings can be expensive and time consuming, and any such claims could provoke defendants to assert counterclaims against us, including claims alleging that we infringe their patents or other intellectual property rights. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Many of our current and potential competitors have the ability to dedicate substantially greater resources to litigate intellectual property rights than we can and have more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Even if resolved in our favor, litigation or other intellectual property proceedings could result in substantial costs and diversion of management attention and resources, which could harm our business and financial results.

In addition, in a litigation or other proceeding, a court or administrative judge may decide that a patent owned by or licensed to us is invalid or unenforceable, or a court may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or other proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation and other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. During the course of any patent or other intellectual property litigation or other proceeding, there could be public announcements of the results of hearings, rulings on motions and other interim proceedings or developments and if securities analysts or investors regard these announcements as negative, the perceived value of our product candidates, programs or intellectual property could be diminished. Accordingly, the market price of our common stock may decline. Any of the foregoing could have a material adverse effect on our business, financial conditions, results of operations and prospects.

Our commercial success depends in part on our ability and the ability of our strategic partners to develop, manufacture, market and sell product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biopharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, reexamination, inter partes review, derivation and post grant review proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are developing and may develop our product candidates. As the biopharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we, our customers, licensees or parties indemnified by us are employing their proprietary technology without authorization or have infringed upon, misappropriated or otherwise violated their intellectual property or other rights, regardless of their merit. For example, we may be subject to claims that we are infringing the patent, trademark or copyright rights of third parties, or that our employees have misappropriated or divulged their former employers’ trade secrets or confidential information. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates, that we failed to identify. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until issued as patents. Except for certain exceptions, including the preceding exceptions, patent applications in the United States and elsewhere are generally published only after a waiting period of approximately 18 months after the earliest filing, and sometimes not at all. Therefore, patent applications covering our platforms or our product candidates could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our platforms, our product candidates or the use or manufacture of our product candidates.

Even if we believe a third party’s claims against us are without merit, a court of competent jurisdiction could hold that such third party’s patent is valid, enforceable and cover aspects of our product candidates, including the materials, formulations, methods of manufacture, methods of analysis, or methods for treatment, in which case, such third party would be able to block our ability to develop and commercialize the applicable technology or product candidate until such patent expired or unless we obtain a license and we may be required to pay such third-party monetary damages, which could be substantial. Such licenses may not be available on acceptable terms, if at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property and it could require us to make substantial licensing and royalty payments. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

Parties making claims against us may also obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our technologies or one or more of our product candidates. Defending against claims of patent infringement, misappropriation of trade secrets or other violations of intellectual property could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business. In the event of a successful claim of infringement against us, in addition to potential injunctive relief, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

We may face a claim of misappropriation if a third party believes that we inappropriately obtained and used trade secrets of such third party. If we are found to have misappropriated a third party’s trade secrets, we may be prevented from further using such trade secrets, limiting our ability to develop our product candidates, we may be required to obtain a license to such trade secrets which may not be available on commercially reasonable terms or at all and may be non-exclusive, and we may be required to pay damages, which could be substantial. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world where we expect there to be significant markets for our products could be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. In addition, our intellectual property license agreements may not always include worldwide rights. For example, certain U.S. and foreign issued patents and patent applications are licensed to us by Recepta on a worldwide basis, except that Recepta retains exclusive rights in such patents and patent applications in Brazil. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection or licenses but enforcement is not as strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Additionally, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our licensed and owned patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing as patents, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any

of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our platform technology and discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants and outside scientific advisors, contractors and partners. We cannot guarantee that we have entered into such agreement with each party that may have or have had access to our trade secrets or proprietary technology and processes. Additionally, our confidentiality agreements and other contractual protections may not be adequate to protect our intellectual property from unauthorized disclosure, third-party infringement or misappropriation. We may not have adequate remedies in the case of a breach of any such agreements, and our trade secrets and other proprietary information could be disclosed to our competitors or others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies.

Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, some courts outside and within the United States sometimes are less willing to protect trade secrets. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business.

Many of our and our licensors’ employees, including our senior management, consultants or advisors are currently, or previously were, employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, including members of our senior management, executed proprietary rights,

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we may develop, one or more of our owned or in-licensed U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent term extension of up to five years as compensation for the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations and prospects could be materially harmed.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and patent applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners to pay these fees due to U.S. and non-U.S. patent agencies. The USPTO and various non-U.S. government agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. We are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our ability to compete in the highly competitive biotechnology and biopharmaceutical industries depends upon our ability to attract, motivate and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on members of our senior management, including Anna Protopapas, our President and Chief Executive Officer. The loss of the services of any of our senior management could impede the achievement of our research, development and commercialization objectives. Also, each of these persons may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.

Recruiting and retaining qualified scientific, clinical, sales and marketing personnel will also be critical to our success. We conduct our operations at our facility in Cambridge, Massachusetts, in a region that is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel is intense and the turnover rate can be high, which may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, may be employed or have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

As we seek to advance our product candidates through clinical ~~studies~~trials and commercialization, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage

We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products. For example, we may be sued if any product we develop ~~allegedly~~ causes, or is perceived to cause, injury or is found to be otherwise unsuitable during ~~product~~clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

Failure to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We currently carry product liability insurance covering our clinical ~~studies~~trials in the amount of $10 million in the aggregate. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. In such instance, we might have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. If we are unable to obtain or maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibit the development and commercial production and sale of our product candidates, which could adversely affect our business, financial condition, results of operations and prospects.

Net cash used in operating activities was $140.0 million for the year ended December 31, 2021 and primarily consisted of a net loss of $170.1 million adjusted for changes in our net working capital and other non-cash items including stock-based compensation of $18.4 million and depreciation of $0.9 million. Net cash used in operating activities was $74.7 million for the year ended December 31, 2020 and primarily consisted of a net loss of $88.0 million adjusted for ~~changes in our net working capital and other~~ non-cash items including stock-based compensation of $7.2 million and depreciation of $1.0 million. ~~Net cash used in operating activities was $67.7 million for the year ended December 31, 2019 and primarily consisted of a net loss of $28.2 million adjusted for non-cash items including~~

Net cash used in investing activities was $0.6 million during the year ended December 31, 2021 compared to net cash provided by investing activities ~~was~~of $37.0 million during the year ended December 31, ~~2020 compared to net~~2020. Net cash used in investing activities ~~of $27.3 million during~~for the year ended December 31, ~~2019.~~2021 consisted primarily of the purchase of property and equipment. Net cash provided by investing activities for the year ended December 31, 2020 consisted primarily of maturities of marketable securities. Net cash used in investing activities for the year ended December 31, 2019 consisted primarily of purchases of marketable securities, partially offset by maturities of marketable securities. Net cash provided by investing activities for the year ended December 31, 2018 consisted primarily of maturities of marketable securities.

Net cash provided by financing activities was ~~$230.4~~$63.6 million during the year ended December 31, ~~2020~~2021 compared to net cash provided by financing activities of ~~$97.7~~$230.4 million during the year ended December 31, ~~2019.~~2020. During the year ended December 31, 2021 cash provided by financing activities consisted primarily of the proceeds from the use of the 2020 ATM of $43.1 million and issuance of debt, net of issuance costs, of $24.0 million under the New Credit Facility, as well as proceeds from exercise of stock options of $1.8 million, partially offset by repayment of debt of $5.5 million to repay the Prior Credit Facility. During the year ended December 31, 2020, cash provided by financing activities consisted primarily of $164.0 million related to the follow-on public offering ~~in May 2020~~ and the proceeds from the use of the 2018 ATM of $63.0 million, ~~in April 2020~~ as well as proceeds from exercise of stock options of $3.1 million. During the year ended December 31, 2019 cash provided by financing activities consisted primarily of the proceeds from our follow-on public offering of our common stock and issuance of debt. During the year ended December 31, 2018 cash provided by financing activities consisted primarily of the proceeds from the exercise of stock options.

We expect our cash expenditures to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical ~~studies~~trials of, and seek marketing approval for our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to drug sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators.

Identifying potential product candidates and conducting preclinical testing and clinical ~~studies~~trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve drug sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, strategic partnerships and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. We currently have access to ~~an additional line of credit under~~ the ~~credit facility with SVB,~~New Credit Facility, as described above, along with funds to potentially be earned in connection with our agreements with Janssen, Merck KGaA and Asana BioSciences, if research and development activities are successful under those agreements. Future additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through additional strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We enter into agreements in the normal course of business with third parties to assist us with preclinical, clinical, manufacturing, and other products and services for operating purpose. Certain of these agreements ~~provide for~~include termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to the parties with whom we contract upon termination, primarily to reimburse them for their unrecoverable outlays incurred prior to cancellation and for wind-down activities. The exact amounts of such obligations are dependent on the timing of termination and the exact terms of the relevant agreement and cannot be reasonably estimated. At December 31, ~~2020,~~2021, we had cancellable open purchase orders of ~~$59.8~~$138.7 million in total under ~~material~~ agreements for preclinical, clinical, manufacturing, and other products and services for operating purposes. These amounts represent only our estimate of those items for which we had a contractual commitment to pay at December 31, ~~2020,~~2021, assuming we would not cancel these agreements. The actual amounts we expect to pay in the future to the third parties under such agreements may differ from the cancellable open purchase order amounts.

Upon commencement of commercial sales of any ADC product directed to a ~~product,~~licensed target, if any, we are required to pay to Synaffix tiered royalties in the low-single digit percentages on net sales of the respective products. The Synaffix License remains in effect on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire valid claim in a patent licensed under the Synaffix License covering such product in such country. Upon the expiration of the Synaffix License for each licensed product in each country, the licenses granted to us for such product in such country will become fully paid-up and perpetual. We ~~have made $0.8 million~~may terminate the Synaffix License in ~~development milestone payments~~its entirety or on a licensed product-by-licensed product basis at any time. Either party may terminate the Synaffix License, subject to ~~Synaffix to date.~~

Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.

We believe that our most critical accounting policies are those relating to revenue recognition and accrued research and development expenses as discussed in the ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements included in this Annual Report on Form 10-K.

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, we perform the following five steps: (i) identification of ~~the promised goods or services in the contract;~~contract(s) with a customer; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.

The promised good or services in our ~~arrangement~~arrangements typically consist of license rights to our intellectual property and research and development services. We also have optional additional items in contracts, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct

We estimate the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include both fixed consideration orand variable consideration. At the inception of each arrangement that includes variable consideration and at each reporting period, we evaluate the amount of potential payment and the likelihood that the payments will be received. We utilize either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method better predicts the amount expected to be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price.

Our contracts often include development and regulatory milestone payments. At contract inception and at each reporting period, we evaluate whether the milestones are considered probable of being reached and ~~estimates~~estimate the amount to be included in the transaction price using the most likely amount method. If it is not probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

We allocate the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. We must develop assumptions that require judgment to determine the ~~stand-alone~~standalone selling price for each performance obligation identified in the contract. We utilize key assumptions to determine the ~~stand-alone~~standalone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable

consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amounts we would expect to receive for each performance obligation.

For performance obligations consisting of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, ~~adjusts~~adjust the measure of performance and related revenue recognition. If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.

We record our expenses related to research and development activities based upon our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrued or prepaid expense balance accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular period. To date, there have been no material differences from our estimates to the amounts actually incurred. Significant judgement is ~~at times,~~ involved in making the above estimates.

We are exposed to market ~~risk-related~~risk related to changes in interest rates. As of December 31, 2021, we had cash and cash equivalents of $177.9 million, primarily held in money market mutual funds consisting of U.S. government-backed securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents and marketable securities are invested in U.S. Treasury obligations, commercial paper and corporate bonds. However, we believe that due to the short-term duration of our investment portfolio and low-risk profile of our investments, an immediate 100 basis points change in interest rates would not have a material effect on the fair market value of our investments portfolio.

We are currently not exposed to market risk related to changes in foreign currency exchange rates, but we may contract with vendors that are located in Asia and Europe and may be subject to fluctuations in foreign currency rates at that time.

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

We have audited the accompanying consolidated balance sheets of Mersana Therapeutics, Inc. (the Company) as of December 31, ~~2020~~2021 and ~~2019,~~2020, the related consolidated statements of operations and comprehensive loss, and stockholders’ equity ~~(deficit)~~ and cash flows for each of the three years in the period ended December 31, ~~2020,~~2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2020~~2021 and ~~2019,~~2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020,~~2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2020,~~2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February ~~26, 2021~~28, 2022 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2013.

Mersana Therapeutics, Inc. is a clinical stage biopharmaceutical company focused on developing antibody drug conjugates (ADCs) that offer a clinically meaningful benefit for cancer patients with significant unmet need. The Company has leveraged over 20 years of industry learning in the ADC field to develop proprietary and differentiated technology platforms that enable it to design ADCs to have improved efficacy, safety and tolerability relative to existing ADC therapies. The Company’s innovative platforms, which include Dolaflexin and Dolasynthen, each delivering its DolaLock payload, as well as Immunosynthen, delivering athe novel stimulator of interferon genes (STING) agonist ImmunoLock payload, together provide an efficient product engine that has enabled a robust discovery pipeline for the Company and its partners. The Company’s ~~product~~clinical candidates include upifitamab rilsodotin ~~(UpRi, XMT-1536)~~(UpRi) and XMT-1592. The Company's early stage programs include XMT-1660, a ~~potentially first-in-class B7-H4-targeted DolaLock~~Dolasynthen ADC ~~XMT-1660,~~targeting B7-H4, as well as ~~candidates leveraging~~XMT-2056, a STING agonist ADC developed using the Company's Immunosynthen platform ~~the most advanced~~and targeting a novel epitope of human epidermal growth factor receptor 2 (HER2). The Company also has two earlier stage preclinical candidates, XMT-2068 and XMT-2175, both of which ~~is XMT-2056.~~

The Company's lead product candidate, UpRi, is a first-in-class Dolaflexin ADC targeting NaPi2b, an antigen broadly expressed in ovarian cancer and ~~non-small cell lung cancer (NSCLC) adenocarcinoma,~~other cancers. The Company is currently evaluating UpRi in platinum-resistant ovarian cancer in a single-arm registrational trial, referred to as UPLIFT, for which the Company expects to complete enrollment in the ~~expansion portion~~third quarter of 2022. The Company is also conducting a Phase 1/2 umbrella combination trial, referred to as UPGRADE. The first combination the Company is exploring is the combination of UpRi with carboplatin, a standard platinum chemotherapy broadly used in the treatment of platinum-sensitive ovarian cancer. The Company may explore other combinations in the future. The Company expects to report interim data from UPGRADE in the second half of 2022. In the second quarter of 2022, the Company expects to initiate enrollment in a randomized placebo-controlled Phase 3 trial, referred to as UP-NEXT, to evaluate UpRi as single agent maintenance treatment in patients with recurrent platinum-sensitive ovarian cancer that have high NaPi2b expression.

The Company's second clinical candidate, XMT-1592, is a NaPi2b-targeted ADC leveraging the Dolasynthen platform. The Company is conducting a Phase 1 ~~study~~dose exploration trial in patients with ovarian cancer and non-small cell lung cancer, or NSCLC, ~~adenocarcinoma. XMT-1592 uses one of~~which it expects to complete in the ~~Company’s new platforms, Dolasynthen, and also targets NaPi2b. In the first~~second half of ~~2020, the Company initiated the Phase 1 dose escalation study of XMT-1592 .~~2022.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval and reimbursement for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products.

The Company has incurred net losses since inception. The Company’s net loss was $170,060, $88,045 ~~$28,208~~ and ~~$64,257~~$28,208 for the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively. The Company expects to continue to incur operating losses for at least the next several years. As of December 31, ~~2020,~~2021, the Company had an accumulated deficit of ~~$280,419.~~$450,479. The future success of the Company is dependent on, among other factors, its ability to identify and develop its product candidates and ultimately upon its ability to attain profitable operations. The Company has devoted substantially all of its financial resources and efforts to research and development and general and administrative expense to support such research and development. Net losses and negative operating cash flows have had, and will continue to have, an adverse effect on the Company’s stockholders’ equity and working capital.

In April 2020, the Company sold 10,900,599 shares of common stock and received net proceeds of $62,976. In addition, in June 2020, the Company sold 9,200,000 shares of common stock and received net proceeds of $163,990. The Company believes that its currently available funds will be sufficient to fund the Company’s operations through at least the next twelve months from the issuance of this Annual Report on Form 10-K. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC).

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). All dollar amounts, except per share data in the text and tables herein, are stated in thousands unless otherwise indicated.

The accompanying consolidated financial statements include those of the Company and its wholly owned subsidiary, Mersana Securities Corp. All intercompany balances and transactions have been eliminated.

The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company's management evaluates its estimates which include, but are not limited to, management's judgments with respect to the identification of performance obligations and standalone selling prices of those performance obligations within its revenue arrangements, accrued preclinical, manufacturing and clinical expenses, valuation of stock-based awards and income taxes. Actual results could differ from those estimates.

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and assess performance. The Company views its operations and manages its business as a single operating segment, which is the business of discovering and developing ADCs.

Research and development costs are expensed as incurred and include:

Costs for certain development activities, such as preclinical studies, clinical ~~studies~~trials and manufacturing development activities, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to the Company by its vendors on their actual costs incurred or level of effort

expended. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheets as prepaid or accrued preclinical, manufacturing and clinical expenses.

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, the Company performs the following five steps: (i) identification of ~~the promised goods or services in the contract;~~contract(s) with a customer; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.

The promised good or services in the Company’s arrangement typically consist of license rights to the Company’s intellectual property and research and development services. The Company also has optional additional items in contracts, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include both fixed consideration and variable consideration. At the inception of each arrangement that includes variable consideration and at each reporting period, the Company evaluates the amount of potential payment and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected ~~amount~~value method to estimate the amount expected to be received based on which method better predicts the amount ~~expected~~of consideration to which the Company will be ~~received.~~entitled. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. We assessed each of our revenue generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of our arrangements because: (a) the promised consideration approximates the cash selling price of the promised goods and services; and (b) timing of payment approximates the transfer of goods and services and performance is over a relatively short period of time within the context of the entire term of the contract.

The Company’s contracts often include development and regulatory milestone payments. At contract inception and at each reporting period, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration arrangements.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the ~~stand-alone~~standalone selling price for each performance obligation identified in the

For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

The Company receives payments from its customers based on billing schedules established in each contract. Such billings generally have 30-day terms. Up-front payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional.

hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company considers all highly liquid investments with an original maturity, or a remaining maturity at the time of purchase, of three months or less to be cash equivalents. The Company invests excess cash primarily in money market funds, commercial paper and government agency securities, which are highly liquid and have strong credit ratings. These investments are subject to minimal credit and market risks. Cash and cash equivalents are stated at cost, which approximates market value.

treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be 0zero as the Company has never paid dividends and has no current plans to do so.

The Company determines the fair value of each restricted stock unit ~~or RSU,~~(RSU), at its grant date based on the closing market price of the Company’s common stock on that date. For stock-based compensation subject to service-based vesting conditions, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock-based compensation on a straight-line basis over the requisite service period.

The Company records forfeitures as a cumulative adjustment in the period in which they occur.

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of each asset as follows:

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the balance sheet and related gains or losses are reflected in the statement of operations. There were no material sales of assets during the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018.~~

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. If an impairment review is performed to evaluate an asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying value. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company did not recognize impairment charges during the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more likely than not to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Comprehensive income (loss) comprises net loss and other comprehensive loss. For the year ended December 31, 2021, comprehensive loss equaled net loss. For the years ended December 31, 2020 ~~2019~~ and ~~2018,~~2019, other comprehensive income (loss) consisted of changes in unrealized income and loss on marketable securities.

The Company has 0no financial instruments with off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk

primarily consist of cash equivalents and marketable securities. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company has not experienced any credit losses and does not believe ~~this~~that it is subject to any significant concentrations of credit risk from these financial instruments.

In June 2014, the Company entered into a Collaboration and Commercial License Agreement with Merck KGaA (the Merck KGaA Agreement). Upon the execution of the Merck KGaA Agreement, Merck KGaA paid the Company a ~~nonrefundable~~non-refundable technology access fee of $12,000 for the right to develop ADCs directed to 6 exclusive targets over a specified period of time. ~~NaN~~No additional fees are due when a target is designated and the commercial license to the target is granted. Merck KGaA will be

Under the terms of the Merck KGaA Agreement, the Company and Merck KGaA develop research plans to evaluate Merck KGaA's antibodies as ADCs incorporating the Company's technology. The Company receives reimbursement for its efforts under the research plans. The goal of the research plans is to provide Merck KGaA with sufficient information to formally nominate a development candidate and begin IND-enabling studies or cease development on the designated target.

In addition to the payments received for research and development activities performed on behalf of Merck KGaA, the Company could be eligible to receive up to a total of $780,000 in future milestones related to all targets under the Merck KGaA Agreement, plus low to ~~mid single~~mid-single digit royalties on the commercial sales of any resulting products during the applicable royalty term. The total milestones are categorized as follows: development milestones $84,000; regulatory milestones $264,000; and sales milestones $432,000. There are 6 individual development milestones per target, payable upon the completion of various activities, from the delivery of ADCs meeting defined specifications, through the dosing in a Phase 3 clinical trial. There are 5 regulatory milestones, which are payable upon regulatory approvals for a first indication in each of the U.S., European Union and Japanese markets and regulatory approvals for both a second and a third indication in the United States. There are 3 individual commercial milestones, which are payable upon the attainment of certain defined thresholds for annual net sales.

Prior to ~~2018,~~2020, the Company had received $3,000 related to development milestones under the Merck KGaA Agreement. There have been 0no additional milestone payments in the years ended December 31, ~~2019~~2021 or 2020. The next potential milestone payment the Company will be eligible to receive will be a development milestone of $500 on Merck KGaA's designation of a preclinical development candidate for any target. Revenue will be recognized when achievement of the milestone is considered probable.

Unless earlier terminated, the Merck KGaA Agreement will expire upon the expiration of the last royalty term for a product under the Merck KGaA Agreement, after which time, Merck KGaA will have a perpetual, royalty-free license, or if Merck KGaA does not designate any ADC product candidates produced by the Company under the Merck KGaA Agreement as preclinical development candidates, upon the expiration of the last to expire research program. Merck KGaA may terminate the Merck KGaA Agreement in its entirety or with respect to any target for convenience upon 60 days' prior written notice. Each party may terminate the Merck KGaA Agreement in its entirety upon bankruptcy or similar proceedings of the other party or upon an uncured material breach of the Merck KGaA Agreement by the other party. However, if such breach only relates to one target, the agreement may only be terminated with respect to such target.

In May 2018, the Company entered into a Supply Agreement with Merck KGaA (the Merck KGaA Supply Agreement). Under the terms of the Merck KGaA Supply Agreement, the Company will provide Merck KGaA preclinical non-GMP ADC ~~Drug Substance~~drug substance and clinical GMP ~~Drug Substance~~drug substance for use in clinical trials associated with one of the antibodies designated under the Merck KGaA Agreement. The Company receives fees for its efforts under the Merck KGaA Supply Agreement and reimbursement equal to the supply cost. The Company may also enter into future supply agreements to provide clinical supply material should Merck KGaA pursue clinical development of any other candidates nominated under the Merck KGaA Agreement.

The Company identified the following performance obligations under the Merck KGaA Agreement: (i) exclusive license and research services for 6 designated targets, (ii) rights to future technological improvements and (iii) participation of project team leaders and providing joint research committee services.

The Company has concluded that each license for a designated target is not distinct from the research services performed related to the designated target as Merck KGaA cannot obtain the benefit of the license without the related research services. Each license for a designated target and the related services performance obligation is considered distinct from every other license for a designated target and related services performance obligation as each research plan is pursued independent of every other research ~~plans~~plan for other designated targets.

The Company utilizes the expected value approach to estimate the amount of consideration related to the payment of fees associated with development and research services. The Company utilizes the most likely amount approach to estimate any development and regulatory milestone payments to be received. As of the date of initial application of Topic 606, there were 0no milestones payments that had not already been received, included in the estimated transaction price. The Company considered the stage of development and the remaining risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Merck KGaA. The milestone payment amounts were fully constrained, as a result of the uncertainty whether any of the associated milestones would be achieved. The Company has determined that any commercial milestones and sales based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling prices of each performance obligation or in the case of certain variable consideration to one or more performance obligations. The estimated standalone selling prices for performance obligations, that include a license and research services, were developed using the estimated selling price of the license and an estimate of the overall effort to perform the research service and an estimated market rate for research services. The estimated standalone selling price of the licenses was established based on comparable transactions. The estimated standalone selling price for the rights to future technological improvements was developed based on the estimated selling prices of a license or rights received, as well as considering the probability that additional technology would be made available or the probability the counterpart would utilize the technology. The estimated standalone selling price for the joint research committee services was developed using an estimate of the time and costs incurred to participate in the committees.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. As of December 31, ~~2019,~~2021 and 2020, the total estimated transaction price for the Merck KGaA Agreement was $21,500. During 2020, the Company revised its estimate for fees associated with research and development activities under the Merck KGaA Agreement to $6,325, a decrease of $175. The revised total transaction price for the Merck KGaA Agreement is $21,325. The transaction price of $21,325 was allocated to the performance obligations as follows: approximately $3,941 for each of the license and corresponding research and development services units of account for the first and second designated targets; $3,439 for each of the license and corresponding research and development services units of account for the third and sixth designated target; $3,152 for the license and corresponding research and development services unit of account for the fourth designated target; $2,746 for the license and corresponding research and development services unit of account for the fifth designated target; $425 for rights to future technological improvements; and $242 for joint research committee services.

The Company is recognizing revenue related to the exclusive license and research and development services performance obligation over the estimated period of the research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred. To

the extent that the Company receives fees for the research services as they are ~~preformed,~~performed, these amounts are recorded as deferred revenue. Revenue related to future technological improvements and joint research committee services will be recognized ratably over the performance period (which in the case of the joint research committee services approximate the time and cost incurred each period), which are 10 and 5 years, respectively. The Company is continuing to reassess the estimated remaining term at each subsequent reporting period.

As of December 31, ~~2020,~~2021, the Company has completed its research service obligations associated with 4 of the 6 designated targets. During the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company recorded collaboration revenue of $43, $828 ~~$853~~ and ~~$2,444,~~$853, respectively, related to its efforts under the Merck KGaA Agreement. During the year ended December 31, 2019, the Company recognized collaboration revenue and corresponding research and development expense of $1,280 related to the Merck KGaA Supply Agreement. There were 0no amounts recognized during the years ended December 31, ~~2020~~2021 and ~~2018~~2020 related to the Merck KGaA Supply Agreement. There was 0no balance in accounts receivable related to the Merck KGaA Agreement and Merck KGaA Supply Agreement as of either December 31, ~~2020~~2021 or December 31, ~~2019.~~2020.

As of December 31, ~~2020~~2021 and ~~2019,~~2020, the Company had recorded ~~$3,987~~$3,944 and ~~$4,815,~~$3,987, respectively, in deferred revenue related to the Merck KGaA Agreement and Merck KGaA Supply Agreement that will be recognized over the remaining performance period.

In January 2016, the Company entered into a Development Collaboration and Commercial License Agreement with ~~Takeda’s~~Takeda Pharmaceutical, Inc.'s wholly owned subsidiary, Millennium Pharmaceuticals, Inc. for the development and commercialization of XMT-1522 (the XMT-1522 Agreement). Under the XMT-1522 Agreement, Takeda was granted the exclusive right to commercialize XMT-1522 outside of the United States and Canada. Under the XMT-1522 Agreement, the Company was responsible for conducting certain Phase 1 development activities for XMT-1522, including the ongoing Phase 1 clinical trial, at its own expense. The parties agreed to collaborate on the further development of XMT-1522 in accordance with a global development plan (Post-Phase 1 Development). On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the XMT-1522 Agreement upon 30 days’ prior written notice. The XMT-1522 Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the XMT-1522 Agreement as of March 31, 2019. Under the XMT-1522 Agreement, the Company and Takeda shared equally all agreed Post-Phase 1 Development costs through the date of termination and for a period of 30 days after the effective termination date.

In March 2014, the Company entered into a Research Collaboration and Commercial License Agreement with Takeda’s wholly owned subsidiary, Millennium Pharmaceuticals, Inc. (the 2014 Agreement). The 2014 Agreement was amended in January 2015 and amended and restated in January 2016 (the 2016 Restated Agreement). The agreements provided Takeda with the right to develop ADCs directed to a total of 7 exclusive targets, designated by Takeda, over a specified period of time. On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the 2016 Restated Agreement upon 45 days’ prior written notice. The 2016 Restated Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the 2016 Restated Agreement as of March 31, 2019.

The Company’s collaboration agreements with Takeda were terminated following receipt of written notices during the first quarter of 2019. As there are no further performance ~~obligation,~~obligations, the Company recognized the remaining deferred revenue of $39,965 related to the termination of the Takeda agreements in the first quarter of 2019.

Prior to the termination of the agreements, the Company had identified 14 performance obligations in the agreements. The Company concluded that the license related to each of the designated targets was not distinct from the research services performed related to each of the designated targets as Takeda could not have obtain the benefit of the license without the related research services. Each license to a designated target and the related service performance obligation was considered distinct from every other license to a designated target and related services performance obligation as each research plan was pursued independent of the any other research plans for other designated targets. Further, the material rights provided were determined

to be distinct from the other performance obligations in the arrangement as they were options in the contract Takeda agreements and not required for Takeda to obtain the benefit of the other promised goods or services in the arrangement. Similarly, the Company concluded that the XMT-1522 license and the related research and development services, including the Phase 1 development and the transfer of certain materials and know-how related to the Company's manufacturing processes, were 1 performance obligation. The license to the Company's intellectual property was not determined to be distinct from the research and related development services that the Company was obligated to perform. For the ~~years~~year ended December 31, 2019, ~~and 2018,~~ the Company recorded total revenue of $39,965 ~~and $5,868, respectively,~~ related to its efforts under the 2016 Restated Agreement and the XMT-1522 Agreement. The Company did not record any revenue under the 2016 Restated Agreement and the XMT-1522 Agreement in the years ended December 31, 2021 and 2020.

The Company concluded that the Post-Phase 1 Development activities under the XMT-1522 Agreement represented joint operating activities in which both parties were active participants and of which both parties were exposed to significant risks and rewards that are dependent on the commercial success of the activities. Accordingly, the Company accounted for the Post-Phase 1 Development activities in accordance with ASC 808. For the ~~years~~year ended December 31, 2019, ~~and 2018,~~ the Company was billed approximately $200 ~~and $8,046, respectively,~~ from Takeda representing Post-Phase 1 Development costs incurred by Takeda. These amounts have been reflected as research and development costs in the consolidated statement of operations. ~~The Company did not perform any Post-Phase 1 Development activities or incur any associated costs prior to January 1, 2018.~~ During the ~~years~~year ended December 31, 2019, ~~and 2018,~~ the Company billed Takeda $195 ~~and $3,746, respectively,~~ related to ASC 808 costs.

The following table presents changes in the balances of our contract assets and liabilities during the years ended December 31, ~~2020~~2021 and December 31, ~~2019:~~2020:

During the year ended December 31, ~~2020,~~2021, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods.

The Company has provided limited services for a collaboration partner, Asana BioSciences. For the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company recorded revenue of $0, ~~$25~~$0 and ~~$782,~~$25, respectively, related to these services. ~~In addition, during the year ended December 31, 2018, the Company recognized revenue~~The next

potential milestone the Company is eligible to receive is $2,500 upon dosing the fifth patient in a Phase 1 clinical ~~study~~trial by Asana BioSciences. As of December 31, ~~2020,~~2021, the Company considered this next milestone to be fully constrained as there is considerable judgment involved in determining whether it is probable that a significant revenue reversal would occur. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestone is outside the control of the Company and there is a high level of uncertainty in achieving this milestone, as this would require initiation of clinical trials by the collaboration partner. The Company reevaluates the probability of achievement of a milestone subject to constraint at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Property and equipment consists of the following as of December 31, 2021 and 2020:

Accrued expenses consist of the following as of December 31, 2021 and 2020:

On May 8, 2019, the Company entered into a loan and security agreement (the Original Agreement) with ~~Silicon Valley Bank (SVB)~~SVB pursuant to which the Company borrowed $5,000. The Original Agreement accrued interest at a floating per annum rate equal to the greater of (i) 4.0% and (ii) 1.50% below the Prime Rate. The Original Agreement had an interest-only period through August 31, 2020.

On August 28, 2020, ~~(the Effective Date),~~ the Company entered into a second amendment (the Second Amendment) to ~~its existing loan and security agreement (as amended prior to~~ the ~~Amendment, the Existing~~Original Agreement with SVB (the Prior Credit Facility) ~~with SVB.~~. Pursuant to the Second Amendment, the Company can borrow term loans in an aggregate amount of $30,000 (the Amended Credit Facility), at its option, (i) up to $25,000 in up to five principal advances through April 30, 2022, and (ii) an additional $5,000 in one principal advance, if the Company reaches certain development milestone events, as described in the Amendment, through April 30, 2022. The Company drew $5,200 upon execution of the Second Amendment, the proceeds of which were used to repay the Company’s existing balance under the Original Agreement and satisfy its obligations to ~~SVB, including the final payment obligation under the Existing Credit Facility.~~

On October 29, 2021, the Company entered into a loan and security agreement (the New Credit Facility) with SVB and Oxford (Oxford and SVB, together the Lenders). Pursuant to the New Credit Facility, the Company can borrow term loans in an aggregate amount of $100,000, which includes (i) $60,000 in up to three principal advances through December 31, 2022, (ii) an additional $10,000 in one principal advance, if the Company reaches certain development milestone events through December 31, 2022, (iii) an additional $10,000 in one principal advance, if the Company reaches additional development milestone events through June 30, 2023 and (iv) an additional tranche of $20,000, subject to conditional approval from the Lenders. The Company drew $25,000 upon execution of the New Credit Facility, of which $5,500 of the proceeds was used to repay the existing balance under the Prior Credit Facility and satisfy its obligations to SVB, resulting in the recording of a $398 loss on extinguishment, which is presented within interest expense for the year ended December 31, 2021 on the Consolidated Statements of Operations and Comprehensive Loss. Upon entering into the New Credit Facility, the Company terminated all commitments by SVB to extend further credit under the Prior Credit Facility and all guarantees and security interests granted by the Company to SVB under the Prior Credit Facility.

The New Credit Facility bears interest at a floating per annum rate equal to the greater of (i) 8.50% and (ii) 5.25% above the Prime Rate. Interest is payable monthly in arrears on the first day of each month. The Company is obligated to make ~~monthly~~ interest-only payments on each outstanding term loan commencing on the first calendar day of the month following the funding date of such term loan, and continuing on the first calendar day of each month thereafter through May 31, 2022. The interest only period may be extended through January 31, 2023 upon the achievement of a regulatory milestone, as described in the Amendment. Following the interest-only period, the Company will be required to repay the outstanding principal balance under the term loans in equal monthly payments plus interest in arrears to SVB through November 1, 2024, followed by equal monthly principal payments and applicable interest through the maturity date of October 1, 2026 (the Maturity Date). If certain development milestones are met, then the interest-only period will be extended to November 1, 2025.

The Company is also required to make a final payment to ~~SVB~~the Lenders equal to ~~5.5%~~4.25% of the principal amount of the ~~Term Loans~~term loans then extended to the Company. This final payment is accreted under the effective interest method over the life of each term loan. The term loans are secured by substantially all of the Company’s assets, except for its intellectual property which is subject to a negative pledge, and certain other customary exclusions.

At the Company’s option, it may prepay the outstanding principal balance of any term loans in whole but not in part, subject to a prepayment fee of: (a) 3.0% of the term loans then extended to the Company if the prepayment occurs on or prior to ~~August 28, 2021,~~the first anniversary of the funding date of such term loan, (b) 2.0% of the term loans then extended to the Company if the prepayment occurs after ~~August 28, 2021~~the first anniversary of the funding date of such term loan but on or prior to ~~August 28, 2022,~~the second anniversary of the funding date of such term loan, or (c) 1.0% of the term loans then extended to the Company if the prepayment occurs after ~~August 28, 2022~~the second anniversary of the funding date of such term loan but before ~~November 1, 2024.~~the Maturity Date. The ~~Amended~~New Credit Facility includes customary affirmative and restrictive covenants applicable to the Company. Affirmative covenants include, among others, covenants requiring the Company to maintain its corporate existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. The ~~Amendment removed the requirement for the Company to maintain a minimum liquidity ratio. The~~ restrictive covenants include, among others, requirements relating to the Company’s ability to

The Company’s payment obligations under the ~~Amended~~New Credit Facility are subject to acceleration upon the occurrence of specified events of default, which include, but are not limited to, the occurrence of a material adverse change in the Company’s business, operations, or financial or other condition. Amounts outstanding upon the occurrence of an event of default are payable upon ~~SVB’s~~the Lenders' demand and shall accrue interest at an additional rate of 5.0% per annum of the past due amount outstanding. As of December 31, ~~2020,~~2021, the Company was in compliance with all covenants under the New Credit Facility. As such, as of

December 31, ~~2020,~~2021, the classification of the loan balance as stated on the balance sheet was based on the timing of defined future payment obligations.

~~The unamortized issuance costs under~~In connection with entering into the ~~Existing~~New Credit Facility, the Company paid $958 in costs, of which $210 was paid to Lenders and $748 was paid to third parties. Certain costs were ~~$139~~recorded as a reduction of the date of the Amendment. The Company incurred debt issuance costs paid to the lender in connection with the Amended Credit Facility of $17. The Company recorded such costs, including the settlement of the final payment obligation under the Existing Credit Facility as a discount from the carrying ~~value of~~amount on the term ~~loans which are~~loan and amortized as interest expense using the effective-interest method, which was comprised of $151 of the costs paid to the Lenders and $273 of the costs paid to third parties. The remaining costs of $533 were capitalized in other assets related to the Company's right to borrow additional amounts from the Lenders in the future and amortized to interest expense over the ~~term of the Amended Credit Facility.~~relevant draw period on a straight-line basis.

During the year ended December 31, ~~2020~~2021 and ~~2019,~~2020, the Company recognized ~~$340~~$797 and ~~$214,~~$340, respectively, of interest expense related to the ~~Existing~~Prior Credit Facility and ~~Amended~~New Credit Facility, as applicable.

As of December 31, ~~2020,~~2021, the Company ~~has~~had 25,000,000 shares of authorized preferred stock. ~~NaN~~No shares of preferred stock have been issued.

In July 2018, the Company established an at-the-market (ATM) equity offering program (the 2018 ATM) pursuant to which it could offer and sell up to $75,000 of its common stock from time to time at prevailing market prices. ~~In April~~During the year ended December 31, 2020, the Company sold ~~8,938,599 and 1,962,000~~10,900,599 shares of common stock ~~at $5.59 per share~~ and ~~$7.74 per share, respectively, to raise~~

In June 2020, the Company sold 9,200,000 shares of common stock, in an underwritten public offering price to the public of $19.00 per share. Net proceeds to the Company after deducting fees, commissions and other expenses related to the offering were $163,990.

In connection with a 2013 Series A-1 Preferred Stock issuance, the Company granted to certain investors warrants to purchase 129,491 shares of common stock. The warrants have a $0.05 per share exercise price and a contractual life of 10 years. The fair value of these warrants was recorded as a component of equity at the time of issuance. As of December 31, ~~2020~~2021 and ~~2019~~2020 there were warrants to purchase 39,474 shares of common stock. During the year ended December 31, ~~2020,~~2021, there were 0no exercises of warrants in exchange for shares of common stock.

On November 26, 2019, the Company entered into an exchange agreement with entities affiliated with Biotechnology Value Fund, L.P. (the Exchanging Stockholders), pursuant to which the Exchanging Stockholders exchanged an aggregate of 2,575,000 shares of common stock for warrants (the Exchange Warrants) to purchase an aggregate of 2,575,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, merger or consolidation, change of control, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share.

The holders of the common stock are entitled to 1 vote for each share held. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors of the Company (the Board).

As of December 31, ~~2020~~2021 and ~~2019~~2020 there were ~~6,869,189~~9,199,512 and ~~7,782,582, respectively,~~6,869,189 shares of common stock, respectively, reserved for the exercise of outstanding stock options and warrants.

As of June 30, 2017, there were 3,141,625 options outstanding under the Company’s 2007 Stock Incentive Plan. The 2007 Plan expired in June 2017. Any cancellations or forfeitures of options granted under the 2007 Stock Incentive Plan will increase the options available under the 2017 Stock Incentive Plan as described below.

In June 2017 the Company’s shareholders approved the 2017 Stock Incentive Plan (the 2017 Plan or the Plan). Under the 2017 Plan initially, up to 2,255,000 shares of common stock may be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, ~~restricted stock units (RSUs)~~RSUs or other stock-based awards. The number of shares of common stock issuable under the Plan ~~will be~~ cumulatively ~~increased~~increases annually by 4% of the outstanding shares or such lesser amount ~~specified~~determined by the Board. The terms of the awards made under the Plan are determined by the Board, subject to the provisions of the Plan. In January 2021, the number of shares of common stock issuable under the 2017 Plan was increased by 2,753,651 shares. As of December 31, ~~2020~~2021 there were ~~1,288,072~~1,308,183 shares available for future issuance under the Plan. During the year ended December 31, 2021, the Company granted to employees 715,716 RSUs and options to purchase 2,870,720 shares of common stock under the 2017 Plan.

Under the 2017 Plan, ~~including 1,815,520 shares automatically added~~both with respect to incentive stock options and nonqualified stock options, the exercise price per share will equal the fair market value of the common stock on the date of grant, as determined by the Board, and the vesting period is generally four years. Options granted under the Plan expire no later than 10 years from the date of grant. Options under the 2007 Plan were granted at an exercise price established by the Board (or a committee thereof) that was not less than the fair market value of the underlying common stock on ~~January 1, 2020.~~the date of grant and subject to such vesting provisions determined by the Board (or a committee thereof). The Board may accelerate vesting or otherwise adjust the terms of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.

The Company ~~granted~~grants to its ~~senior vice president of regulatory affairs an option~~employees, upon approval by the Board, options to purchase ~~up to 120,000 and its senior vice president and chief medical officer an option to purchase 200,000~~ shares of common stock ~~on September 2, 2020 and November 30, 2020, respectively,~~ as an inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4). ~~No underwriters were involved in this issuance of securities.~~ The securities ~~were~~are issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, relating to transactions by an issuer not involving any public offering. These options are subject to terms substantially the same as the ~~2017 Plan.~~

The weighted-average grant date fair value of options granted during the years ended December 31, 2021, 2020 and 2019, was $11.71, $7.99 and ~~2018, was $7.99,~~ $2.47 ~~and $8.78~~ per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019, was $4,299, $11,147, and $202, respectively. The aggregate intrinsic value represents the difference between the exercise price and the selling price received by option holders upon the exercise of stock options during the period.

Cash received from the exercise of stock options was $1,837, $3,138 and $175 for the years ended December 31, 2021, 2020 and 2019, respectively.

Number
of Shares Weighted-Average
Remaining
Contractual Term Aggregate
Intrinsic Value Weighted-Average
Grant Date
Fair Value
Unvested at January 1, 2020 447,336 1.5 $ 2,564 $ 4.00
Granted 361,932 — 8.14
Vested 0 — 0
Forfeited (92,501) — 4.68
Unvested at December 31, 2020 716,767 1.0 $ 19,073 $ 6.00
The total fair value of RSUs vested during the years ended December 31, 2021, 2020 and 2019, was $5,790, $0, and, $0, respectively.

The measurement date for ~~employee~~ awards is generally the date of grant. Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.

The following table presents stock-based compensation expense by award type included within the Company’s consolidated statement of operations and comprehensive loss:

The following table presents stock-based compensation expense as reflected in the Company’s consolidated statements of operations and comprehensive loss:

As of December 31, ~~2020,~~2021, there was ~~$19,487~~$38,958 and ~~$2,699~~$9,929 of unrecognized compensation expense related to unvested stock options and unvested RSUs, respectively, that is expected to be recognized over a weighted average period of ~~2.8~~2.6 years and ~~2.3~~2.8 years, respectively.

Expected volatility for the Company’s common stock is determined based on the historical volatility of comparable publicly traded companies. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the expected term of the option. ~~NaN~~No dividend yield was assumed as the Company has not historically and does not expect to pay dividends on its common stock. The expected term of the options granted is based on the use of the simplified method, in which the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.

The fair value of RSUs is determined based on the closing price of the Company’s common stock on the date of grant.

During the year ended December 31, 2017, the Board adopted and the Company's stockholders approved the 2017 employee stock purchase plan (the 2017 ESPP). The Company initially reserved 225,000 shares of common stock for issuance under the 2017 ~~ESPP.~~ESPP, plus an annual increase, to be added as of January 1st of each year, equal to the least of (i) 450,000 shares of common stock; (ii) 1 percent of the number of shares of common stock outstanding as of the close of business on the immediately preceding December 31st; and (iii) the number of shares of common stock determined by the Board on or prior to such date for such year, up to maximum of 4,725,000 shares of common stock in the aggregate. During the years ended December 31, ~~2020~~2021 and ~~2019~~2020 the Company issued ~~80,267~~78,253 and ~~140,073~~80,267 shares, respectively, under the 2017 ESPP. As of December 31, ~~2020,~~2021, there were ~~644,818~~566,565 shares available for ~~issuance, including 450,000 shares automatically added to the 2017 ESPP on January 1, 2020.~~issuance.

The Company has an operating lease for its office and lab space in Cambridge, MA and operating and finance leases for certain equipment. In March 2020, the Company entered into the Seventh Amendment to the office and lab space lease (the Office Lease) to extend the term of the lease through March 2026 and to provide the Company with a tenant improvement allowance of $172. The current rate per square foot that is in place through March 2021 (the original expiration date of the lease) did not change. After March 2021, there are predetermined fixed escalations of the rate as outlined in the amendment.2026. The Company has an option to extend the lease term of the Office Lease for an additional five years.

On April 5, 2021, the Company entered into an Eighth Amendment to the Office Lease, which granted the Company additional office space in its existing building for five years, beginning July 1, 2021, and committed the Company to lease payments of $4,983 over that period (the Expansion Lease). In connection with the Expansion Lease, the Company increased the balance of the security deposit by increasing the standby letter of credit for the benefit of its landlord by $157. The Expansion Lease also provided the Company with a tenant improvement allowance of $51. Independent from the option under the Office Lease, the Company has an option to extend the lease term of the Expansion Lease for an additional five years. The Company’s exercise of ~~this option was~~the options to extend the lease terms of both the Office Lease and Expansion Lease were not considered reasonably certain as of December 31, ~~2020.~~2021.

The ~~extension~~Expansion Agreement is a lease modification accounted for as a separate contract, because it expands the scope of the Office Lease and the additional lease ~~modification.~~payments are commensurate with market rents. The Company assessed the lease classification of the ~~amended office space lease at~~Expansion Lease as of the ~~modification~~ date of signing and determined that the ~~amended office space lease~~Expansion Lease should be accounted for as an operating lease. The right-of-use asset and corresponding operating lease liability have been ~~remeasured~~calculated based on the present value of ~~remaining~~ lease payments over the ~~remaining extended~~ lease ~~term, using the incremental borrowing rate applicable as of the lease modification date.~~term. The Company determined the appropriate incremental borrowing rate to utilize as a discount rate by using a synthetic credit rating which was estimated based on an analysis of outstanding debt of companies with similar credit and financial profiles. Since the operating lease is a net lease, as the non-lease components (i.e., common area maintenance) are paid separately from rent based on actual costs incurred, such non-lease components were not included in the right-of-use (ROU) asset and liability and are reflected as an expense in the period incurred.

As a result of the signing of the Expansion Lease in April 2021, the Company recorded an increase of $3,783 to its ROU asset and lease liabilities in the second quarter of 2021.

The Company had a standby letter of credit agreement for the benefit of its landlord in the amount of $478 in connection with the Office Lease and Expansion Lease as of December 31, 2021 and $321 in connection with the Office Lease as of December 31, 2020, collateralized by a money market account.

For the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company recorded no income tax benefit for the net operating losses incurred in each year, due to its uncertainty of realizing a benefit from those items.

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations as of December 31, 2021, 2020 ~~2019~~ and ~~2018~~2019 are as follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets as of December 31, ~~2020~~2021 and ~~2019~~2020 are as follows:

The Company has incurred net operating losses (NOL) since inception. At December 31, ~~2020,~~2021, the Company had Federal and State net operating loss carryforwards of approximately ~~$250,367~~$403,579 and ~~$184,781,~~$337,057, respectively. Of the ~~$250,367~~$403,579 of Federal net operating loss carryforwards, $34,149 expire at various dates through 2037. The remaining ~~$216,218~~$369,430 of Federal net operating loss carryforwards do not expire. The State net operating loss carryforwards expire at various dates through ~~2040.~~2041. At December 31, ~~2020,~~2021, the Company had Federal and State research and development tax credit carryforwards of approximately ~~$4,582~~$10,077 and ~~$1,482,~~$3,061, respectively, which expire at various dates through ~~2040.~~2041.

As required by ASC 740, management of the Company has evaluated the evidence bearing upon the reliability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, management has determined that it is more likely than not that the Company will not realize the benefits of all of these assets. Accordingly, the Company recorded a valuation allowance of ~~$77,375~~$130,051 and ~~$48,889~~$77,375 at December 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The valuation allowance increased by ~~$28,468~~$52,676 and ~~decreased by $5,051~~$28,468 during the years ended December 31, ~~2020~~2021 and ~~2019,~~2020, respectively, primarily as a result of the Company’s ~~382 limitation and~~ net operating losses generated during the periods, respectively.

Utilization of the NOLs and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382, as well as similar state provisions. These ownership changes may limit the amount of NOLs and research and development tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. If a change in control as defined by Section 382 has occurred at any time since the Company’s formation, utilization of its NOLs or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, which could then be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOLs or research and development tax carryforwards before their utilization. The Company has determined that ownership changes have occurred through November 4, 2019 and that certain NOLs and research and development tax credit carryforwards will be subject to limitation. The amounts presented do not include NOLs or research and development tax credit carryforwards that will expire unused due to ownership changes.

The Company applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by the

Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. As of December 31, ~~2020~~2021 and ~~2019,~~2020, the Company had 0no unrecognized tax benefits.

The Company has not conducted a study of its research and development credit carryforwards. This study may result in an adjustment to research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations if an adjustment were required.

Interest and penalties related to uncertain tax positions would be classified as income tax expense in the accompanying statements of operations. As of December 31, ~~2020~~2021 and ~~2019,~~2020, the Company had 0no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the United States federal tax jurisdiction and 24 state ~~jurisdiction.~~jurisdictions. The Company did not have any foreign operations during the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018.~~2019. The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is closed for tax years prior to ~~2016,~~2017, although carryforward attributes that were generated prior to tax year ~~2015~~2017 may still be adjusted upon examination to the extent utilized in a future period. There are 0no federal or state audits currently in progress.

The Company has a defined contribution plan established under Section 401(k) of the Internal Revenue Code (401(k) Plan), which covers substantially all employees. Employees who have attained the age of 21 are eligible to participate in the 401(k) Plan with no service requirement. Employees may contribute up to ~~75%~~95% of eligible pay on a pre–tax basis up to the federal annual limits. For ~~the year ended December 31, 2018 and~~ the period from January 1, 2019 to July 31, 2019, the Company matched the employees’ contributions at 50% on the first 6% up to $6. For the period from August 1, 2019 to December 31, ~~2019~~2020 and for the year ended December 31, ~~2020,~~2021, the Company matched the employees’ contributions at 100% on the first 4% up to $7. For the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company recorded expense of $764, $486 ~~$404~~ and ~~$332,~~$404, respectively, related to its contribution to its 401(k) Plan.

During the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company recorded research and development expense related to non-refundable ~~upfront~~license payments of $3,075, $250, and $750, respectively. Further development milestones of $2,125, $750 and ~~$0, respectively. Further milestone payments of $750,~~ $600, ~~and $0,~~ respectively, were also recorded as research and development expense during the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

The Company received an upfront payment of $40,000 in February 2022. The Company is eligible to receive development and regulatory milestones with an aggregate total of $501,000, if licensed products directed to all three Targets are advanced by Janssen. The Company is also eligible to receive commercial milestones with an aggregate total of $530,000 in the event of commercialization of three Targets by Janssen and tiered royalties based on mid-single digits to low-double digits on future net sales of licensed ADCs

Unless earlier terminated, the Janssen Collaboration will continue in effect until the date on which the royalty term and all payment obligations with respect to all licensed ADCs in all countries have expired.

On February 2, 2022, the Company amended the Commercial License and Option Agreement with Synaffix B.V. (Synaffix) in connection with the Janssen Collaboration, and agreed to pay Synaffix a non-refundable execution fee of $1,500 which will be applied against future target license fees or development milestones.

Three months ended
March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019
Collaboration revenue $ 41,035 $ 202 $ 844 $ 42
Operating expenses:
Research and development 15,143 13,766 13,701 12,430
General and administrative 4,443 4,192 4,436 4,212
Total operating expenses 19,586 17,958 18,137 16,642
Other income:
Interest income 452 725 608 441
Interest expense 0 (40) (107) (87)
Total other income (expense), net 452 685 501 354
Net income (loss) $ 21,901 $ (17,071) $ (16,792) $ (16,246)
Net income (loss) per share attributable to common stockholders — basic $ 0.72 $ (0.36) $ (0.35) $ (0.34)
Net income (loss) per share attributable to common stockholders — diluted $ 0.70 $ (0.36) $ (0.35) $ (0.34)
Weighted-average number of common shares used in net income (loss) per share attributable to common stockholders — basic 30,299,650 47,708,085 47,833,607 47,886,144
Weighted-average number of common shares used in net income (loss) per share attributable to common stockholders — diluted 31,461,696 47,708,085 47,833,607 47,886,144
Subsequent to December 31, 2021 and through February 25, 2022, the Company sold 9,493,776 shares of common stock resulting in net proceeds of $45,579 from ATM offerings, with substantial participation from existing long-term investors. Approximately $9,414 remains unsold and available for sale under the 2020 ATM.

None.

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2020,~~2021, the end of the period covered by this Annual Report on Form 10-K. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of such date.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles, or GAAP. Our internal control over financial reporting includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2020.~~2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control — Integrated Framework. Based on our assessment, our management has concluded that, as of December 31, ~~2020,~~2021, our internal control over financial reporting is effective based on those criteria.

The effectiveness of our internal control over financial reporting as of December 31, ~~2020~~2021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

/s/ Ernst & Young LLP

The information required by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our ~~2021~~2022 Annual Meeting of Stockholders and is incorporated herein by reference.

The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our ~~2021~~2022 Annual Meeting of Stockholders and is incorporated here by reference.

The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our ~~2021~~2022 Annual Meeting of Stockholders and is incorporated herein by reference.

The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our ~~2021~~2022 Annual Meeting of Stockholders and is incorporated herein by reference.

The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our ~~2021~~2022 Annual Meeting of Stockholders and is incorporated herein by reference.

For a list of the consolidated financial statements included herein, see Index to the Consolidated Financial Statements in this Annual Report on Form 10-K, which is incorporated into this Item by reference.

No financial statement schedules have been submitted because they are not required or are not applicable or because the information required is included in the consolidated financial statements or the notes thereto.

See the Exhibit Index immediately before the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K.

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Delaware						04-3562403
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

840 Memorial Drive Cambridge, MA						02139
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	MRSN	The Nasdaq Global Select Market


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page
	PART I

FORWARD LOOKING STATEMENTS		2

ITEM 1.	BUSINESS	34

ITEM 1A.	RISK FACTORS	2939

ITEM 1B.	UNRESOLVED STAFF COMMENTS	6279

ITEM 2.	PROPERTIES	6279

ITEM 3.	LEGAL PROCEEDINGS	6279

ITEM 4.	MINE SAFETY DISCLOSURES	6279

	PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	6380

ITEM 6.	~~SELECTED FINANCIAL DATA~~[RESERVED]	6481

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6581

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7793

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	7894

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	~~109~~124

ITEM 9A.	CONTROLS AND PROCEDURES	~~109~~124

ITEM 9B.	OTHER INFORMATION	~~111~~125

ITEM 9 C .	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	126

	PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	~~112~~127

ITEM 11	EXECUTIVE COMPENSATION	~~112~~127

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	~~112~~127

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	~~112~~127

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	~~112~~127

	PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	~~113~~128

ITEM 16.	FORM 10-K SUMMARY	~~113~~128

EXHIBIT INDEX		~~114~~129

SIGNATURES		~~117~~132


	Year Ended December 31,
	2020		2019		2018		2017		2016
	(in thousands, except share and per share data)
Statements of Operations Data:
Collaboration revenue	$	828	$	42,123	$	10,594	$	17,545	$	25,171
Operating expenses:
Research and development	67,036		55,040		59,915		46,700		32,008
General and administrative	21,902		17,283		16,334		10,462		6,984
Total operating expenses	88,938		72,323		76,249		57,162		38,992
Other income (expense):
Interest income	424		2,226		1,398		910		121
Interest expense	(359)		(234)		—		—		—
Total other income (expense), net	65		1,992		1,398		910		121
Net loss	$	(88,045)	$	(28,208)	$	(64,257)	$	(38,707)	$	(13,700)
Net loss attributable to common stockholders — basic and diluted(1)	$	(88,045)	$	(28,208)	$	(64,257)	$	(38,707)	$	(13,700)
Net loss per share attributable to common stockholders — basic and diluted(1)	$	(1.43)	$	(0.65)	$	(2.79)	$	(3.22)	$	(10.82)
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — basic and diluted(1)	61,485,205		43,492,113		23,032,250		12,022,733		1,266,758


	Year Ended December 31,
(in thousands)	2020		2019		2018
UpRi external costs	$	18,689	$	9,461	$	15,922
XMT-1592 external costs	7,180		—		—
XMT-1522 external costs	—		1,936		15,562
Preclinical and discovery costs	9,883		16,980		4,517
Internal research and development costs	31,284		26,663		23,914
Total research and development costs	$	67,036	$	55,040	$	59,915


	Year Ended December 31,
(in thousands)	2021		2020		2019
UpRi external costs	$	45,511	$	18,689	$	9,461
XMT-1592 external costs	9,126		7,180		—
XMT-1522 external costs	—		—		1,936
Preclinical and discovery costs	28,464		9,883		16,980
Internal research and development costs	48,912		31,284		26,663
Total research and development costs	$	132,013	$	67,036	$	55,040


	Year Ended December 31,				Dollar Change
(in thousands)	2020		2019
Collaboration revenue	$	828	$	42,123	$	(41,295)
Operating expenses:
Research and development	67,036		55,040		11,996
General and administrative	21,902		17,283		4,619
Total operating expenses	88,938		72,323		16,615
Other income (expense):
Interest income	424		2,226		(1,802)
Interest expense	(359)		(234)		(125)
Total other income (expense), net	65		1,992		(1,927)
Net loss	$	(88,045)	$	(28,208)	$	(59,837)


(in thousands)	(in thousands)	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 years		(in thousands)	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 years
Lease commitments(1)	Lease commitments(1)	$	15,739	$	2,888	$	5,929	$	6,140	$	782	Lease commitments(1)	$	17,916	$	4,064	$	8,339	$	5,513	$	—
Long-term debt obligations(2)	Long-term debt obligations(2)	6,074		224		3,796		2,054		—		Long-term debt obligations(2)	34,416		2,155		6,391		25,870		—
Total	Total	$	21,813	$	3,112	$	9,725	$	8,194	$	782	Total	$	52,332	$	6,219	$	14,730	$	31,383	$	—


			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			7995
Consolidated Balance Sheets			8197
Consolidated Statements of Operations and Comprehensive Loss			8298
Consolidated Statements of Stockholders’ Equity			8399
Consolidated Statements of Cash Flows			84100
Notes to Consolidated Financial Statements			85101


						Accrued ~~Preclinical, Manufacturing and~~& Prepaid Clinical Expenses

Description of the Matter						~~The~~ As summarized in Note 6 to the consolidated financial statements, the Company’s accrual for ~~preclinical, manufacturing and~~ clinical expenses totaled ~~$9.9~~$7.9 million atas of December 31, ~~2020.~~2021. In addition, the Company’s Prepaid Expenses and Other Current Assets and Other Assets accounts totaled $13.3 million, which included amounts that were paid in advance of services pursuant to clinical trials as of December 31, 2021. As discussed in Note 2 to the consolidated financial statements, the Company is required to estimate clinical costs incurred and related accruals ~~for preclinical, manufacturing and clinical~~or remaining prepaid expenses based on certain information, including actual costs incurred or level of effort expended, as provided by its vendors. Payments for such activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred. Auditing the Company’s ~~accrual for preclinical, manufacturing~~accrued and prepaid clinical expenses was complex and judgmental, as the amounts are based on various estimates from third-party vendors, as well as other inputs estimated by members of management, such as, actual costs incurred but not yet billed, estimated project timelines, and the ~~number of active sites, patient enrollment, and project timelines.~~costs associated with these services. Furthermore, due to the duration of the Company’s ongoing research and development activities and the timing of invoicing received from third parties, the actual amounts incurred are not typically known by the date the financial statements are issued.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Company’s process for recording accrued ~~preclinical, manufacturing~~ and prepaid clinical expenses. These procedures included controls over management’s review of inputs used, as well as the completeness and accuracy of the underlying data, in estimating the ~~accrual.~~accrual and prepaid. To test the ~~accruals for preclinical, manufacturing~~accrued and prepaid clinical expenses, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the estimates and evaluating the ~~various estimates and other inputs~~significant assumptions noted above that are used by management to estimate the amounts recorded. We corroborated the progress of research and development activities through discussion with the Company’s research and development personnel that oversee the research and development projects. We also inspected the Company’s contracts with third parties and any pending change orders to assess the impact on amounts recorded. Additionally, we reviewed information received by the Company directly from certain sites and other third parties, which included third parties’ estimates of costs incurred to date. We also performed analytical procedures over fluctuations in ~~accruals~~accrued and prepaid clinical expenses by vendor, study, or other significant work order throughout the period subject to audit and inspected subsequent invoices received from third parties to assess the impact to the ~~accrual.~~accrued and prepaid balances.


	December 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	255,094	$	62,351
Short-term marketable securities	0		37,439

Prepaid expenses and other current assets	3,486		1,536
Total current assets	258,580		101,326
Property and equipment, net	1,730		2,164
Operating lease right-of-use assets	10,936		2,598
Other assets	2,153		1,453
Total assets	$	273,399	$	107,541
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,340	$	7,296
Accrued expenses	16,146		8,986
Deferred revenue	3,987		4,815
Operating lease liabilities	1,437		2,219
Short-term debt	0		667
Other liabilities	93		87
Total current liabilities	30,003		24,070
Operating lease liabilities	10,158		677
Long-term debt, net	4,977		4,201
Other liabilities	174		275
Total liabilities	45,312		29,223
Commitments (Note 14)	0		0
Stockholders' equity
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively	0		0
Common stock, $0.0001 par value; 175,000,000 shares authorized; 68,841,288 and 45,388,023 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively	7		5
Additional paid-in capital	508,499		270,662
Accumulated other comprehensive income	0		25
Accumulated deficit	(280,419)		(192,374)
Total stockholders’ equity	228,087		78,318
Total liabilities and stockholders’ equity	$	273,399	$	107,541


	December 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	177,947	$	255,094


Prepaid expenses and other current assets	10,951		3,486
Total current assets	188,898		258,580
Property and equipment, net	1,968		1,730
Operating lease right-of-use assets	12,889		10,936
Other assets	2,356		2,153
Total assets	$	206,111	$	273,399
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	12,321	$	8,340
Accrued expenses	28,716		16,146
Deferred revenue	3,944		3,987
Operating lease liabilities	2,303		1,437

Other liabilities	239		93
Total current liabilities	47,523		30,003
Operating lease liabilities	11,247		10,158
Long-term debt, net	24,626		4,977
Other liabilities	974		174
Total liabilities	84,370		45,312
Commitments (Note 13)	0		0
Stockholders' equity
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	—		—
Common stock, $0.0001 par value; 175,000,000 shares authorized; 73,709,056 and 68,841,288 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	7		7
Additional paid-in capital	572,213		508,499

Accumulated deficit	(450,479)		(280,419)
Total stockholders’ equity	121,741		228,087
Total liabilities and stockholders’ equity	$	206,111	$	273,399


	Year ended December 31,
	2020		2019		2018
Collaboration revenue	$	828	$	42,123	$	10,594
Operating expenses:
Research and development	67,036		55,040		59,915
General and administrative	21,902		17,283		16,334
Total operating expenses	88,938		72,323		76,249
Other income (expense):
Interest income	424		2,226		1,398
Interest expense	(359)		(234)		0
Total other income (expense), net	65		1,992		1,398
Net loss	$	(88,045)	$	(28,208)	$	(64,257)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities	(25)		33		141
Comprehensive loss	$	(88,070)	$	(28,175)	$	(64,116)
Net loss attributable to common stockholders — basic and diluted	$	(88,045)	$	(28,208)	$	(64,257)
Net loss per share attributable to common stockholders — basic and diluted	$	(1.43)	$	(0.65)	$	(2.79)
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — basic and diluted	61,485,205		43,492,113		23,032,250


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Stockholders' Equity
	Shares	Amount
Balance at December 31, 2017	22,765,017	$	3	$	168,018	$	(149)	$	(97,878)	$	69,994
Cumulative effect adjustment for adoption of ASC 606	—	—		—		—		(2,031)		(2,031)
Exercise of stock options	427,269	—		918		—		—		918
Purchase of common stock under ESPP	42,186	—		146		—		—		146
Stock-based compensation expense	—	—		3,884		—		—		3,884
Other comprehensive income	—	—		—		141		—		141
Net loss	—	—		—		—		(64,257)		(64,257)
Balance at December 31, 2018	23,234,472	$	3	$	172,966	$	(8)	$	(164,166)	$	8,795
Issuance of common stock under public offering, net of issuance costs of $5,587	24,437,500	2		92,160		—		—		92,162
Exercise of stock options and warrants	150,978	—		175		—		—		175
Purchase of common stock under ESPP	140,073	—		489		—		—		489
Retirement of common stock in exchange for common stock warrant	(2,575,000)	—		(8,986)		—		—		(8,986)
Issuance of common stock warrant in exchange for retirement of common stock	—	—		8,986		—		—		8,986
Stock-based compensation expense	—	—		4,872		—		—		4,872
Other comprehensive income	—	—		—		33		—		33
Net loss	—	—		—		—		(28,208)		(28,208)
Balance at December 31, 2019	45,388,023	$	5	$	270,662	$	25	$	(192,374)	$	78,318
Issuance of common stock from at-the-market transactions, net of issuance costs of $2,176	10,900,599	1		62,976		—		—		62,977
Issuance of common stock under public offering, net of issuance costs of $10,809	9,200,000	1		163,990		—		—		163,991
Exercise of common stock warrant in exchange for common stock	2,574,971	—		—		—		—		—
Exercise of stock options	697,428	—		3,138		—		—		3,138
Purchase of common stock under ESPP	80,267	—		561		—		—		561
Stock-based compensation expense	—	—		7,172		—		—		7,172
Other comprehensive loss	—	—		—		(25)		—		(25)
Net loss	—	—		—		—		(88,045)		(88,045)
Balance at December 31, 2020	68,841,288	$	7	$	508,499	$	0	$	(280,419)	$	228,087


	Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2019
Marketable securities:
Commercial paper	$	11,940	$	0	$	11,940	$	0
Corporate bonds	12,010		0		12,010		0
U.S. Treasuries	13,489		13,489		0		0
	$	37,439	$	13,489	$	23,950	$	0


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2019
Commercial paper	$	11,940	$	0	$	0	$	11,940
Corporate bonds	11,990		20		0		12,010
U.S. Treasuries	13,484		5		0		13,489
	$	37,414	$	25	$	0	$	37,439


	Year ended December 31, 2020				Year ended December 31, 2019
	Beginning of period		End of period		Beginning of period		End of period
Cash and cash equivalents	$	62,351	$	255,094	$	59,634	$	62,351
Restricted cash included in other assets, noncurrent	321		321		371		321
Total cash, cash equivalents and restricted cash per statement of cash flows	$	62,672	$	255,415	$	60,005	$	62,672


	Year ended December 31, 2021				Year ended December 31, 2020
	Beginning of period		End of period		Beginning of period		End of period
Cash and cash equivalents	$	255,094	$	177,947	$	62,351	$	255,094
Restricted cash included in other assets, noncurrent	321		478		321		321
Total cash, cash equivalents and restricted cash per statement of cash flows	$	255,415	$	178,425	$	62,672	$	255,415


Computer equipment, office equipment and software			3 years
Laboratory equipment			5 years
Leasehold improvements			Shorter of useful life or life of lease


		Balance at Beginning of Period		Additions		Deductions		Balance at End of Period			Balance at Beginning of Period		Additions		Deductions		Balance at End of Period
Year ended December 31, 2020
Year ended December 31, 2021										Year ended December 31, 2021
Contract assets	Contract assets	$	0	$	—	$	—	$	0	Contract assets	$	—	$	—	$	—	$	—
Contract liabilities:	Contract liabilities:									Contract liabilities:
Deferred revenue	Deferred revenue	$	4,815	$	0	$	828	$	3,987	Deferred revenue	$	3,987	$	—	$	43	$	3,944


	December 31, 2021		December 31, 2020
Accrued manufacturing expenses	$	8,476	$	4,157
Accrued clinical expenses	7,879		5,126
Accrued payroll and related expenses	7,319		5,412
Accrued preclinical expenses	3,848		619
Accrued professional fees	909		757
Accrued other	285		75
	$	28,716	$	16,146


	December 31, 2020		December 31, 2019
Accrued preclinical, manufacturing and clinical expenses	$	9,902	$	4,230
Accrued payroll and related expenses	5,412		4,037
Accrued professional fees	757		675
Accrued other	75		44
	$	16,146	$	8,986


	December 31, ~~2020~~2021
Total debt	$	~~5,200~~25,000
Less: Current portion of long-term-debt	0—
Total debt, net of current portion	~~5,200~~25,000
Debt financing costs, net of accretion	~~(246)~~(410)
Accretion related to final payment	2336
Long-term debt, net	$	~~4,977~~24,626


2021		$	0
2022	2022	1,213		2022	$	—
2023	2023	2,080		2023	—
2024	2024	1,907		2024	2,083
2025				2025	12,500
2026				2026	10,417
Total debt	Total debt	$	5,200	Total debt	$	25,000


	December 31, 2020	December 31, 2019
Stock options	6,112,948	4,720,772
Restricted stock units	716,767	447,336
Warrants	39,474	39,474
Exchange warrants	0	2,575,000
	6,869,189	7,782,582


	Number of Shares	Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	4,720,772	$	5.24	7.3	$	9,836
Granted	2,359,074	11.96
Exercised	(697,428)	4.50
Cancelled	(269,470)	7.05
Outstanding at December 31, 2020	6,112,948	$	7.84	7.3	$	114,729

Exercisable at December 31, 2020	3,147,379	$	5.14	6.1	$	67,562


	Number of Shares	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021	716,767	1.0	$	19,073	$	6.00
Granted	715,716	—			$	18.39
Vested	(419,336)	—			$	5.33
Forfeited	(195,538)	—			$	12.34
Unvested at December 31, 2021	817,609	1.5	$	5,086	$	15.68


	December 31,
	2020		2019		2018
Risk-free interest rate	1.2	%	2.3	%	2.7	%
Expected dividend yield	0	%	0	%	0	%
Expected term (years)	6.05		5.99		6.07
Expected stock price volatility	74	%	74	%	73	%


	Years ended December 31,
	2021		2020		2019
Operating lease cost	$	3,502	$	2,755	$	2,160

Finance lease cost:
Amortization of right-of-use assets	$	169	$	101	$	75
Interest on lease liabilities	28		21		20
	$	197	$	122	$	95


	Operating leases		Finance leases
2021	$	2,772	$	116
2022	2,843		84
2023	2,928		74
2024	3,016		18
2025 and thereafter	3,888		0
Total lease payments	15,447		292
Present value adjustment	(3,854)		(25)
Present value of lease liabilities	$	11,593	$	267


	Three months ended
	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020
Collaboration revenue	$	11	$	796	$	11	$	10
Operating expenses:
Research and development	12,219		15,413		16,546		22,858
General and administrative	4,936		5,171		5,881		5,914
Total operating expenses	17,155		20,584		22,427		28,772
Other income:
Interest income	306		89		19		10
Interest expense	(88)		(87)		(92)		(92)
Total other income (expense), net	218		2		(73)		(82)
Net loss	$	(16,926)	$	(19,786)	$	(22,489)	$	(28,844)
Net loss per share attributable to common stockholders — basic and diluted	$	(0.35)	$	(0.33)	$	(0.33)	$	(0.42)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic and diluted	47,988,630		60,748,225		68,419,192		68,630,078


	Three months ended
	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Collaboration revenue	$	41,035	$	202	$	844	$	42
Operating expenses:
Research and development	15,143		13,766		13,701		12,430
General and administrative	4,443		4,192		4,436		4,212
Total operating expenses	19,586		17,958		18,137		16,642
Other income:
Interest income	452		725		608		441
Interest expense	0		(40)		(107)		(87)
Total other income (expense), net	452		685		501		354
Net income (loss)	$	21,901	$	(17,071)	$	(16,792)	$	(16,246)
Net income (loss) per share attributable to common stockholders — basic	$	0.72	$	(0.36)	$	(0.35)	$	(0.34)
Net income (loss) per share attributable to common stockholders — diluted	$	0.70	$	(0.36)	$	(0.35)	$	(0.34)
Weighted-average number of common shares used in net income (loss) per share attributable to common stockholders — basic	30,299,650		47,708,085		47,833,607		47,886,144
Weighted-average number of common shares used in net income (loss) per share attributable to common stockholders — diluted	31,461,696		47,708,085		47,833,607		47,886,144


Exhibit Number			Description of Exhibit
3.1			Fifth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, File No. 001-38129, filed on July 10, 2017).

3.2			Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, File No. 001-38129, filed on July 10, 2017).

4.1			Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

4.2			Third Amended and Restated Investor Rights Agreement, dated as of June 15, 2016, by and among Mersana Therapeutics, Inc. and the Stockholders listed therein (incorporated by reference to Exhibit 4.2 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

4.3			Form of Exchange Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K, File No. 001-38129, filed on November 27, 2019).

4.4			Description of Registrant’s Common Stock (incorporated by reference to Exhibit 4.4 to the Company's Form 10-K, File No. 001-38129, filed on February 28, 2020).

10.1†			Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Form S-1/A, File No. 333-218412, filed on June 16, 2017).

10.2			Commercial Lease, dated February 24, 2009, between Mersana Therapeutics, Inc. and Rivertech Associates II, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

10.3			Seventh Lease Extension and Modification Agreement to the Lease Between Rivertech Associates II LLC and Mersana Therapeutics, Inc., dated March 10,2020, by and between Mersana Therapeutics, Inc. and Rivertech Associates II LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, File No. 001-38129, filed on May 8,2020).

~~10.4+~~10.4			Eighth Lease Modification Agreement to the Lease Between Rivertech Associates II LLC and Mersana Therapeutics, Inc., effective as of April 5, 2021, by and between Mersana Therapeutics, Inc. and Rivertech Associates II LLC. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, File No. 001-38129, filed on May 10, 2021).

10.5+			Collaboration and Commercial License Agreement, dated June 23, 2014, by and between Mersana Therapeutics, Inc. and Merck KGaA (incorporated by reference to Exhibit 10.4 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.5+~~10.6+			Amendment 1 to the Collaboration and Commercial License Agreement, dated June 1, 2016, by and between Mersana Therapeutics, Inc. and Merck KGaA (incorporated by reference to Exhibit 10.5 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.6+~~10.7+			Amendment 2 to the Collaboration and Commercial License Agreement, dated August 12, 2016, by and between Mersana Therapeutics, Inc. and Merck KGaA (incorporated by reference to Exhibit 10.6 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.7+~~10.8+			Amendment 3 to the Collaboration and Commercial License Agreement, dated February 28, 2017, by and between Mersana Therapeutics, Inc. and Merck KGaA (incorporated by reference to Exhibit 10.7 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.8~~10.9			Amendment 4 to Collaboration and Commercial License Agreement dated May 15, 2018, by and between Mersana Therapeutics, Inc. and Merck KGaA (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, File No. 001-38129, filed on August 14, 2018).

~~10.9+~~10.10+			License, Development and Commercialization Agreement, dated July 9, 2015, by and between Mersana Therapeutics, Inc. and Recepta Biopharma S.A. (incorporated by reference to Exhibit 10.8 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).


~~10.10~~10.11			First Amendment to the License, Development and Commercialization Agreement, dated August 19, 2019, by and between Mersana Therapeutics, Inc. and Recepta Biopharma S.A. (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, File No. 001-38129, filed on November 6, 2019).

10.12			Second Amendment to the License, Development and Commercialization Agreement, dated September 28, 2021, by and between Mersana Therapeutics, Inc. and Recepta Biopharma S.A. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, File No. 001-38129, filed on November 9, 2021).

~~10.11+~~10.13+			Agreement Regarding LICR Technology, dated July 9, 2015, by and between Ludwig Institute for Cancer Research, Recepta Biopharma S.A. and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.12+~~10.14			~~Collaboration~~Loan and Security Agreement, dated ~~as of July 25, 2012,~~October 29, 2021, by and between ~~Adimab,~~Oxford Finance LLC, Silicon Valley Bank and Mersana Therapeutics, Inc. ~~(incorporated by reference to Exhibit 10.10 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).~~

~~10.13+~~			Amendment Number One to the Collaboration Agreement, dated February 21, 2013, by and between Adimab, LLC and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.11 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.14+~~			Amendment Number One, to the Collaboration Agreement dated June 17, 2014, by and between Adimab, LLC and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.12 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

10.15			~~Second Amendment to~~ Amended and Restated ~~Research Collaboration and~~ Commercial License and Option Agreement, ~~as amended,~~ dated ~~August 2, 2017~~November 23, 2021, by and between Synaffix B.V. and Mersana Therapeutics, Inc. ~~and Millennium Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, File No. 001-38129, filed on August 11, 2017).~~

~~10.16~~			Third Amendment to the Amended and Restated Research Collaboration and Commercial License Agreement, as amended, dated October 30, 2017 by and between Mersana Therapeutics, Inc. and Millennium Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, file No. 001-38129, filed on November ~~13, 2017).~~

~~10.17~~			Exchange Agreement, dated November 26, 2019, by and between Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P. and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, File No. 001-38129, filed on November 27, 2019).

~~10.18~~			Loan and Security Agreement, dated May 8, 2019, by and between Silicon Valley Bank and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q, File No. 001-38129, filed on May 9, 2019).

~~10.19~~			First Amendment to the Loan and Security Agreement, dated June 21, 2019 by and between Silicon Valley Bank and Mersana Therapeutics, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q, File No. 001-38129, filed on August 8, 2019).

~~10.20~~			~~Second~~ ~~Amendment to~~ ~~Loan and Security Agreement, dated~~ ~~August28,2020,~~ ~~by and between~~ ~~MersanaTherapeutics,Inc.,~~ ~~and~~ ~~SiliconValleyBank~~ ~~(incorporated by reference to Exhibit~~ ~~10.1~~ ~~to the Company’s~~ ~~Current Report on~~ ~~Form~~ ~~8-K,~~ ~~File No. 001-38129, filed on~~ ~~September~~3,~~2020).~~

~~10.21†~~10.16†			Amended and Restated Offer Letter, by and between Mersana Therapeutics, Inc. and Anna Protopapas, dated March 17, 2017 (incorporated by reference to Exhibit 10.16 to the Company's Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.22†~~			~~OfferLetter,~~ ~~by and between Mersana Therapeutics, Inc. and~~ ~~DirkHuebner,~~ ~~dated~~ ~~November~~5,~~2018~~ ~~(incorporated by reference to Exhibit~~ ~~10.2~~ ~~to the Company's Form~~ ~~10-Q,~~ ~~File No.~~ ~~001-38129,~~ ~~filed on~~ ~~May~~8,~~2020).~~

~~10.23†~~10.17†			Offer Letter, by and between Mersana Therapeutics, Inc. and ~~Brian~~Arvin Yang, dated November 5, 2020 (incorporate by reference to Exhi bit 10.2 to the Company's Form 10-Q, File No. 001-38129, filed on May 10, 2021).

10.18†			Offer Letter, by and between Mersana Therapeutics, Inc. and Brian DeSchuytner, dated June 10,2019 (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q, File No. 001-38129, filed on May 8,2020).

~~10.24†~~10.19†			Amended and Restated Offer Letter, by and between Mersana Therapeutics, Inc. and Michael Kaufman, dated March 8, 2017 (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q, File No. 001-38129, filed on May 10, 2021).

10.20†			Amended and Restated Offer Letter, by and between Mersana Therapeutics, Inc. and Timothy B. Lowinger, dated March 8 (incorporated by reference to Exhibit 10.18 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

10.21†			2007 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.19 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.25†~~10.22†			Form of Incentive Stock Option under the 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).

~~10.26†~~10.23†			Form of Nonqualified Stock Option under the 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.21 to the Company’s Form S-1, File No. 333-218412, filed on June 1, 2017).


~~10.27†~~10.24†			2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to the Company’s Form S-1/A, File No. 333-218412, filed on June 16, 2017).

~~10.28†~~10.25†			Form of Incentive Stock Option under the 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.23 to the Company’s Form S-1/A, File No. 333-218412, filed on June 16, 2017).

~~10.29†~~10.26†			Form of Nonqualified Stock Option under the 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the Company’s Form S-1/A, File No. 333-218412, filed on June 16, 2017).

10.27†			Form of Restricted Stock Unit under the 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, File No. 333-38129, filed on August 6, 2021).

10.28†			2022 Inducement Stock Incentive Plan

10.29†			Form of Inducement Restricted Stock Unit under the 2022 Inducement Stock Incentive Plan