☒ 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

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter)~~charter)

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, 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 April ~~30, 2021,~~29, 2022, the registrant had ~~25,626,139~~25,884,023 shares of common stock, $0.0001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions and are not guarantees of future performance or development. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the section titled “Risk Factors” under Part II, Item 1A, below and ~~elsewhere~~under "Item 1A. Risk Factors" in ~~this Quarterly~~our Annual Report on Form 10-K for the year ended December 31, 2021 and under similar captions in our periodic reports filed with the SEC from time to time. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this ~~report~~Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to new information, actual results or changes in our expectations, except as required by law.

~~A summary of risks that could materially and adversely affect our business, financial condition, operating results and prospects include the following:~~

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

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

	SERIES A-1 REDEEMABLE CONVERTIBLE PREFERRED STOCK				SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK				COMMON STOCK
	SHARES		AMOUNT		SHARES		AMOUNT		SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL			ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)			COMMON STOCK
Balance at December 31, 2019		76,499,992	$	63,494		62,535,183	$	53,138		988,700	$	—	$	—		$	(74,297	)	$	(74,297	)
Series A-1 and Series B preferred stock dividends and accretion		—		1,570		—		1,155		—		—		(308	)		(2,417	)		(2,725	)
Stock-based compensation expense		—		—		—		—		—		—		303			—			303
Vesting of restricted common stock		—		—		—		—		8,855		—		—			—			0
Exercise of options to purchase common stock		—		—		—		—		1,572		—		5			—			5
Net loss		—		—		—		—		—		—		—			(7,827	)		(7,827	)
Balance at March 31, 2020		76,499,992		65,064		62,535,183		54,293		999,127		—		—			(84,541	)		(84,541	)
																						SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS			ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2020		—		—		—		—		22,599,048		2		264,487			(129,825	)		134,664			25,599,048	$	2	$	264,487	$	—		$	(129,825	)	$	134,664
Proceeds from issuance of common stock, net of issuance costs of $4,017		—		—		—		—		3,000,000		—		52,983			—			52,983
Proceeds from issuance of common stock, net of issuance costs of $4,017																							3,000,000		—		52,983		—			—			52,983
Stock-based compensation expense		—		—		—		—		—		—		1,172			—			1,172			—		—		1,172		—			—			1,172
Vesting of restricted common stock		—		—		—		—		5,171		—		—			—			—			5,171		—		—		—			—			—
Exercise of options to purchase common stock		—		—		—		—		22,470		—		98			—			98			22,470		—		98		—			—			98
Net loss		—		—		—		—		—		—		—			(12,663	)		(12,663	)		—		—		—		—			(12,663	)		(12,663	)
Balance at March 31, 2021		—	$	-		—	$	-		25,626,689	$	3	$	318,740		$	(142,488	)	$	176,255			28,626,689	$	3	$	318,740	$	—		$	(142,488	)	$	176,255

Balance at December 31, 2021																							25,848,229	$	3	$	324,620	$	(14	)	$	(194,587	)	$	130,022
Stock-based compensation expense																							—		—		1,980		—			—			1,980
Exercise of options to purchase common stock																							34,967		—		62		—			—			62
Other comprehensive loss																							—		—		—		(26	)		—			(26	)
Net loss																							—		—		—		—			(17,780	)		(17,780	)
Balance at March 31, 2022																							25,883,196	$	3	$	326,662	$	(40	)	$	(212,367	)	$	114,258

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

1. Nature of the Business and Liquidity

Oncorus, Inc. (the “Company”) is a ~~clinical stage~~clinical-stage biopharmaceutical company focused on developing next-generation viral immunotherapies to transform outcomes for cancer patients. Using its two platforms, the Company is developing a pipeline of intratumorally and intravenously administered product candidates designed to selectively attack and kill tumor cells.

The Company’s operations to date have focused on organization and staffing, business planning, raising capital, acquiring and developing the Company’s technology, establishing the Company’s intellectual property portfolio, identifying potential product candidates and undertaking preclinical studies, commencing a clinical trial and manufacturing scale-up activities. The Company does not have any product candidates approved for sale and has not generated any revenue from product sales. The Company’s product candidates are subject to long development cycles and the Company may be unsuccessful in its efforts to develop, obtain regulatory approval for or market its product candidates.

On September 25, 2020, the Company effected a 1-for-12.0874 reverse stock split of its issued and outstanding common stock and a proportional adjustment to the existing conversion ratios for the outstanding shares of Series A-1 redeemable convertible preferred stock (“Series A-1”), and the Series B redeemable convertible preferred stock (“Series B”). Accordingly, all share and per share amounts for all periods presented in the accompanying unaudited interim condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split, including reclassification of par, additional paid-in capital and accumulated deficit amounts as a result of the split adjustment.

On October 6, 2020, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 5,800,000 shares of its common stock at a public offering price of ~~$15.00~~$15.00 per share. On October 14, 2020, the Company sold an additional 757,991 shares of common stock at ~~$15.00~~$15.00 per share pursuant to the underwriters’ partial exercise of their option to purchase additional shares of common stock. The total gross proceeds from the IPO were ~~$98.4~~$98.4 million and the Company raised ~~approximately $88.3~~$88.3 million in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Upon the closing of the IPO, all of the outstanding shares of convertible preferred stock automatically converted into 14,951,554 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no0 shares of preferred stock outstanding.

In February 2021, the Company completed a follow-on public offering of its common stock in which it sold 3,000,000 shares at an offering price of ~~$19.00~~$19.00 per share, resulting in gross proceeds of ~~$57.0~~$57.0 million and net proceeds of ~~$53.0~~$53.0 million, after deducting underwriting discounts and commissions and ~~estimated~~ offering ~~expenses.~~expenses payable by the Company.

In November 2021, the Company entered into an open market sale agreement pursuant to which the Company may issue and sell shares of its common stock from time to time for aggregate gross proceeds of up to $50.0 million. There have been no sales related to this agreement as of March 31, 2022.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, possible failure of preclinical studies or clinical trials, the need to obtain marketing approval for its product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the need to successfully commercialize and gain market acceptance of any of the Company’s products that are approved and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing, and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company expects to continue to incur losses from operations for the foreseeable future and additional capital will be required to fund future operations. The Company expects that its cash and cash equivalents as of March 31, ~~2021~~2022 will be sufficient to fund its operating expenses and capital expenditure requirements through at least the next 12 months from the date these financial statements were issued.

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash ~~equivalents.~~equivalents and short-term investments. The Company has all of its cash at one financial institution that management believes to be of high credit quality, in amounts that exceed federally insured limits. ~~Cash equivalents consist of~~The Company invests its excess cash, in line with its investment policy, primarily in money market funds ~~that invest primarily in U.S. government-backed securities~~ and ~~treasuries.~~high credit quality debt instruments.

The Company is dependent upon a third-party contract manufacturer and third-party contract research organizations for the performance of portions of its testing for pre-clinical and clinical studies. The Company believes that its relationships with these organizations are satisfactory, and that alternative suppliers of these services are available in the event of the loss of one or more of these suppliers.

Short-term investments consist of commercial paper, corporate bonds, asset-backed securities, and U.S. Treasury securities with original maturities greater than three months. The Company may sell investments at any time for use in current operations even if the investments have not yet reached maturity. As a result, the Company classifies its investments, including securities with maturities beyond twelve months, as current assets. As of March 31, 2022, all investments are classified as available-for-sale securities, which are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities are reported as a net amount in accumulated other comprehensive income or loss in stockholders’ equity until realized. Purchase premiums and discounts are amortized to interest income over the terms of the related securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the statements of operations and comprehensive loss using the specific-identification method. The Company periodically reviews all available-for-sale securities for other than temporary declines in fair value below the cost basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company also evaluates whether it has plans or is required to sell short-term investments before recovery of their amortized cost bases. For the three months ended March 31, 2022, the Company has not identified any other than temporary declines in fair value of its short-term investments.

Fair Value Measurements

Certain assets and liabilities of the Company are carried at fair value under GAAP. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly, such as quoted market prices, interest rates, and yield curves.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent a valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

~~The Company’s cash equivalents, classified within Level 1, are valued using net asset value per share for the money market funds.~~

The tranche rights granted to the Series B stockholders (the “Series B Tranche Rights”) were classified within Level 3 of the fair value hierarchy because they were valued using significant inputs not observable in the market. The valuation of the tranche rights used assumptions the Company believed would be made by a market participant. The Company assessed these estimates on an ongoing basis as additional data impacting the assumptions was obtained. Refer to Note 6 for additional information regarding the valuation of the tranche rights.

The Company believes that the carrying amounts of prepaid expenses, other current assets, accounts payable, and accrued expenses approximate their fair value due to the short-term nature of those instruments.

Operating Leases

During the quarter ended December 31, 2020, the Company early adopted ASC Topic 842, “Leases” (“ASC 842”) using the revised modified retrospective approach as of January 1, 2020. The unaudited interim condensed consolidated financial statements for the three months ended March 31, 2020, have been retroactively adjusted to reflect the adoption of ASC 842, including retroactive adjustments to the unaudited interim condensed consolidated statement of cash flows and certain additional footnote disclosures as included herein. The adoption of ASC 842 had no material impact to the Company’s condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2020.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. The lease liability is measured at the present value of future lease payments, discounted using the discount rate as of the lease commencement date. Future lease payments may include payments that depend on an index or a rate (such as the consumer price index or other market index). The ~~interest~~Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts typically do not have variable payments based on index or rate. The Company’s contracts that include a lease component generally include additional services that are transferred to the lessee (e.g., common-area maintenance services), which are non-lease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee to reimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. The Company elected the practical expedient to account for the lease and its associated non-lease components as a single lease component for its real estate leases, including the office, lab, and its manufacturing space.

When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in ~~lease contracts is~~the lease. As the Company's leases typically do not ~~readily determinable. As such,~~provide an implicit rate, the Company ~~utilizes the~~uses its incremental borrowing rate ~~which is the rate incurred to borrow~~based on ~~a collateralized basis over a similar term an amount equal to~~ the lease ~~payments in a similar~~term and economic ~~environment.~~ environment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are no economic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.

The Company recognizes a corresponding lease right of use (“ROU”) asset, initially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, and reduced by any lease incentives. In certain instances when there is unpredictability of payout of leasehold improvement reimbursements, the right-of-use asset and lease liability will be adjusted on a prospective basis as construction related to leasehold improvements is performed over the life of the lease.

The Company’s leases consist of only operating leases. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non-current. Fixed rents are included in the calculation of the lease balances while certain variable costs paid for certain operating and pass-through costs are excluded. Lease expense is recognized over the expected lease term on a straight-line basis. For leases with a term of one year or less, or short-term leases, the Company has elected to not recognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statements of operations and comprehensive loss.

Recently Issued Accounting Pronouncements

There have been no recently issued accounting pronouncements other than those described in the Company’s audited financial statements as of and for the year ended December 31, ~~2020,~~2021, and the notes thereto, which are included in the ~~2020~~ Annual ~~Report~~Report.

3. Cash Equivalents and Investments

The following tables summarize the amortized cost and fair value of the Company's cash equivalents and investments (in thousands):


	MARCH 31, 2022
	AMORTIZED COST BASIS		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES			ESTIMATED FAIR VALUE
Cash Equivalents
Money market funds	$	72,915	$	0	$	0		$	72,915
Total Cash Equivalents	$	72,915	$	0	$	0		$	72,915

Investments
Commercial paper	$	11,104	$	0	$	0		$	11,104
Asset-backed securities		2,013		0		(8	)		2,005
U.S. treasury securities		4,815		0		(32	)		4,783
Corporate bonds		5,264		0		0			5,264
Total Investments	$	23,196	$	0	$	(40	)	$	23,156


	DECEMBER 31, 2021
	AMORTIZED COST BASIS		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES			ESTIMATED FAIR VALUE
Cash Equivalents
Money market funds	$	98,900	$	0	$	0		$	98,900
Total Cash Equivalents	$	98,900	$	0	$	0		$	98,900

Investments
Commercial paper	$	11,084	$	0	$	0		$	11,084
Asset-backed securities		2,020		0		(2	)		2,018
U.S. treasury securities		4,812		0		(8	)		4,804
Corporate bonds		5,271		0		(4	)		5,267
Total Investments	$	23,187	$	0	$	(14	)	$	23,173

As of March 31, 2022, the Company held two investments with unrealized losses. All investments in an unrealized loss position were in this position for less than 12 months. The Company evaluated its securities for potential other-than-temporary impairment and considered the decline in market value to be primarily attributable to current economic and market conditions. Additionally, the Company does not intend to sell the securities in an unrealized loss position and does not expect it will be required to sell the securities before recovery of the unamortized cost basis. Given the Company's intent and ability to hold such securities until recovery, and the lack of a significant change in credit risk for these investments, the Company does not consider these investments to be impaired as of March 31, 2022.

There were 0 realized gains or losses recognized on ~~Form 10-K filed with~~investments as of March 31, 2022. Interest on investments is recognized as interest income in the ~~SEC on~~consolidated statements of operations and comprehensive loss.

All investments held as of March ~~10, 2021.~~31, 2022 were classified as available-for-sale securities and had contractual maturities of less than two years.

3.4. Fair Value Measurements

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	FAIR VALUE MEASUREMENTS AS OF MARCH 31, 2021								FAIR VALUE MEASUREMENTS AS OF MARCH 31, 2022
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL		LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Money market funds (included in cash and cash equivalents)	$	169,058	$	—	$	—	$	169,058
	$	169,058	$	—	$	—	$	169,058
Money market funds									$	72,915	$	—	$	—	$	72,915
U.S. treasury securities										4,783		—		—		4,783
Commercial paper										0		11,104		—		11,104
Asset-backed securities										0		2,005		—		2,005
Corporate bonds										0		5,264		—		5,264
Total Assets									$	77,698	$	18,373	$	—	$	96,071


	FAIR VALUE MEASUREMENTS AS OF DECEMBER 31, 2021
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Money market funds	$	98,900	$	—	$	—	$	98,900
U.S. treasury securities		4,804		—		—		4,804
Commercial paper		0		11,084		—		11,084
Asset-backed securities		0		2,018		—		2,018
Corporate bonds		0		5,267		—		5,267
Total Assets	$	103,704	$	18,369	$	—	$	122,073

FAIR VALUE MEASUREMENTS
AS OF DECEMBER 31, 2020

LEVEL 1

LEVEL 2

LEVEL 3

TOTAL

Assets:

Money market funds (included in cash and cash equivalents)

$
126,056

$
—

$
—

$
126,056

$
126,056

$
—

$
—

$
126,056

The Company classifies its money market funds and U.S. treasury securities as Level 1 assets since it measures fair value using quoted prices in active markets for identical assets. The Level 2 assets include commercial paper, asset-backed securities, and corporate bonds and are valued based on quoted prices for similar assets in active markets and inputs other than quoted prices that are derived from observable market data. The Company did not hold any Level 3 assets during the periods presented.

The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between Level 1 and Level 2 assets during the periods presented.

5. Leases

~~4. Leases~~

The Company has an operating lease in Cambridge, Massachusetts for its corporate headquarters. The lease will expire in January 2024 and includes an optional extension for an additional 3three year period.

The Company also has an operating lease for approximately 33,518 square feet (the “Pod 4 Portion”), approximately 54,666 square feet (the “Pod 5 Portion”), and approximately 17,150 square feet ("Pod 3 Portion") of a manufacturing ~~and laboratory space~~facility located in Andover, Massachusetts that expires in December 2036. The Company has two options to extend the term of the lease for a period of 10ten years ~~each.~~each. As of March 31, ~~2021,~~2022, the Company ~~has~~had not exercised its options to extend the lease term for either ~~lease.~~lease and it does not deem it reasonably certain that these options will be exercised. The Company agreed to provide the landlord with a ~~$2.9~~$3.4 million letter of credit as support for its obligations under the Andover facility lease. The lease provides a lease incentive ~~related to~~in the form of reimbursable leasehold improvements of approximately ~~$13.2~~$14.9 million. ~~As construction related~~Due to ~~leasehold improvements is performed over~~ the ~~life~~unpredictability of the ~~lease,~~payout of leasehold improvement reimbursements, the right-of-use asset ~~and lease liability~~ will be adjusted on a prospective basis to reflect any payments relating to the lease incentive as construction related to these improvements is performed over the life of the lease. As of March 31, 2022, the Company capitalized $23.1million of leasehold improvement costs, of which $6.2 million was reimbursed through the lease incentive. The lease payments include fixed base rent payments and variable rents for certain shared facility operating and other costs.

During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized total rent expense of ~~$1.4~~$1.6 million and ~~$0.3~~$1.4 million, respectively, related to ~~office and lab space under~~ the leases described above. The amount of variable rent expense and rent for short-term leases for ~~these periods~~the three months ended March 31, 2022 and 2021, was ~~$0.3~~$0.9 million and ~~$0.1~~$0.3 million, respectively.

Other supplemental information related to leases was as follows:


	AS OF AND FOR THREE MONTHS ENDED MARCH 31,
	2022	2021
Weighted average remaining lease term	13.5 years	14.3 years
Weighted average discount rate	8.1%	8.5%
Cash paid for amounts included in the measurement of lease liabilities (in thousands)	$1,505	$381

THREE MONTHS ENDED
MARCH 31,

2021

2020

Weighted average remaining lease term
14.3 years

3.8 years

Weighted average discount rate
8.5%

12.0%

Cash paid for amounts included in the measurement of lease liabilities (in thousands)
$
381

$
370

Maturities of operating lease liabilities were as follows as of March 31, ~~2021~~2022 (in thousands):


Year	Amount
2022	$	4,198
2023		6,380
2024		4,995
2025		5,145
2026		5,299
Thereafter		62,575
Total lease payments		88,592
Less imputed interest		(36,993	)
Total lease liabilities	$	51,599

Current portion		1,678
Long-term portion		49,921

~~At March 31, 2021~~ and ~~December 31, 2020, accrued~~Other Long-Term Liabilities

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


	MARCH 31, 2021		DECEMBER 31, 2020		MARCH 31, 2022		DECEMBER 31, 2021
Accrued research and development costs	$	1,857	$	1,369	$	2,104	$	1,474
Accrued leasehold improvement costs						2,382		999
Accrued compensation		594		1,661		1,444		2,697
Accrued professional fees		532		568		821		846
Miscellaneous accrued expenses		217		140		378		468
Total accrued expenses	$	3,200	$	3,738
Total accrued expenses and other long-term liabilities					$	7,129	$	6,484

~~6. Series B Tranche Rights~~As of March 31, 2022, other long-term liabilities of $0.2 million were primarily represented by the value of unmet conditions associated with a governmental grant received in 2021. The Company anticipates meeting these conditions between 2024 and 2026 and, upon satisfaction, will reduce these liabilities with a corresponding reduction to research and development expenses.

7. Common Stock

~~Included in the terms~~Each share of the purchase agreement for the Series B (“Series B Purchase Agreement”) entered into in August 2019 were Series B tranche rights (“Series B Tranche Rights”) granted to the purchasers of the Series B.

The Series B Tranche Rights provided the holders with the right to purchase additional shares of Series B, in a second tranche, upon either the achievement by the Company of certain clinical development milestones for the Company’s primary clinical candidate, as set forth in the Series B Purchase Agreement, or upon the election of certain holders of the Series B prior to August 5, 2021. In the second tranche, the Company had the ability to sell up to 41,690,117 shares of Series B at $0.8597 per share. The Company reached the clinical development milestones set forth in the Series B Purchase Agreement in September 2020 and the Company sold 41,690,117 shares of Series B at $0.8597 per share, resulting in total gross proceeds to the Company of $35.8 million.

At the time of issuance, the Series B Tranche Rights met the definition of a freestanding financial instrument, as the Series B Tranche Rights were both legally detachable and separately exercisable from the Series B. In addition, the Company determined at the time of issuance that the Series B Tranche Rights met the definition of a liability (or in some circumstances, an asset) because the Series B Tranche Rights (i) embodied an obligation to repurchase the Company’s equity shares and (ii) may have required the Company to settle the obligation by transferring assets. As a result, upon issuance, the respective Series B Tranche Rights were initially recorded at fair value and were subsequently re-measured at the end of each reporting period until settlement. Changes in the fair value were recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss.

At December 31, 2019 and at the end of each reporting period prior to settlement in September 2020, the estimated fair value of the Series B Tranche Rights was determined using a probability weighted present value model that considered the probability of triggering the Series B Tranche Rights through achievement of the clinical development milestones specified in the Series B Purchase Agreement. The Company converted the future values to their present values using a discount rate it considered to be appropriate for probability adjusted cash flows. The estimates were based, in part, on subjective assumptions. Significant assumptions for the Series B Tranche Rights valuation at March 31, 2020 included an 85% probability of achieving the clinical development milestones and a discount rate of 0.2%. Based upon the valuation performed at March 31, 2020, the estimated fair value of the Series B Tranche Rights was not adjusted during the three months ended March 31, 2020.

~~7. Redeemable Convertible Preferred Stock~~

Upon the closing of the IPO on October 6, 2020, all of the outstanding shares of Series A-1 and Series B automatically converted into an aggregate of 14,951,554 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. In connection with the closing of the IPO, the Company changed its authorized capital to include 10,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share.

~~Issuance of Series B Redeemable Convertible Preferred Stock~~

In August 2019, the Company authorized and agreed to sell 92,477,021 shares of Series B in two tranches. The first tranche closed on dates between August 5, 2019 and August 27, 2019. On those dates, the Company sold a total of 55,486,215 shares of Series B at $0.8597 per share, for gross proceeds to the Company of $47.7 million. In November 2019, the Company authorized and agreed to sell 11,748,279 additional shares of its Series B to new investors on the same terms and conditions as the previous sale of Series B. The first tranche of this sale occurred on November 27, 2019, in which the Company sold 7,048,968 shares of Series B for gross proceeds of $6.1 million. The Company paid $0.4 million of issuance costs related to these sales.

In September 2020, the Company achieved the second tranche milestones related to the clinical development of its lead product candidate, ONCR-177. Upon achievement of the milestones, the Series B investors became obligated to purchase additional shares of Series B in a second tranche closing and the Company issued an aggregate of 41,690,117 shares of Series B at $0.8597 per share, for gross proceeds to the Company of $35.8 million.

A description of the rights and privileges of the Series B and Series A-1 prior to their conversion to common stock upon the IPO in October 2020 can be found in the Company’s Annual Report filed on Form 10-K with the SEC on March 10, 2021.

~~8. Common Stock~~

~~Each share of~~Company's common stock is entitled to one ~~vote.~~vote. The holders of shares of common stock are entitled to receive dividends, if and when declared by the Board of Directors. Prior to the IPO, the voting, dividend, and liquidation rights of the holders of common stock were subject to, and qualified by, the rights, powers, and preferences of the holders of Series B and Series A-1.

Upon the closing of the IPO, the Company ~~changed~~amended and restated its ~~authorized capital stock~~certificate of incorporation to ~~include~~ provide for 100,000,000 shares designated as common stock with a par value of ~~$0.0001~~$0.0001 per ~~share.~~share as part of its authorized capital.

Restricted Stock

The Company issued restricted stock to its founders and certain officers of the Company. In general, the shares of restricted stock vest over a four-year period, with ~~25%~~25% of the shares vesting after one year, followed by monthly vesting over the remaining three years. ~~A summary~~As of ~~non-vested~~March 31, 2022, all restricted stock ~~during the three months ended March 31, 2021 is as follows:~~awards were fully vested.

AMOUNT

WEIGHTED-AVERAGE
GRANT DATE FAIR
VALUE

Balance at December 31, 2020

17,234

$
1.57

Repurchases

—

—

Issuances

—

—

Vested

(5,171
)

1.57

Balance at March 31, 2021

12,063

$
1.57

Common Stock Warrants

The Company issued warrants to purchase common stock (the “Common Stock Warrants”) in connection with a preferred stock financing in March 2016. The Common Stock Warrants allow for the holders to purchase 71,544 shares of common stock at ~~$1.21~~$1.21 per share. As of March 31, ~~2021,~~2022, all of the Common Stock Warrants were fully exercisable. The Common Stock Warrants expire in 2031.

Reserved Shares

The Company ~~had~~has reserved the following shares of common stock for the conversion or exercise of the following securities:


	MARCH 31, 2022		DECEMBER 31, 2021
Exercise of Common Stock Warrants		71,544		71,544
Exercise of options to purchase common stock		4,584,601		3,681,793
Shares available for issuance under employee stock purchase plan		280,000		0
Shares available for issuance under equity incentive plans		2,486,854		2,132,067
Total		7,422,999		5,885,404

The Company adopted the 2016 Equity Incentive Plan, as amended, (the “2016 Plan”) on March 31, 2016. The 2016 Plan provided for the granting of stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock awards to employees, directors and non-employees. All option awards were granted with an exercise price equal to or greater than the market price of the Company’s stock at the date of grant. Option awards generally vest over three to four ~~years.~~years. Certain option awards provide for accelerated vesting if there is a change in control as defined in the 2016 Plan. The provisions of the 2016 Plan allow for early exercises for options that have not yet vested. Early exercises have historically been for a de ~~minimis.~~minimis number of shares.

On September 23, 2020, the Company adopted the 2020 Equity Incentive Plan ~~(“the 2020~~(the “2020 Plan”), which became effective upon the execution of the underwriting agreement related to the IPO and serves as the successor to the 2016 Plan. The 2020 Plan authorizes the

award of stock options, restricted stock awards, stock appreciation rights, restricted stock units, cash awards, performance awards and stock bonus awards. The number of shares reserved for issuance under the 2020 Plan will increase automatically on January 1 of each fiscal year, starting on January 1, 2021 and ending on and including January 1, 2030, by the number of shares equal to 5%5% of the aggregate number of outstanding shares of common stock as of the immediately preceding December 31, or a lesser number of shares as may be determined by the board of directors (or an authorized committee thereof).

~~At March 31, 2021, there were~~ ~~2,599,588~~ ~~shares of common stock available for grant under the 2020 Plan.~~ On January 1, ~~2021,~~2022, the number of shares reserved for issuance under the 2020 Plan automatically increased by ~~1,130,896~~1,292,458 shares of common stock.

At March 31, 2022, there were 2,486,854 shares of common stock available for issuance under the 2020 Plan.

On September 23, 2020, the Company adopted the 2020 Employee Stock Purchase Plan ~~or the ESPP,~~(the "ESPP"), which became effective upon the execution of the underwriting agreement related to the IPO. The Company initially reserved 280,000 shares of common stock for sale under the ESPP. The aggregate number of shares reserved for sale under the ESPP will increase automatically on January 1st of each fiscal year starting on January 1, 2021 and ending on and including January 1, 2030, by the number of shares equal to the lesser of (a) 1% of the total number of shares of common stock outstanding on the last day of the fiscal year prior to the date of such automatic increase and (b) 560,000 shares, provided that prior to the date of any such increase, the board of directors may determine a ~~less~~lesser number of shares for such increase.In December ~~2020,~~2021, the board of directors determined that there would be no0 automatic increase in the number of shares of common stock reserved under the ESPP on January 1, ~~2021.~~2022. The ESPP provides for six-month option periods commencing on January 1 and ending on June 30 and commencing on July 1 and ending on December 31 of each calendar year. The first offering under the ESPP began on January 1, 2022.

In December 2020, the Company granted an employee an option to purchase 113,000 shares of the Company’s common stock ~~having~~with an exercise price per share equal to the fair value of the Company’s common stock on the date of grant. This grant is included in the outstanding options in the summary table below. The option grant includes three separate tranches (each tranche representing ~~33.33%~~one-third of the total grant) that will each vest four years from the date of grant. This option grant and its tranches are subject to accelerated vesting in the event that the Company achieves certain defined milestones related to the Company’s manufacturing efforts. As of March 31, ~~2021,~~2022, the Company determined that the requisite service period of ~~the~~this award is four years and ~~recorded $0.1~~recognized $0.1 million of ~~expense.~~stock-based compensation expense for the three months ended March 31, 2022. Accelerated vesting was not considered to be probable at March 31, ~~2021.~~2022.

A summary of option activity for the three months ended March 31, 2022 is presented below:

SHARES

WEIGHTED
AVERAGE
EXERCISE
PRICE

WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)

AGGREGATE
INTRINSIC
VALUE
(IN THOUSANDS)

Outstanding at December 31, 2020

2,790,746

$
8.13

Granted

689,350

$
16.25

Exercised

(22,057
)

$
4.29

Canceled, expired or forfeited

(34,602
)

$
11.39

Outstanding at March 31, 2021

3,423,437

$
9.76

8.66

$
20,704

Vested and expected to vest at March 31, 2021

3,423,437

$
9.76

8.66

$
20,704

Exercisable at March 31, 2021

1,040,347

$
3.03

7.52

$
11,352


	SHARES			WEIGHTED AVERAGE EXERCISE PRICE		WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM (YEARS)		AGGREGATE INTRINSIC VALUE (IN THOUSANDS)
Outstanding at December 31, 2021		3,681,793		$	10.84
Granted		982,250		$	2.12
Exercised		(34,863	)	$	1.77
Canceled, expired or forfeited		(44,579	)	$	7.98
Outstanding at March 31, 2022		4,584,601		$	9.07		8.39	$	29
Vested and expected to vest at March 31, 2022		4,584,601		$	9.07		8.39	$	29
Exercisable at March 31, 2022		1,670,042		$	7.08		7.30	$	25

The weighted average grant date fair value per share of options granted to employees, directors and non-employee consultants during the three months ended March 31, 2022 and 2021 was $1.54and ~~2020 was $11.62 and $4.67,~~$11.62, respectively. The total intrinsic value of options exercised was ~~$0.3~~$0.02 million and ~~$0.01~~$0.3 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Total unrecognized stock-based compensation expense related to ~~stock~~ options amounted to ~~$20.1~~$19.2 million at March 31, ~~2021~~2022, and is expected to be ~~incurred~~recognized over a weighted-average period of ~~3.5~~2.8 years.

~~The total fair value of restricted shares vested was $0.01 million during the three months ended March 31, 2021 and 2020.~~

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses ~~as incurred the~~ costs related to such legal proceedings as incurred.

~~11.~~10. Net Loss Per Share

The following securities that could potentially dilute basic net loss per share in the future were not included in the computation of diluted net loss per share for the periods presented, because to do so would have been antidilutive:

	THREE MONTHS ENDED MARCH 31,
	2021		2020		THREE MONTHS ENDED MARCH 31,
Series A-1		—		6,328,894
Series B		—		5,173,569
					2022		2021
Outstanding stock options		3,423,437		2,060,685		4,584,601		3,423,437
Restricted stock		12,063		32,748		0		12,063
Shares expected to be purchased under employee stock purchase plan						62,243		0
Common stock warrants		71,544		71,544		71,544		71,544
Total		3,507,044		13,667,440		4,718,388		3,507,044

~~12.~~11. Subsequent Events

On April 1, 2022, the Company entered into a loan and security agreement (the "Loan Agreement") with K2 HealthVentures LLC ("K2HV"), and together with any other lender from time to time party thereto, the “Lenders”), K2HV as administrative agent for the Lenders, and Ankura Trust Company, LLC, as collateral agent for the Lenders. The Loan Agreement provides up to $45.0 million principal in term loans consisting of a first tranche of $20.0 million funded at closing and three subsequent tranches totaling $25.0 million to be funded upon the achievement of certain time-based clinical and regulatory milestones.

The facility carries a 48-month term with interest only payments for 24 months, subject to increase to up to 36 months upon the Company drawing on the third tranche and no event of default having occurred. The Term Loan will mature on April 1, 2026 and bears a variable interest rate equal to the greater of (i) 7.75% and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate) and (B) 4.25%. The Company ~~has evaluated subsequent events from~~may prepay, at its option, all, but not less than all, of the outstanding principal balance ~~sheet date through the date on which these financial statements were issued. Subsequent~~and all accrued and unpaid interest with respect to the ~~issuance~~principal balance being prepaid of the ~~financial statements, there were no events that occurred that required disclosure in, or revision~~term loans, subject to a prepayment premium to which the Lenders are entitled and certain notice requirements.

The Lenders may elect at any time following the closing and prior to the ~~financial statements.~~full repayment of the term loans to convert any portion of the principal amount of the term loans then outstanding, up to an aggregate of $5.0 million in principal amount, into shares of the Company's common stock at a conversion price of $2.2689, subject to customary beneficial ownership limitations.

The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict the Company’s ability to, among other things, dispose of assets, make changes to the Company’s business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions. As security for its obligations under the Loan Agreement, the Company granted the Lenders a first priority security interest on substantially all of the Company’s assets (other than intellectual property), subject to certain exceptions.

In connection with entering into the Loan Agreement, the Company also issued to K2HV a warrant to purchase a number of shares of Common Stock equal to the quotient of 2.95% of the aggregate funded term loan amount divided by $1.5126, the exercise price, up to a maximum of 877,627 shares (the "Warrant"). The Warrant expires on April 1, 2032.

The Loan Agreement and the Warrant each provide the Lenders with certain piggyback registration rights with respect to the shares issuable upon conversion under the Loan Agreement or upon exercise of the Warrant.

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

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled ~~“Risk Factors”~~"Risk Factors" under Part II, Item 1A, below and under ~~Part~~"Part I, Item 1A. Risk ~~Factors~~Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission, or the SEC, on March 10, 2021. These forward-looking statements may include, but are not limited to, statements regarding our future results of operations and financial position, the impact of the COVID-19 pandemic, business strategy, market size, potential growth opportunities, preclinical and clinical development activities, efficacy and safety profile of our product candidates, use of net proceeds from our offerings, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of preclinical studies and clinical trials, commercial collaborations with third parties and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “predict,” “target,” “intend,” “could,” “would,” “should,” “project,” “plan,” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.9, 2022.

These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

Introduction

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying unaudited interim condensed consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. Our MD&A is organized as follows:

Overview- A discussion of our business and overall analysis of financial and other highlights in order to provide context for the remainder of MD&A.

Results of Operations- An analysis of our financial results comparing the three months ended March 31, ~~2021~~2022 to the three months ended March 31, ~~2020.~~2021.

Liquidity and Capital Resources- An analysis of changes in our unaudited interim condensed consolidated balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.

Critical Accounting Policies and Significant Judgments and Estimates - A discussion of critical accounting policies and those that require us to make subjective estimates and judgments.

Overview

We are a clinical-stage biopharmaceutical company focused on developing next-generation, systemically active viral immunotherapies to transform outcomes for cancer patients. Using our two distinct proprietary platforms, we are developing a pipeline of intratumorally and intravenously administered product candidates designed to selectively attack and kill tumor cells and deliver transgenes to stimulate multiple arms of the immune system against tumors. We believe that the therapies we are developing could bring significant benefit to many patients who are currently underserved by approved immuno-oncology therapies, including other viral immunotherapies and immune checkpoint inhibitors.

Our HSV Platform

Our lead product candidate, ONCR-177, is an intratumorally administered viral immunotherapy based on our oncolytic HSV-1 platform, referred to as our ~~oHSV~~HSV Platform, which leverages the Herpes Simplex ~~Virus-1,~~Virus type 1, or HSV-1, a virus which has been clinically proven to effectively treat certain cancers. ~~Utilizing this proprietary platform,~~Using our HSV Platform, we ~~are engineering our product candidates, such as~~engineered ONCR-177 to ~~carry~~overcome the limitations of existing viral immunotherapies by enhancing potency and driving strong systemic anti-tumor immune responses at injected as well as distant non-injected tumor sites. ONCR-177 is armed with five immunostimulatory transgenes—a greater ~~numbers~~number of ~~immunostimulatory~~ transgenes than viral immunotherapies that are either currently approved or in clinical development. ~~These transgenes~~Product candidates from our HSV Platform are designed to ~~drive strong systemic anti-tumor immunity to elicit tumor responses at injected and distant non-injected tumor sites, or abscopal activity. In addition, viruses from our oHSV Platform~~ maintain full viral replication competency in tumors and ~~are designed~~ to be selectively attenuated in ~~normal~~healthy tissues, meaning they replicate and express transgenes only in tumor cells while disabling potentially harmful effects on healthy tissues. In multiple preclinical cancer models, we observed that these attributes of ONCR-177 were achieved without either the systemic release of cytokines that can be associated with toxicity or significant presence of the virus in non-injected tumors or in circulation, in addition to favorable tolerability when administered via intravenous and intratumoral injection in a validated murine model of HSV-1 infection. We believe this ~~unique~~ combination of features allows usour HSV Platform to ~~break~~overcome the safety versus potency trade-off that has generally limited the viral immunotherapy field to date. Based on safety and tolerability profile observed to date and its ability to stimulate multiple arms of the immune system to attack cancer systemically, we also believe that ONCR-177 has potential in pre-surgical, or neoadjuvant, settings.

In June 2020, we initiated aour Phase 1 clinical trial of ONCR-177 in patients with several different ~~tumor types.~~ types of solid tumors, including breast cancers and cutaneous tumors. We presented our preliminary findings from the Phase 1 clinical trial in November 2021, which included data from 14 patients in the fully enrolled and completed dose escalation cohorts of the trial and five patients enrolled in the

dose expansion monotherapy portion of the trial. In the fully enrolled and completed surface lesion dose escalation portion of the trial, ONCR-177 administered to heavily pretreated patients with advanced, injectable solid tumors was well tolerated with no dose-limiting toxicities. No treatment-related adverse events exceeded Grade 2, and no infectious virions were detected in skin swabs. After four weeks of monotherapy treatment with ONCR-177 at the recommended Phase 2 dose, or RP2D, three of eight evaluable patients (one with cutaneous melanoma, one with squamous cell carcinoma of the head and neck, or SCCHN, and one with mucosal melanoma) had demonstrated clinical benefit. We have initiated enrollment in the surface lesion dose combination expansion portion of the clinical trial. Patients in the trial will receive ONCR-177 in combination with Merck's KEYTRUDA® (pembrolizumab), an immune checkpoint inhibitor. In addition, we are enrolling and currently dosing separate cohorts of patients with visceral tumors in the liver with the goal of showing additional safety data.We plan to report additional surface lesion monotherapy expansion data as well as initial surface lesion combination expansion data in the second half of 2022.

In addition to ONCR-177, we also have additional preclinical stage programs within our HSV Platform addressing both intratumoral and intravenous solutions to other unmet medical needs, including ONCR-GBM, our program designed to target brain cancer through intratumoral injection.

Our Selectively Self-Amplifying vRNA Immunotherapy Platform

We are also developing a broad pipeline of product candidates that leverages our second platform, ~~which we refer~~our selectively self-amplifying viral RNA, or vRNA, immunotherapy platform, referred to as our ~~Synthetic~~ vRNA Immunotherapy Platform, which aims to enable repeat intravenous, or IV, administration of viral immunotherapies ~~in order~~ to treat cancers that are less amenable to intratumoral injection due to safety and feasibility reasons, such as cancers of the lung. Our IV-administered approach involves encapbsulating in a lipid nanoparticle, or LNP, the genomes of RNA viruses known to kill cancer cells, creating a selectively self-amplifying vRNA immunotherapy. We believe this approach will avoid the rapid immune clearance from circulation caused by neutralizing antibodies otherwise observed to date with IV-administered oncolytic viruses and thought to limit their effectiveness in the clinic. Once inside the tumor, the synthetic viral genome from our synthetic viruses is first amplified and then instructs tumor cells to synthesize actual infectious virions, which can cause tumor lysis before infecting nearby tumor cells while stimulating immune cell recruitment and activity.

Our two product candidates from our vRNA Immunotherapy Platform are ONCR-021 and ONCR-788. ONCR-021 encodes an optimized strain of Coxsackievirus A21, or CVA21, and ONCR-788 encodes for a modified version of the Seneca Valley Virus, or SVV. Both CVA21 and SVV have extensive clinical experience and favorable safety profiles when administered IV. We believe our selectively self-amplifying vRNA Immunotherapy Platform holds the potential for IV administration and avoids the challenge of neutralizing antibodies seen in previous approaches with IV-administered RNA-based oncology therapeutics. We plan to investigate our novel vRNA immunotherapies in multiple histologies, including cancers of the lung, both as monotherapy and in combination with immune checkpoint inhibitors and other cancer treatments. We plan to submit an IND to the U.S. Food and Drug Administration, or FDA, for ONCR-021 in mid-2023 to enable clinical development for non-small cell lung cancer and other cancers such as clear cell renal cell carcinoma and melanoma, both as a single agent and in combination with immune checkpoint inhibitors. Following the IND submission for ONCR-021 and pending further resources, we plan to submit an IND for ONCR-788 to enable its development in small cell lung cancer, neuroendocrine prostate and other neuroendocrine cancers, both as a single agent and in combination with immune checkpoint inhibitors and other cancer treatments. In the process of developing our vRNA Immunotherapy Platform, we also developed a proprietary LNP platform intended to efficiently deliver large nucleic acids with minimal endosomal escape.

Manufacturing

We plan to manufacture our product candidates at our approximately 105,000 square foot manufacturing facility in Andover, Massachusetts, 41,000 square feet of which is specifically dedicated to processes that are compliant with good manufacturing practices, or GMP. We began process development activities at the facility in 2021 and we anticipate this facility will be operational in late 2022.

Financial

Since inception in 2015, our operations have focused on organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, establishing our intellectual property portfolio, identifying potential product candidates and undertaking preclinical studies, commencing a clinical trial, and manufacturing scale-up activities. We do not have any products approved for sale and have not generated any revenue from product sales. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.

We have funded our operations primarily through the sale of redeemable convertible preferred stock, including Series A-1 redeemable convertible preferred stock, or Series A-1, and Series B redeemable convertible preferred stock, or Series B, ~~the~~our initial public offering, or IPO, of our common stock and a follow-on public offering, or the Follow-on Offering, of our common stock. ~~In 2019, we conducted a~~Through our Series

A-1 and Series B ~~financing, with the funding occurring~~financings we raised $150.9 million in two tranches. We closed the first tranche of the Series B financing in August 2019 and November 2019, raising $53.8 million of gross proceeds. In September 2020, we achieved the clinical development milestones that triggered the second and final tranche of the Series B financing, and as a result, we received an additional $35.8 million ofaggregate gross proceeds. In October 2020, we completed our IPO, in which we issued an aggregate of 6,557,991 shares of common stock for aggregate ~~net~~gross proceeds of ~~$88.3 million, after deducting underwriting discounts and commissions and offering expenses payable by us of $3.2~~$98.4 million. Our shares of common stock began trading on the Nasdaq Global Market under the ticker symbol “ONCR” on October 2, 2020. ~~Upon closing of our IPO, all outstanding shares of Series A-1 and Series B converted into an aggregate of 14,951,554 shares of common stock.~~ In February 2021, we completed the Follow-on Offering in which we issued 3,000,000 shares of common stock for aggregate ~~net~~gross proceeds of ~~approximately $53.0 million, after deducting underwriting discounts and commissions and offering expenses of $4.0~~$57.0 million.

From inception through March 31, ~~2021,~~2022, we have raised an aggregate of $306.3 million of gross proceeds through the issuance of redeemable convertible preferred stock, ~~the~~our IPO, and the Follow-on Offering.

Since inception, we have incurred significant operating losses. Our net losses were ~~$12.7~~$17.8 million and ~~$7.8~~$12.7 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. As of March 31, ~~2021,~~2022, we had an accumulated deficit of ~~$142.5~~$212.4 million. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company.

We will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition.

As of March 31, ~~2021,~~2022, we had cash and cash equivalents and investments of ~~$172.6~~$98.7 million. We believe that our existing cash and cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements into ~~late 2023.~~early 2024.

Recent Developments

On April 1, 2022, we entered into a loan and security agreement, or the Loan Agreement, with K2 HealthVentures LLC, or K2HV, which we refer to together with any other lender from time to time party thereto, as the Lenders. The Loan Agreement provides up to $45.0 million principal in term loans consisting of a first tranche of $20.0 million that was funded at closing and three subsequent tranches totaling $25.0 million to be funded upon the achievement of certain time-based, clinical and regulatory milestones. The Term Loan will mature on April 1, 2026 and bears a variable interest rate equal to the greater of (i) 7.75% and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate) and (B) 4.25%. The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, dispose of assets, make changes to our business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions. As security for its obligations under the Loan Agreement, we granted the Lenders a first priority security interest on substantially all of our assets (other than intellectual property), subject to certain exceptions.

The Lenders may elect at any time following the closing and prior to the full repayment of the term loans to convert any portion of the principal amount of the term loans then outstanding, up to an aggregate of $5.0 million in principal amount, into shares of our common stock at a conversion price of $2.2689, subject to customary beneficial ownership limitations. In connection with entering into the Loan Agreement, we also issued to K2HV a warrant to purchase a number of shares of our common stock equal to the quotient of 2.95% of the aggregate funded term loan amount divided by $1.5126, the exercise price, up to a maximum of 877,627 shares. The warrant expires on April 1, 2032.

On April 5, 2022, we announced plans to relocate all of our operations to our facility in Andover, Massachusetts. We anticipate that the relocation will be complete in the fourth quarter of 2022.

Impact of the COVID-19 Pandemic on Our Business

~~In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a national emergency with respect to COVID-19.~~ In response to the COVID-19 pandemic, a number of governmental orders and other public health guidance measures have been implemented across much of the United States, including in the locations of our office, clinical trial sites and third parties on whom we rely. We anticipate that our clinical development timelines could be negatively affected by COVID-19, which could materially and adversely affect our business, financial condition and results of operations. Further, we have implemented a work-from-home policy allowing employees who can work from home to do ~~so, while those needing~~so. We are in the process of transitioning back to in-office work ~~in laboratory facilities work in shifts to reduce~~for the ~~number~~majority of ~~people gathered together at one time. Business travel has been suspended, and online and teleconference technology is used to meet virtually rather than in person.~~our employees. We have taken measures to secure our research and development project activities, while work in laboratories has been organized to reduce risk of COVID-19 transmission. Our increased reliance on personnel working from home may negatively impact productivity, or disrupt, delay or otherwise adversely impact our business. For example, with our personnel working from home, some of our research activities that require our personnelBusiness travel was previously suspended but is now limited, and online and teleconference technology continues to be inused regularly. We continue to monitor health guidance measures and may adjust our ~~laboratories could be delayed.~~plans based upon the status of the pandemic.

Components of Operating Results

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities, including our product candidate discovery efforts, preclinical and clinical studies under our research programs, which include:

•

employee-related expenses, including salaries, bonuses, benefits and stock-based compensation expense for our research and development personnel;

•

costs of funding research performed by third parties that conduct research and development and preclinical and clinical activities on our behalf;

•

costs of manufacturing drug product and drug supply related to our current or future product candidates;

•

costs of conducting preclinical studies and clinical trials of our product candidates;

•

consulting and professional fees related to research and development activities, including ~~equity-based~~stock-based compensation to non-employees;

•

costs of maintaining our laboratory, including purchasing laboratory supplies and non-capital equipment used in our preclinical studies;

•

costs related to compliance with clinical regulatory requirements;

•

facility costs and other allocated expenses, which include expenses for rent and maintenance of facilities, insurance, depreciation and other supplies; and

•

fees for maintaining licenses and other amounts due under our third-party licensing agreements.

Research and development costs are expensed as incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our preclinical and clinical studies or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period.

We track external research and development costs on a program-by-program basis beginning, with respect to each program, upon our internal nomination of a candidate in that program for further preclinical and clinical development. For example, ONCR-021 and ONCR-788 were both nominated as candidates in May 2021, at which time we began tracking their external research and development costs. External costs include fees paid to consultants, contractors and vendors, including contract manufacturing organizations, or CMOs, and clinical research organizations, or CROs, in connection with our preclinical, clinical and manufacturing activities and license milestone payments related to candidate development. We do not allocate employee costs, costs associated with our discovery efforts, costs incurred for laboratory supplies, and facilities, including depreciation, or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

The successful development of our product candidates is highly uncertain. We cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of our current or future product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of our product candidates, if they are approved. This is due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:

•

the scope, rate of progress, and expenses of our ongoing research activities as well as any preclinical studies and clinical trials and other research and development activities;

•

establishing an appropriate safety profile;

•

successful enrollment in and completion of clinical trials;

•

whether our product candidates show safety and efficacy in our clinical trials;

•

receipt of marketing approvals from applicable regulatory authorities;

•

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

•

obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

•

commercializing product candidates, if and when approved, whether alone or in collaboration with others; and

•

continued acceptable safety profile of the products following any regulatory approval.

A change in the outcome of any of these variables with respect to the development of our current and future product candidates would significantly change the costs and timing associated with the development of those product candidates.

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 research and development costs to increase significantly for the foreseeable future as we commence clinical trials and continue the development of our current and future product candidates. However, we do not believe that it is possible at this time to accurately project expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

General and Administrative Expenses

General and administrative expenses include salaries, bonuses and other compensation-related costs, including stock-based compensation, for personnel in executive, finance and accounting, business development, operations and administrative roles. Other significant costs include professional service and consulting fees including legal fees relating to intellectual property and corporate matters, ~~accounting~~audit and tax fees, recruiting costs, costs for consultants who we utilize to supplement our personnel and insurance costs. ~~Also included are~~General and administrative expenses also include travel costs, facility and office-related costs that are not included in research and development expenses, ~~and~~as well as depreciation and amortization.

We anticipate that our general and administrative expenses will increase in the future as our business expands to support expected growth in research and development activities, including our future clinical programs. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside service providers, among other expenses. We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the ~~Securities~~SEC and ~~Exchange Commission, or the SEC, and~~Nasdaq listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums, and investor relations costs. In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

Other Income (Expense)

Other income (expense) ~~primarily includes changes in fair value of the Series B tranche rights and interest income, net.~~

Included in the terms of the Series B stock purchase agreement in August 2019 were tranche rights granted to the holders of the Series B. The tranche rights provided the Series B holders with the right to purchase additional shares of Series B in an additional tranche under certain events. The tranche rights met the definition of a freestanding financial instrument as the tranche rights were legally detachable and separately exercisable from the Series B. The tranche rights were initially recorded at fair value as a liability on our consolidated balance sheet. The tranche rights were subsequently re-measured at fair value at the end of each reporting period and at settlement, which occurred in September 2020, when the second and final tranche of the Series B financing closed. Changes in the fair value were recognized as a component of other income (expense). There was no change to the fair value of the Series B tranche rights during the three months ended March 31, 2020, based upon the valuation performed at March 31, 2020.

~~Interest income~~ primarily consists of interest income from our ~~cash~~short-term investments and cash equivalents.

Results of Operations

The following table summarizes our results of operations for the periods indicated.


	THREE MONTHS ENDED MARCH 31,						CHANGE						THREE MONTHS ENDED MARCH 31,						CHANGE
	2021			2020			$			%			2022			2021			$			%
	(in thousands, except percentages)												(in thousands, except percentages)
Operating expenses:
Research and development	$	8,447		$	5,892		$	2,555			43	%	$	12,469		$	8,447		$	4,022			48	%
General and administrative		4,222			2,052			2,170			106	%		5,349			4,222			1,127			27	%
Total operating expenses		12,669			7,944			4,725			59	%		17,818			12,669			5,149			41	%
Loss from operations		(12,669	)		(7,944	)		(4,725	)		-59	%		(17,818	)		(12,669	)		(5,149	)		-41	%
Total other income (expense), net		6			117			(111	)		-95	%		38			6			32			533	%
Net loss	$	(12,663	)	$	(7,827	)	$	(4,836	)		-62	%	$	(17,780	)	$	(12,663	)	$	(5,117	)		-40	%

Three Months Ended March 31, ~~2021~~2022 Compared to the Three Months Ended March 31, ~~2020~~2021

Research and Development Expenses

The table below summarizes our research and development expenses by product candidate or development program and unallocated research and development expenses for each of the periods presented:

THREE MONTHS ENDED
MARCH 31,

2021

2020

CHANGE

(in thousands)

Direct external expenses by program

ONCR-177

$
1,630

$
1,485

$
145

Platform development, early stage research and unallocated
expenses:

Employee compensation and related

3,011

1,959

1,052

External research, development and consulting

857

907

(50
)
Laboratory supplies

924

778

146

Facility-related

1,522

358

1,164

Other expenses

503

405

98

Total research and development

$
8,447

$
5,892

$
2,555


	THREE MONTHS ENDED MARCH 31,
	2022		2021		CHANGE
	(in thousands)
Direct external expenses by program
ONCR-177	$	3,127	$	1,630	$	1,497
ONCR-021		925		—		925
ONCR-788		46		—		46
Platform development, early stage research and unallocated expenses:
Employee compensation and related		4,600		3,011		1,589
External research, development and consulting		284		857		(573	)
Laboratory supplies		958		924		34
Facility-related		1,793		1,522		271
Other expenses		736		503		233
Total research and development	$	12,469	$	8,447	$	4,022

Research and development expenses increased from ~~$5.9 million for the three months ended March 31, 2020 to~~ $8.4 million for the three months ended March 31, ~~2021.~~2021 to $12.5 million for the three months ended March 31, 2022. The increase of ~~$2.6~~$4.0 million, or ~~43%~~48%, was primarily the result of:

•

a ~~$0.1~~$1.5 million increase in direct external expenses for ONCR-177 due to increased clinical trial costs associated with the Phase 1 trial and increased drug production costs directly attributable to ONCR-177;

•

a $1.0 million increase in direct external expenses for ~~our product candidate ONCR-177,~~ONCR-021 and ONCR-788, which was attributable to ~~increased clinical trial~~pre-clinical development costs ~~associated with our Phase 1 trial of ONCR-177, which began~~that were incurred subsequent to their respective candidate nominations in ~~June 2020;~~

May 2021;

•

a ~~$1.1~~$1.6 million increase in employee compensation costs, including salaries, bonus and employee benefits due to increased headcount in ~~2021~~2022 as compared to ~~2020.~~2021. Employee compensation costs also increased due to higher stock compensation expense incurred from increased stock option grants to existing and new employees ~~at higher share prices~~ in ~~2021~~2022 compared to ~~2020;~~

2021;

•

a ~~$0.1~~$0.6 million decrease in external research, development and consulting costs as costs in this category related to ONCR-021 and ONCR-788 are now being captured as program costs following their candidate nominations in May 2021;

•

a $0.3 million increase in ~~laboratory supplies driven~~facility-related costs primarily due to additional rent expense incurred from us entering into an amendment to our Andover lease in December 2021 and increasing total leased space by ~~our increased headcount~~17,150 square feet; and ~~activities; and~~

•

a ~~$1.2~~$0.2 million increase in other expenses primarily related to increased license expense, depreciation related to our manufacturing facility and support costs related to ~~rent expense for~~ our ~~manufacturing facility in Andover, Massachusetts.~~

growth.

General and Administrative Expenses


	THREE MONTHS ENDED MARCH 31,							THREE MONTHS ENDED MARCH 31,
	2021		2020		CHANGE			2022		2021		CHANGE
	(in thousands)							(in thousands)
Employee compensation and related	$	1,649	$	847	$	802		$	2,535	$	1,649	$	887
Professional service and consultant fees		2,089		825		1,264			1,922		2,089		(168	)
Facility-related		108		119		(11	)		301		108		193
Other expenses		376		261		115			591		376		215
Total general and administrative expenses	$	4,222	$	2,052	$	2,170		$	5,349	$	4,222	$	1,127

General and administrative expenses increased from ~~$2.1 million for the three months ended March 31, 2020 to~~ $4.2 million for the three months ended March 31, ~~2021.~~2021 to $5.3 million for the three months ended March 31, 2022. The increase of ~~$2.2~~$1.1 million, or ~~106%~~27%, was primarily the result of:

•

a ~~$0.8~~$0.9 million increase in employee compensation costs primarily related to ~~increased salaries and bonus, increased headcount associated with our growth and~~ higher stock compensation ~~expenses in 2021 compared to 2020, due to an~~expense incurred from increased ~~number of~~ stock ~~options granted at higher share prices~~option grants to existing and new ~~employees;~~

employees in 2022 compared to 2021 as well as higher salaries, bonus and employee benefits costs, due to increased headcount in 2022 as compared to 2021;

•

a ~~$1.3~~$0.2 million ~~increase~~decrease in professional service and consultant fees primarily related to decreased costs for consultants who have been replaced by increased headcount;

•

a $0.2 million increase in facility-related costs ~~related~~primarily due to ~~operating as public company, including increased insurance~~additional rent expense ~~and increased consultant costs to support our personnel and efforts, and increased recruiting costs related~~incurred from us entering into an amendment to our ~~headcount growth;~~Andover lease in December 2021 and

increasing total leased space by 17,150 square feet and changes in rent expense allocation driven by changes in our employee headcount; and

•

a ~~$0.1~~$0.2 million increase in other expenses primarily related to increased support costs related to our growth.

Other Income (Expense)

Other income (expense) for the three months ended March 31, ~~2021 decreased by $0.1 million~~2022 improved slightly compared to the three months ended March 31, ~~2020 primarily due to lower returns~~2021. The major component of other income (expense) is interest income earned on ~~invested cash. There was no change to the fair value of the Series B tranche rights during the three months ended March 31, 2020, based upon the valuation performed at March 31, 2020.~~our investments which we purchased in late 2021.

Liquidity and Capital Resources

Sources of Liquidity

From inception through March 31, ~~2021,~~2022, we funded our operations with gross proceeds of $306.3 million from sales of our redeemable convertible preferred stock, our IPO and our Follow-on Offering. As of March 31, ~~2021,~~2022, our cash and cash equivalents and investments totaled ~~$172.6~~$98.7 million.

Cash Flows


	THREE MONTHS ENDED MARCH 31,						THREE MONTHS ENDED MARCH 31,
	2021			2020			2022			2021
	(in thousands)						(in thousands)
Net cash (used in) provided by:
Operating activities	$	(10,379	)	$	(8,690	)	$	(23,437	)	$	(10,379	)
Investing activities		(385	)		(233	)		(1,868	)		(385	)
Financing activities		53,081			5			62			53,081
Net increase (decrease) in cash and cash equivalents	$	42,317		$	(8,918	)
Net (decrease) increase in cash and cash equivalents							$	(25,243	)	$	42,317

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2022 was $23.4 million and was primarily related to our net loss for the period of $17.8 million, partially offset by non-cash charges consisting primarily of depreciation and amortization of $0.6 million and stock-based compensation expense of $2.0 million. Our net cash used in operating activities also included a net use of cash of $8.2 million related to changes in operating assets and liabilities as follows:

•

a net use of cash of $13.7 million from an decrease in accounts payable and accrued expenses primarily due to the timing of Andover construction invoices and payment of our 2021 annual bonuses; and

•

a source of cash of $4.5 million from the reimbursement of certain Andover construction costs through our tenant improvement allowance;

Net cash used in operating activities for the three months ended March 31, 2021 was $10.4 million and was primarily related to our net loss for the period of $12.7 million, partially offset by non-cash charges consisting of depreciation and amortization of $0.4 million and stock-based compensation expense of $1.2 million. Our net cash used in ~~operations was decreased by~~operating activities also included a net source of cash of $0.7 million ~~cash inflow~~ related to changes in ~~certain~~ operating assets and liabilities ~~from~~ as follows:

•

a ~~combination~~net source of ~~the following:~~

A cash ~~inflow~~of $0.2 million due to a decrease in prepaid expenses and other current assets primarily due to services being performed on amounts already paid to vendors;

•

a net source of cash of $1.0 million from changes in the operating lease liability and associated right-of-use asset due to the difference in the timing of rent expense compared to rent payments;

•

Aa net source of cash ~~inflow~~ of $0.8 million from an increase in accounts payable ~~as a result of increased activity~~due to overall expense growth and the timing of ~~invoicing;~~

invoices; and

•

~~A cash inflow~~a net use of ~~$0.2 million from a decrease in prepaid expenses and other current assets primarily due to a decrease in payments to vendors in advance of services being performed; and~~

A cash ~~outflow~~ of $1.3 million from a decrease in accrued expenses and other current liabilities primarily ~~related~~due to the payment of our 2020 ~~employee bonuses paid in 2021.~~

annual bonuses.

Investing Activities

Net cash used in ~~operating~~investing activities for the three months ended March 31, ~~2020~~2022 and 2021 was ~~$8.7~~$1.9 million and ~~was primarily related to~~$0.4 million, respectively. These investing activities in 2022 and 2021 were associated with purchases of property and equipment, specifically leasehold improvements and laboratory equipment for our net loss for the period of $7.8 million, partially offset by non-cash charges consisting of depreciation and amortization of $0.3 million and stock-based compensation expense of $0.3 million. Our cash used in operations was increased by a $1.5 million cash outflow from changes in certain operating assets and liabilities from a combination of the following:

~~A cash outflow of $1.0 million from a decrease in accrued expenses primarily related to the payment of 2019 employee bonuses paid in 2020;~~

~~A cash outflow of $0.9 million from an increase in prepaid expenses and other current assets primarily related to an increase in payments to vendors in advance of work being performed;~~

~~A cash outflow of $0.2 million from changes in the operating lease liability and associated right-of-use asset due to the difference in the timing of rent expense compared to rent payments; and~~

~~A cash inflow of $0.6 million from an increase in accounts payable as a result of increased activity and the timing of invoicing.~~

~~Investing Activities~~Andover facility.

Financing Activities

Net cash ~~used in investing~~provided by financing activities for the three months ended March 31, ~~2021 and 2020~~2022 was ~~$0.4~~$0.1 million, ~~and $0.2 million, respectively, and~~which consisted of proceeds from the ~~purchase~~exercise of ~~property and equipment.~~

~~Financing Activities~~

stock options. Net cash provided by financing activities for the three months ended March 31, 2021 was $53.1 million and primarily consisted of net proceeds from the issuance of common stock in connection with our Follow-on ~~offering. Net cash from financing activities for the three months ended March 31, 2020 was not significant.~~Offering.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development, initiate clinical trials, continue the buildout of our Andover manufacturing facility and seek marketing approval for our current and any of our future product candidates. In addition, if we obtain marketing approval for any of our current or our future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution, which costs we may seek to offset through entry into collaboration agreements with third parties. We also expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into ~~late 2023.~~early 2024. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future capital requirements will depend on a number of factors, including:

•

the costs of conducting preclinical studies and clinical trials;

•

the costs of manufacturing;

•

the scope, progress, results and costs of discovery, preclinical development, laboratory testing, and clinical trials for product candidates we may develop, if any;

•

the costs, timing, and outcome of regulatory review of our product candidates;

•

our ability to establish and maintain collaborations on favorable terms, if at all;

•

the achievement of milestones or occurrence of other developments that trigger payments under any license or collaboration agreements we might have at such time;

•

the costs associated with the ongoing buildout of our Andover facility;

•

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

•

the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;

•

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

•

our headcount growth and associated costs as we expand our business operations, ~~and~~ research and development ~~activities;~~activities and

manufacturing capabilities; and

•

the costs of operating as a public company.

Our cash and cash equivalents as of March 31, ~~2021~~2022 will not be sufficient to complete development of ONCR-177 or any other product candidate. Accordingly, we will be required to obtain further funding to achieve our business objectives.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests of stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of our common stockholders. Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

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

Critical Accounting Policies and Significant Judgments and Estimates

Our unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited interim condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent

assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.

There have been no significant changes to our critical accounting policies or other significant judgements and estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on March ~~10, 2021.~~9, 2022.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

~~During the three months ended~~As of March 31, ~~2021,~~2022, there ~~were~~have been no material changes to our contractual obligations and commitments, ~~since~~consisting solely of operating lease obligations, from those described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, filed with the SEC on March 9, 2022.

See "—Recent Developments" above for a discussion of our Loan Agreement with K2HV, which we entered into on April 1, 2022.

Emerging Growth Company and Smaller Reporting Company Status

We are an ‘‘emerging growth company,’’ or EGC, under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.

As an EGC, we may also take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:

•

we may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our annual reports on Form 10-K filed with the SEC;

•

we will avail ourselves of the exemption from providing an auditor’s attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

•

we will avail ourselves of the exemption from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis;

•

we may provide reduced disclosure about our executive compensation arrangements in our proxy statements filed with the SEC; and

•

we will not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.

We will remain an EGC until the earliest of (i) December 31, 2025, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (iii) the date on which we have issued more than $1 billion in non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We are also a ‘‘smaller reporting company,’’ meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during our most recently completed fiscal year. We may continue to be a smaller reporting company for so long as (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during our most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Recent Accounting Pronouncements

Refer to Note 2 in the accompanying notes to our unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Item 3. Quantitative and ~~Qualitati~~veQualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our cash equivalents, in the form of a money market fund, are primarily invested in U.S. Treasury obligations. However, because of the short-term nature of the investments in our portfolio, an immediate one percentage point change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.

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, foreign vendors that are located in Europe. 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. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the year ended December 31, ~~2020~~2021 and the three months ended March 31, ~~2021.~~2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our ~~Chief Executive Officer~~principal executive officer and ~~our Chief Financial Officer,~~principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2021,~~2022, the end of the period covered by this Quarterly Report on Form 10-Q. Based on the evaluation of our disclosure controls and procedures as of March 31, ~~2021,~~2022, our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer~~principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.

Item 1A. Risk Factors.

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. ~~Our~~The discussion of our business and operations in this report should be read together with the risk factors ~~as of the date of this Quarterly Report on Form 10-Q have not changed materially from those described~~contained below, in ~~“Part I,~~ Item ~~1A. Risk Factors”~~1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020, filed~~2021, and in our other filings with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. Except as noted below, there are no material changes from the risk factors as previously disclosed in our Annual Report.

The terms of our loan agreement place restrictions on ~~March 10, 2021.~~our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our operating and financial flexibility.

In April 2022, we entered into a loan and security agreement, or the Loan Agreement, with K2 HealthVentures LLC, or K2HV. At closing we borrowed $20.0 million in the first tranche under the Loan Agreement and may borrow up to an additional $5.0 million by the end of 2022 at the option of the parties. We may borrow an additional $10.0 to $15.0 million based upon the achievement of certain time-based, clinical and regulatory developments, and an additional $10.0 million at the discretion of the lenders.

Our obligations under the Loan Agreement are secured by a security interest in substantially all of our assets, other than certain intellectual property assets. The Loan Agreement includes customary affirmative and negative covenants, as well as standard events of default, including an event of default based on the occurrence of a material adverse event. The negative covenants include, among others, restrictions on us transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying cash dividends or making other distributions, making investments, creating liens, selling assets and making any payment on subordinated debt, in each case subject to certain exceptions. These restrictive covenants could limit our flexibility in operating our business and our ability to pursue business opportunities that we or our stockholders may consider beneficial. In addition, K2HV could declare a default upon the occurrence of any event that it interprets could have material adverse effect, subject to the limitations specified in the Loan Agreement. Upon the occurrence and continuance of an event of default, K2HV may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement. Any declaration of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. If we are liquidated, the rights of our lenders to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation. We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay these outstanding obligations at the time any event of default occurs. Further, if we raise any additional capital through debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.

Factors associated with the planned relocation of our operations to Andover, Massachusetts may have a negative impact on our business, results of operations and stock price.

In April 2022, we announced plans to relocate all of our operations to our approximately 105,000 square foot manufacturing facility in Andover, Massachusetts. We anticipate the relocation to be complete in the fourth quarter of 2022. Our planned relocation may have a negative impact on our business, results of operations and stock price. In particular, we may experience difficulties retaining our executive officers, key employees and our scientific and medical advisors as a result of our planned relocation due to travel limitations or other inconveniences or preferences, and we may experience difficulties finding suitable replacements for these key personnel, which could result in delays in our research, development and clinical objectives and ultimately harm our business. For more information on risks related to employee and operational matters, see “Risks Related to Managing Our Growth and Employee and Operational Matters–We are highly dependent on our key personnel. If we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy” in our Annual Report on Form 10-K. Our failure to complete the relocation to Andover on our stated timeline could adversely impact our financial position and results of operations and ultimately affect our stock price.

In addition, as a result our planned relocation, we anticipate surrendering or subleasing our current headquarters in Cambridge, which may not ultimately be successful on our stated timeline. If we are unable to sublease our Cambridge space on commercially reasonable terms, or if other factors impact our ability to sublease or surrender the lease prior to its termination date or otherwise succeed in negotiations related to our Cambridge lease, we could be obligated to make rent payments beyond those included in our current forecasts, which could negatively impact our cash runway and leasehold-related expenses in reporting periods to come.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Sales of Unregistered Securities

None.

(b) Use of Proceeds from Initial Public Offering of Common Stock

On October 1, 2020, our Registration Statement on Form S-1, as amended (File No. 333-248757), was declared effective in connection with the IPO of our common stock, pursuant to which we registered an aggregate of 6,670,000 shares of our common stock, of which we sold 6,557,991 shares, including the partial exercise of the underwriters’ option to purchase additional shares, at a price to the public of $15.00 per share. The offering closed on October 6, 2020, and, as a result, we received net proceeds of $88.3 million (after deducting underwriters’ discounts and commissions of approximately $6.9 million and additional offering related costs of approximately $3.2 million). The joint book-running managers of the offering were Jefferies LLC, Evercore Group L.L.C. and Piper Sandler & Co.

No expenses incurred by us in connection with our IPO were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.

There has been no material change in the planned use of proceeds from our IPO from that described in the final prospectus filed by us with the ~~Securities and Exchange Commission~~SEC pursuant to Rule 424(b) on October 2, 2020.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None.~~On May 4, 2022, our board of directors adopted resolutions approving the ratification pursuant to Section 204 of the Delaware General Corporation Law (the "DGCL") of the grant of options to purchase common stock (collectively, the “Grants”) to certain consultants (the "Ratification"), after determining that the Grants were defective corporate acts because they were not authorized and effected in accordance with Section 157 of the DGCL and the terms of our equity incentive plans. The Grants consisted of options to purchase the following aggregate number of shares of our common stock (after giving effect to the one-for-12.0874 reverse stock split of the common stock effective on September 25, 2020) on each of the following dates: options to purchase 3,308 shares granted on June 19, 2020, options to purchase 1,654 shares granted on July 22, 2020, options to purchase 4,962 shares granted on September 9, 2020, options to purchase 1,654 shares granted on September 22, 2020, options to purchase 2,000 shares granted on May 3, 2021, options to purchase 1,654 shares granted on January 4, 2021, options to purchase 1,654 shares granted on February 1, 2021, and options to purchase 15,000 shares granted on January 3, 2022. The Ratification also covered the issuance of 1,654 shares of our common stock on October 1, 2020 upon the exercise of the options granted pursuant to the Grants, all of which constitute shares of putative stock. Any claim that the defective corporate acts or putative stock (including all options and putative common stock issued upon the exercise of such options) ratified in connection with the Ratification are void or voidable due to the failure of authorization, or any claim that the Court of Chancery of the State of Delaware should declare in its discretion that the Ratification not be effective or be effective only on certain conditions, must be brought within 120 days from the date of the filing of this Quarterly Report on Form 10-Q.

Item 6. E~~xhibits.~~Exhibits.


Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-39575), filed with the SEC on October 6, 2020).

3.2		Amended and Restated Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-39575), filed with the SEC on October 6, 2020).

31.1*

31.1*		Certification of Principal Executive Officer ~~Pursuant~~and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as ~~Adopted Pursuant~~adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* 32.1^		~~Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1^~~		Certification of Principal Executive Officer ~~Pursuant~~and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as ~~Adopted Pursuant~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2^~~101.INS*		~~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~~		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its 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
		1
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	~~Filed herewith.~~

This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing by the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

~~SIGNATURES~~

* Filed herewith.

^ This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing by the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on

its behalf by the undersigned thereunto duly authorized.


	~~Oncorus, Inc.~~ONCORUS, INC.

Date: May 4, ~~2021~~2022	By:	/s/ Theodore (Ted) Ashburn
		Theodore (Ted) Ashburn, M.D., Ph.D.
		President, Chief Executive Officer and Director
		(Principal Executive ~~Officer)~~

~~Date: May 4, 2021~~	~~By:~~	~~/s/ John McCabe~~
		~~John McCabe~~
		~~Chief Financial~~ Officer,
		(Principal Financial Officer and Principal Accounting Officer)


Delaware		47-3779757
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

50 Hampshire Street, Suite 401 Cambridge, Massachusetts		02139
(Address of principal executive offices)		(Zip Code)


	MARCH 31, 2021			DECEMBER 31, 2020			MARCH 31, 2022			DECEMBER 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	172,622		$	130,305		$	75,509		$	100,752
Investments								23,156			23,173
Prepaid expenses and other current assets		2,910			3,086			3,943			5,185
Total current assets		175,532			133,391			102,608			129,110
Property and equipment, net		5,401			4,173			29,491			23,233
Right-of-use asset		40,847			41,372			40,183			45,218
Restricted cash		2,877			2,877			3,437			3,437
Other assets		450			450			849			589
Total assets	$	225,107		$	182,263		$	176,568		$	201,587
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,524		$	1,245		$	3,582		$	13,009
Accrued expenses		3,200			3,738			6,885			6,281
Lease liability - current portion		1,037			993			1,678			1,684
Other current liabilities		8			8
Total current liabilities		6,769			5,984			12,145			20,974
Lease liability - net of current portion		42,083			41,615			49,921			50,388
Other long-term liabilities								244			203
Total liabilities		48,852			47,599			62,310			71,565
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized — 10,000 shares at March 31, 2021 and December 31, 2020; issued and outstanding — no shares at March 31, 2021 and December 31, 2020		—			—
Common stock, $0.0001 par value; authorized — 100,000 shares at March 31, 2021 and December 31, 2020; issued and outstanding — 25,627 and 22,599 shares at March 31, 2021 and December 31, 2020, respectively		3			2
Preferred stock, $0.0001 par value; authorized — 10,000 shares at March 31, 2022 and December 31, 2021; issued and outstanding — 0 shares at March 31, 2022 and December 31, 2021								0			0
Common stock, $0.0001 par value; authorized — 100,000 shares at March 31, 2022 and December 31, 2021; issued and outstanding — 25,883 and 25,848 shares at March 31, 2022 and December 31, 2021, respectively								3			3
Additional paid-in capital		318,740			264,487			326,662			324,620
Accumulated other comprehensive loss								(40	)		(14	)
Accumulated deficit		(142,488	)		(129,825	)		(212,367	)		(194,587	)
Total stockholders’ equity		176,255			134,664			114,258			130,022
Total liabilities and stockholders’ equity	$	225,107		$	182,263		$	176,568		$	201,587


	THREE MONTHS ENDED MARCH 31,						THREE MONTHS ENDED MARCH 31,
	2021			2020			2022			2021
Operating activities:
Net loss	$	(12,663	)	$	(7,827	)	$	(17,780	)	$	(12,663	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		396			309			583			396
Stock-based compensation		1,172			303			1,980			1,172
Amortization of premium/discount on investments								51			0
Non-cash interest income								(59	)		0
Changes in:
Prepaid expenses and other current assets		176			(922	)
Prepaid expenses and other assets								975			176
Operating lease right-of-use asset		525			111			523			525
Tenant improvement allowance reimbursements								4,511			0
Accounts payable		843			638			(11,940	)		843
Accrued expenses and other current liabilities		(1,340	)		(953	)		(1,807	)		(1,340	)
Operating lease liability		512			(349	)		(474	)		512
Net cash used in operating activities		(10,379	)		(8,690	)		(23,437	)		(10,379	)
Investing activities
Purchase of property and equipment		(385	)		(233	)		(1,868	)		(385	)
Net cash used in investing activities		(385	)		(233	)		(1,868	)		(385	)
Financing activities
Proceeds from exercise of options to purchase common stock		98			5			62			98
Proceeds from issuance of common stock, net of issuance costs		52,983			—
Proceeds from issuance of conmon stock, net of issuance costs								0			52,983
Net cash provided by financing activities		53,081			5			62			53,081
Increase (decrease) in cash and cash equivalents		42,317			(8,918	)
Increase (Decrease) in cash and cash equivalents								(25,243	)		42,317
Cash, cash equivalents and restricted cash at beginning of period		133,182			45,286			104,189			133,182
Cash, cash equivalents and restricted cash at end of period	$	175,499		$	36,368		$	78,946		$	175,499
Supplemental disclosure of non-cash investing and financing activities
Purchase of property and equipment in accrued expenses and accounts payable	$	1,238		$	391		$	4,965		$	1,238
Accretion of discount and dividends on preferred stock	$	—		$	2,725

	March 31,
	2021		2020
	(in thousands)
Cash and cash equivalents	$	172,622	$	36,368
Restricted cash		2,877		—
Total cash, cash equivalents and restricted cash shown in the unaudited interim consolidated statements of cash flows	$	175,499	$	36,368


	MARCH 31,
	2022		2021
	(in thousands)
Cash and cash equivalents	$	75,509	$	172,622
Restricted cash		3,437		2,877
Total cash, cash equivalents and restricted cash shown in the unaudited interim consolidated statements of cash flows	$	78,946	$	175,499


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒


		Page
	~~SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS~~	1
PART I.	~~SUMMARY RISK FACTORS~~FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
~~PART I.~~	~~FINANCIAL INFORMATION~~	5
~~Item 1.~~	~~Financial Statements (Unaudited)~~	5
	Condensed Consolidated Balance Sheets	53
	Condensed Consolidated Statements of Operations and Comprehensive Loss	64
	Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit~~)	75
	Condensed Consolidated Statements of Cash Flows	86
	Notes to Condensed Consolidated Financial Statements	97
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1816
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2726
Item 4.	Controls and Procedures	2726

PART II.	OTHER INFORMATION	2827
Item 1.	Legal Proceedings	2827
Item 1A.	Risk Factors	2827
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

	AMOUNT			WEIGHTED-AVERAGE GRANT DATE FAIR VALUE
Balance at December 31, 2020		17,234		$	1.57
Repurchases		—			—
Issuances		—			—
Vested		(5,171	)		1.57
Balance at March 31, 2021		12,063		$	1.57

	~~MARCH 31,~~ ~~2021~~
~~Exercise of Common Stock Warrants~~		~~71,544~~
~~Exercise of options to purchase common stock~~		~~3,423,437~~
~~Vesting of restricted stock~~		~~12,063~~
~~Shares available for issuance under the 2020 Plan~~		~~2,599,588~~
~~Total~~		~~6,106,632~~