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

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

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

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

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

As of ~~August 31,~~November 5, 2021, the registrant had ~~59,970,843~~60,192,061 shares of common stock, $0.0001 par value per share, outstanding.


	June 30,			December 31,			September 30,			December 31,
	2021			2020			2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	129,524		$	15,953		$	435,310		$	15,953
Accounts receivable		2			150			578			150
Contract assets ($0 and $250 from related party, respectively)		830			1,328			1,853			1,328
Other receivables		7,575			3,682			5,354			3,682
Prepaid expenses and other current assets		5,036			3,193			5,952			3,193
Total current assets		142,967			24,306			449,047			24,306
INVESTMENTS IN EQUITY SECURITIES		7,626			7,626			7,626			7,626
PROPERTY AND EQUIPMENT—NET		4,408			3,502			4,477			3,502
OTHER ASSETS		3,396			612			810			612
TOTAL ASSETS	$	158,397		$	36,046		$	461,960		$	36,046
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable ($0 and $500 to related party, respectively)	$	4,029		$	2,601		$	3,482		$	2,601
Accrued expenses and other current liabilities		13,297			8,973			13,930			8,973
Promissory note — PPP Loan		0			654			—			654
Deferred revenue		8,681			161			8,746			161
Total current liabilities		26,007			12,389			26,158			12,389
LONG-TERM LIABILITIES
Deferred revenue, net of current portion ($50 and $50 from related party)		24,208			937
Deferred revenue, net of current portion ($100 and $50 from related party)								23,022			937
Deferred rent and lease incentive liability		1,570			925			1,833			925
Promissory note — PPP Loan, net of current portion		0			924			—			924
Success payments liability		3,835			2,654
MSKCC success payments liability								6,238			2,654
Other liabilities		163			176			153			176
Deferred tax liabilities		155			155			155			155
Total liabilities		55,938			18,160			57,559			18,160
COMMITMENTS AND CONTINGENCIES (Note 9)
CONVERTIBLE PREFERRED STOCK, par value $0.0001 per share—14,430,622 and 7,766,582 shares authorized at June 30, 2021 and December 31, 2020, respectively; 14,430,522 and 7,766,582 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively; (liquidation preference of $156,620 and $41,620 at June 30, 2021 and December 31, 2020, respectively)		150,150			41,323
STOCKHOLDERS’ DEFICIT
Common stock, par value $0.0001 per share—44,541,000 and 28,933,380 shares authorized at June 30, 2021 and December 31, 2020, respectively; 11,333,423 and 9,710,830 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		1			1
CONVERTIBLE PREFERRED STOCK, par value $0.0001 per share; 0 shares authorized, issued, and outstanding at September 30, 2021; 7,766,582 shares authorized, issued, and outstanding at December 31, 2020								—			41,323
STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, par value $0.0001 per share 300,000,000 and 28,933,380 shares authorized at September 30, 2021 and December 31, 2020, respectively; 60,021,319 and 9,710,830 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively								6			1
Additional paid-in-capital		10,649			7,433			483,710			7,433
Accumulated deficit		(58,341	)		(30,871	)		(79,315	)		(30,871	)
Total stockholders’ deficit		(47,691	)		(23,437	)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT	$	158,397		$	36,046
Total stockholders’ equity (deficit)								404,401			(23,437	)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)							$	461,960		$	36,046

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


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2021			2020			2021			2020
Licensing and collaboration revenue ($0 and $7,500 from related party, respectively)	$	1,476		$	8,478		$	3,062		$	10,178
Licensing and collaboration revenue (including $7,500 for nine months ended September 2020 from related party, and 0ne for all other periods)													$	3,977		$	1,198		$	7,039		$	11,377
Operating expenses:
Research and development		12,327			7,580			22,491			16,221			15,833			6,180			37,144			22,401
General and administrative		5,113			3,153			9,709			6,641			6,760			3,247			16,469			9,887
Total operating expenses		17,440			10,733			32,200			22,862			22,593			9,427			53,613			32,288
Loss from operations		(15,964	)		(2,255	)		(29,138	)		(12,684	)		(18,616	)		(8,229	)		(46,574	)		(20,911	)
Other income (expense):
Interest income		46			11			50			153			22			4			72			157
Interest expense		(2	)		(5	)		(8	)		(8	)		0			(6	)		(8	)		(14	)
Change in fair value of equity securities		-			-			-			(733	)		—			—			—			(733	)
Change in fair value of the MSKCC success payments liability														(2,403	)		—			(3,584	)		—
Gain on extinguishment of PPP Loan		1,584			-			1,584			-			—			—			1,584			—
Other income		25			327			42			348			23			85			66			431
Total other income (expense)		1,653			333			1,668			(240	)		(2,358	)		83			(1,870	)		(159	)
Net loss before provision for income taxes		(14,311	)		(1,922	)		(27,470	)		(12,924	)		(20,974	)		(8,146	)		(48,444	)		(21,070	)
Benefit from income taxes		-			(50	)		-			(1,252	)		—			213			—			1,465
Net loss and comprehensive loss	$	(14,311	)	$	(1,872	)	$	(27,470	)	$	(11,672	)	$	(20,974	)	$	(7,933	)	$	(48,444	)	$	(19,605	)
Net loss per share, basic and diluted	$	(1.39	)	$	(0.22	)	$	(2.78	)	$	(1.38	)	$	(0.46	)	$	(0.93	)	$	(2.20	)	$	(2.31	)
Weighted-average common shares outstanding, basic and diluted		10,261,770			8,441,934			9,882,715			8,435,672			45,889,646			8,537,965			22,052,944			8,470,019

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

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ ~~Deficit~~Equity (Deficit)


											Retained			Total															Retained			Total
									Additional		Earnings			Stockholders’													Additional		Earnings			Stockholders’
	Convertible Preferred Stock				Common Stock				Paid-In		(Accumulated			Equity			Convertible Preferred Stock						Common Stock				Paid-In		(Accumulated			Equity
	Shares		Amount		Shares		Amount		Capital		Deficit)			(Deficit)			Shares			Amount			Shares		Amount		Capital		Deficit)			(Deficit)
BALANCE—December 31, 2020		7,766,582	$	41,323		9,710,830	$	1	$	7,433	$	(30,871	)	$	(23,437	)		7,766,582		$	41,323			9,710,830	$	1	$	7,433	$	(30,871	)	$	(23,437	)
Issuance of Series C convertible preferred stock, net of issuance costs of $6.2 million		6,663,940		108,827		-		-		-		-			-			6,663,940			108,827			—		—		—		—			—
Issuance of common stock on exercise of options		-		-		584,614		-		564		-			564			—			—			584,614		—		564		—			564
Stock-based compensation expense		-		-		-		-		343		-			343			—			—			—		—		343		—			343
Net loss and comprehensive loss		-		-		-		-		-		(13,159	)		(13,159	)		—			—			—		—		—		(13,159	)		(13,159	)
BALANCE—March 31, 2021		14,430,522	$	150,150		10,295,444	$	1	$	8,340	$	(44,030	)	$	(35,689	)		14,430,522		$	150,150			10,295,444	$	1	$	8,340	$	(44,030	)	$	(35,689	)
Stock-based compensation expense		-		-		-		-		593		-			593			—			—			—		—		593		—			593
Repayment of loan issued by stockholder		-		-		-		-		1,150		-			1,150			—			—			—		—		1,150		—			1,150
Issuance of common stock on exercise of options		-		-		1,037,979		-		566		-			566			—			—			1,037,979		—		566		—			566
Net loss and comprehensive loss		-		-		-		-		-		(14,311	)		(14,311	)		—			—			—		—		-		(14,311	)		(14,311	)
BALANCE—June 30, 2021		14,430,522	$	150,150		11,333,423	$	1	$	10,649	$	(58,341	)	$	(47,691	)		14,430,522		$	150,150			11,333,423	$	1	$	10,649	$	(58,341	)	$	(47,691	)
Stock-based compensation expense																		—			—			—		—		935		—			935
Conversion of convertible preferred stock into common stock																		(14,430,522	)		(150,150	)		26,234,654		3		150,147		—			150,150
Issuance of common stock upon initial public offering, net of issuance costs of $28.6 million																		—			—			21,850,000		2		321,018		—			321,020
Issuance of common stock on exercise of options																		—			—			603,246		—		961		—			961
Net loss and comprehensive loss																		—			—			—		—		—		(20,974	)		(20,974	)
BALANCE—September 30, 2021																		0		$	0			60,021,323	$	6	$	483,710	$	(79,315	)	$	404,401

BALANCE—December 31, 2019		7,766,582	$	41,323		8,839,205	$	1	$	4,025	$	3,437		$	7,463			7,766,582		$	41,323			8,839,205	$	1	$	4,025	$	3,437		$	7,463
Stock-based compensation expense		-		-		-		-		237		-			237			—			—			—		—		237		—			237
Net loss and comprehensive loss		-		-		-		-		-		(9,800	)		(9,800	)		—			—			—		—		—		(9,800	)		(9,800	)
BALANCE—March 31, 2020		7,766,582	$	41,323		8,839,205	$	1	$	4,262	$	(6,363	)	$	(2,100	)		7,766,582		$	41,323			8,839,205	$	1	$	4,262	$	(6,363	)	$	(2,100	)
Stock-based compensation expense		-		-		-		-		286		-			286			—			—			—		—		286		—			286
Issuance of restricted stock awards		-		-		4,545		-		-		-			-			—			—			4,545		—		—		—			—
Issuance of common stock on exercise of options		-		-		50,358		-		21		-			21			—			—			50,358		—		21		—			21
Net loss and comprehensive loss		-		-		-		-		-		(1,872	)		(1,872	)		—			—			—		—		—		(1,872	)		(1,872	)
BALANCE—June 30, 2020		7,766,582	$	41,323		8,894,108	$	1	$	4,569	$	(8,235	)	$	(3,665	)		7,766,582		$	41,323			8,894,108	$	1	$	4,569	$	(8,235	)	$	(3,665	)
Stock-based compensation expense																		—			—			—		—		248		—			248
Issuance of common stock on exercise of options																		—			—			75,468		—		139		—			139
Net loss and comprehensive loss																		—			—			—		—		—		(7,933	)		(7,933	)
BALANCE—September 30, 2020																		7,766,582		$	41,323			8,969,576	$	1	$	4,956	$	(16,168	)	$	(11,211	)

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


	Six Months Ended June 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(27,470	)	$	(11,672	)	$	(48,444	)	$	(19,605	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		451			454			711			680
Loss on disposal of fixed assets		3			0			3			70
Change in fair value of equity securities		0			733			—			733
Non-cash consideration for licensing and collaboration revenue		0			(7,500	)
Non-cash consideration for licensing and collaboration revenue ($0 and $7,500 from related party, respectively)								—			(7,580	)
Stock-based compensation expense		936			523			1,871			771
Change in fair value of success payments liability		1,181			0
Change in fair value of MSKCC success payments liability								3,584			—
Acquired in-process research and development		1,000			425			1,000			425
Extinguishment of PPP Loan		(1,578	)		0			(1,578	)		—
Changes in operating assets and liabilities:
Accounts receivable		148			(17	)		(428	)		4
Contract assets		498			415			(525	)		170
Other receivables		(3,894	)		527			(1,673	)		147
Prepaid expenses and other current assets		(1,842	)		1,555			(2,759	)		1,487
Other assets		(151	)		(19	)		(151	)		(19	)
Accounts payable		1,031			318			848			(1,907	)
Accrued expenses and other current liabilities		1,009			(897	)		4,855			1,112
Deferred revenue, current and long-term		31,791			(609	)		30,669			(667	)
Deferred rent and lease incentive liability		738			134			909			23
Other liabilities		(14	)		(479	)		(22	)		(431	)
Deferred tax liabilities		0			(339	)		—			(552	)
Net cash provided by (used in) operating activities		3,837			(16,448	)
Net cash used in operating activities								(11,130	)		(25,139	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equity securities		0			7,668			—			7,668
Purchases of property and equipment		(506	)		(276	)		(1,436	)		(290	)
Payments to acquire in-process research & development		0			(425	)
Proceeds from sale of property and equipment								—			10
Payments to acquire in-process research and development								(1,000	)		(425	)
Net cash provided by (used in) investing activities		(506	)		6,967			(2,436	)		6,963
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Series C convertible preferred stock		108,827			-
Proceeds from common stock options exercised		1,130			21
Proceeds from initial public offering of common stock, net of offering costs								321,020			—
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs								108,827			—
Proceeds from exercise of stock options								2,091			160
Repayment of promissory note		1,150			-			1,150			—
Principal payments for capital lease		(119	)		(50	)
Payments on capital lease								(119	)		(81	)
Proceeds from PPP Loan		0			1,570			0			1,574
Payment of deferred issuance costs		(702	)		-
Net cash provided by financing activities		110,286			1,541			432,969			1,653
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		113,617			(7,940	)		419,403			(16,523	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — BEGINNING OF PERIOD		15,953			41,070			15,953			41,070
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — END OF PERIOD	$	129,570		$	33,130		$	435,356		$	24,547
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	129,524		$	33,130		$	435,310		$	24,547
Restricted cash		46			-			46			—
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ON THE BALANCE SHEET	$	129,570		$	33,130		$	435,356		$	24,547

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	11		$	11		$	11		$	11

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment accrued	$	869		$	-
Deferred issuance costs related to initial public offering accrued	$	1,884		$	-
Acquired in-process research and development accrued	$	1,000		$	-
Acquisition of property and equipment included in accrued expenses and other current liabilities							$	268		$	27
Extinguishment of PPP Loan	$	1,578		$	-		$	1,578		$	—
Non-cash consideration in exchange for licensing and collaboration revenue	$	0		$	7,500		$	—		$	7,580
Conversion of convertible preferred stock to common stock at closing of initial public offering							$	150,150		$	—

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

2. Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the years ended December 31, 2019 and 2020 included in ~~the Company~~’sour final prospectus for our IPO (“Final Prospectus”) ~~filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (the “SEC”) on July 23, 2021,~~ except as ~~noted~~set forth below.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Caribou Biosciences, Inc. and its ~~wholly owned~~wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP ~~can~~may be condensed or omitted. ~~These~~Our condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in our Final Prospectus, except as noted below.

In the opinion of our management, the information furnished in ~~these~~our condensed consolidated financial statements reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported interim periods. We consider events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of ~~the~~our condensed consolidated financial statements; and the reported amounts of revenue, income, and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, common stock valuation, stock-based compensation expense, accrued expenses related to research and development activities, valuation of the MSKCC success payments liability, and income taxes. ~~Management~~Our management bases its estimates on historical experience and on various other assumptions that ~~are believed~~they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Segments

We operate and manage our business as 1 reportable and operating segment, which is the business of developing an internal pipeline of off-the-shelf CAR-T and CAR-NK cell therapies. Our chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All long-lived assets are maintained in the United States.

Concentrations of Credit Risk and Other Uncertainties

Financial instruments that potentially subject us to concentration of credit risk ~~consisted~~consist of cash and cash equivalents, accounts receivable, contract assets, other receivables, and investments in equity securities. Substantially all our cash and cash equivalents ~~are~~were deposited in accounts at one financial institution, and account balances may at times exceed federally insured limits. We believe the financial institution to be of high credit quality.

Licensees that represent 10% or more of our ~~revenues~~revenue and accounts receivable and contract assets ~~are~~were as follows:


	Revenue						Revenue						Accounts Receivable and Contract Assets						Revenue						Revenue						Accounts Receivable and Contract Assets
	Three Months Ended						Six Months Ended						As of			As of			Three Months Ended						Nine Months Ended						As of			As of
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020			June 30, 2021			December 31, 2020			September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020			September 30, 2021			December 31, 2020
Licensee A		36.3	%			*		35.2	%			*		64.5	%		40.6	%		14.0	%		38.8	%		23.2	%		10.5	%		23.1	%		40.6	%
Licensee B			*			*			*			*			*		13.2	%			*			*			*			*			*		13.2	%
Licensee C, related party			*			*			*			*			*		16.9	%			*			*			*			*			*		16.9	%
Licensee D			*			*			*			*			*		10.1	%			*			*			*			*			*		10.1	%
Licensee E			*			*			*			*		15.7	%			*		57.2	%			*		39.5	%			*		50.4	%			*
Licensee F, related party			*		88.5	%			*		73.7	%			*			*			*			*			*		65.9	%			*			*
Licensee G		11.3	%			*			*			*			*			*			*		24.0	%			*			*			*			*
Licensee H		34.3	%			*		16.5	%			*			*			*			*		20.4	%			*			*			*			*
Licensee I			*			*		20.1	%			*			*			*
Total		81.9	%		88.5	%		71.8	%		73.7	%		80.2	%		80.8	%		71.2	%		83.2	%		62.7	%		76.4	%		73.5	%		80.8	%

*Less than 10%

We monitor economic conditions to identify facts or circumstances that may indicate ~~that~~if any of our accounts receivable are not collectible ~~and~~or if the contract assets should be impaired. NaN allowance for doubtful accounts was recorded as of ~~June~~September 30, 2021 ~~and~~or December 31, 2020.

Restricted Cash

We define restricted cash as cash and cash equivalents that cannot be withdrawn or used for general operating activities. Our restricted cash consists of a letter of credit with a financial institution ~~in connection with~~related to our workers’ compensation insurance, which renews annually. As of ~~June~~September 30, 2021, we had less than $0.1 million of restricted cash, which was recorded in other assets ~~within the~~in our condensed consolidated balance ~~sheet.~~sheets. We did 0t have any restricted cash as of December 31, 2020.

~~Deferred Issuance Costs~~

Issuance costs, consisting of legal, accounting, audit, and filing fees relating to in-process equity financings, including the IPO, are capitalized. Deferred issuance costs are offset against offering proceeds upon the completion of an equity financing or an offering. In the event an equity financing or an offering is terminated or delayed, deferred issuance costs will be expensed immediately as a charge to general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2021, we capitalized deferred issuance costs in the amount of $~~2.6~~ ~~million related to our IPO. As of December 31, 2020, we did~~ 0~~t capitalize any issuance costs.~~

Patent Costs

We expense costs as incurred for filing, prosecuting, and maintaining patents and patent applications, including certain of the patents and patent applications that we license from third ~~parties, as incurred, and~~parties. We classify such costs as general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. In addition, we are entitled to receive reimbursement offrom third parties for a portion of the filing, prosecution, and maintenance costs for certain patents and patent ~~applications from third parties.~~applications. We accrue for these reimbursements as the respective expenses are incurred, and we classify such reimbursements as a reduction of general and administrative expenses. During each of the three months ended ~~June~~September 30, 2021 and 2020, we incurred gross patent costs of $~~3.6~~2.8 ~~million and $2.2~~ ~~million, respectively.~~million. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we incurred gross patent costs of $~~7.5~~10.3 million and $~~4.5~~7.3 million, respectively. During the three months ended ~~June~~September 30, 2021 and 2020, we recorded $~~2.4~~1.6 million and $~~1.1~~1.5 million, respectively, of patent cost reimbursements as a credit to general and administrative expenses. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we recorded $~~4.5~~6.1 million and $~~2.2~~3.7 million, respectively, of patent cost reimbursements as a credit to general and administrative expenses.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) or other standard-setting bodies and adopted by us as of the specified effective date.

New Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize in ~~the~~its statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. We may elect not to apply Topic 842 to short-term leases with a term of 12 months or less. This ASU is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. We are ~~currently evaluating~~in the process of completing a qualitative and quantitative assessment of our lease portfolio and implementing new processes and controls to account for leases in accordance with the new standard. We believe the most significant changes to our financial statements will relate to the recognition of right-of-use assets and offsetting lease liabilities for operating leases in the consolidated balance sheet. We do not expect the standard to have a material impact on cash flows or results of ~~adoption of this update on the condensed consolidated financial statements.~~operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ~~The update~~This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ~~The updated guidance~~ASU 2016-13 replaces the current incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. This ASU is to be applied on a modified retrospective approach and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, and interim reporting periods within fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact of adoption of this ~~update~~ASU on ~~the~~our condensed consolidated financial statements.

3. Fair Value Measurements and Fair Value of Financial Instruments

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their ~~entirety~~entireties based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires our management to make judgments and consider factors specific to the asset or liability.

Our financial instruments ~~consisted~~consist of Level 1 and Level 3.3 financial instruments. Level 1 financial instruments are comprised of money market mutual funds. Level 3 financial instruments are comprised of the success payments liability related to the Exclusive License Agreement (the “MSKCC Agreement”), dated November 13, 2020, by and between us and Memorial Sloan Kettering Cancer Center (“MSKCC”).

The following table sets forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


	Fair Value Measurements at June 30, 2021								Fair Value Measurements as of September 30, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Money market investments (included in cash and cash equivalents)	$	129,524	$	129,524	$	-	$	-	$	435,310	$	435,310	$	-	$	-
Total	$	129,524	$	129,524	$	-	$	-	$	435,310	$	435,310	$	-	$	-

Liabilities:
Success payments liability	$	3,835	$	-	$	-	$	3,835
MSKCC success payments liability									$	6,238	$	-	$	-	$	6,238
Total	$	3,835	$	-	$	-	$	3,835	$	6,238	$	-	$	-	$	6,238


	Fair Value Measurements at December 31, 2020								Fair Value Measurements as of December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Money market investments (included in cash and cash equivalents)	$	15,953	$	15,953	$	-	$	-	$	15,953	$	15,953	$	-	$	-
Total	$	15,953	$	15,953	$	-	$	-	$	15,953	$	15,953	$	-	$	-

Liabilities:
Success payments liability	$	2,654	$	-	$	-	$	2,654
MSKCC success payments liability									$	2,654	$	-	$	-	$	2,654
Total	$	2,654	$	-	$	-	$	2,654	$	2,654	$	-	$	-	$	2,654

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liability (in thousands):


	Success Payments Liability		MSKCC Success Payments Liability
Balance at December 31, 2020	$	2,654	$	2,654
Change in fair value		1,181		3,584
Balance at June 30, 2021	$	3,835
Balance at September 30, 2021			$	6,238

We recorded a $~~0.5~~2.4 million change and a $~~1.2~~3.6 million change in fair value of the MSKCC success payments liability ~~as research and development expense~~ in ~~the~~other income (expense) in our condensed consolidated ~~statement~~statements of operations and comprehensive loss for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

We utilize a Monte Carlo simulation model that requires significant estimates and assumptions in determining the estimated MSKCC success payments liability under the MSKCC Agreement and associated expense at each balance sheet date. The assumptions used to calculate the fair value of the success payments are subject to a significant amount of judgment including the expected volatility, estimated term, and estimated number and timing of valuation measurement dates.

Our liability for the MSKCC success payments is carried at fair value and changes are recognized as expense or income as part of “other income (expense)” until the success payments liability is paid or expires (Note 4). ~~The~~

We utilize a Monte Carlo simulation ~~methodology~~model that models the future movement of stock prices based on several key variables. This model requires significant estimates and assumptions in determining the estimated success payments liability under the MSKCC Agreement and associated expense or income at each balance sheet date based on changes in the estimated success payments liability. The assumptions used to calculate the fair value of the MSKCC success payments are subject to a significant amount of judgment including the expected volatility that was estimated using available information about the historical volatility of stocks of publicly traded companies that are similar to us, the estimated term, and the estimated number and timing of valuation measurement dates. The table below summarizes key assumptions used in the valuation of MSKCC success payments liability:


	As of June 30, 2021			As of December 31, 2020			As of September 30, 2021			As of December 31, 2020
Fair value of common stock	$	7.712		$	5.462		$	23.870		$	5.462
Risk free interest rate		1.45	%		0.93	%
Risk-free interest rate								1.52	%		0.93	%
Expected volatility		75	%		80	%		80	%		80	%
Probability	6.6% to 19.3%			4.4% to 13.4%			11.9% to 26.7%			4.4% to 13.4%
Expected term (years)	4.5 to 5.7			4.7 to 5.7			4.0 to 4.8			4.7 to 5.7

The computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption and the historical and implied volatility of our stock. The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated timing of our phase 1 clinical trial and U.S. Food and Drug Administration (“FDA”) approval of ~~a particular~~one of our product ~~candidate.~~candidates. In addition, we incorporated the estimated number and timing of valuation measurement dates in the calculation of the MSKCC success payments liability.

A small change in the assumptions and other inputs, such as the fair value of our common stock, may have a relatively large change in the estimated valuation and associated liability and ~~expense.~~expense or income.

The carrying value of the promissory note pursuant to the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (the “SBA”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) approximates its fair value (Note 8).

4. Significant Agreements

The Regents of the University of California/University of Vienna

We entered into an Exclusive License Agreement, dated April 16, 2013, as amended (the “UC/Vienna Agreement”) with The Regents of the University of California (“UC”) and the University of Vienna (“Vienna”) (together, “UC/Vienna”) wherein UC/Vienna granted us an exclusive worldwide license, with the right to sublicense, in all fields to the foundational CRISPR-Cas9 patent family co-owned by UC, Vienna, and Dr. Emmanuelle Charpentier (the “CVC IP”). Dr. Charpentier has not granted us any rights, either directly or indirectly. The UC/Vienna Agreement continues until the last-to-expire patent or last-to-be-abandoned patent application ~~licensed under~~within the ~~UC/Vienna Agreement;~~CVC IP; provided, however, that UC/Vienna may terminate the UC/Vienna Agreement upon the occurrence of certain events and we may terminate the UC/Vienna Agreement at our sole discretion upon written notice. Without patent term adjustment or patent term extension, the CVC IP will expire in 2033. The UC/Vienna Agreement includes certain diligence milestones that we must meet. For products and services sold by us that are covered by the CVC IP, we will owe low- to mid-single-digit percent royalties on net sales, subject to a minimum annual royalty. Prior to ~~such~~the time that we are selling products, we owe UC/Vienna an annual license maintenance fee. We may owe UC/Vienna up to $~~3.6~~3.4 million in certain regulatory and clinical milestone payments in the field of human therapeutics and diagnostics for products that are covered by the CVC IP and developed by us, an affiliate, or a sublicensee. Additionally, we pay UC/Vienna a specified percentage of sublicensing revenue, ~~we receive~~ including cash and equity, ~~under our~~we receive from sublicensing ~~agreements~~,the CVC IP, subject to certain exceptions. If we include intellectual property owned or controlled by us in ~~such~~a sublicense to the CVC IP, we pay UC/Vienna a low double-digit percentage of sublicensing revenues received under the sublicense. If we do not include intellectual property owned or controlled by us in ~~such~~a sublicense to the CVC IP, we pay ~~UC /Vienna~~UC/Vienna 50% of sublicensing revenues received under the sublicense. To date, we have entered into over 20 sublicensing agreements in a variety of fields such as human therapeutics, forestry, agriculture, research reagents, transgenic animals, certain livestock targets, internal research,

~~research,~~ bioproduction, cell lines, and microbial applications that include the CVC IP as well as other Cas9 intellectual property owned or controlled by us. We are obligated to reimburse UC for its prosecution and maintenance costs of the CVC IP.

For the three months ended ~~June~~September 30, 2021 and 2020, we ~~paid UC~~incurred $~~0.7~~0.3 million and $0.1 million, respectively, infor payments we owe to UC related to sublicensing revenues, ~~related to our sublicensing agreements,~~ which were recorded in research and development expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. For the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we ~~paid UC~~incurred $~~1.0~~1.3 million and $~~0.4~~0.6 million, respectively, infor payments we owe to UC related to sublicensing revenues, ~~related to our sublicensing agreements,~~ which were recorded in research and development expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss.

For the three months ended ~~June~~September 30, 2021 and 2020, we reimbursed UC $~~3.3~~2.4 million and $~~1.8~~2.3 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. For the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we reimbursed UC $~~6.5~~8.9 million and $~~3.7~~6.0 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss.

On December 15, 2016, we entered into a Consent to Assignments, Licensing and Common Ownership and Invention Management Agreement (“IMA”) relating to the CVC IP. Under the IMA, CRISPR Therapeutics AG (“CRISPR”) reimburses us 50% of the amounts we reimburse UC for patent prosecution and maintenance ~~costs.~~costs of the CVC IP. For the three months ended ~~June~~September 30, 2021 and 2020, CRISPR reimbursed us $~~1.6~~1.2 million and $~~0.8~~1.1 million, respectively, which were recorded as ~~a reduction~~reductions of general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. For the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, CRISPR reimbursed us $~~3.2~~4.4 million and $~~1.5~~2.6 million, respectively, which were recorded as ~~a reduction~~reductions of general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss.

Memorial Sloan Kettering Cancer Center

~~On November 13, 2020, we entered into~~Under the MSKCC Agreement, ~~under which~~ we exclusively licensed know-how, biological materials, and intellectual property relating to humanized single-chain variable fragments targeting CD371 for use in T cells, NK cells, and genome-edited induced pluripotent stem cells for allogeneic CD371-targeted cell therapy ~~(our~~(currently used in our CB-012 product candidate). We paid MSKCC an upfront payment of $0.5 million in cash and $2.1 million in stock. For each licensed CD371 product, ~~there are~~we may owe potential clinical, regulatory, and commercial ~~milestones~~milestone payments totaling $112.0 ~~million and,~~million. In addition, in the event we, or our affiliates, or sublicensees, receive regulatory approval for ~~CB-012,~~a licensed CD371 product, we will owe low- to ~~mid-single- digit~~mid-single-digit percent royalties on net sales by us, our affiliates, and our sublicensees. Our license from MSKCC includes the right to sublicense through multiple tiers and we will owe MSKCC a percentage of upfront cash or equity received from our sublicensees. The percentage owed decreases as our ~~products move~~licensed CD371 product candidate moves through development, starting at a ~~low -double-digit~~low-double-digit percentage if clinical trials have not yet begun and decreasing to a mid-single-digit percentage if ~~the~~our licensed CD371 product candidate is in later clinical trial stages. We are also responsible for paying a percentage of licensed patent costs. The MSKCC Agreement includes certain diligence milestones that we must meet by specified dates, which dates may be extended upon payment of additional fees.

MSKCC is entitled to certain success payments ~~in the event that~~if our common stock fair value increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock ~~compared~~ with the split-adjusted initial stock price of our Series B convertible preferred stock financing of $5.1914, per share, as adjusted for any future stock splits (the “Initial Share Price”), during a specified time interval. Under the MSKCC Agreement, as a publicly traded company, our common stock fair value is determined by any given 45-day ~~volume weight~~volume-weighted average trading price. At our option, success payments to MSKCC may be made in cash or common stock. The relevant time interval commences when the first patient is dosed with ~~our CB-012~~a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary from the approval of our, or our affiliate’s, or sublicensee’s, biologics license application by the FDA or 10 years from the date the first patient was dosed with ~~CB-012~~a licensed CD371 product candidate in the first phase 1 clinical trial. The aggregate success payments ~~are~~will not to exceed $35.0 million. Additionally, if we undergo a change of control during the specified time ~~period,~~interval, we may owe a change of control payment, ~~may be owed,~~ depending upon the increase in our stock price due to the change of control and also to what extent success payments have already been ~~paid.~~paid by us to MSKCC. In no event will the combination of success payments and the change of control payment owed to MSKCC exceed $35.0 million.

The following table summarizes the amounts of the MSKCC success ~~payments amounts:~~payments:

Multiple of initial share price at issuance

5x

10x

15x

Success payment(s) (in millions)

$
10.0

$
10.0

$
15.0


Multiple of Initial Share Price giving rise to a success payment	5x		10x		15x
MSKCC success payments (in millions)	$	10.0	$	10.0	$	15.0

We may terminate the MSKCC Agreement upon 90 calendar days’ prior written ~~notice.~~notice to MSKCC. MSKCC may terminate in the event of our uncured material breach, bankruptcy, or criminal activity. In the event that MSKCC materially breaches the MSKCC Agreement in certain circumstances (e.g., granting a third party a license in our field), then, during the time of such uncured breach, MSKCC will not be entitled to receive any success payments or any change of control payment.

As of ~~June~~September 30, 2021, the estimated fair value of the total success payments obligation to MSKCC was $~~3.8~~6.2 million, which was included in long-term liabilities in ~~the~~our condensed consolidated balance ~~sheet as of June 30, 2021.~~sheets. For the three and ~~six~~nine months ended ~~June~~September 30, 2021, we recognized $~~0.5~~2.4 million and $~~1.2~~3.6 million, respectively, of change in fair value of the MSKCC success payments liability, which were recorded in ~~the research and development expenses~~other income (expense) in ~~the~~our condensed consolidated ~~statement~~statements of operations and comprehensive loss.

Intellia Therapeutics, Inc.

On July 16, 2014, we entered into a License Agreement, as amended (the “Intellia License Agreement”) and a Services Agreement ~~(the “Intellia Services Agreement”)~~ with Intellia, LLC, to which Intellia Therapeutics, Inc. (“Intellia”) is a successor in interest. Under the Intellia License Agreement, we granted Intellia an exclusive worldwide license, with the right to sublicense, to certain CRISPR-Cas9 technology for a defined field of human ~~therapeutics.~~therapeutics, including a license to certain of our future CRISPR-Cas9 intellectual property until our direct or indirect percentage of Intellia’s common stock dropped below 10% (the “IP Cut-off Date”). Intellia granted us an exclusive worldwide license, with the right to sublicense, to certain of its CRISPR-Cas9 technology for all fields outside of the defined field of human therapeutics, including a license to certain of Intellia’s future CRISPR-Cas9 intellectual property until ~~our direct or indirect ownership percentage dropped below~~ 10~~% (the “IP cut-off date”).~~the IP Cut-off Date. Each party had the right to opt-in to any licenses in its field of use entered into by the other party prior to the IP ~~cut-off date,~~Cut-off Date, subject to the terms and conditions of such license. The IP ~~cut-off date~~Cut-off Date occurred on January 30, 2018. Under the Intellia License Agreement, each party is responsible for 30% of the other party’s expenses for prosecution and maintenance of the licensed intellectual property. For each of the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we reimbursed Intellia less than $0.1 million, which was recorded as general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. During each of the three months ended ~~June~~September 30, 2021 and 2020, Intellia reimbursed us $~~0.8~~0.4 million ~~and $0.3~~ ~~million, respectively~~ (including reimbursement for a portion of the patent prosecution and maintenance costs of the CVC IP paid to UC), which ~~were~~was recorded as ~~a reduction~~reductions of general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, Intellia reimbursed us $~~1.3~~1.7 million and $~~0.7~~1.1 million, respectively (including reimbursement for a portion of patent prosecution and maintenance costs of the CVC IP paid to UC), which were recorded as ~~a reduction~~reductions of general and administrative expenses in ~~the~~our condensed consolidated statements of operations and comprehensive loss. The term of the Intellia License Agreement continues for the life of the licensed patents and patent applications; provided, however, ~~that~~ either party may terminate upon the occurrence of certain events.

On June 16, 2021, we and Intellia entered into a leaseback agreement (the “Leaseback Agreement”), which resolved the arbitration dispute between the parties (Note 9). Pursuant to the Leaseback Agreement, in exchange for Intellia’s grant to us of an exclusive license to certain intellectual property relating to CRISPR-Cas9, including Cas9 chRDNAs, for use solely in the manufacture of our CB-010 product candidate, we agreed to make certain payments to ~~Intellia. We accrued~~Intellia, including $1.0 million ~~in research and development expenses as of June 30, 2021 for the upfront payment of $1.0 million, which was~~ paid to Intellia in July 2021. We are also obligated to pay up to $23.0 million in potential future regulatory and sales milestones for our CB-010 product candidate if and when such milestones are achieved. We will also pay Intellia low- to mid-single-digit percent royalties on net sales of our CB-010 product candidate sold by us, our affiliates, and sublicensees until the expiration, abandonment, or invalidation of the last patent within the intellectual property relating to certain CRISPR-Cas9, including ~~that~~those relating to Cas9 chRDNAs.

Pioneer Hi-Bred International, Inc. (now Corteva Agriscience)

On July 13, 2015, we and Pioneer Hi-Bred International, Inc. (“Pioneer”) (now Corteva Agriscience), then a DuPont company (“DuPont”), entered into an Amended and Restated Collaboration and License Agreement, as amended (the “Pioneer Agreement”). Under the terms of the Pioneer Agreement, we and Pioneer cross-licensed CRISPR intellectual property portfolios. Pioneer granted us an exclusive worldwide license, with the right to sublicense, to its CRISPR intellectual property in the field of research tools, as well as a non-exclusive worldwide license to such intellectual property in human and animal therapeutics, industrial biotechnology, certain agriculture segments, and other fields; and we granted Pioneer an exclusive worldwide license, with the right to sublicense, to our CRISPR intellectual property, including the CVC IP, in a defined field of agriculture relating to specified row crops, as well as a non-exclusive worldwide license to such intellectual property in other agricultural applications, industrial biotechnology, nutrition and health, and other fields. The Pioneer Agreement continues until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed intellectual property; provided, however, that the parties may terminate the Pioneer Agreement by mutual consent or either party may unilaterally terminate the Pioneer Agreement in the event of an uncured breach of a payment obligation, bankruptcy, or failure to maintain or own licensed intellectual property by the other party in the event the

non-breaching party is materially adversely affected by such failure. We are obligated to pay low-single-digit percent royalties to Pioneer for the sales of our products in the research tools field as well as certain sublicensing ~~revenue~~revenues in that field. We are eligible to receive milestone payments from Pioneer in the event certain regulatory and commercial milestones are met related to specified row crops, for a total of up to $22.4 million, ~~related to specified row crops,~~ as well as ~~receiving~~to receive low-single-digit percent royalties for sales of defined agricultural products and certain sublicensing ~~revenue~~revenues in that field. ~~Through June 30,~~In March 2021, we received a milestone payment of $0.3 million ~~in milestone payments~~ from Pioneer.

Under the Pioneer Agreement, we and Pioneer also entered into a three-year collaboration, funded by Pioneer, which ended in 2016. Initially, Pioneer owned the patents and patent applications developed under the collaboration, including the chRDNA patent family, and granted us an exclusive license ~~thereto~~to these patents and patent applications in the fields of research tools and therapeutics.

In December 2020, we and Pioneer entered into an amendment to the Pioneer Agreement under which Pioneer assigned to us the chRDNA patent family developed under the research collaboration, and we paid Pioneer an upfront payment of $0.5 million. We considered the payment to Pioneer in accordance with revenue recognition guidance and accounted for it as a reduction of the licensing and collaboration revenue ~~within the~~in our condensed consolidated statements of operations and comprehensive loss. In addition to the upfront payment, we are now obligated to pay all patent prosecution and maintenance costs ~~going forward;~~for the chRDNA patent family; up to $2.8 million in regulatory ~~milestones~~milestone payments for therapeutic products developed by us, our affiliates, or ~~licensees;~~licensees that are covered by the chRDNA patent family; up to $20.0 million in sales milestones over a total of four therapeutics products sold by us, our affiliates, or ~~licensees;~~licensees that are covered by the chRDNA patent family; and a low-single-digit percentage of ~~sublicensing~~licensing revenues received by us for licensing the chRDNA patent family after December 2020.

During the ~~six~~nine months ended ~~June~~September 30, 2021, we incurred $0.8 million ~~of sublicensing fees,~~for payments we owe to Pioneer related to licensing revenues, which ~~was~~were recorded as a research and development expense in our condensed consolidated ~~statement~~statements of operations and comprehensive loss. ~~No sublicensing~~NaN licensing fees payments were incurred to Pioneer during the three months ended ~~June~~September 30, 2021 ~~nor~~0r during the three and ~~six~~nine months ended ~~June~~September 30, 2020.

Genus plc

On May 12, 2016, we entered into a Research Collaboration and License Agreement, as amended (the “Genus Agreement”) with Genus plc (“Genus”) under which we granted Genus an exclusive worldwide license to certain CRISPR-Cas9 technology for the introduction of genetic traits into cattle and pigs raised to produce protein primarily for human consumption; provided, however, that at the end of the four-year research collaboration, Genus was required to select a specified number of licensed products and ~~the~~our license to Genus is now limited to those particular products. The Genus Agreement continues until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed patent rights; provided, however, that each party may terminate the Genus Agreement upon the occurrence of certain events, and Genus may terminate the Genus Agreement at its sole discretion upon written ~~notice.~~notice to us. In addition to an upfront payment we received, we are eligible to receive milestone payments from Genus in the event certain regulatory and commercial milestones are met, for the selected licensed products, up to a total of $10.0 million. We will also be eligible to receive either low- to mid-single-digit percent royalties or low-single to ~~low-double -digit~~low-double-digit percent royalties on net sales of the licensed products.

Under the Genus Agreement, we and Genus entered into a four-year research collaboration, which was funded by Genus. The collaboration ended in May 2020. We did ~~NaN~~0t recognize any revenue ~~was recognized~~ in ~~relation~~connection with the Genus Agreement for the three and ~~six~~nine months ended ~~June~~September 30, 2021. During the three ~~and six~~ months ended ~~June~~September 30, 2020, we did 0t recognize any revenue related to the Genus Agreement. During the nine months ended September 30, 2020, we recognized revenue of $~~0.3~~ ~~million and~~ $0.8 million related to the Genus ~~Agreement, respectively.~~Agreement.

Related Party Private Company

On May 15, 2020, we entered into an Exclusive License Agreement, as amended, with a related party private company (the “Private Company License Agreement”), under which we granted the private company an exclusive worldwide license ~~under~~to certain CRISPR intellectual property rights and know-how in a defined field.

We are eligible to receive milestone payments for licensed products following the first commercial sale of each ~~such~~ licensed product in each of the United States and the first European country in which each ~~such~~ licensed product is sold by the private company. The private company may select one of several milestone payment amounts for each licensed product, which selection then dictates the applicable royalty rate for net sales of licensed products. We are also eligible to receive a percentage of sublicensing revenues ~~earned by~~in the event the private company sublicenses the CRISPR intellectual property that we licensed to the private company.

The Private Company License Agreement will continue in force and effect until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed patent rights. The Private Company License Agreement may be terminated during the term by either party for an uncured material breach or bankruptcy. Additionally, the private company may terminate the Private Company License Agreement upon 90 days’ written notice to us.

As consideration for the exclusive license, the private company issued to us 7,500,000 shares of convertible preferred stock with an estimated fair value of $7.5 million, which was the price paid for similar shares by another investor, and which was an arm’s length transaction. We accounted for the grant of the license as a contract with a customer under ~~ASC~~Accounting Standards Codification (“ASC”) 606 and recognized $7.5 million as license and collaboration revenue in our condensed consolidated statements of operations and comprehensive loss for the ~~three months~~

~~and six~~nine months ended ~~June~~September 30, 2020. We did ~~NaN~~0t recognize any revenue ~~was recognized~~ in ~~relation to~~connection with the ~~agreement~~Private Company License Agreement for the three and ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021 nor for the three months ended September 30, 2020.

On May 15, 2020, we entered into a separate option agreement under which we granted the same private company a three-year option to negotiate an exclusive, royalty-bearing, worldwide license in a defined field to the CVC IP and certain other CRISPR-Cas9 patent rights controlled by us. WeThrough September 2021, we received a total of $~~50,000~~100,000 in upfront option ~~payment~~payments and may receive an additional annual option ~~fees~~fee and an option exercise fee. We recorded the upfront ~~payment~~payments received in long-term deferred revenue in our condensed consolidated balance ~~sheet~~sheets as of ~~June~~September 30, 2021 and December 31, 2020.

AbbVie Manufacturing Management Unlimited Company

On February 9, 2021, we entered into a Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”). ~~The collaboration is based on~~Pursuant to the ~~selection and use of targets under programs (each, a “Program Slot”) (which may include~~AbbVie Agreement, AbbVie selects one target or, for a dual CAR-T product, two ~~targets),~~targets (each selection, a “Program Slot”) to develop collaboration CAR-T products (and corresponding licensed products). For each of AbbVie’s two Program Slots (or up to four Program Slots, if AbbVie elects to expand the number as ~~discussed~~set forth below), we will collaborate to ~~identify and~~ develop one or more collaboration allogeneic CAR-T products directed toward the single cancer target or target combination chosen by AbbVie ~~and~~ as described in an applicable research plan, utilizing our Cas12a chRDNA genome-editing and cell therapy technologies. We granted AbbVie an exclusive (even as to us), royalty-bearing, worldwide license, with the right to grant sublicenses, under our Cas12a chRDNA and cell therapy intellectual property, ~~(as~~as well as certain genome-editing technology that we may gain rights to in the ~~future)~~future and intellectual property that may be developed under the collaboration, solely for AbbVie to develop, commercialize, manufacture, and otherwise exploit the collaboration CAR-T products in the field of human diagnostics, prophylactics, and therapeutics. Under the terms of the AbbVie Agreement, we will conduct certain preclinical research, development, and manufacturing activities under the collaboration, including certain activities for the manufacture and supply of licensed product for AbbVie’s phase 1 clinical ~~studies, and~~studies. AbbVie will reimburse us for all such activities, ~~(including~~including reimbursement for time spent ~~our~~by employees at a designated FTE ~~rate).~~rate. The duration of the collaboration is not fixed. Under the terms of the AbbVie Agreement, AbbVie has selected its initial ~~targets~~Program Slot and has reserved six additional targets, which AbbVie may choose to be used or substituted into the two Program Slots or used for the third or fourth Program Slots if AbbVie expands the number of Program Slots during the collaboration.

During the collaboration, AbbVie may expand from two Program Slots to a total of four Program Slots by paying us an additional $15.0 million for each ~~such~~ Program Slot, provided that AbbVie must make such payment within the earlier of (a) 60 calendar days following completion of the phase 1 clinical studies for the initial collaboration CAR-T and (b) December 31, 2025. Under the terms of the AbbVie Agreement, we are eligible to receive up to $150.0 million in future developmental and regulatory ~~and product launch milestones~~milestone payments for each Program Slot and up to $200.0 million in ~~commercial~~sales-based milestones for each Program Slot. We are also eligible to receive global royalties on net sales of licensed products sold by AbbVie, its affiliates, and sublicensees in the high-single-digit to low-teens percent range, subject, in certain instances, to various reductions.

The term of the AbbVie Agreement will continue in force and effect until the date of expiration of the last royalty term of the last country in which a licensed product is exploited. On a licensed product-by-licensed product and country-by-country basis, the royalty term is the period of time beginning on the first commercial sale of a licensed product in a country and ending on the latest of the following three dates: (a) the expiration, invalidation, revocation, cancellation, or abandonment date of the last patent that includes a valid claim ~~that claims~~to either (i) the collaboration CAR-T product in ~~such~~the licensed product or (ii) the method of making the collaboration CAR-T product in ~~such~~the licensed product in such country (in the case of (ii), only for so long as no biosimilar product is commercially available in such country)~~, in such country;~~; (b) 10 years from the date of the first commercial sale of such licensed product in such country; and (c) the expiration date of regulatory exclusivity for such licensed product in such country. The AbbVie Agreement may be terminated during the term by either party for an uncured material breach or ~~bankruptcy.~~bankruptcy by the other party. Additionally, AbbVie may terminate the AbbVie Agreement, in its entirety or on a licensed product-by-licensed product basis, effective immediately upon written notice to us,

if AbbVie in good faith believes that it is not advisable for AbbVie to continue to exploit the collaboration CAR-T products or licensed products as a result of a perceived serious safety issue. AbbVie may also terminate the AbbVie Agreement in its entirety ~~or, for any or no reason,~~at its sole discretion upon 90 days’ prior written notice to us.

The transaction price inwe received under the AbbVie Agreement associated with the first two Program Slots ~~consists~~consisted of the $30.0 million upfront cash payment and the estimated variable consideration related to our performance of preclinical, development, and manufacturing activities under the collaboration and the developmental and regulatory ~~and launch milestones.~~milestone payments. We constrain the estimated variable consideration if we assess that it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. We constrained all developmental and regulatory ~~and launch milestones~~milestone payments as of ~~June~~September 30, 2021. The transaction price ~~is re-evaluated~~will be reevaluated in each reporting period and as changes in circumstances occur. We determined that the licenses we granted to AbbVie and

our participation in the joint governance committee are not capable of being distinct from the preclinical research, development, and manufacturing activities and therefore are combined into one performance obligation. We recognize revenue based on the measure of progress using an estimated cost-based input method each reporting period.

We received an upfront cash payment of $30.0 million from AbbVie on March 11, 2021. We recognized short-term deferred revenue in the amount of $~~8.4~~8.3 million and long-term deferred revenue in the amount of $~~21.1~~20.1 million related to ~~the~~this upfront cash payment ~~received~~ in ~~the~~our condensed consolidated balance ~~sheet~~sheets as of ~~June~~September 30, 2021. We ~~have~~ recognized $~~0.5~~2.3 million and $2.8 million in revenue for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, in relation to the AbbVie Agreement.

5. Revenue

Disaggregation of Revenue

We disaggregate revenue by geographical market based on the location of research and development activities of our licensees and collaborators. The following is a summary of revenue by geographic location for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
United States	$	1,476	$	8,306	$	2,951	$	9,992	$	3,507	$	953	$	6,483	$	10,946
Rest of world		-		172		111		186		470		245		556		431
Total	$	1,476	$	8,478	$	3,062	$	10,178	$	3,977	$	1,198	$	7,039	$	11,377

During the three months ended ~~June~~September 30, 2021, we recognized $~~1.0~~1.7 million of revenue ~~we recognized~~ related to performance obligations satisfied at a point in time, and we recognized $~~0.5~~2.3 million of revenue ~~we recognized~~ related to performance obligations satisfied over time.

During the three months ended ~~June~~September 30, 2020, we recognized $~~8.2~~1.2 million of revenue ~~we recognized~~ related to performance obligations satisfied at a point in time, and $we did ~~0.3~~0 ~~million of~~t recognize any revenue ~~we recognized~~ related to performance obligations satisfied over time.

During the ~~six~~nine months ended ~~June~~September 30, 2021, we recognized $~~2.6~~4.2 million of revenue ~~we recognized~~ related to performance obligations satisfied at a point in time, and we recognized $~~0.5~~2.8 million of revenue ~~we recognized~~ related to performance obligations satisfied over time.

During the ~~six~~nine months ended ~~June~~September 30, 2020, we recognized $~~9.3~~10.5 million of revenue ~~we recognized~~ related to performance obligations satisfied at a point in time, and we recognized $~~0.8~~0.9 million of revenue ~~we recognized~~ related to performance obligations satisfied over time.

Contract Balances

Accounts receivable relate to our right to consideration for performance obligations completed (or partially completed) for which we have an unconditional right to consideration. Our accounts receivable balances represent amounts that ~~are~~we billed to licensees with invoices outstanding as of the period end.

Contract assets are rights to consideration in exchange for a license that we have ~~transferred~~granted to a ~~customer~~licensee when such right is conditional on something other than the passage of time. Our contract asset balances represent royalties, milestone payments, and ~~milestones~~research costs related to the AbbVie Agreement that are unbilled as of the period end.

Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, ~~customers,~~licensees, which precede our satisfaction of the associated performance ~~obligation(s).~~obligations. Our deferred revenue primarily results from upfront payments received relating to performance obligations that are satisfied over time ~~related to~~under the AbbVie Agreement. The remaining deferred revenue relates to upfront payments received under license agreements that also include non-refundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time the annual license fee is paid by the licensee and the renewal period begins.

The following table presents changes in our contract assets and liabilities during the ~~six~~nine months ended ~~June~~September 30, 2021 (in thousands):


	Balance at December 31, 2020		Additions		Deductions			Balance at June 30, 2021		Balance as of December 31, 2020		Additions		Deductions			Balance as of September 30, 2021
Accounts receivable	$	150	$	5,381	$	(5,529	)	$	2	$	150	$	7,220	$	(6,792	)	$	578

Contract assets:
Unbilled accounts receivable	$	1,328	$	1,803	$	(2,301	)	$	830	$	1,328	$	3,656	$	(3,131	)	$	1,853

Contract liabilities:
Deferred revenue, current and long-term	$	1,098	$	33,080	$	(1,289	)	$	32,889	$	1,098	$	34,826	$	(4,156	)	$	31,768

Unbilled accounts receivable ~~decreased~~increased during the ~~six~~nine months ended ~~June~~September 30, 2021, primarily due to ~~billing~~unbilled research costs under the AbbVie Agreement in the amount of ~~earned royalties accrued as of December 31, 2020.~~$1.0 million.

Deferred revenue increased during the ~~six~~nine months ended ~~June~~September 30, 2021, primarily due to recognition of $30.0 million in deferred revenue related to the AbbVie Agreement (Note 4).

During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we recognized $0.1 million and $~~0.9~~1.0 million of ~~revenues,~~revenue, respectively, ~~that~~which were included in the opening contract liabilities ~~balance.~~balances as of December 31, 2020 and 2019, respectively.

Transaction Prices Allocated to the Remaining Performance Obligations

Remaining unsatisfied performance obligations represent in aggregate the amount of a transaction price that has been allocated to performance obligations not delivered, or only partially ~~undelivered,~~delivered, as of the end of ~~the~~a reporting period. The value of transaction prices allocated to remaining unsatisfied performance obligations as of ~~June~~September 30, 2021 was approximately $~~63.2~~54.0 million. We expect to recognize approximately $8.7 million of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

Capitalized Contract Acquisition Costs and Fulfillment ~~Cost~~Costs

We did not incur any expenses to obtain license and collaboration agreements, and costs to fulfill those contracts do not generate or enhance our resources. As such, no costs to obtain or fulfill a contract have been capitalized in any period.

6. Balance Sheet Items

Other receivables consisted of the following ~~at June~~as of September 30, 2021 and December 31, 2020, respectively (in thousands):


	June 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Patent cost reimbursements	$	6,993	$	3,672	$	4,890	$	3,672
Other		582		10		464		10
Total	$	7,575	$	3,682	$	5,354	$	3,682

Prepaid expenses and other current assets consisted of the following ~~at June~~as of September 30, 2021 and December 31, 2020, respectively (in thousands):

June 30,
2021

December 31,
2020

Prepaid income taxes

$
1,490

$
1,479

Prepaid contract manufacturing and clinical costs

2,269

954

Other

1,277

760

Total

$
5,036

$
3,193


	September 30, 2021		December 31, 2020
Prepaid income taxes	$	1,490	$	1,479
Prepaid insurance		2,646		-
Prepaid contract manufacturing and clinical costs		609		954
Prepaid rent		444		337
Other		763		423
Total	$	5,952	$	3,193

Property and equipment, net, consisted of the following ~~at June~~as of September 30, 2021 and December 31, 2020, respectively (in thousands):


	June 30, 2021			December 31, 2020			September 30, 2021			December 31, 2020
Furniture and equipment	$	128		$	117		$	128		$	117
Computer equipment		263			263			273			263
Lab equipment		5,949			5,038			6,245			5,038
Leasehold improvements		1,612			1,180			1,636			1,180
Total property and equipment, gross		7,952			6,598			8,282			6,598
Less: accumulated depreciation and amortization		(3,544	)		(3,096	)		(3,805	)		(3,096	)
Property and equipment, net	$	4,408		$	3,502		$	4,477		$	3,502

Depreciation and amortization expenses related to property and equipment were $~~0.2~~0.3 million for each of the three months ended ~~June~~September 30, 2021 and 2020. Depreciation and amortization expenses related to property and equipment were $~~0.5~~0.7 million for each of the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

Accrued expenses and other current liabilities consisted of the following ~~at June~~as of September 30, 2021 and December 31, 2020, respectively (in thousands):


	June 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Accrued patent expenses	$	5,370	$	5,087	$	5,633	$	5,087
Accrued legal expenses		1,579		-
Income taxes payable		5		5
Accrued sublicensing fees		964		402
Accrued licensing fees		1,000		-
Accrued employee compensation and related expenses		960		2,081		2,948		2,081
Accrued research and development expenses		1,161		581		2,822		581
Credit card liability		559		193		871		193
Accrued sublicensing fees						478		402
Accrued legal expenses						407		-
Other		1,699		624		771		629
Total	$	13,297	$	8,973	$	13,930	$	8,973

On May 22, 2021, ~~the~~our PPP Loan was forgiven in full by the ~~SBA.~~SBA and, Weat that time, we recognized a PPP Loan extinguishment gain of $1.6 million in ~~the~~our condensed consolidated statements of operations and comprehensive ~~loss for the three and six months ended June 30, 2021~~.loss.

10. Convertible Preferred Stock

The authorized, issued, and outstanding shares of ~~the~~our convertible preferred stock and liquidation preferences as of ~~June 30, 2021, are~~December 31, 2020 were as follows (in thousands, except for share amounts):


Series	Authorized Shares		Outstanding Shares		Liquidation Preference		Carrying Value		Authorized Shares		Outstanding Shares		Liquidation Preference		Carrying Value
Series A		1,576,342		1,576,342	$	3,550	$	3,452		1,576,342		1,576,342	$	3,550	$	3,452
Series A-1		3,004,124		3,004,124		8,000		7,901		3,004,124		3,004,124		8,000		7,901
Series B		3,186,116		3,186,116		30,070		29,970		3,186,116		3,186,116		30,070		29,970
Series C		6,664,040		6,663,940		115,000		108,827
		14,430,622		14,430,522	$	156,620	$	150,150		7,766,582		7,766,582	$	41,620	$	41,323

~~The authorized, issued, and outstanding shares of the convertible preferred stock and liquidation preferences as of December 31, 2020 are as follows (in thousands, except for share amounts):~~18

Series

Authorized
Shares

Outstanding
Shares

Liquidation
Preference

Carrying
Value

Series A

1,576,342

1,576,342

$
3,550

$
3,452

Series A-1

3,004,124

3,004,124

8,000

7,901

Series B

3,186,116

3,186,116

30,070

29,970

7,766,582

7,766,582

$
41,620

$
41,323

~~The rights, preferences, and privileges of~~Upon the ~~Series A, Series A-1, Series B, and Series C convertible preferred stock as of June 30, 2021 and December 31, 2020, were as follows:~~

~~Dividends~~

~~We may not declare, pay, or set aside any dividends on shares of any other class or series~~closing of our ~~capital stock other than dividends~~IPO on ~~shares of our common stock payable in shares of common stock, unless the holders of the convertible preferred stock then~~July 27, 2021, all outstanding first receive, or simultaneously receive, in order of priority first to Series C convertible preferred stock holders, then to Series B convertible preferred stock holders, then to Series A convertible preferred stock holders and the Series A-1 preferred convertible stock holders on a ~~pari passu~~ ~~basis, and finally to common stock.~~ ~~The dividend on each outstanding share~~shares of convertible preferred stock, ~~equals~~including the ~~greater of (a)(i) $0.18~~ ~~per share of Series A preferred stock, (ii) $0.213~~ ~~per share of Series A-1 preferred stock, (iii) $0.76~~ ~~per share of Series B preferred stock, or (iv) $1.38~~ ~~per share of~~ Series C preferred stock ~~subject~~issued in the case of (a)(i)-(iv) to appropriate adjustments in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to such series of convertible preferred stock, or (b) the dividend’s amount payable on such share on an as-converted to common stock basis. ~~We have~~ 0~~t declared any dividends as of June 30, 2021.~~

~~Conversion~~

~~Convertible preferred stock is convertible, at the option of the holder, at any time,~~March 2021, were converted into ~~fully paid, non-assessable~~ shares of common ~~stock at an initial conversion ratio~~stock. Our Amended and Restated Certificate of ~~one-to-one~~. The convertible preferred stock will automatically convert into common stock, at the then-applicable conversion rate, upon the earliest of (i) the closing of a firm-commitment underwritten public offering ofIncorporation, which was approved by our ~~common stock pursuant to a registration statement on Form S-1 under the Securities Act, at a price of at least $11.866~~ ~~per share, resulting in at least $50.0~~ million of gross proceeds to us; (ii) the consent of at least a majority of the then outstanding shares of the preferred stock, voting together as a single class on as-converted to common stock basis, the holders of a majority of the outstanding Series B convertible preferred stock, voting together as a single class on an as-converted to common stock basis (unless the majority vote of the preferred stock referenced above is obtained in connection with a firm-commitment underwritten public offering resulting in at least $~~50.0~~ ~~million of gross proceeds at a price of at least $7.7871~~),Board and the holders of at least two-thirds of the outstanding Series C convertible preferred stock, consenting together as a single class on an as converted to common stock basis; or (iii) the closing of a special purpose acquisition company (“SPAC”) transaction, resulting in the public company surviving or resulting from the SPAC transaction having available cash immediately after the consummation of the SPAC transaction of at least $~~50.0~~ ~~million from cash retained by the SPAC following all redemption offers to its existing equity interest holders and the net cash proceeds from any capital-raising transaction conducted~~stockholders in connection with the ~~SPAC transaction, and whereby~~IPO, authorizes the issuance of 10,000,000outstanding Company shares are exchanged for or otherwise converted into securities that are publicly listed on specified securities exchanges, and the aggregate value of such securities received with respect to each share of Series C preferred stock (or the common stock issuable upon conversion of one share of Series C Preferred Stock) is equal to at least $~~11.866~~ ~~per share.~~ ~~Upon closing the IPO, all outstanding shares of our convertible preferred stock converted into~~ ~~26,234,654~~ ~~shares of common stock (Note 1).~~

~~Voting Rights~~

The holders of convertible preferred stock are entitled to that number of votes on all matters presented to stockholders equal to the number of shares of common stock then-issuable upon conversion of such preferred stock.

~~Liquidation~~

~~In the event of any sale of substantially all of the assets, a merger, or a liquidation, dissolution, or winding up of the Company, as defined in the Company~~’s certificate of incorporation, the holders of Series A, Series A-1, Series B, and Series C convertible preferred stock will be entitled to receive in preference to the holders of common stock an amount per share equal to the original issue price of $~~2.252, $2.663, $9.4379, and $17.257~~ per share, respectively, subject to appropriate adjustments in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to such series of convertible preferred stock, plus declared and unpaid dividends, if any. Series C holders will receive their liquidation preference and any declared but unpaid dividends before any distribution is made to Series A, Series A-1, and Series B holders. Series B holders will receive their liquidation preference and any declared but unpaid dividends before any distribution is made to Series A and Series A-1 holders. Series A and Series A-1 holders will receive their liquidation preference and any declared but unpaid dividends ratably before any distribution is made to common holders. After distributions to all preferred stockholders of all preferential amounts, our remaining assets will be distributed among the holders of shares of preferred stock ~~and common stock on a pro rata basis based on~~upon the ~~number of shares held by each holder, treating the preferred stock on an as-converted basis immediately prior to such sale of assets, merger, or liquidation, dissolution, or winding up.~~

~~Redemption~~

~~Our convertible preferred stock is not redeemable at the option~~closing of the ~~holder thereof. Upon the occurrence~~IPO, 0ne of ~~certain change in control events that are outside~~which was issued and outstanding as of our control, including liquidation, sale, or transfer, holders of the convertible preferred stock can effectively cause redemption for cash. As a result, we classified the convertible preferred stock as mezzanine equity on the condensed consolidated balance sheets as the stock is contingently redeemable.September 30, 2021.

12. Stock Option Plans

In ~~2012, we~~July 2021, our Board adopted ~~a 2012 Stock Option~~ and ~~Issuance~~our stockholders approved the 2021 Equity Incentive Plan (the ~~“2012 Plan”~~“2021 Plan“)~~, which allowed~~ that became effective on July 22, 2021. We reserved 5,200,000 shares of common stock for the granting of incentive stock options (“ISOs”), non-qualified stock options (“NSOs”), and restricted stock awards (“RSAs”) to our employees, directors, and consultants. We granted a total ~~454,500~~ ~~stock options~~issuance under the ~~2012 Plan until we adopted~~2021 Plan. In addition, 934,562 shares available for issuance under the 2013 Equity Incentive Plan, asadopted in 2013 and amended ~~(the “2013 Plan”). The 2013 Plan allows for~~and restated in 2019, were transferred into the ~~granting of ISOs, NSOs, and RSAs~~2021 Plan. Furthermore, any shares subject to our employees, directors, and consultants. ISOs may be granted only to our employees, including officers and directors who are also employees. NSOs and RSAs may be granted to employees, consultants, and non-employee directors.

~~Stock options~~awards under the 2013 Plan that terminate, expire, or lapse for any reason without the delivery of shares, or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price, are added to the 2021 Plan. The 2021 Plan also provides that the number of shares initially reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending in January 1, 2031, by 5% of the outstanding number of shares of our common stock as of the last day of the immediately preceding fiscal year, or such lesser number of shares as determined by our Board. No more than 56,000,000 shares of stock may be issued upon the exercise of incentive stock options under the 2021 Plan. Options under the 2021 Plan may be granted for periods of up to 10 yearsat exercise prices no less than ~~100% of~~ the ~~estimated~~ fair market value of ~~the~~our common ~~shares~~stock on the date of ~~grant, as determined by the Board, with a maximum term of~~ ~~10 years~~;grant; provided, however, that the exercise price of an ~~ISO or an NSO~~incentive stock option granted to a 10% ~~holder of outstanding shares shall~~stockholder may not be less than 110% of the ~~estimated~~ fair market value of the shares on the date of grant and such option may ~~only~~not be ~~granted with a term~~exercisable after the expiration of five years from the date of grant. . The grant date fair market value of all awards made under our 2021 Plan and all cash compensation paid by us to any non-employee director for services as a director in any fiscal year may not exceed $~~In general, our ISO grants vest over~~ ~~four years~~750,000, ~~with~~ increased to $

~~25% of the option vesting after a~~ ~~one-year~~1,000,000 ~~cliff and~~in the ~~remainder vesting monthly thereafter. The vesting periods for our NSO grants vary depending upon the length~~fiscal year of their initial service ~~provided to the Company and such grants vested ratably from three months to two years.~~

as a non-employee director. As of ~~June~~September 30, 2021, ~~a total of~~we had ~~9,954,446~~5,782,814 shares ~~of common stock are authorized~~available for issuance ~~and~~ ~~932,846~~ ~~shares are available for future grant~~ under ~~the 2013~~our 2021 Plan.

The following table summarizes stock option activity ~~for employees and non-employees~~under our equity incentive plans during the ~~six~~nine months ended ~~June~~September 30, 2021:


	Shares Available to Grant			Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (a)		Shares Available to Grant			Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands) (a)
				(Aggregate Intrinsic Value in thousands)
Outstanding at December 31, 2020		582,340			4,520,551		$	1.64	5.3		$	6,929		582,340			4,520,551		$	1.64	5.3		$	6,929
Addition—Option pool		2,671,714
Addition to option pool														7,871,714
Options granted		(1,561,079	)		1,561,079		$	4.11		10.0				(2,809,660	)		2,809,660		$	6.99		9.6
Options exercised		-			(584,614	)	$	0.97		3.6				-			(2,225,839	)	$	0.94		4.0
Options cancelled or forfeited		33,473			(33,473	)	$	2.58	-					138,420			(138,420	)	$	2.07	-
Outstanding at March 31, 2021		1,726,448			5,463,543		$	2.41		6.7	$	9,292
Addition—Option pool		0
Options granted		(896,831	)		896,831		$	5.27		10.0
Options exercised		-			(1,037,979	)	$	0.55		1.2
Options cancelled or forfeited		103,229			(103,229	)	$	1.89	-
Exercisable at June 30, 2021		932,846			5,219,166		$	3.28		7.9	$	10,380
Vested and expected to vest at June 30, 2021					5,219,166		$	3.28		7.9	$	10,380
Exercisable at September 30, 2021														5,782,814			4,965,952		$	4.97		8.3	$	94,075
Vested and expected to vest at September 30, 2021																	4,965,952		$	4.97		8.3	$	94,075

(a)

The aggregate intrinsic value is calculated as the difference between the stock ~~options~~option exercise price and the estimated fair value of the underlying common stock ~~at June~~as of September 30, 2021.

We have recorded stock-based compensation expenses related to employee and non-employee stock options granted in the condensed consolidated statements of operations and comprehensive loss as follows for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Research and development

$
288

$
192

$
485

$
353

General and administrative

305

94

451

170

Total

$
593

$
286

$
936

$
523

~~Stock-based compensation expenses related to employees were $0.6~~ ~~million and $0.3~~ ~~million for the three months ended June 30, 2021 and 2020, respectively. Stock-based compensation expenses related to employees were $0.9~~ ~~million and $0.5~~ ~~million for the six months ended June 30, 2021 and 2020, respectively. Stock-based compensation expenses related to non-employees were less than $0.1~~ ~~million for the three and six months ended June 30, 2021 and 2020, respectively.~~

Grant Date Fair Value

During the three months ended ~~June~~September 30, 2021, we granted ~~896,831~~351,750 stock options to employees (0 stock options were granted to non-employees) with a weighted average grant date fair value of $~~3.44~~16.64. During the ~~six~~nine months ended ~~June~~September 30, 2021, we granted ~~2,457,910~~2,809,660 stock options to employees and non-employees with a weighted average grant date fair value of $~~2.99~~4.70.

During the three months ended ~~June~~September 30, 2020, ~~we granted~~ ~~279,699~~0 stock options were granted to employees ~~and non-employees with a weighted average grant date fair value of $1.88~~.or non-employees. During the ~~six~~nine months ended ~~June~~September 30, 2020, we granted 379,761 stock options to employees and non-employees with a weighted average grant date fair value of $1.82.

We estimated the fair value of each employee and non-employee stock option award on the grant date using the Black-Scholes option-pricing model based on the following assumptions for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

2021

2020

2021

2020

Volatility

75.3% to 75.9%

77.1% to 77.4%

75.3% to 76.5%

74.8% to 77.4%

74.8%

N/A

74.8% to 76.5%

74.9% to 77.4%

Expected term (in years)

5.5 to 6.1

5.5 to 6.0

5.5 to 6.1

5.5 to 6.0

N/A

5.5 to 7.0

5.5 to 6.0

Risk free interest rate

0.9% to 1.1%

0.4%

0.9% to 1.2%

0.4% to 0.7%

Risk-free interest rate

1.1%

N/A

0.9% to 1.2%

0.4% to 0.7%

Expected dividend yield

0.0%

N/A

0.0%

As of ~~June~~September 30, 2021, there was $~~8.4~~7.7 million of unrecognized stock-based compensation expense related to employee and non-employee stock options that is expected to be recognized over a weighted-average period of ~~1.6~~9.3 years.

Employee Stock Purchase Plan

In July 2021, our Board adopted and our stockholders approved the 2021 Employee Stock Purchase Plan (“2021 ESPP”), which became effective on July 22, 2021. The 2021 ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (“Tax Code”). We reserved 511,000 shares of our common stock for employees’ purchases under the 2021 ESPP. The number of shares of common stock reserved for issuance under the 2021 ESPP will be automatically increased each year for ten calendar years beginning in 2022 by the number of shares equal to 1% of the total number of shares of common stock outstanding as of the last day of the immediately preceding fiscal year; provided that the maximum number of shares that may be issued under the ESPP is 10,000,000 shares. The 2021 ESPP allows an eligible employee to purchase shares of our common stock at a discount through payroll deductions of up to 15% of the employee’s eligible compensation. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of the offering period or at the end of each applicable offering period. The first offering period commenced on August 16, 2021 and will end on February 15, 2022. We recorded $0.1 million in accrued liabilities related to the amounts withheld as of September 30, 2021.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee and non-employee stock options grants in our condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020 as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development	$	484	$	173	$	970	$	526
General and administrative		451		75		901		245

Total	$	935	$	248	$	1,871	$	771

The above stock-based compensation expense related to the following equity-based awards (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options	$	894	$	248	$	1,830	$	771
ESPP		41		-		41		-

Total	$	935	$	248	$	1,871	$	771

Stock-based compensation expense related to employees was $0.9 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense related to employees was $1.9 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense related to non-employees was less than $0.1 million for each of the three and nine months ended September 30, 2021 and 2020.

NaN income tax benefit was recorded during the three and ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021 due to our operating losses. During the three and nine months ended ~~June~~September 30, 2020, we recorded ~~an income tax benefit of less than $0.1~~ ~~million, representing an effective tax rate of~~ ~~2.6%. During the six months ended June 30, 2020, we recorded an~~ income tax benefit of $~~1.3~~0.2 million ~~representing an effective tax rate of~~ and $~~9.7~~1.5%. million, respectively. The income tax benefit iswas primarily ~~due~~related to the recognition of net operating loss carrybacks under the CARES Act, which generated a ~~tax~~ refund of taxes paid for the year ended December 31, 2018.

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

You should read the following discussion and analysis of our financial condition and results of operations together with ~~the~~our unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2020 included in our final prospectus (the “Final Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) on July ~~23,~~22, 2021 pursuant to Rule 424(b)(4)of the Securities Act of 1933, as amended (the “Securities Act”).

This Quarterly Report contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, future revenue, business strategy, prospects, product candidates, planned and ongoing preclinical studies and clinical trials, results of preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

As a result of many factors, including but not limited to risks related to our financial position and our ability to raise additional capital as needed to fund our operations and product candidate development; risks associated with the initiation, cost, timing, progress, and results of current and future research and development programs, preclinical studies, and clinical trials; risks related to our ability to obtain and maintain regulatory approval for our product candidates; risks that our product candidates, if approved, may not gain market acceptance due to negative public opinion and increased regulatory scrutiny of cell therapies involving genome editing; risks related to our ability to meet future regulatory standards with respect to our products; risks related to our ability to establish and/or maintain intellectual property rights covering our product candidates and genome-editing technology; risks of third parties asserting that our product candidates infringe their patents; ~~developments~~risks related to developments of our competitors and our industry; risks related to our reliance on third parties to conduct our clinical trials and manufacture our product candidates; ~~and~~risks caused by the impact of COVID-19 on our business and operations; and other risks ~~are~~ described in greater detail in the section of the Final Prospectus titled “Risk ~~Factors.~~Factors,” ~~The~~the events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. ~~Our company assumes~~We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

We are a clinical-stage biopharmaceutical company dedicated to transforming the lives of patients with devastating diseases by applying our novel CRISPR platform, CRISPR hybrid RNA-DNA (“chRDNA,” pronounced “chardonnay”), toward the development of next-generation, genome-edited cell therapies. Our renowned founders, including a Nobel laureate, are pioneers in CRISPR genome editing. Our chRDNA technology has demonstrated superior specificity and high efficiency in preclinical studies, which enables us to perform multiple, precise genome edits, while maintaining genomic integrity.

We believe that our technology has broad potential to generate gene and cell therapies in oncology and in therapeutic areas beyond oncology, including immune cell therapies, cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”), and in vivo genome-editing therapies.

The genome-editing technologies currently used in the allogeneic cell therapy field generally have limited efficiency, specificity, and versatility for performing the multiple, precise genome edits necessary to address insufficient persistence. Our chRDNA technology is designed to address these genome-editing limitations and improve cell therapy activity. By applying this approach to allogeneic cell therapies, we believe we can unlock their full potential by improving upon their effectiveness and durability.

We are initially focused on advancing multiple proprietary allogeneic cell therapies for the treatment of both hematologic malignancies and solid tumors against cell surface targets for which autologous chimeric antigen receptor T cell (“CAR-T”) therapeutics have previously demonstrated clinical proof of concept, including both CD19 and B cell maturation antigen (“BCMA”), as well as new emerging targets. We use our chRDNA technology to enhance, or armor, our cell therapies by creating additional genome edits to improve persistence of antitumor activity.

Our lead product candidate, CB-010, is, to our knowledge, the first clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell death protein 1 (“PD-1”) removed from the CAR-T cell surface by a genome-edited knockout of the PDCD1 gene. We have demonstrated in preclinical models that the PD-1 knockout improves the persistence of antitumor activity by disrupting a pathway that leads to rapid T cell exhaustion. Our ANTLER phase 1 clinical trial for CB-010 is a study in patients with relapsed or refractory B cell non-Hodgkin lymphoma, with initial data expected to be disclosed in 2022. We announced in July 2021 that we had dosed the first patient in this clinical ~~trial.~~trial, and we continue to enroll patients in our ANTLER phase 1 clinical trial for CB-010.

Our CB-011 product candidate is an allogeneic CAR-T cell therapy that is, to our knowledge, the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2-microglobulin protein and insertion of a beta-2-microglobulin–human-leukocyte-antigen-E–peptide transgene. This strategy is designed to blunt CAR-T cell rejection by both patient T cells and natural killer (“NK”) cells to enable more durable antitumor activity. CB-011 is in preclinical development for relapsed or refractory multiple myeloma with an investigational new drug (“IND”) filing expected in 2022.

Our CB-012 program is an allogeneic armored CAR-T cell therapy targeting CD371, currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“AML”), with an IND filing expected in 2023. CD371 is an attractive target for AML due to its expression on myeloid cancer cells, its enrichment on leukemic stem cells, and its absence on hematopoietic stem cells.

We are also developing allogeneic CAR-NK cell therapies derived from genome-edited iPSCs for the treatment of solid tumors. CB-020 is our first CAR-NK product candidate and it will contain genome edits designed to overcome the challenges of targeting solid tumors including trafficking, heterogeneity, and the immunosuppressive tumor microenvironment.

We control a robust patent portfolio protecting our chRDNA technology as well as certain of our allogeneic cell therapy binders.

In February 2021, we entered into a Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”) to develop two new CAR-T cell therapies for AbbVie. We view this collaboration as an external recognition of the potential for our chRDNA genome-editing technology to significantly improve genome-editing specificity and efficiency.

On July 27, 2021, we successfully completed our initial public offering (“IPO”) of common stock. On that date, we issued and sold an aggregate of 19,000,000 shares of our common stock at a price to the public of $16.00 per share for approximately $304.0 million in gross proceeds and approximately $282.7 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses. On August 9, 2021, we issued and sold an additional 2,850,000 shares of our common stock pursuant to the IPO underwriters’ full exercise of their over-allotment option to purchase additional shares at the public offering price of $16.00 per share. In total, we received an aggregate of approximately $349.6 million in gross proceeds from the IPO, including the exercise of the IPO underwriters’ over-allotment option, and approximately $321.0 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses. In addition, in connection with the closing of our IPO, all outstanding shares of our convertible preferred stock automatically converted into 26,234,654 shares of our common stock. Subsequent to the closing of our IPO, there ~~were~~are no shares of convertible preferred stock outstanding.

Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, developing our genome-editing platform technologies, developing our product candidates and building our pipeline, creating and maintaining our intellectual property portfolio, and establishing arrangements with third parties for the manufacture of our product candidates. We do not have any products approved for commercial sale and have not generated any ~~revenues~~revenue from product sales and have incurred net losses since commencement of our operations.

To date, we have primarily funded our operations through ~~revenues~~revenue from our license agreements, license and collaboration agreements, and a service agreement; the sale of shares of Intellia Therapeutics, Inc. (“Intellia”) common stock that we received as consideration for the License Agreement, dated July 16, 2014, as amended, between us and Intellia, LLC (now Intellia Therapeutics, Inc.) (the “Intellia License Agreement”); the issuance and ~~the~~ sale of our Series A, Series A-1, Series B, and Series C convertible preferred ~~shares.~~shares; and the issuance and sale of common stock related to our IPO. As of ~~June~~September 30, 2021, we had approximately ~~$129.5~~$435.3 million in cash and cash equivalents. Based on our current operating plan, we expect that our existing cash and cash equivalents, including net cash proceeds from the IPO of approximately $321.0 million received in July and August of 2021, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report. See ~~“—Liquidity,~~“Liquidity, Capital Resources, and Capital Requirements.”

Our net losses for the three months ended ~~June~~September 30, 2021 and 2020 were ~~$14.3~~$21.0 million and ~~$1.9~~$7.9 million, respectively. Our net losses for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were ~~$27.5~~$48.4 million and ~~$11.7~~$19.6 million, respectively. We had an accumulated ~~deficit~~deficits of ~~$58.3~~$79.3 million and $30.9 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. Our net losses and operating

losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. In addition, we will incur ~~additional~~increased costs associated with operating as a public company, including ~~significant~~ legal, audit, and accounting fees; regulatory ~~tax-related,~~costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select Market; director and officer ~~liability~~ insurance premiums; costs for investor and public relations activities; and other ~~expenses that we did not incur as a private company.~~accompanying compliance and governance costs. We anticipate that our expenses will increase substantially if and as we:

We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties. We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes (“cGMP”), the plasmids, chRDNA guides, Cas proteins, and AAV6 vectors used in the manufacture of our CAR-T cells as well as ~~the~~our CAR-T cell ~~therapies.~~therapy product candidates. We expect to rely on our CMOs in the future for the manufacturing of our product candidates to expedite readiness for future clinical trials and most of these CMOs have demonstrated capability in preparation of materials for commercialization. Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.

Because of the numerous risks and uncertainties associated with therapeutic product development, we may never achieve profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through ~~private~~public or ~~public~~private equity or debt financings, collaborations, strategic alliances, and licensing arrangements with third parties. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as

and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

The COVID-19 pandemic has caused governments worldwide to implement measures to slow the spread of the outbreak through ~~quarantines,~~ travel restrictions, business shutdowns, and other measures. In response to the COVID-19 pandemic, starting on March 17, 2020, our entire workforce began working remotely pursuant to state, county, and city requirements. ~~Additionally, for the period from April 6, 2020 to May 5, 2020, we reduced the salaries and workload of approximately 50% of our research employees who could not work in the lab during this period.~~ Since May 2020, we have gradually brought back on site all of our research employees whose work must be performed in the lab and most of our non-research employees are currently working partially remotely and partially on site. At this point in time, we do not know if or when we will bring our off-site functions back on site ~~as of August 31, 2021.~~full-time. We have experienced no significant workforce reduction as a result of the COVID-19 pandemic.

WeThe COVID-19 pandemic did have an impact on our supply chain in the early months of the pandemic. For example, we experienced delays in receiving healthy donor cells used in the manufacture of our CB-010 product candidate. These issues have been largely alleviated in recent months and we are currently receiving adequate supplies of donor cells, however we could face similar obstacles in the future. Although vaccines are now being distributed and administered across many parts of the world, new variants of the virus have emerged, and may continue to emerge, that are more contagious. As a result of future developments in the COVID-19 pandemic, we and our CMOs, contract research organizations (“CROs”), clinical trial sites, and other third-party vendors may face disruptions that could delay or otherwise affect our ability to initiate and complete preclinical studies or clinical trials as a result of the COVID-19 pandemic (including the emergence of COVID-19 variants). The COVID-19 pandemic has had an impact on our supply chain, although these issues have been alleviated in recent months. For example, in the early stages of the COVID-19 pandemic, we experienced delays in receiving healthy donor cells used in the manufacture of our CB-010 product candidate. We are currently receiving adequate supplies of donor cells.trials.

Since the start of the COVID-19 pandemic, we have been and will continue to be focused on the safety of our employees. In response to the COVID-19 pandemic, we have instituted on-site protocols and procedures in accordance with guidance provided by the Centers for Disease Control and the State of California and regulations and guidelines promulgated by the County of Alameda and the City of Berkeley. As of ~~August 31, 2021,~~January 1, 2022, all of our ~~on-site~~ employees ~~are~~will be required to ~~wear masks at all times when in common areas~~be fully vaccinated against COVID-19 as a condition of employment with us. Employees will be considered to be fully vaccinated two weeks after receiving both doses of a two-dose vaccine or ~~in labs~~one dose of a single-dose vaccine. Individuals who are unable to be vaccinated, due to a religious belief, a medical condition, or offices with other employees. We have reconfigured several labs to accommodate social distancing. At this point in time, we do not know if or when we will bring our non-on-site functions back on site full-time.disability that prevents them from being vaccinated, can request a reasonable accommodation.

In May 2020, we received a Paycheck Protection Plan (“PPP”) loan from the Small Business Administration (the “SBA”) in the amount of $1.6 million (the “PPP Loan”), which we used exclusively to pay employees’ salaries. In December 2020, we submitted an application to have ~~the~~our PPP Loan forgiven and, on May 22, 2021, ~~the~~our PPP Loan was forgiven in full by the SBA.

To the extent the COVID-19 pandemic adversely affects our business prospects, financial condition, and results of operation, it may also have the effect of exacerbating many of the other risks described or referenced in the section of the Final Prospectus titled “Risk Factors,” such as those relating to the timing and results of our planned and future clinical trials and our financing needs. See the section of the Final Prospectus titled “Risk Factors” for more information regarding the potential adverse impact of the COVID-19 pandemic on our business, results of operations, and financial condition.

We have not generated any revenue from product sales to date and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval and commercialization, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates if we succeed in obtaining regulatory approval for such product candidates.

To date, all of our revenue consists of licensing and collaboration revenue earned from collaboration and/or licensing agreements entered into with third parties, ~~and~~including related parties. Under these agreements, we license rights to certain intellectual property controlled by us. The terms of these arrangements typically include ~~payment~~payments to us of one or more of the following: nonrefundable, upfront license fees or exclusivity fees; annual maintenance fees; regulatory and/or commercial milestone payments; research and development payments; and royalties on the net sales of products and/or services. Each of these payments results in licensing and collaboration ~~revenues. Revenues~~revenue. Revenue under such licensing and collaboration agreements ~~were $1.5~~was $4.0 million and ~~$8.5~~$1.2 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, and ~~$3.1~~$7.0 million and ~~$10.2~~$11.4 million for the ~~six~~nine months ended ~~June~~

September 30, 2021 and 2020, respectively. See Note 4 to ~~the~~our condensed consolidated financial statements included elsewhere in this Quarterly Report.

For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the ~~condensed~~annual consolidated financial statements for the years ended December 31, 2019 and 2020 included ~~elsewhere~~ in ~~this Quarterly Report.~~our Final Prospectus.

For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.

Our research and development expenses consist of internal and external expenses incurred in connection with the development of our product candidates, development of our platform technologies, and our in-licensing and assignment agreements.

We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. ~~Payments~~However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our condensed consolidated balance ~~sheet.~~sheets. The capitalized amounts are recognized as expense as the goods are delivered or ~~the~~as related services are performed. Historically, we have not tracked external costs by clinical program. We intend to separately track certain external costs for each clinical program. However, we do not currently track, and do not intend to track, costs that are deployed across multiple programs.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to implement our business strategy; advance our CB-010 product candidate through clinical trials and later stages of development; conduct preclinical studies and clinical trials for our other product candidates; seek regulatory approvals for any product candidates that successfully complete clinical trials; expand our research and development efforts and incur expenses associated with hiring additional personnel to support our research and development efforts; and seek to identify, in-license, acquire, and/or develop additional product candidates.

The successful development of our CB-010, CB-011, CB-012, and CB-020 ~~and our~~product candidates, as well as other potential future product candidates, is highly uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of ~~these~~such product candidates. We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval. We may never succeed in achieving regulatory approval for any of our

product candidates. The duration, costs, and timing of preclinical studies, clinical trials, and development of our product candidates will depend on a variety of factors, including:

The following table summarizes our research and development expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
	(in thousands)				(in thousands)				(in thousands)				(in thousands)
External costs:
Acquisition of technology and intellectual property licenses	$	2,606	$	171	$	4,466	$	811	$	359	$	480	$	3,644	$	1,291
Services provided by third-party CROs, CMOs, and other third parties that conduct preclinical studies and clinical trials on our behalf		3,835		3,623		6,694		7,132		7,515		1,897		14,210		9,029
Other research and development expenses		1,626		716		3,660		2,007		2,322		862		5,981		2,869
Total external costs		8,067		4,510		14,820		9,950		10,196		3,239		23,835		13,189
Internal costs:
Payroll and personnel expenses		2,769		1,985		5,204		4,141
Payroll-related expenses										4,176		1,915		9,380		6,056
Facilities and other allocated expenses		1,491		1,085		2,467		2,130		1,461		1,026		3,929		3,156
Total external costs		4,260		3,070		7,671		6,271		5,637		2,941		13,309		9,212
Total research and development expenses	$	12,327	$	7,580	$	22,491	$	16,221	$	15,833	$	6,180	$	37,144	$	22,401

Our general and administrative expenses consist primarily of ~~personnel~~payroll-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities. ~~Personnel~~Payroll-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel. Intellectual property costs include expenses for filing, prosecuting, and maintaining patents and patent applications, including certain ~~of the~~ patents and patent applications that we license from third parties. We are entitled to receive reimbursement from third parties of a portion of the costs for filing, prosecuting, and maintaining certain patents and patent ~~applications from third parties.~~applications. We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses. During the three months ended ~~June~~September 30, 2021 and 2020, we recorded ~~$2.4~~$1.6 million and ~~$1.1~~$1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we recorded ~~$4.5~~$6.1 million and ~~$2.2~~$3.7 million, respectively, of patent reimbursements as a reduction to general and administrative expense.

We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and additional facility occupancy costs, as well as ~~various incremental~~increased costs associated with operating as a public company (including ~~increased~~ legal, audit, and accounting ~~fees,~~fees; regulatory costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select ~~Market,~~Market; director and officer ~~liability~~ insurance ~~premiums,~~premiums; costs for investor and public relations ~~activities,~~activities; and other accompanying compliance and governance costs). We also expect to increase the size of our administrative function to support the growth of our business.

Other income (expense) consists primarily of interest income earned on cash and money market funds, interest expense for our capital lease, and the promissory note related to our PPP ~~Loan,~~Loan; change in the fair value of Intellia common stock in 2020; change in fair value of the MSKCC success payments liability under the Exclusive License Agreement (the “MSKCC Agreement”), dated November 13, 2020, by and between us and MSKCC; and other income from the sale of certain intellectual property rights. During the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, other income (expense) ~~consists~~consisted primarily of interest income earned on cash and money market funds, interest expense on our capital lease, ~~and~~ extinguishment of the promissory note related to our PPP ~~Loan.~~Loan, and changes in the fair value of the MSKCC success payments liability.

The following table summarizes our results of operations for the three months ended ~~June~~September 30, 2021 and 2020:


	Three Months Ended June 30,						Change						Three Months Ended September 30,						Change
	2021			2020			$			%			2021			2020			$			%
	(in thousands, except percentages)												(in thousands, except percentages)
Licensing and collaboration revenue	$	1,476		$	8,478		$	(7,002	)		-83	%	$	3,977		$	1,198		$	2,779			232	%
Operating expenses
Research and development		12,327			7,580			4,747			63	%		15,833			6,180			9,653			156	%
General and administrative		5,113			3,153			1,960			62	%		6,760			3,247			3,513			108	%
Total operating expenses		17,440			10,733			6,707			62	%		22,593			9,427			13,166			140	%
Loss from operations		(15,964	)		(2,255	)		(13,709	)		608	%		(18,616	)		(8,229	)		(10,387	)		126	%
Other income (expense)
Interest income		46			11			35			318	%		22			4			18			450	%
Interest expense		(2	)		(5	)		3			-60	%		-			(6	)		6			-100	%
Gain on extinguishment of PPP Loan		1,584			-			1,584			100	%
Change in fair value of the MSKCC success payments liability														(2,403	)		-			(2,403	)		100	%
Other income		25			327			(302	)		-92	%		23			85			(62	)		-73	%
Total other income (expense)		1,653			333			1,320			396	%		(2,358	)		83			(2,441	)		-2941	%
Net loss before provision for income taxes		(14,311	)		(1,922	)		(12,389	)		645	%		(20,974	)		(8,146	)		(12,828	)		157	%
Benefit from income taxes		-			(50	)		50			-100	%		-			213			(213	)		-100	%
Net loss and comprehensive loss	$	(14,311	)	$	(1,872	)	$	(12,439	)		664	%	$	(20,974	)	$	(7,933	)	$	(13,041	)		164	%

Licensing and collaboration revenue ~~decreased $7.0~~increased $2.8 million, or ~~83%~~232%, to ~~$1.5~~$4.0 million for the three months ended ~~June~~September 30, 2021 from ~~$8.5~~$1.2 million for the three months ended ~~June~~September 30, 2020. This ~~decrease~~increase was primarily ~~due to decreases of $7.5 million~~ related to ~~an Exclusive License Agreement entered into with a related party private company, as amended (the “Private Company License Agreement”) during the corresponding 2020 period, and $0.3~~increases of $2.3 million related ~~to completion of work under a Research Collaboration and License Agreement with Genus plc, as amended (the “Genus Agreement”), partially offset by increases of $0.5 million due~~ to recognition of revenue under the AbbVie Agreement and ~~$0.3~~$0.5 million related to other license agreements with various licensees.

The following table summarizes our revenue by licensee for the three months ended ~~June~~September 30, 2021 and 2020:

Research and development expenses increased ~~$4.7~~$9.7 million, or ~~63%~~156%, to ~~$12.3~~$15.8 million for the three months ended ~~June~~September 30, 2021 from ~~$7.6~~$6.2 million for the three months ended ~~June~~September 30, 2020. This increase was primarily related to increases of $1.9 million in costs associated with our intellectual property license and assignment agreements, $0.9 million related to the purchase of materials related to our preclinical programs, $0.8 million in payroll and personnel related expenses, $0.5 million due to the change in fair value of the MSKCC success payments liability, $0.4 million in facilities and other allocated expenses, and $0.2$5.6 million in external clinical trial-related activities and contract manufacturing activities for our product ~~candidates.~~candidates, $2.3 million in payroll-related expenses, $1.5 million related to our preclinical programs, and $0.4 million in facilities and other allocated expenses, partially offset by a $0.1 million decrease in costs associated with our intellectual property license agreements.

General and administrative expenses increased ~~$2.0~~$3.5 million, or ~~62%~~108%, to ~~$5.1~~$6.8 million for the three months ended ~~June~~September 30, 2021 from $3.2 million for the three months ended ~~June~~September 30, 2020. This increase was primarily related to increases of ~~$1.1~~$2.1 million in ~~recruiting and personnel~~payroll-related costs, ~~$0.4~~$0.6 million in fees related to legal and accounting services, ~~$0.3~~$0.5 million in insurance expenses, and

$0.4 million in facilities and maintenance expenses, ~~and~~partially offset by a $0.1 million decrease in costs of prosecuting and maintaining ~~patents licensed from third parties.~~third-party patents.

~~Interest income increased by less than $0.1~~We recognized expense related to the change in fair value of the MSKCC success payments liability in the amount of $2.4 million for the three months ended ~~June~~September 30, ~~2021 as compared~~2021. The increase in the liability was primarily related to the increase in our common stock fair value after our IPO in July 2021. The MSKCC Agreement was entered into on November 13, 2020, and no similar expense was recorded during the three months ended ~~June 30, 2020.~~

~~Interest expense decreased by less than $0.1 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020.~~

~~Other income of $0.3 million for the three months ended June 30, 2020 was related to earned sale and assignment of patents and patent applications, which was not an ordinary business activity.~~

The PPP Loan was forgiven in May 2021, and we recognized gain on the PPP Loan extinguishment of $1.6 million for the three months ended June 30, 2021. No such gain was recognized for the three months ended JuneSeptember 30, 2020.

No income tax benefit or expense was recognized for the three months ended ~~June~~September 30, 2021. An income tax benefit of ~~less than $0.1~~$0.2 million was recognized for the three months ended ~~June~~September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which generated a ~~tax~~ refund of taxes paid for the year ended December 31, 2018.

The following table summarizes our results of operations for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


	Six Months Ended June 30,						Change						Nine Months Ended September 30,						Change
	2021			2020			$			%			2021			2020			$			%
	(in thousands, except percentages)												(in thousands, except percentages)
Licensing and collaboration revenue	$	3,062		$	10,178		$	(7,116	)		-70	%	$	7,039		$	11,377		$	(4,338	)		-38	%
Operating expenses
Research and development		22,491			16,221			6,270			39	%		37,144			22,401			14,743			66	%
General and administrative		9,709			6,641			3,068			46	%		16,469			9,887			6,582			67	%
Total operating expenses		32,200			22,862			9,338			41	%		53,613			32,288			21,325			66	%
Loss from operations		(29,138	)		(12,684	)		(16,454	)		130	%		(46,574	)		(20,911	)		(25,663	)		123	%
Other income (expense)
Interest income		50			153			(103	)		-67	%		72			157			(85	)		-54	%
Interest expense		(8	)		(8	)		-			0	%		(8	)		(14	)		6			-43	%
Change in fair value of equity securities		-			(733	)		733			-100	%		-			(733	)		733			-100	%
Change in fair value of the MSKCC success payments liability														(3,584	)		-			(3,584	)		100	%
Gain on extinguishment of PPP Loan		1,584			-			1,584			100	%		1,584			-			1,584			100	%
Other income		42			348			(306	)		-88	%		66			431			(365	)		-85	%
Total other income (expense)		1,668			(240	)		1,908			-795	%		(1,870	)		(159	)		(1,711	)		1076	%
Net loss before provision for income taxes		(27,470	)		(12,924	)		(14,546	)		113	%		(48,444	)		(21,070	)		(27,374	)		130	%
Benefit from income taxes		-			(1,252	)		1,252			-100	%		-			1,465			(1,465	)		-100	%
Net loss and comprehensive loss	$	(27,470	)	$	(11,672	)	$	(15,798	)		135	%	$	(48,444	)	$	(19,605	)	$	(28,839	)		147	%

Licensing and collaboration revenue decreased ~~$7.1~~$4.3 million, or ~~70%~~38%, to ~~$3.1~~$7.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021 from ~~$10.2~~$11.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020. ~~The~~This decrease ~~in licensing and collaboration revenue for the six months ended June 30, 2021~~ was primarily due to decreases of $7.5 million related to ~~the Private Company~~an Exclusive License Agreement, as amended, entered into with a related party private company on May 15, 2020 during the corresponding 2020 period, and $0.8

million related to completion of work under ~~the~~a Research Collaboration and License Agreement, as amended, with Genus ~~Agreement,~~plc on May 12, 2016, partially offset by increases of ~~$0.5~~$2.8 million due to recognition of revenue under the AbbVie Agreement and ~~$0.7~~$1.2 million related to other license agreements with various licensees.

The following table summarizes our revenue by licensee for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


	Six Months Ended June 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)				(in thousands)
AbbVie	$	507	$	—	$	2,781	$	-
Genus		-		844		-		844
Related party private company		-		7,500		-		7,500
Other licensing agreements		2,555		1,834
Other licensees						4,258		3,033
Total licensing revenue	$	3,062	$	10,178	$	7,039	$	11,377

Research and development expenses increased ~~$6.3~~$14.7 million, or ~~39%~~66%, to ~~$22.5~~$37.1 million for the ~~six~~nine months ended ~~June~~September 30, 2021 from ~~$16.2~~$22.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020. This increase was primarily related to increases of $2.5 million in costs associated with our intellectual property license and assignment agreements, $1.7 million related to the purchase of materials for our preclinical programs, $1.2 million due to the change in fair value of the MSKCC success payments liability, $1.1 million in payroll and personnel related expenses, and $0.3 million in facilities and other allocated expenses, partially offset by a decrease of $0.4$5.2 million in external clinical trial-related activities and contract manufacturing activities for our product ~~candidates.~~candidates, $3.3 million in payroll-related expenses, $3.1 million in expenses for our preclinical programs, $2.4 million in costs associated with our intellectual property license and assignment agreements, and $0.8 million in facilities and other allocated expenses.

General and administrative expenses increased ~~$3.1~~$6.6 million, or ~~46%~~67%, to ~~$9.7~~$16.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021 from ~~$6.6~~$9.9 million for the ~~six~~nine months ended ~~June~~September 30, 2020. This increase was primarily related to increases of ~~$1.4~~$3.5 million in recruiting and ~~personnel~~payroll-related costs, $1.5 million in fees related to accounting, audit, and investor and public relations, $0.7 million in facilities and other allocated expenses, $0.6 million in insurance expenses, and $0.5 million in costs of prosecuting and maintaining third-party patents, ~~licensed from third parties, $0.5~~partially offset by a decrease of $0.2 million in ~~expenses~~professional fees related to ~~accounting and financial services, and $0.4 million in facilities and other allocated expenses.~~legal services.

Interest income decreased by $0.1 million, or 67%, to less than $0.1 million for the six months ended June 30, 2021 from $0.2 million for the six months ended June 30, 2020. This decrease was primarily as a result of a decrease in average cash balances in our interest-bearing money market accounts and a decrease in average interest rates.

~~Interest expense has not changed for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.~~

We recognized a $0.7 million change in fair value of our equity investment in Intellia common stock during the ~~six~~nine months ended ~~June~~September 30, 2020. We sold Intellia common shares during the three months ended March 31, 2020, and there were no changes in fair value of other equity securities during the ~~six~~nine months ended ~~June~~September 30, 2021. We have not held any Intellia shares since March 31, 2020.

We recognized expense related to the change in the fair value of the success payments liability under the MSKCC Agreement in the amount of $3.6 million for the nine months ended September 30, 2021. The MSKCC Agreement was entered into on November 13, 2020 and no similar expense was recorded during the nine months ended September 30, 2020.

Other income of ~~$0.3~~$0.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 was related to earned sale and assignment of patents and patent applications, which was not an ordinary business activity.

~~The~~Our PPP Loan was forgiven in May 2021, and we recognized a gain on the loan extinguishment of $1.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021. No such gain was recognized for the ~~six~~nine months ended ~~June~~September 30, 2020.

No income tax benefit or expense was recognized for the ~~six~~nine months ended ~~June~~September 30, 2021. AnWe recognized an income tax benefit of ~~$1.3~~$1.5 million ~~was recognized~~ for the ~~six~~nine months ended ~~June~~September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the CARES Act, which generated a tax refund of taxes paid for the year ended December 31, 2018.

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations through ~~the sale~~sales of Series A, A-1, B, and C convertible preferred stock that generated approximately $150.1 million in aggregate net proceeds and from our IPO that generated approximately $321.0 million in net proceeds. We have also received approximately $88.4 million in net proceeds from the sale of Intellia common

stock received under the Intellia License Agreement. Additionally, through September 30, 2021, we received approximately ~~$72.7~~$77.7 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $30.0 million that was received from AbbVie under the AbbVie Agreement.

As of ~~June~~September 30, 2021, we had cash and cash equivalents of ~~$129.5~~$435.3 million. In March 2021, we received net proceeds of $108.8 million from our Series C convertible preferred stock financing and $30.0 million from AbbVie under the AbbVie Agreement. In July and August 2021, we received aggregate net proceeds of approximately $321.0 million from our IPO. We will continue to be dependent upon equity financing, debt financing, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations. We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five ~~years.~~years, except for our lease commitments as described in Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report. We have based these estimates on our current assumptions, ~~that~~which may require future adjustments based on our ongoing business decisions.

Our primary use of cash is to fund operating expenses and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses.

Our future funding requirements will depend on many factors, including the following:

Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.

If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs, and/or commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, and licensing arrangements. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our stockholders. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.


	Six Months Ended June 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Cash provided by (used in) operating activities	$	3,837		$	(16,448	)
Cash used in operating activities							$	(11,130	)	$	(25,139	)
Cash provided by (used in) investing activities		(506	)		6,967			(2,436	)		6,963
Cash provided by financing activities		110,286			1,541			432,969			1,653
Net increase (decrease) in cash and cash equivalents	$	113,617		$	(7,940	)	$	419,403		$	(16,523	)

Net cash ~~provided by operating activities was $3.8 million for the six months ended June 30, 2021 and net cash~~ used in operating activities was ~~$16.4~~$11.1 million and $25.1 million for the ~~six~~nine months ended ~~June~~September 30, ~~2020.~~2021 and 2020, respectively.

Cash ~~provided by~~used in operating activities in the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily due to our net loss ~~for the year~~ of ~~$27.5~~$48.4 million, adjusted by non-cash charges of ~~$2.0~~$5.6 million and net changes in our net operating assets and liabilities of ~~$29.3~~$31.7 million. Our non-cash charges ~~were comprised~~consisted of a change in the fair value of the MSKCC success payments liability of ~~$1.2~~$3.6 million, $1.9 million of stock-based compensation, $1.0 million of acquired in-process research development, ~~accrued at period end, $0.9 million of stock-based compensation,~~which represents an investing activity, and ~~$0.5~~$0.7 million of depreciation and amortization expense, which were offset by ~~the~~our PPP Loan extinguishment gain upon the loan forgiveness of $1.6 million. The changes in our net operating assets and liabilities were due to increases of ~~$31.8~~$30.7 million in deferred revenue, ~~$1.0 million in accounts payable, $1.0~~$4.9 million in accrued expenses and other current liabilities, ~~$0.7~~$0.9 million in deferred rent and lease incentive liability, and ~~a decrease of $0.5~~$0.8 million in ~~contract assets,~~accounts payable, offset by increases of ~~$3.9 million in other receivables and $1.8~~$2.8 million in prepaid expenses and other current assets, $1.7 million in other receivables, $0.5 million in contract assets, $0.4 million in accounts receivable, and $0.2 million in other assets.

Cash used in operating activities in the ~~six~~nine months ended ~~June~~September 30, 2020 was primarily due to our net loss for the ~~year~~nine months of ~~$11.7~~$19.6 million, adjusted by non-cash charges of ~~$5.4~~$4.9 million and net changes in our net operating assets and liabilities of $0.6 million. Our

non-cash charges ~~were comprised~~consisted of $0.8 million of stock-based compensation, a change in the fair value of equity securities of $0.7 million, ~~$0.5 million of stock-based compensation, $0.5~~$0.7 million of depreciation and amortization expense, and $0.4 million of acquired in-process research and development, which represents an investing activity. These were offset by receipt of non-cash consideration for licensing and collaboration revenue in the amount of ~~$7.5~~$7.6 million. The changes in our net operating assets and liabilities were primarily due to decreases of ~~$1.6~~$1.5 million in prepaid expenses and other current assets, ~~$0.5~~$0.2 million in contract assets, $0.1 million in other receivables, ~~$0.4 million in contract assets,~~ and an increase of ~~$0.3 million in accounts payable, partially offset by decreases of $0.9~~$1.1 million in accrued expenses and other current liabilities, partially offset by a decrease of $1.9

million in accounts payable, $0.7 million in deferred revenue, $0.6 million in deferred ~~revenue, $0.5~~tax liabilities, and $0.4 million in other ~~liabilities, and $0.3 million in deferred tax~~ liabilities.

During the ~~six~~nine months ended ~~June~~September 30, 2021 ~~net~~ cash used in investing activities was ~~$0.5 million and during~~$2.4 million. During the ~~six~~nine months ended ~~June~~September 30, 2020, cash provided by investing activities was $7.0 million.

Cash used byin investing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily due to ~~our~~ purchases of property and equipment of ~~$0.5~~$1.4 million and payments for the acquisition of in-process research and development of $1.0 million.

Cash provided by investing activities for the ~~six~~nine months ended ~~June~~September 30, 2020 was primarily due to ~~our~~the receipt of $7.7 million in proceeds from the sale of ~~our investment in~~ Intellia common ~~stock,~~stock. This was partially offset by ~~purchases of property and equipment of $0.3 million and~~ cash paid for the acquisition of in-process research and development of $0.4 million and purchases of property and equipment of $0.3 million.

During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, cash provided by financing activities was ~~$110.3~~$433.0 million and ~~$1.5~~$1.7 million, respectively.

Cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 was primarily due to ~~our~~the receipt of net proceeds from our IPO in the amount of $321.0 million, net proceeds from the issuance of Series C convertible preferred stock in the amount of $108.8 million, proceeds from the exercise of ~~our common~~ stock options of ~~$1.1~~$2.1 million, and repayment of the promissory note issued to ~~the Company’s President~~our president and ~~Chief Executive Officer~~chief executive officer in the amount of $1.2 million, partially offset by principal payments for a capital lease of $0.1 ~~million and payment of deferred issuance costs of $0.7~~ million.

Cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2020 was primarily due to our receipt of proceeds from ~~the~~our PPP Loan in the amount of $1.6 million and receipt of proceeds from exercise of stock options of $0.2 million, offset by principal payments for a capital lease of $0.1 million.

The following summarizes our contractual obligations as of ~~June~~September 30, 2021:


	Less Than				Due by Period		More Than				Less Than				Due by Period		More Than
	1 Year		1-3 Years		3-5 Years		5 Years		Total		1 Year		1-3 Years		3-5 Years		5 Years		Total
	(in thousands)										(in thousands)
Operating leases (1)	$	3,432	$	7,192	$	7,901	$	24,959	$	43,484	$	3,459	$	7,248	$	8,183	$	23,750	$	42,640
Total obligation (2)	$	3,432	$	7,192	$	7,901	$	24,959	$	43,484
Total obligations (2)											$	3,459	$	7,248	$	8,183	$	23,750	$	42,640

We enter into contracts in the normal course of business with suppliers, CMOs, CROs, clinical trial sites, and the like.

These agreements provide for termination at the request of either party generally with less than one-year notice and, therefore, we believe that our non-cancelable obligations under these agreements are not material and they are not included in the table above.

We have not included milestones, royalty, or other payments due under our existing license agreements in the table above due to the uncertainty of the occurrence of the events requiring payment under those agreements.

Under the MSKCC Agreement, ~~with MSKCC in November 2020, under which~~ we ~~exclusively licensed certain know-how, materials, and intellectual property in a specified field related to our CB-012 program. We~~ are obligated to make success payments to MSKCC of up to $35.0 million if our stock price increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock ~~compared~~ with $5.1914 per share, which is the ~~split-adjusted~~split adjusted initial price at which our Series B convertible preferred stock was sold, as adjusted for ~~any~~ future stock splits, during a specified time interval. The relevant time interval commences when the first patient is dosed with ~~our CB-012~~a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary of approval by the FDA of our, our affiliate’s, or ~~our affiliates’ or licensees’,~~licensee’s biologics license application ~~by the FDA~~ for ~~our CB-012~~a licensed CD371 product ~~candidate~~ or 10 years from the date the first patient was dosed with ~~CB-012~~a licensed CD371 product in the first phase 1 clinical trial. Additionally, if we undergo a change of control during the specified time interval, we may owe a change of control payment, ~~may be owed,~~ depending upon the increase in our stock price due to the change of control and also to what extent the MSKCC success payments have already been paid. In no event will the combination of the MSKCC success payments and the change of control payment exceed $35.0 million. The relevant time period during which MSKCC is eligible for success payments and a change of control payment has not yet commenced. As of ~~June~~September 30, 2021 and December 31, 2020, the timing and likelihood of triggering the MSKCC success payments are uncertain and therefore any related payments are not included in the tables above. See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information about the MSKCC success payments liability.

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under applicable SEC rules.

Our critical accounting policies are disclosed in our audited consolidated financial statements for the year ended December 31, 2020, and the related notes included in the Final Prospectus. Since the date of such financial statements, there have been no material changes to our significant accounting policies other than those described in Note 2 ~~of the notes~~ to ~~the unaudited~~our condensed consolidated financial statements included elsewhere in this Quarterly Report.

See Note 2 to ~~the~~our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information regarding recently issued accounting pronouncements.

As permitted under Delaware General Corporation Law and in accordance with our ~~amended~~Amended and ~~restated bylaws,~~Restated Bylaws, we indemnify our executive officers and directors for certain events or occurrences while ~~the executive~~such officer or director is or was serving in such capacity. We are also party to indemnification agreements with our executive officers, directors, and ~~directors.~~controller. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of ~~June~~September 30, 2021.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we ~~(i)~~(a) are no longer an emerging growth company or ~~(ii)~~(b) affirmatively and irrevocably opt

out of the extended transition period provided in the JOBS Act. As a result, ~~the~~our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company. As described in ~~“Recently adopted accounting pronouncements”~~“Recent Accounting Pronouncements” in ~~the~~Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have early adopted multiple accounting standards, asbecause the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies, to the extent early adoption is allowed by the accounting standard.

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities.

WeAs of September 30, 2021, we had cash and cash equivalents of ~~$129.5~~$435.3 million, ~~as of June 30, 2021,~~ which consisted of bank deposits and money market mutual funds. The primary objective of our investment activities is to preserve capital to fund our operations while earning a low-risk return. Because our money market mutual funds are short-term in duration, we believe that our exposure to interest rate risk is not significant and that a hypothetical 1% change in market interest rates during any of the periods presented would not have had a significant impact on the total value of our portfolio.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with vendors that are located outside of the United States and our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation generally affects us by increasing our cost of labor and research and development costs. We do not believe that inflation had a material effect on our business, results of operations, or financial condition during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is ~~(1)~~(a) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and ~~(2)~~(b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of ~~June~~September 30, 2021, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act). 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 principal executive officer and principal financial officer have concluded that, based upon the evaluation described above, ~~that,~~ as of ~~June~~September 30, 2021, our disclosure controls and procedures were effective at ~~the~~a reasonable assurance level.

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new and more efficient systems, consolidating activities, and migrating processes. During the quarter ended ~~June~~September 30, 2021, we implemented an ERP system as well as hired additional experienced staff in an effort to strengthen our overall control environment. Other than these changes, there were no changes in our internal control over financial reporting ~~as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act,~~ that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, litigation can have a material adverse effect on us ~~because of~~due to defense and settlement costs, diversion of our management resources, and other factors. We are not currently a party to any legal proceeding that, we believe, the ultimate outcome of which ~~we believe, if determined adversely to us,~~ would ~~individually or taken together~~ have a material adverse effect on our business, operating results, cash flows, or financial condition.

On October 16, 2018, Intellia initiated an arbitration proceeding ~~(the “Intellia Arbitration”)~~ with JAMS asserting that we had violated the terms and conditions of the Intellia License ~~Agreement.~~Agreement (the “Intellia Arbitration”). The Intellia Arbitration involved whether two patent families controlled by us and relating, respectively, to CRISPR-Cas9 chRDNA guides and Cas9 scaffolds, are included in the Intellia License Agreement. On September 19, 2019, we received an interim award from the arbitration panel determining that the two patent families are included in the Intellia License Agreement, but the panel granted us an exclusive leaseback to Cas9 chRDNA guides under economic terms to be negotiated by the parties. On February 6, 2020, the arbitration panel clarified that the leaseback relates solely to our CB-010 product candidate, and instructed the parties to negotiate economic terms based on a leaseback of that scope. On June 16, 2021, we entered into a leaseback agreement with Intellia, which resolved the dispute, and, on July 21, 2021, the arbitration panel dismissed the Intellia Arbitration with prejudice. See Note 4 to ~~the~~our condensed consolidated financial statements included elsewhere in this Quarterly Report.

There have been no material changes to the Risk Factors previously disclosed in the Final Prospectus. The risks described in the Final Prospectus are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

Unregistered Sales of Equity Securities for the Three Months Ended ~~June~~September 30, 2021

~~The following list sets forth information regarding all unregistered securities sold by us during the three months ended June 30, 2021:~~

~~The issuances of the above~~ These securities were ~~exempt either pursuant to~~issued in reliance on an exemption set forth in Rule 701 under the Securities Act, as transactions pursuant to compensatory benefit ~~plans, or pursuant to Section 4(a)(2) of the Securities Act, as transactions by an issuer not involving a public offering.~~plans.

On July 22, 2021, our Registration Statement on Form S-1 (File No. 333-257604) relating to our IPO of our common stock was declared effective by the SEC. On July 22, 2021, we filed a second Registration Statement on Form S-1 (File No. 333-258105) pursuant to Rule 462(b) of the Securities Act, which was effective immediately upon filing.

On July 27, 2021, we closed our IPO and issued and sold 19,000,000 shares of our common stock at a price to the public of $16.00 per share, and on August 9, 2021 we issued and sold an additional 2,850,000 shares of our common stock pursuant to the underwriters’ full exercise of their over-allotment option to purchase additional shares, at the public offering price of $16.00 per share,

for aggregate gross proceeds of $349.6 million. BofA Securities, Inc., Citigroup Global Markets Inc., and SVB Leerink LLC acted as joint book-running managers for the IPO and as representatives of the underwriters.

The net proceeds from ~~the~~our IPO, ~~to us,~~ after deducting underwriting discounts and commissions and offering expenses of $28.6 million, were $321.0 million. No IPO expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10.0% or more of any class of our equity securities or to any other affiliates. We are holding a significant portion of the balance of the net proceeds from our IPO in money market mutual funds. There has been no material change in our planned use of the net proceeds from our IPO described in the Final Prospectus.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware	45-3728228
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2929 7th Street, Suite 105 Berkeley, California	94710
(Address of principal executive offices)	(Zip Code)


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


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3837
Item 4.	Controls and Procedures	3837
PART II.	OTHER INFORMATION	3938
Item 1.	Legal Proceedings	3938
Item 1A.	Risk Factors	3938
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3938
Item 6.	Exhibits	4039
Signatures		4140


Remainder of 2021	$	1,690	$	845
2022		3,485		3,485
2023		3,596		3,596
2024		3,708		3,708
2025		3,627		3,627
Thereafter		27,378		27,379
Total	$	43,484	$	42,640


	As of June 30, 2021		As of December 31, 2020		As of September 30, 2021		As of September 30, 2020
Convertible preferred stock		26,234,654		14,119,631		-		14,119,631
Stock options outstanding		5,219,166		4,520,551		4,965,952		4,759,953
Shares committed under ESPP						18,804		-
Common shares subject to nonrecourse notes		0		409,795		-		409,795
		31,453,820		19,049,977		4,984,756		19,289,379


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


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


Multiple of initial share price at issuance	5x		10x		15x
Success payment(s) (in millions)	$	10.0	$	10.0	$	15.0


	As of June 30, 2021		As of December 31, 2020		As of September 30, 2021		As of December 31, 2020
Preferred stock, issued and outstanding		26,234,654		14,119,631		0		14,119,631
Stock options, issued and outstanding		5,219,166		4,520,551		4,965,952		4,520,551
Stock options, authorized for future issuance		932,846		582,340		5,782,814		582,340
Stock available under the Employee Stock Purchase Plan						511,000		0
Restricted stock awards		0		5,999		0		5,999
Total		32,386,666		19,228,521
						11,259,766		19,228,521


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2021			2020			2021			2020
Numerator:
Net loss	$	(14,311	)	$	(1,872	)	$	(27,470	)	$	(11,672	)	$	(20,974	)	$	(7,933	)	$	(48,444	)	$	(19,605	)
Denominator:
Weighted-average common shares outstanding used to compute net loss per share, basic and diluted		10,261,770			8,441,934			9,882,715			8,435,672			45,889,646			8,537,965			22,052,944			8,470,019
Net loss per share, basic and diluted	$	(1.39	)	$	(0.22	)	$	(2.78	)	$	(1.38	)	$	(0.46	)	$	(0.93	)	$	(2.20	)	$	(2.31	)


Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation of Caribou Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021)
3.2		Amended and Restated Bylaws of Caribou Biosciences, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021)
~~10.1†~~		Leaseback Agreement, dated June 16, 2021, by and between the Registrant and Intellia Therapeutics, Inc. (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1/A (File No. 333-257604) filed with the SEC on July 19, 2021).
~~10.2†~~10.1*+		~~Amendment No.~~Form of Stock Option Agreement under the 2013 Equity Incentive Plan, as amended and restated on April 3, to the Exclusive License Agreement, dated April 16, 2021, by and among the Registrant, The Regents of the University of California, and the University of Vienna (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-1 (File No. 33-257604) filed with the SEC on July 1, 2021).2019.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101.INS~~101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~104~~104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)


*	Filed herewith.
†**	Furnished herewith.
+	Indicates ~~certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10).~~management contract or compensatory plan.


	Caribou Biosciences, Inc.

Date: ~~September 2~~November 9, 2021	By:	/s/ Rachel E. Haurwitz
		Rachel E. Haurwitz President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~September 2~~,November 9, 2021	By:	/s/ Jason V. O'Byrne
		Jason V. O’Byrne
		Chief Financial Officer (Principal Financial Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company