(Former name, former address and former fiscal year, if changed since last report)

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

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

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

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

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

As of ~~July 28, 2021,~~May 5, 2022, the registrant had ~~28,047,393~~28,148,125 shares of common stock, $0.001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans to develop, manufacture and commercialize our product candidates, the timing or outcome of our ongoing or planned clinical trials for SQZ-PBMC-HPV, SQZ-AAC-HPV, SQZ-eAPC-HPV or any of our other pipeline product candidates and any future product candidates, the clinical utility of our product candidates, the anticipated impact of the COVID-19 pandemic on our business and operations, including manufacturing, research and development, clinical trials and employees, our cash needs and availability, and the plans and objectives of management for future operations, are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, risks and uncertainties related to our limited operating history; our significant losses incurred since inception and expectation to incur significant additional losses for the foreseeable future; the development of our initial product candidates, upon which our business is highly dependent; the impact of the COVID-19 pandemic on our operations and clinical activities; our need for additional funding and our cash runway; the lengthy, expensive, and uncertain process of clinical drug development, including uncertain outcomes of clinical trials and potential delays in regulatory approval; our ability to maintain our relationships with our third party ~~vendors;~~vendors and strategic collaborators; protection of our proprietary technology, intellectual property portfolio and the confidentiality of our trade secrets; and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and other filings with the U.S. Securities and Exchange Commission.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.


	JUNE 30,			DECEMBER 31,			MARCH 31,			DECEMBER 31,
	2021			2020			2022			2021
Assets
Current assets:
Cash and cash equivalents	$	185,067		$	170,357		$	122,914		$	143,513
Accounts receivable		—			1,892			—			3,000
Prepaid expenses and other current assets		4,196			4,582			5,003			4,122
Total current assets		189,263			176,831			127,917			150,635
Property and equipment, net		3,519			3,645			2,885			3,046
Restricted cash		2,305			2,305			2,305			2,305
Deferred offering costs								323			323
Operating lease right-of-use assets		43,467			48,360			67,367			69,843
Total assets	$	238,554		$	231,141		$	200,797		$	226,152
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,104		$	3,708		$	1,204		$	3,971
Accrued expenses		5,245			7,358			8,526			6,810
Current portion of deferred revenue		26,609			25,917			9,638			12,507
Current portion of operating lease liabilities		9,877			8,210			10,131			9,936
Total current liabilities		43,835			45,193			29,499			33,224
Deferred revenue, net of current portion		9,200			19,659			9,196			9,196
Operating lease liabilities, net of current portion		32,610			38,885			57,188			59,756
Other liabilities		205			205
Total liabilities		85,850			103,942			95,883			102,176
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at June 30, 2021 and December 31, 2020; NaN shares issued or outstanding.		—			—
Common stock, $0.001 par value; 200,000,000 shares authorized at June 30, 2021 and December 31, 2020; 28,031,404 and 24,786,324 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.		28			25
Preferred stock, $0.001 par value; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021; NaN shares issued or outstanding.								—			—
Common stock, $0.001 par value; 200,000,000 shares authorized at March 31, 2022 and December 31, 2021; 28,148,125 and 28,133,368 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.								28			28
Additional paid-in capital		313,914			253,943			321,434			319,458
Accumulated deficit		(161,238	)		(126,769	)		(216,548	)		(195,510	)
Total stockholders’ equity		152,704			127,199			104,914			123,976
Total liabilities and stockholders’ equity	$	238,554		$	231,141		$	200,797		$	226,152

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


	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,						THREE MONTHS ENDED MARCH 31,
	2021			2020			2021			2020			2022			2021
Collaboration revenue	$	4,539		$	5,980		$	9,993		$	12,390		$	2,869		$	5,454
Operating expenses:
Research and development		17,682			12,037			32,422			23,905			17,010			14,740
General and administrative		5,933			4,029			12,054			9,527			6,912			6,120
Total operating expenses		23,615			16,066			44,476			33,432			23,922			20,860
Loss from operations		(19,076	)		(10,086	)		(34,483	)		(21,042	)		(21,053	)		(15,406	)
Other income (expense):
Interest income	11				103		20				477		15				9
Other income (expense), net		(5	)		(3	)		(6	)		(4	)		—			(2	)
Total other income, net		6			100			14			473			15			7
Net loss		(19,070	)		(9,986	)		(34,469	)		(20,569	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.68	)	$	(5.74	)	$	(1.27	)	$	(11.83	)
Net loss and comprehensive loss														(21,038	)		(15,399	)
Net loss per share, basic and diluted													$	(0.75	)	$	(0.59	)
Weighted-average common shares outstanding, basic and diluted		27,919,647			1,739,114			27,100,817			1,738,353			28,145,036			26,264,019
Comprehensive loss:
Net loss	$	(19,070	)	$	(9,986	)	$	(34,469	)	$	(20,569	)
Other comprehensive income (loss):
Unrealized gains (losses) on marketable securities, net of tax of $0		—			(83	)		—			33
Comprehensive loss	$	(19,070	)	$	(10,069	)	$	(34,469	)	$	(20,536	)

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

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

CONVERTIBLE
PREFERRED STOCK

COMMON STOCK

ADDITIONAL

ACCUMULATED
OTHER

TOTAL

SHARES

AMOUNT

SHARES

AMOUNT

PAID-IN
CAPITAL

COMPREHENSIVE
INCOME (LOSS)

ACCUMULATED
DEFICIT

STOCKHOLDERS’
DEFICIT

Balances at March 31, 2020

14,963,274

$
147,351

1,737,907

$
2

$
3,400

$
146

$
(86,831
)

$
(83,283
)
Issuance of Series D convertible
   preferred stock, net of issuance
   costs of $8

1,940,945

$
27,006

—

—

—

—

—

—

Issuance of common stock upon
   exercise of stock options

—

—

18,111

—

32

—

—

32

Stock-based compensation expense

—

—

—

—

754

—

—

754

Net loss

—

—

—

—

—

—

(9,986
)

(9,986
)
Unrealized gains on marketable
   securities, net of tax of $0

—

—

—

—

—

(83
)

—

(83
)
Balances at June 30, 2020

16,904,219

$
174,357

1,756,018

$
2

$
4,186

$
63

$
(96,817
)

$
(92,566
)

CONVERTIBLE
PREFERRED STOCK

COMMON STOCK

ADDITIONAL

ACCUMULATED
OTHER

TOTAL

SHARES

AMOUNT

SHARES

AMOUNT

PAID-IN
CAPITAL

COMPREHENSIVE
INCOME (LOSS)

ACCUMULATED
DEFICIT

STOCKHOLDERS’
DEFICIT

Balances at December 31, 2019

13,869,027

$
132,109

1,737,388

$
2

$
2,701

$
30

$
(76,248
)

$
(73,515
)
Issuance of Series D convertible
   preferred stock, net of issuance
   costs of $8

3,035,192

$
42,248

—

—

—

—

—

—

Issuance of common stock upon
   exercise of stock options

—

—

18,630

—

33

—

—

33

Stock-based compensation expense

—

—

—

—

1,452

—

—

1,452

Net loss

—

—

—

—

—

—

(20,569
)

(20,569
)
Unrealized gains on marketable
   securities, net of tax of $0

—

—

—

—

—

33

—

33

Balances at June 30, 2020

16,904,219

$
174,357

1,756,018

$
2

$
4,186

$
63

$
(96,817
)

$
(92,566
)

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


	SIX MONTHS ENDED JUNE 30,						THREE MONTHS ENDED MARCH 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net loss	$	(34,469	)	$	(20,569	)	$	(21,038	)	$	(15,399	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		640			677			276			327
Amortization of operating lease right-of-use assets		4,895			4,643			2,476			2,474
Stock-based compensation expense		3,412			1,452			1,947			1,581
Accretion of discounts on marketable securities		—			(24	)
Loss on termination of operating lease		—			108
Loss on disposal of equipment		6			—			41			—
Changes in operating assets and liabilities:
Accounts receivable		1,892			36			3,000			1,892
Prepaid expenses and other current assets		386			241			(881	)		(1,603	)
Accounts payable		(793	)		(25	)		(2,729	)		572
Accrued expenses		(1,818	)		(2,690	)		1,716			(2,645	)
Deferred revenue		(9,767	)		11,464			(2,869	)		(5,454	)
Operating lease liabilities		(4,609	)		(4,292	)		(2,373	)		(2,329	)
Other liabilities		—			108
Net cash used in operating activities		(40,225	)		(8,871	)		(20,434	)		(20,584	)
Cash flows from investing activities:
Purchases of property and equipment		(521	)		(788	)		(228	)		(247	)
Sales and maturities of marketable securities		—			43,000
Net cash (used in) provided by investing activities		(521	)		42,212
Proceeds from disposals of property and equipment								34			—
Net cash used in investing activities								(194	)		(247	)
Cash flows from financing activities:
Proceeds from follow-on public offering of common stock, net of commissions and underwriting discounts		56,400			—			—			56,400
Payment of follow-on public offering costs		(798	)		—
Payment of initial public offering costs of common stock issued in prior period		(1,106	)		—
Proceeds from issuance of convertible preferred stock, net of issuance costs paid in the period		—			42,248
Payments of issuance costs of convertible preferred stock issued in prior period		—			(245	)
Payment of public offering costs								—			(1,296	)
Proceeds from exercise of stock options		960			33			29			299
Net cash provided by financing activities		55,456			42,036			29			55,403
Net increase in cash, cash equivalents and restricted cash		14,710			75,377
Net (decrease) increase in cash, cash equivalents and restricted cash								(20,599	)		34,572
Cash, cash equivalents and restricted cash at beginning of period		172,662			41,574			145,818			172,662
Cash, cash equivalents and restricted cash at end of period	$	187,372		$	116,951		$	125,219		$	207,234
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accrued expenses at end of period	$	—		$	208
Lease assets obtained in exchange for operating lease liabilities	$	—		$	886
Deferred offering costs included in accrued expenses at end of period	$	—		$	7		$	—		$	605

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

1. Nature of the Business and Basis of Presentation

SQZ Biotechnologies Company (the “Company”) is a clinical-stage biotechnology company developing cell therapies for patients with cancer, autoimmune and infectious diseases and other serious conditions. The Company uses its proprietary ~~technology,~~ Cell Squeeze technology to physically squeeze cells through a microfluidic chip, temporarily opening the cell membrane and enabling biologic material of interest, or cargo, to diffuse into the cell. The Company is using Cell Squeeze technology to create multiple cell therapy platforms focused on directing specific immune responses. The Company was incorporated in March 2013 under the laws of the State of Delaware.

The Company is subject to a number of risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, the ability to obtain additional financing, protection of proprietary technology, dependence on key personnel, the ability to attract and retain qualified employees, compliance with government regulations, the impact of the COVID-19 ~~coronavirus,~~pandemic, and the clinical and commercial success of its product candidates. 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.

On February 17, 2021, the Company completed a follow-on public offering (the “Follow-on Offering”) pursuant to which it issued and sold 3,000,000 shares of its common stock. The aggregate net proceeds received by the Company from the Follow-on Offering were approximately $56.4 million, after deducting underwriting discounts and commissions, but before deducting offering costs payable by the Company, which were approximately $0.8 million.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has funded its operations primarily with ~~proceeds from sales of convertible preferred stock,~~ payments received in connection with collaboration agreements, proceeds from ~~borrowings under a convertible promissory note, which converted into shares of convertible preferred stock,~~equity and debt financing, and most recently, with proceeds from its 2020 initial public offering (“IPO”) and ~~the Follow-on Offering.~~its 2021 follow-on offering. The Company has incurred recurring losses since inception, including net losses of ~~$34.5~~$21.0 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, the Company had an accumulated deficit of ~~$161.2~~$216.5 million. The Company expects to continue to generate operating losses for the foreseeable future. As of the issuance date of these interim condensed consolidated financial statements, the Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 ~~months from~~months. The Company will seek additional funding through private or public equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the ~~issuance date~~Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or the rights of the ~~interim condensed consolidated financial statements.~~Company's stockholders. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. If the Company is unable to obtain funding, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

Impact of the COVID-19 ~~Coronavirus~~Pandemic

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government-imposed travel restrictions on travel between the United States, Europe and certain other countries. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on hospitals, businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, and facilities and production have been suspended. The future progression of the pandemic and its effects on the Company’s business and operations are uncertain.

The COVID-19 pandemic has impacted and may continue to impact personnel at third-party manufacturing facilities or the availability or cost of materials, which would disrupt the Company’s supply chain. It also has affected and may continue to affect the Company’s ability to enroll patients in and timely complete its ongoing ~~Phase 1~~ clinical ~~trial~~trials of SQZ-PBMC-HPV, SQZ-AAC-HPV and SQZ-eAPC-HPV and delay the initiation of future clinical trials, ~~including SQZ-AAC-HPV,~~ disrupt regulatory activities or have other adverse effects on its business and operations. For example, the Company has experienced delays in receiving supplies of raw materials for its preclinical activities due to the impact of COVID-19 on its suppliers’ ability to timely manufacture these materials, and it has experienced an increase in the transportation cost of its product candidates due to the decreased availability of commercial flights. In addition, the Company has experienced delays in opening clinical trial sites and sites that are open may also have challenges enrolling patients due to the COVID-19 pandemic. Further, staff shortages, including staff that are required to conduct certain testing, such as biopsies, at the Company’s clinical sites or at third-party vendors have resulted in delays in site initiations and in such tests not being properly or timely performed or being delayed. The pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact the Company’s ability to raise additional funds to support its operations. Moreover, the pandemic has significantly impacted economies worldwide and could result in adverse effects on the Company’s business and operations.

The Company is monitoring the potential impact of the COVID-19 pandemic on its business and financial statements. To date, the Company has not incurred impairment losses in the carrying values of its assets as a result of the pandemic and it is not aware of any specific related event or

~~Table of Contents~~

circumstance that would require it to revise its estimates reflected in these interim condensed consolidated financial statements. The extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, financial condition and liquidity, including planned and future clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, the actions taken to contain or treat it, and the duration and intensity of the related effects.

Table of Contents

Basis of Presentation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned ~~subsidiary,~~subsidiaries, SQZ Biotechnologies Security ~~Corporation.~~Corporation, SQZ Biotech HK Limited and SQZ Biotech (Shanghai) Co., Ltd. All intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited consolidated financial statements as of ~~June 30, 2021~~March 31, 2022 and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The accompanying condensed consolidated balance sheet as of December 31, ~~2020~~2021 was derived from audited financial statements but does not include all disclosures required by GAAP. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2020~~2021 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March ~~18, 2021.~~16, 2022. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of ~~June 30, 2021,~~March 31, 2022, the consolidated results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the consolidated cash flows for ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ have been made. The Company’s consolidated results of operations for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the full year or any other subsequent interim period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, the accrual of research and development expenses, the valuation of common stock and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, judgments and methodologies as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company is developing methods of engineering cell function and therapies for the treatment of patients across a range of indications. The Company has determined that its chief operating decision maker is its Chief Executive Officer. The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance.

Recently Issued Accounting Pronouncements

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (~~Topic 326~~) (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will ~~result in the earlier recognition of~~

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result in the earlier recognition of credit losses, if any. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—CreditLosses (Topic 326): Targeted Transition Relief (“ASU 2019-05”), which provides additional implementation guidance on the previously issued ASU 2016-13. For ~~public entities,~~the Company, this guidance is effective for fiscal years beginning after December 15, ~~2019, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for fiscal years beginning after December 15,~~ 2022. ~~Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.~~ The Company is currently evaluating the impact that the adoption of ASU 2016-13 ~~and ASU 2019-05~~ will have on its consolidated financial ~~statements.~~

~~In November 2018,~~statements, however the ~~FASB issued ASU No. 2018-18,~~ ~~Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606~~ ~~(“ASU 2018-18”). ASU 2018-18 makes targeted improvements to GAAP for collaborative arrangements, including (i) clarification~~Company does not expect that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (ii) adding unit-of-account guidance in ASC 808, ~~Collaborative Arrangements~~, to align with the guidance in ASC 606 and (iii) a requirement that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer. For public entities, this guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company adopted ASU 2018-18 as of January 1, 2021, and the standard ~~did not~~will have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating certain exceptions, including the approach for intraperiod tax allocation, the accounting for income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ~~For public entities,~~The Company adopted this guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted in interim or annual periods with any adjustments reflectedstandard as of January 1, 2022 and the ~~beginning of the fiscal year of adoption. Additionally, entities that elect early adoption must adopt all changes as~~standard did not have a ~~result of ASU 2019-12. The Company is currently evaluating the~~material impact ~~that the adoption of ASU 2019-12 will have~~ on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance, which requires business entities to provide certain disclosures when they have 1) received government assistance and 2) use a grant or contribution accounting model by analogy to other accounting guidance. The Company adopted this standard as of January 1, 2022 and the standard did not have a material impact on its consolidated financial statements.

3. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	FAIR VALUE MEASUREMENTS AT JUNE 30, 2021 USING:								FAIR VALUE MEASUREMENTS AT MARCH 31, 2022 USING:
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL		LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Cash equivalents:
Money market funds	$	184,395	$	—	$	—	$	184,395	$	121,958	$	—	$	—	$	121,958
	$	184,395	$	—	$	—	$	184,395	$	121,958	$	—	$	—	$	121,958


	FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2021 USING:
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Cash equivalents:
Money market funds	$	142,547	$	—	$	—	$	142,547
	$	142,547	$	—	$	—	$	142,547

FAIR VALUE MEASUREMENTS AT
DECEMBER 31, 2020 USING:

LEVEL 1

LEVEL 2

LEVEL 3

TOTAL

Assets:

Cash equivalents:

Money market funds

$
170,097

$
—

$
—

$
170,097

$
170,097

$
—

$
—

$
170,097

Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no0 changes to the valuation methods during the ~~six~~three months ended ~~June 30, 2021 The~~March 31, 2022.The Company evaluates transfers between levels at the end of each reporting period. There ~~were0~~were 0 transfers between ~~Level 1 or Level 2~~levels during the ~~six~~three months ended ~~June 30, 2021.~~ March 31, 2022.

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~~4. Prepaid Expenses and Other Current Assets~~

~~Prepaid expenses and other current assets consisted of the following (in thousands):~~

JUNE 30,

DECEMBER 31,

2021

2020

Prepaid expenses

$
4,144

$
4,032

Unbilled and other receivables

48

548

Interest receivable

4

2

$
4,196

$
4,582

5.4. Property and Equipment, Net

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


	JUNE 30,			DECEMBER 31,			MARCH 31,			DECEMBER 31,
	2021			2020			2022			2021
Machinery and equipment	$	6,568		$	6,139		$	6,536		$	6,659
Leasehold improvements		579			579			579			579
Furniture and fixtures	$	459			459			318			319
	$	7,606		$	7,177		$	7,433		$	7,557
Less: Accumulated depreciation and amortization		(4,087	)		(3,532	)		(4,548	)		(4,511	)
	$	3,519		$	3,645		$	2,885		$	3,046

Depreciation and amortization expense ~~was $0.3 million~~ for each of the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020. Depreciation and amortization expense~~ was ~~$0.6 million and $0.7 million for the six months ended June 30, 2021 and 2020, respectively.~~$0.3 million.

6.5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

JUNE 30,

DECEMBER 31,

2021

2020

Accrued external research, development and manufacturing costs

$
1,921

$
3,085

Accrued employee compensation and benefits

1,811

2,682

Accrued licensing fees (Note 10)

772

743

Other

741

848

$
5,245

$
7,358

~~7. Preferred Stock~~

~~In January and February 2020, the Company issued and sold an aggregate of 1,094,247 shares of Series D Preferred Stock at a price of $13.9365 per share for gross proceeds of $15.2 million.~~ In May and June 2020, the Company issued and sold an additional 1,940,945 shares of Preferred Stock at a price of $13.9365 per share for gross proceeds of $27.0 million. All of the 16,904,219 shares of Preferred Stock outstanding as of June 30, 2020 as shown in the Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit) automatically converted into a total of 17,800,084 shares of common stock upon the closing of the IPO in November 2020.


	MARCH 31,		DECEMBER 31,
	2022		2021

Accrued external research, development and manufacturing costs	$	5,168	$	2,156
Accrued employee compensation and benefits		1,349		3,040
Other		2,009		1,614
	$	8,526	$	6,810

6. Stock-Based Compensation

On October 20, 2020, the Company’s board of directors adopted, and on October 22, 2020 its stockholders approved, the 2020 Incentive Award Plan (the “2020 Plan”), which became effective the day prior to the first public trading date of the Company’s common stock. Following the effectiveness of the 2020 Plan, no further awards are made under the Company’s previous 2014 Stock Incentive Plan (the “2014 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock

~~Table of Contents~~

units, and other stock-based awards. The number of shares reserved for issuance under the 2020 Plan was initially equal to 2,690,415 and is subject to an annual increase on the first day of each calendar year. The initial increase began on January 1, 2021 and ends on and includes January 1, 2030, equal to the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as is determined by the board of directors. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2020 Plan or following the effective date of the 2020 Plan, under the 2014 Plan are added back to the shares of common stock available for issuance under the 2020 Plan. As of June 30, 2021 and December 31, 2020, there were ~~2,541,715~~

~~and 2,079,230 shares available, respectively, for future issuance under the 2020 Plan.~~

On October 20, 2020, the Company’s board of directors adopted, and on October 22, 2020 its stockholders approved, the 2020 Employee Stock Purchase Plan (the ‘‘2020 ESPP’’), which became effective the day prior to the first public trading date of the Company’s common stock. A total of 275,886 shares of common stock was initially reserved for issuance under this plan. The number of shares of common stock that may be issued under the 2020 ESPP automatically increases on the first day of each calendar year. The initial increase began on January 1, 2021 and ends on and includes January 1, 2030, equal to the lesser of (i) 1% of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as is determined by the board of directors, provided that not more than 3,724,461 shares of common stock may be issued under the 2020 ESPP. As of June 30, 2021, 0 shares had been issued under the 2020 ESPP and there were 523,749 shares available for issuance.

~~Stock Option Valuation~~

~~The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model.~~

The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer public companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the option. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The expected dividend yield of 0% is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table summarizes the Company’s stock option activity since December 31, ~~2020:~~2021:

NUMBER OF
SHARES

WEIGHTED-
AVERAGE
EXERCISE PRICE

WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
TERM

INTRINSIC
VALUE

(in years)

(in thousands)

Outstanding at December 31, 2020

4,039,894

$
7.69

8.41

$
85,993

Granted

1,023,037

16.13

Exercised

(245,080
)

3.92

Forfeited or canceled

(246,206
)

10.47

Outstanding at June 30, 2021

4,571,645

$
9.64

8.37

$
25,730

Vested and expected to vest at June 30, 2021

4,571,645

$
9.64

8.37

$
25,730

Options exercisable at June 30, 2021

1,515,222

$
4.62

7.11

$
14,931


	NUMBER OF SHARES			WEIGHTED- AVERAGE EXERCISE PRICE		WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM		INTRINSIC VALUE
						(in years)		(in thousands)
Outstanding at December 31, 2021		4,339,523		$	9.75		7.68	$	8,823
Granted		1,962,387			6.46
Exercised		(14,757	)		1.95
Forfeited or canceled		(195,726	)		10.85
Outstanding at March 31, 2022		6,091,427		$	8.67		8.02	$	1,298
Vested and expected to vest at March 31, 2022		6,091,427		$	8.67		8.02	$	1,298
Options exercisable at March 31, 2022		2,306,348		$	7.23		6.03	$	1,247

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options was classified in the consolidated statements of operations as follows (in thousands):


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,				THREE MONTHS ENDED MARCH 31,
	2021		2020		2021		2020		2022		2021
Research and development expenses	$	683	$	283	$	1,247	$	517	$	655	$	562
General and administrative expenses		1,146		471		2,165		935		1,292		1,019
	$	1,829	$	754	$	3,412	$	1,452	$	1,947	$	1,581

As of ~~June 30, 2021,~~March 31, 2022, total unrecognized stock-based compensation expense related to unvested stock-based awards was ~~$21.9~~$22.7 million, which is expected to be recognized over a weighted-average period of ~~2.9~~3.1 years.

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9.7. Income Taxes

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded 0 income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items. All of the Company’s operating losses since inception have been generated in the United States.

~~10.~~8. Commitments and Contingencies

Leases

The Company’s commitments under its leases are described in Note ~~11.~~9.

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License and Supply Agreements

License Agreement with Massachusetts Institute of Technology

In December 2015, the Company entered into an exclusive patent license agreement with the Massachusetts Institute of Technology (“MIT”) (the “MIT Agreement”). The MIT Agreement replaced a May 2013 exclusive agreement with MIT. Under the MIT Agreement, the Company received an exclusive license under the licensed patent rights to develop, manufacture and commercialize any products related to certain intracellular delivery methods that were developed at MIT.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had 0liabilities ~~of $0.8 million and $0.7 million, respectively, included within accrued expenses (see Note 6).~~related to the MIT Agreement. During each of the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company did 0t0t recognize any research and development expense under the sublicense terms of the MIT Agreement.

Manufacturing Services Agreements

~~During the years ended December 31, 2020 and 2019, the~~The Company has entered into agreements with a contract manufacturing organization to provide manufacturing services related to its product ~~candidates as it began to prepare for a future clinical trial. The~~candidates. As of March 31, 2022, the Company had 0 non-cancelable ~~purchase commitments as of June 30, 2021 and December 31, 2020~~payments under these agreements, as ~~amended.~~amended, other than the amounts included in the current portion of operating lease liabilities on the Company's consolidated balance sheets.

401(k) Plan

The Company sponsors a 401(k) defined contribution benefit plan (the “401(k) Plan”), which covers all employees who meet certain eligibility requirements as defined in the 401(k) Plan and allows participants to defer a portion of their annual compensation on a pre-tax basis. Contributions to the 401(k) Plan may be made at the discretion of management. For each of the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company contributed ~~$0.1~~$0.1 million to the 401(k) Plan. ~~For each of the six months ended June 30, 2021 and 2020, the Company contributed $0.2 million to the 401(k) Plan.~~

Indemnification Agreements

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

Legal Proceedings

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.

9. Leases

~~11. Leases~~

As of ~~June 30, 2021,~~March 31, 2022, the Company leases its office and laboratory facilities under a non-cancelable operating lease entered into in December 2018, which included lease incentives, payment escalations and rent holidays. In addition, the Company has an agreement entered into in April 2019 with a contract manufacturing supplier that is considered an embedded lease because the Company has substantially all the economic benefits of the related asset and can direct its use. The Company had not entered into any financing leases or any short-term operating leases as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

~~2018 Lease~~

~~Table of Contents~~

In December 2018, the Company entered into a lease for office and laboratory space in Watertown, Massachusetts (the “2018 Lease”). The 2018 Lease term commenced in December 2019 and expires in November 2029. Under the 2018 Lease, the Company has one ~~five-year~~ option to extend the term of the lease. The initial annual base rent was $3.8 million upon entering into the lease, with such base rent increasing during the initial term by 3% annually on the anniversary of the commencement date. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement and management of the new leased premises. In connection with the lease, the Company maintains a letter of credit for the benefit of the landlord in the amount of $2.3 million, for which the Company is required to maintain a separate cash balance of the same amount. The 2018 Lease Agreement includes a landlord-provided tenant improvement allowance of $9.8 million that was applied to the costs of the construction of leasehold improvements.

~~2016 Lease~~

In September 2016, the Company entered into a lease for office and laboratory space in Watertown, Massachusetts (the “2016 Lease”). The 2016 Lease was set to expire in September 2023; however, in February 2020, the Company and the landlord jointly terminated the 2016 Lease. Accordingly, as of February 2020, the Company had no further obligations under the 2016 Lease. As a result of this termination, the Company removed from the consolidated balance sheet the associated operating lease right-of-use asset of $2.1 million, leasehold improvements with a net carrying value of $1.4 million (see Note 5) and operating lease liabilities of $3.4 million. The Company therefore recognized a net loss on termination of the 2016 Lease of $0.1 million in the consolidated statement of operations and comprehensive loss for the six months ended June 30, 2020.

~~Embedded Lease~~

The Company evaluated its vendor contracts to identify embedded leases, if any, and noted that an agreement entered into in April 2019 with a contract manufacturing supplier constituted a lease under ASC 842 because the Company has the right to substantially all of the economic benefits from the use of the asset and can direct the use of the asset. The embedded lease commenced in September 2019 and expires in August 2022 and includes an option of the Company to further extend the term of the manufacturing services agreement by one additional year. The Company has evaluated the probability of its exercising the option to extend the term of the agreement and concluded that it was reasonably certain that it would occur. The Company has therefore included the minimum lease payments of the additional year in its calculation of its right-of-use asset and lease liability in relation to the embedded lease.

Right-of-use assets under operating leases at June 30, 2021 and December 31, 2020 totaled $43.5 million and $48.4 million, respectively. The leases do not include any restrictions or covenants that had to be accounted for under applicable lease guidance.

~~Lease Portfolio~~

The components of lease cost and other information for the Company’s lease portfolio were as follows (in thousands, except term and discount rate amounts):


	THREE MONTHS ENDED MARCH 31,
	2022		2021
Lease cost:
Operating lease cost	$	3,760	$	3,261
Variable lease cost		557		325
	$	4,317	$	3,586

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	MARCH 31, 2022			DECEMBER 31, 2021
Other information:
Weighted-average remaining lease term (in years)		5.9			6.2
Weighted-average discount rate		7.6	%		7.6	%

THREE MONTHS ENDED
JUNE 30,

SIX MONTHS ENDED
JUNE 30,

2021

2020

2021

2020

Lease cost:

Operating lease cost

$
3,273

$
2,970

$
6,534

$
6,134

Variable lease cost

679

246

1,003

601

Short-term lease cost

—

—

—

21

$
3,952

$
3,216

$
7,537

$
6,756

JUNE 30,
2021

DECEMBER 31,
2020

Other information:

Weighted-average remaining lease term (in years)

6.4

6.7

Weighted-average discount rate

7.4
%

7.2
%

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):


	THREE MONTHS ENDED MARCH 31,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	3,657	$	3,132

In April 2017, the Company entered into a second license and collaboration agreement with Roche (the “2017 Roche Agreement”) to allow Roche to use the Company’s Cell Squeeze technology to enable gene editing of immune cells to discover new targets in cancer immunotherapy. The 2017 Roche Agreement ~~includes~~included several licenses granted by Roche to the Company and by the Company to Roche in order to conduct a specified research program in accordance with a specified research plan. ~~The 2017 Roche Agreement has a term that ends upon~~In the ~~earlier to occur~~first quarter of (i) the completion of all work under the research plan or (ii) two years after the effective date of the agreement. The collaboration term is subject to Roche’s right to extend the collaboration term for up to two additional ~~one-year~~ periods. Roche has the right to terminate the agreement, in whole or on a workstream-by-workstream basis, upon a specified amount of notice to the Company. The Company or Roche may terminate the agreement if the other party fails to cure its material breach within a specified period after receiving notice of such breach.

~~Under the agreement,~~2022, the Company received an upfront payment of $5.0 million as a technology access fee and is entitled to (i) payments of up to $1.0 million, in two tranches of $0.5 million, as reimbursement for the Company’s research costs; (ii) milestone payments of up to $7.0 million upon the achievement of specified development milestones; and (iii) annual maintenance fees ranging from $0.5 million to $0.9 million for each year following the fifth anniversary of the effective date, subject to specified prepayment discounts.

~~The Company assessed its accounting for~~notice that the 2017 Roche Agreement ~~under ASC 606 as the transactions underlying the agreement were deemed to be transactions with a customer. The Company identified the following promises~~was terminated and all active work streams under the 2017 Roche ~~Agreement: (i) a non-exclusive license granted to Roche to perform research related to and use~~Agreement were concluded. As of the Company’s Cell Squeeze technology for gene editing of immune cells; (ii) specified research and development services related to gene editing of immune cells through the research term; (iii) manufacturing activities to support the specified research plan; and (iv) participation on a joint research committee (“JRC”). The annual maintenance fees described above were determined by the Company to be optional renewal payments. The Company concluded that each of the promises under the agreement was not distinct from the other promises in the arrangement. The research license was determined to not be distinct from the research and manufacturing activities primarily as a result of Roche being unable to benefit on its own or with other resources reasonably available in the marketplace because the license to the Company’s intellectual property requires significant specialized capabilities in order to be further developed, the research services necessary to develop the product are highly specialized, and the Company’s proprietary Cell Squeeze technology is a key capability of that development. The research and manufacturing services were determined not to be distinct because the promise under the agreement is to complete research and development, inclusive of the manufacturing. In addition,December 31, 2021, the Company determined that it expected to incur no additional costs to satisfy the ~~impact of participation on the JRC was insignificant and had an immaterial impact on the accounting model. As such, the Company concluded that the first three promises should be combined into a single~~remaining performance ~~obligation. Based on these assessments, the Company identified one distinct performance obligation at the outset of~~obligations under the 2017 Roche ~~Agreement.~~

~~The Company recognizes~~Agreement and all remaining deferred revenue associated with the performance obligation as the research, development and manufacturing services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy the performance obligation. The transfer of control to the customer occurs over the time period that the research and development services are to be provided by the Company, and this cost-to-cost method is, in management’s judgment, the best measure of progress towards satisfying the performance obligation. The amounts received from Roche that have not yet beenwas recognized as of that date. There was 0revenue ~~are deferred as a contract liability in~~recorded under this agreement during the ~~Company’s consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied.~~three months ended March 31, 2022.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2021, the total costs expected to be incurred to satisfy the performance obligation under the 2017 Roche Agreement decreased by $0.1 million and $0.3 million, respectively. During the three and six months ended June 30, 2020, there were 0 significant changes in the total estimated costs expected to be incurred to satisfy the performance obligation.$0.3 million. The Company recognized revenue of ~~$0.2~~$0.6 million during ~~each of~~ the three months ended June 30, 2021 and 2020 under the 2017 Roche Agreement. The Company recognized revenue of $0.8 million and $0.3 million, respectively, during the six months ended June 30, 2021 and 2020 under this agreement. As of June 30, 2021, the Company recorded as a contract liability deferred revenue related to the 2017 Roche Agreement of $0.5 million, all of which was a current liability. As of June 30, 2021, the research and development services related to the performance obligation were expected to be performed over a remaining period of approximately 1.0 year.March 31, 2021.

In October 2018, the Company entered into a license and collaboration agreement with Roche (the “2018 Roche Agreement”) to jointly develop certain products based on mononuclear antigen presenting cells (“APCs”), including human papilloma virus (“HPV”), using the SQZ APC platform for the treatment of oncology indications. The Company granted Roche a non-exclusive license to its intellectual property, and Roche granted the Company a non-exclusive license to its and its affiliates’ intellectual property for the purpose of performing research activities. In connection with this agreement, the parties terminated an earlier agreement. The 2018 Roche Agreement has a term that extends until all royalty, profit-share and other payment obligations expire or have been satisfied. Roche has the right to terminate the 2018 Roche Agreement, in whole

or on a product-by-product basis, upon a specified amount of notice to the Company. The Company or Roche may terminate the agreement if the other party fails to cure its material breach within a specified period after receiving notice of such breach.

Under the 2018 Roche Agreement, Roche was granted option rights to obtain an exclusive license to develop APC products or products derived from the collaboration programs on a product-by-product basis. These option rights are exercisable upon the achievement of clinical Phase 1 proof of concept and expire, if unexercised, as of a date specified in the agreement. In addition, Roche was granted an option right to obtain an exclusive license to develop a Tumor Cell Lysate (“TCL”) product. This option right is exercisable upon the achievement of clinical proof of concept and expires, if unexercised, as of a date specified in the agreement. For each of the APC products and TCL product, once Roche exercises its option and pays a specified incremental amount ranging from ~~$15.0~~$15.0 million to ~~$50.0~~$50.0 million for APC products and of ~~$100.0~~$100.0 million for the TCL product, Roche will receive worldwide, exclusive commercialization rights for the licensed products, subject to the Company’s alternating option to retain U.S. APC commercialization rights. The Company will retain worldwide commercialization rights to any APC products or the TCL product for which Roche elects not to exercise its applicable option. For the first APC product that Roche exercises its option, Roche will receive worldwide, exclusive commercialization rights for the licensed product. On a product-by-product basis for the APC products, after the first product option is exercised by Roche and for every other product for which Roche exercises its option, the Company will retain an option to obtain the exclusive commercialization rights in the United States. Upon exercise of the TCL option by Roche, (i) the Company will be entitled to receive the aforementioned

milestone payment of ~~$100.0~~$100.0 million and (ii) profits from the TCL product will be shared equally by the Company and Roche. Through ~~June 30, 2021,~~March 31, 2022, Roche had not exercised any of its options under the 2018 Roche Agreement.

Under the 2018 Roche Agreement, the Company received an upfront payment of ~~$45.0~~$45.0 million and is eligible to receive (i) reimbursement of a mid-double-digit percentage of its development costs; (ii) aggregate milestone payments on a product-by-product basis of up to ~~$1.6~~$1.6 billion upon the achievement of specified milestones, consisting of up to ~~$217.0~~$217.0 million of development milestone payments, up to ~~$240.0~~$240.0 million of regulatory milestone payments and up to ~~$1.2~~$1.2 billion of sales milestone payments; and (iii) tiered royalties on annual net sales of APC and TCL products licensed under the agreement, as described below. The Company received the upfront payment of ~~$45.0~~$45.0 million in October 2018 upon execution of the agreement. In addition, during the second quarter of 2019, the Company received a payment of ~~$10.0~~$10.0 million following the achievement of the first development milestone under the 2018 Roche Agreement related to submission by the Company of preclinical data to the U.S. Food and Drug Administration (“FDA”)~~, and during~~. During the first quarter of 2020, the Company received a payment of ~~$20.0~~$20.0 million following the achievement of the second development milestone under the 2018 Roche Agreement related to first-patient dosing in a Phase 1 clinical trial. In the first quarter of 2022, the Company received a milestone payment of $3.0 million having achieved in the fourth quarter of 2021 the following: (i) the endorsement by an independent panel that it could advance its SQZ-PBMC-HPV clinical trial to combination therapy using checkpoint inhibitors and (ii) the initiation of that therapy.

Roche will pay tiered royalties based on annual net sales of APC and TCL products. If Roche exercises its option to obtain a license to commercialize an APC product, Roche will pay the Company tiered royalties on annual net sales of that licensed product at rates ranging from a mid-single-digit percentage to a mid-teens percentage, depending on net sales of the product. If the Company exercises its option to obtain a license to commercialize an APC product in the United States, it will pay Roche tiered royalties on annual net sales of that licensed product at rates ranging from a mid-single-digit percentage to a mid-teens percentage, depending on net sales of the product in the United States. For APC products selected by Roche, rather than mutually, Roche will pay the Company royalties on annual net sales of that licensed product at rates ranging from a mid-single-digit percentage to a high single-digit percentage, depending on net sales of the product. For APC products that are selected mutually and for which the Company has not exercised its option to commercialize the product in the United States, Roche will pay the Company tiered royalties on annual net sales of that licensed product at a rate ranging from a high single-digit percentage to a mid-teens percentage, depending on net sales of the product. For TCL products, Roche will pay the Company tiered royalties on the aggregate net sales of all TCL products at rates ranging from either a mid-single digit percentage to a percentage in the low twenties, with the caveat that the rates for sales in the United States may instead range from a low-teens percentage to a percentage in the mid-twenties, depending on whether and when the Company opts out of sharing certain profits and costs of commercializing the TCL product in the United States with Roche.

The Company identified three performance obligations at the outset of the 2018 Roche Agreement: (1) the license to the Company’s intellectual property, the research and development activities related to HPV through Phase 1 clinical trials under a specified research plan, and the manufacturing of the Company’s SQZ APC platform and equipment in order to support the HPV research plan (the “first performance obligation”); (2) the license to the Company’s intellectual property and the research and development activities on next-generation APCs (the “second performance obligation”); and (3) the license to the Company’s intellectual property and the research and development activities on TCL (the “third performance obligation”).

During the second quarter of 2019, the Company received a payment of $10.0 million following the achievement of the first development milestone under the 2018 Roche Agreement related to submission by the Company of preclinical data to the U.S. Food and Drug Administration, or FDA. During the first quarter of 2020, the Company received a payment of $20.0 million following the achievement of the second development milestone under the 2018 Roche Agreement related to first-patient dosing in a Phase 1 clinical trial. These milestones were added to the transaction price in the period that it was “most likely” and that it was probable that a significant reversal in the amount of cumulative revenue recognized would not occur.

During the fourth quarter of 2019, the Company evaluated its overall program priorities and determined that ~~in 2020~~ it would continue to focus its resources on progressing the specified APC programs related to the 2018 Roche Agreement as well as its Activating Antigen Carriers (“AAC”) and Tolerizing Antigen Carriers (“TAC”) platforms. As a result of its continuing focus on these specific programs, the Company reduced the level of priority of the TCL research activities under the 2018 Roche Agreement and expects to perform such TCL research

activities over a longer time period than as originally expected under the specified research plan of the agreement. Since the fourth quarter of 2019, the Company has classified $9.2 million as non-current deferred revenue, which will remain unrecognized as revenue until TCL research activities resume or the 2018 Roche Agreement is modified by the Company and Roche.

The Company separately recognizes revenue associated with each of the three performance obligations as the research, development and manufacturing services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy each performance obligation. The transfer of control to the customer occurs over the time period that the research and development services are to be provided by the Company, and this cost-to-cost method is, in management’s judgment, the best measure of progress towards satisfying each performance obligation. The amounts received that have not yet been recognized as revenue are deferred as a contract liability in the Company’s consolidated balance sheet and will be recognized over the remaining research and development period until each performance obligation is satisfied.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were 0 significant changes in the total estimated costs expected to be incurred to satisfy the performance obligations under the 2018 Roche Agreement. The Company recognized revenue of ~~$4.3~~$2.9 million and ~~$5.8~~$4.9 million during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, under this agreement. ~~The~~As of March 31, 2022, the Company ~~recognized~~recorded as a contract liability deferred revenue ~~of $9.1 million and $12.1 million during the six months ended June 30, 2021 and 2020, respectively, under~~related to the 2018 Roche ~~Agreement.~~Agreement of $18.3 million, of which $9.1 million

was a current liability. As of ~~June 30,~~March 31, 2022, the research and development services related to the performance obligations were expected to be performed over a remaining period of nine months. As of December 31, 2021, the Company recorded as a contract liability deferred revenue related to the 2018 Roche Agreement of ~~$34.8~~$21.2 million, of which ~~$25.7~~$12.0 million was a current liability.

As of ~~June 30, 2021, the research and development services related to the performance obligations were expected to be performed over remaining periods ranging from~~ ~~0.5 to 1.0 years. As of December~~March 31, ~~2020, the Company recorded as a contract liability deferred revenue related to the 2018 Roche Agreement of $44.0 million, of which $24.7 million was a current liability.~~

~~As of June 30, 2021~~2022 and December 31, ~~2020,~~2021, the expected remaining period of performance of the Company’s research and development services related to the third performance obligation was not determinable, and it will not become determinable until TCL research activities resume or the 2018 Roche Agreement is modified by the Company and Roche.

The changes in the total contract liability (deferred revenue) balances related to the Company’s license and collaboration agreements were as follows (in thousands):


	THREE MONTHS ENDED MARCH 31,
	2022			2021
Balance at beginning of period	$	21,203		$	45,201
Recognition of deferred revenue		(2,869	)		(5,454	)
Balance at end of period	$	18,334		$	39,747

THREE MONTHS ENDED
JUNE 30,

SIX MONTHS ENDED
JUNE 30,

2021

2020

2021

2020

Balance at beginning of period

$
39,747

$
56,059

$
45,201

$
40,453

Deferral of revenue

—

1,838

—

23,854

Other

100

—

100

—

Recognition of deferred revenue

(4,539
)

(5,980
)

(9,993
)

(12,390
)
Balance at end of period

$
35,308

$
51,917

$
35,308

$
51,917

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):


	THREE MONTHS ENDED MARCH 31,
	2022			2021
Numerator:
Net loss	$	(21,038	)	$	(15,399	)
Denominator:
Weighted-average common shares outstanding, basic and diluted		28,145,036			26,264,019
Net loss per share attributable to common stockholders, basic and diluted	$	(0.75	)	$	(0.59	)

THREE MONTHS ENDED
JUNE 30,

SIX MONTHS ENDED
JUNE 30,

2021

2020

2021

2020

Numerator:

Net loss

$
(19,070
)

$
(9,986
)

$
(34,469
)

$
(20,569
)
Denominator:

Weighted-average common shares outstanding, basic and
diluted

27,919,647

1,739,114

27,100,817

1,738,353

Net loss per share attributable to common stockholders, basic and
diluted

$
(0.68
)

$
(5.74
)

$
(1.27
)

$
(11.83
)

The Company’s potential dilutive securities, which ~~in the current period~~ consist of ~~common stock options and in the previous period included convertible preferred stock, a warrant to purchase common stock and~~ common stock options have been excluded from the computation of diluted

net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission, or SEC, on March ~~18, 2021~~16, 2022 (the ~~“2020~~“2021 Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk ~~Factors”~~Factors�� section of our ~~2020~~2021 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biotechnology company ~~developing~~focused on unlocking the full potential of cell therapies ~~for~~to benefit patients ~~in multiple therapeutic areas, including~~with cancer, autoimmune and infectious diseases, and other serious conditions. ~~We use~~The company was founded on the therapeutic potential of Cell Squeeze® technology, our proprietary technology ~~Cell Squeeze®, to physically squeeze cells through~~which allows for rapid delivery of a ~~microfluidic chip, temporarily opening the~~variety of cargo into different cell ~~membrane and enabling biologic material of interest, or cargo, to diffuse into the cell. This technology allows us to create a broad pipeline of product candidates for different diseases.~~types. We believe our Cell Squeeze technology has the potential to create well-tolerated cell therapies that can provide therapeutic benefit for patients. Our potential differentiation includes accelerated timelines with production time under 24 hours, compared to four to six weeks for other existing cell therapies, improved patient experience by eliminating the need for pre-conditioning or lengthy hospital stays, and broadened therapeutic impact. Our goal is to use the Cell Squeeze approach to establish a new paradigm for cell therapies. We are currently using Cell Squeezeaim to create multiple cell therapies that drive the immune system to combat diseases.

In oncology, we are developing cell therapy platforms ~~focused~~that are based on directing ~~specific~~tumor antigen-specific immune ~~responses. Our most advanced platform~~activation via engineered antigen presentation. We believe that by engineering physiological antigen presentation signals in ~~development,~~subsets of peripheral blood cells that act on immune priming pathways, we have the potential to develop cell therapies that are designed to be potent drivers of tumor-specific immunity, well-tolerated, administered without lymphodepleting preconditioning or hospitalization, and produced in under 24 hours. We have three oncology candidates in clinical trials across our SQZ® Antigen Presenting ~~Cells,~~Cell, or APC, SQZ ~~APCs, is currently~~® enhanced APC, or eAPC, and SQZ® Activating Antigen Carrier, or AAC, cell therapy platforms. In our autoimmune diseases portfolio, we are developing our SQZ® Tolerizing Antigen Carrier, or TAC, cell therapy platform with the aim to restore immune tolerance to self-antigens or other autoimmune disease-associated antigens that are central to disease pathogenesis.

In 2021, we executed on several key areas of our pipeline and advanced our APC platform objectives. As of December 31, 2021, we have dosed 20 patients in aour Phase 1 trial for our lead APC candidate, SQZ-PBMC-HPV, in ~~HPV+~~HPV16+ advanced solid tumors. We reported interim data from the first three monotherapy dose-escalation cohorts at the 2021 American Society of Clinical Oncology, or ASCO, Annual Meeting, and presented interim safety, biomarker, and clinical data from the highest dose SQZ-PBMC-HPV monotherapy cohort at the 2021 European Society for Medical Oncology Immuno-Oncology, or ESMO-IO, Congress. Key observations from the reported data include, as of a cutoff date of October 8, 2021 (n=18 patients):

We have advanced our trial to evaluate SQZ-PBMC-HPV in combination with checkpoint inhibitor therapies, and are continuing to enroll patients in the highest dose monotherapy cohort. We are targeting additional data in the second half of 2022. In April 2022, the U.S. Food and Drug Administration, or FDA, granted Fast Track Designation to SQZ-PBMC-HPV for the treatment of HPV16+ advanced or metastatic solid tumors.

We have continued to build upon the progress of our SQZ® APC platform through the development of the novel SQZ® eAPC platform. Our ~~additional platforms~~lead eAPC product candidate leverages the added capabilities and functionality of multiple antigen presentation and immunological signals achieved through multiplexed mRNA delivery to diverse immune cell types. In January 2022, we received allowance to proceed with clinical trials from the FDA under our Investigational New Drug, or IND, application for SQZ-eAPC-HPV, our lead eAPC candidate engineered with HPV16 antigens and costimulatory signals. We plan to initiate the SQZ-eAPC-HPV trial, the COMMANDER-001 Phase 1/2 study, in patients with HPV16+ advanced solid tumors in the first half of 2022. We anticipate announcing initial interim data from this study in the second half of 2022. In addition to our efforts in the oncology field, we are also continuing to advance the eAPC platform in the infectious diseases field.

In 2021, we received allowance to proceed with clinical trials from the FDA under our IND for SQZ-AAC-HPV, our lead AAC product candidate derived from red blood cells engineered with tumor-specific antigens. We are currently ~~in development are SQZ Activating Antigen Carriers, or SQZ AACs, also entering a~~enrolling monotherapy cohorts as part of the Phase 1 ENVOY-001 trial to assess safety and tolerability as well as secondary outcome measures of the investigational SQZ-AAC-HPV therapy in ~~HPV+~~HPV16+ advanced solid tumors, and ~~SQZ Tolerizing Antigen Carriers, or SQZ TACs.~~ plan to announce initial interim data in the second half of 2022.

We are ~~leveraging each~~also advancing our SQZ® TAC platform focused on creating novel and proprietary cell therapies as it relates to modulating or restoring immune tolerance. We have selected Celiac disease as the first proposed autoimmune indication for SQZ® TAC platform development. We believe the evidence of ~~these platforms~~a causal disease antigen and T-cell driven pathology, and the substantial unmet need for a

tolerizing treatment option provide a compelling opportunity for us to ~~create differentiated product candidates that have applicability across multiple disease areas.~~pursue Celiac disease. We presented characterization of TAC-mediated mechanisms of antigen-specific tolerance in preclinical models at the 2021 Federation of Clinical Immunology Societies, or FOCIS, Meeting. We anticipate further development of our TAC-Celiac candidate through IND-enabling studies in 2022 to support an IND submission in the first half of 2023, and, in parallel, are planning to use our proprietary, point-of-care manufacturing system for the production of the clinical batches.

Since our inception, we have focused substantially all of our resources on building our Cell Squeeze technology, establishing and protecting our intellectual property portfolio, conducting research and development activities, developing our manufacturing process and manufacturing product candidate materials, preparing for and initiating clinical trials of our product candidates, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. Through ~~June 30, 2021,~~March 31, 2022, we have funded our operations ~~from sales of common and preferred stock,~~primarily with upfront and milestone payments received under our collaboration agreements with Hoffman La Roche Inc. and F. Hoffman La Roche Ltd. (together, "Roche",) and with proceeds from equity and debt offerings, most recently from our initial public offering, or IPO, and follow-on public offering of common stock, or the Follow-on Offering. In November 2020, we completed our IPO pursuant to which we issued and sold 5,073,529 shares of common stock, inclusive of 661,764 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares. We received aggregate net proceeds of approximately $75.5 million from the IPO, after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which were $2.6 million. In February 2021, we completed the Follow-on Offering pursuant to which we issued and sold 3,000,000 shares of common stock. We received aggregate net proceeds of approximately $56.4 million in the Follow-on Offering, after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which were approximately $0.8 million.

Since our inception, we have incurred significant operating losses. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates. We reported a net loss of ~~$34.5~~$21.0 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, we had an accumulated deficit of ~~$161.2~~$216.5 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, and distribution.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. WeCurrently, market conditions in the biotechnology sector are challenging due to ongoing global and economic uncertainties. Accordingly, we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we would have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with cell therapy product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

~~In December 2019, a novel strain of coronavirus, which causes the disease known as~~The COVID-19 ~~was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a~~ pandemic ~~and the U.S. government-imposed travel restrictions on travel between the United States, Europe and certain other countries. The outbreak~~ and government measures taken in response have had a significant impact, both direct and indirect, on hospitals, businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, and facilities and production have been suspended. The future progression of the pandemic and its effects on our business and operations are uncertain.

The COVID-19 pandemic has impacted and may continue to impact personnel at third-party manufacturing facilities or the availability or cost of materials, which would disrupt our supply chain. It also has affected and may continue to affect our ability to enroll patients in and timely complete our ongoing ~~Phase 1~~ clinical ~~trial~~trials of SQZ-PBMC-HPV, SQZ-AAC-HPV and SQZ-eAPC-HPV and delay the initiation of future clinical trials, ~~including SQZ-AAC-HPV,~~ disrupt regulatory activities or have other adverse effects on our business and operations. For example, we have experienced delays in receiving supplies of raw materials for our preclinical activities due to the impact of COVID-19 on our suppliers’ ability to timely manufacture these materials, and we have experienced an increase in the transportation cost of our product candidates due to the decreased availability of commercial flights. In addition, we have experienced delays in opening clinical trial sites and sites that are open may also have challenges enrolling ~~patients due to the COVID-19 pandemic.~~patients. Further, staff shortages, including staff that are required to conduct certain testing, such as biopsies, at ~~the Company’s~~our clinical sites or at third-party vendors have resulted in delays in site initiations and in ~~such~~some tests not being properly or timely performed or being delayed. In response to the public health directives and to help reduce the risk to our employees, we took precautionary measures, including implementing work-from-home policies for our administrative employees and staggered work times for our lab employees. We plan to continue ~~these~~to implement restrictive measures and are assessing when and how to resume normal operations. The effects of the public health directives and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines and future clinical trials, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, results of operations and financial condition, including our ability to obtain financing.

The pandemic ~~has~~and related uncertainties have already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds to support our operations. Moreover, the pandemic has significantly impacted inflation and economies worldwide and could result in adverse effects on our business and operations. We are monitoring the potential impact of the COVID-19 pandemic on our business and financial statements. To date, we have not incurred impairment losses in the carrying values of our assets as a result of the pandemic and we are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in our interim condensed consolidated financial statements. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business and people. The extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations, financial condition, and liquidity, including planned and future clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, the actions taken to contain or treat it, and the duration and intensity of the related effects.

To date, we have not generated any revenue from product sales and do not expect to do so for the next several years. All of our revenue to date has been derived from three collaboration agreements with Roche, ~~which we entered into in 2015, 2017 and 2018,~~ and, to a lesser extent, from government grants.

If our development efforts for our product candidates are successful and result in regulatory approval, or in license or additional collaboration agreements with third parties, we may generate revenue in the future from product sales, payments from additional collaboration or license agreements that we may enter into with third parties, or any combination thereof. We expect that our revenue for the next several years will be derived primarily from our collaboration agreements with Roche as well as any additional collaborations that we may enter into in the future. We cannot provide assurance as to the timing of future milestone or royalty payments or that we will receive any of these payments at all.

In April 2017, we entered into a second license and collaboration agreement with Roche ~~or the 2017~~(the “2017 Roche ~~Agreement,~~Agreement”) to allow Roche to use our Cell Squeeze® technology to enable gene editing of immune cells to discover new targets in cancer immunotherapy. The 2017 Roche Agreement ~~includes~~included several licenses granted by Roche to us and by us to Roche in order to conduct a specified research program in accordance with a specified research plan.

~~Under~~ In the ~~agreement,~~first quarter of 2022, we received an upfront payment of $5.0 million as a technology access fee and are entitled to (i) payments of up to $1.0 million as reimbursement for our research costs; (ii) milestone payments of up to $7.0 million upon the achievement of specified development milestones; and (iii) annual maintenance fees ranging from $0.5 million to $0.9 million for each year following the fifth anniversary of the effective date, subject to specified prepayment discounts.

~~We assessed our accounting for~~notice that the 2017 Roche Agreement ~~under Accounting Standards Codification, or ASC, 606,~~ ~~Revenue from Contracts with Customers, or ASC 606,~~was terminated and ~~identified the following promises~~all active work streams under the agreement: (i) a non-exclusive license granted to Roche to perform research related to and use our Cell Squeeze technology for gene editing of immune cells; (ii) specified research and development services related to gene editing of immune cells through the research term; (iii) manufacturing activities to support the specified research plan; and (iv) participation on a joint research committee, or JRC. We concluded at the outset of the 2017 Roche Agreement were concluded. As of December 31, 2021, we had determined

that we expected to incur no additional costs to satisfy the ~~first three promises should be combined into a single~~remaining performance ~~obligation and that the JRC participation had an immaterial impact on the accounting model.~~

~~We received the upfront payment of $5.0 million in April 2017 upon execution of~~obligations under the 2017 Roche ~~Agreement. We also received the payments~~Agreement and all remaining deferred revenue was recognized as of ~~$0.5 million in each of 2017 and 2018 related to our reimbursable research costs. In addition,~~that date. There was no revenue recorded under this agreement during the third quarter of 2018, we received a payment of $2.0 million following the achievement of the first development milestone under the agreement related to Roche’s validation of preclinical proof of concept.three months ended March 31, 2022.

We recognize revenue associated with the performance obligation as the research and development services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy the performance obligation. The amounts received from Roche that have not yet been recognized as revenue are deferred as a contract liability in our consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied.

As of June 30, 2021, we recorded as a contract liability deferred revenue related to the 2017 Roche Agreement of $0.5 million, all of which was a current liability. As of June 30, 2021, the research and development services related to the performance obligation were expected to be performed over a remaining period of approximately 1.0 year.

In October 2018, we entered into a license and collaboration agreement with Roche, or the 2018 Roche Agreement, to jointly develop certain products based on mononuclear antigen presenting cells, or APCs, including human papilloma virus, or HPV, using our SQZ APC platform for the treatment of oncology indications. We granted Roche a non-exclusive license to our intellectual property, and Roche granted us a non-exclusive license to its and its affiliates’ intellectual property for the purpose of performing research activities. In connection with this agreement, the parties terminated an earlier agreement.

Under the 2018 Roche Agreement, Roche was granted option rights to obtain an exclusive license to develop APC products or products derived from the collaboration programs on a product-by-product basis and to develop a Tumor Cell Lysate, or TCL, product. For each of the APC products and TCL product, once Roche exercises its option and pays a specified incremental amount, Roche will receive worldwide, exclusive commercialization rights for the licensed products. Through ~~June 30, 2021,~~March 31, 2022, Roche had not exercised any of its options under the 2018 Roche Agreement.

Under the 2018 Roche Agreement, we received an upfront payment of $45.0 million and are eligible to receive (i) reimbursement of a mid-double-digit percentage of our development costs; (ii) aggregate milestone payments on a product-by-product basis of up to $1.6 billion upon the achievement of specified milestones, consisting of up to $217.0 million of development milestone payments, up to $240.0 million of regulatory milestone payments and up to $1.2 billion of sales milestone payments; and (iii) tiered royalties on annual net sales of APC and TCL products licensed under the agreement at specified rates ranging from a mid-single-digit percentage to a percentage in the mid-twenties. We received the upfront payment of $45.0 million in October 2018 upon execution of the agreement. In addition, during the second quarter of 2019, we received a payment of $10.0 million following the achievement of the first development milestone under the 2018 Roche Agreement related to submission by us of preclinical data to the ~~U.S. Food and Drug Administration, or FDA, and during~~FDA. During the first quarter of 2020, we received a payment of $20.0 million following the achievement of the second development milestone under the 2018 Roche Agreement related to first-patient dosing in a Phase 1 clinical trial. In the first quarter of 2022, we received a milestone payment of $3.0 million having achieved in the fourth quarter of 2021 the following: (i) the endorsement by an independent panel that we could advance our SQZ-PBMC-HPV clinical trial to combination therapy using checkpoint inhibitors and (ii) the initiation of that therapy.

We identified three performance obligations at the outset of the 2018 Roche Agreement: (1) the license to our intellectual property, the research and development activities related to HPV through Phase 1 clinical trials under a specified research plan, and the manufacturing of our SQZ APC platform and equipment in order to support the HPV research plan (the “first performance obligation”); (2) the license to our intellectual property and the research and development activities on next-generation APCs (the “second performance obligation”); and (3) the license to our intellectual property and the research and development activities on TCL (the “third performance obligation”).

In addition, we determined that the upfront payment of $45.0 million as well as the reimbursable costs of $10.8 million estimated by us constituted the entirety of the consideration to be included in the transaction price. This transaction price of $55.8 million was initially allocated to the three performance obligations based on the relative standalone selling price of each obligation. The potential milestone payments that we may be eligible to receive were excluded from the transaction price at the outset of the arrangement. We reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, we will adjust our estimate of the transaction price.

During the second quarter of 2019, we received a payment of $10.0 million following the achievement of the first development milestone under the 2018 Roche Agreement related to submission by us of preclinical data to the FDA. During the first quarter of 2020, we received a payment of $20.0 million following the achievement of the second development milestone under the 2018 Roche Agreement related to first-patient dosing in a Phase 1 clinical trial. These milestones were added to the transaction price in the period that it was “most likely” and that it was probable that a significant reversal in the amount of cumulative revenue recognized would not occur.

We separately recognize revenue associated with each of the three performance obligations as the research, development and manufacturing services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy each performance obligation. The amounts received from Roche that have not yet been recognized as revenue are deferred as a contract liability in our consolidated balance sheet and will be recognized over the remaining research and development period until each performance obligation is satisfied.

During the fourth quarter of 2019, we evaluated our overall program priorities and determined that we would continue to focus our resources on progressing the specified APC programs related to the 2018 Roche Agreement as well as our SQZ AAC and SQZ TAC platforms. As a result of our continuing focus on these specific programs, we reduced the level of priority of the TCL research activities under the 2018 Roche Agreement and expect to perform such TCL research activities over a longer time period than as originally expected under the specified research plan of the agreement. Since the fourth quarter of 2019, we have classified $9.2 million as

non-current deferred revenue, which will remain unrecognized as revenue until TCL research activities resume or the 2018 Roche Agreement is modified by us and Roche.

During the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020,~~2021, there were no significant changes in the total estimated costs expected to be incurred to satisfy the performance obligations under the 2018 Roche Agreement. We recognized revenue of ~~$4.3~~$2.9 million and ~~$5.8~~$4.9 million during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, under this agreement. ~~We recognized revenue of $9.1 million and $12.1 million during the six months ended June 30, 2021 and 2020, respectively, under the 2018 Roche Agreement.~~ As of ~~June 30, 2021,~~March 31, 2022, we recorded as a contract liability deferred revenue related to the 2018 Roche Agreement of ~~$34.8~~$18.3 million, of which ~~$25.7~~$9.1 million was a current liability. As of ~~June 30, 2021,~~March 31, 2022, the research and development services related to the performance obligations were expected to be performed over a remaining ~~periods ranging from 0.5 to 1.0 years.~~period of nine months.

As of ~~June 30, 2021,~~March 31, 2022, the expected remaining period of performance of ~~the Company’s~~our research and development services related to the third performance obligation was not determinable, and it will not become determinable until TCL research activities resume or the 2018 Roche Agreement is modified by ~~the Company~~us and Roche.

Research and development expenses consist primarily of costs incurred for our research activities, including development of our product candidates and costs incurred under our collaboration arrangements with Roche, which include:

We expense research and development costs as incurred. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Our direct research and development expenses are tracked on a program-by-program basis and consist of external costs and fees paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development and manufacturing activities. Such program costs also include the external costs of laboratory and consumable materials and costs of raw materials that are directly attributable to and incurred for any single program. We do not allocate employee costs, costs associated with our platform development and discovery efforts, payments made under third-party licensing agreements, costs of laboratory supplies and consumable materials that are not directly attributable to any single program, and facilities expenses, including rent, depreciation and other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and in the future, particularly should Roche determine not to exercise its options and we decide to continue clinical development of a product candidate. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. In addition, we may never succeed in obtaining regulatory approval for any of our product candidates.

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Interest income consists of interest earned on our cash equivalents ~~and marketable securities~~ balances.

Other income (expense), net consists of miscellaneous income and expense unrelated to our core operations.

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was passed by the U.S. Congress and signed into United States law. The CARES Act, among other things, includes certain provisions for individuals and corporations (including a suspension on the application of the 80% limitation described above for taxable years beginning prior to January 1, 2021), and technical amendments for qualified improvement property, or QIP. While we accelerated tax depreciation expenses due to the technical amendments made by the CARES Act to QIP, this and other CARES Act benefits did not materially impact our income tax provisions in the periods presented.

Comparison of the Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table summarizes our results of operations for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Collaboration revenue decreased by ~~$1.5~~$2.6 million to ~~$4.5~~$2.9 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$6.0~~$5.5 million for the three months ended ~~June 30, 2020.~~March 31, 2021. The decrease in revenue was primarily due to the following:

Research and development expenses increased by ~~$5.6~~$2.3 million to ~~$17.7~~$17.0 million for the three months ended ~~June 30, 2021,~~March 31, 2022, from ~~$12.0~~$14.7 million for the three months ended ~~June 30,~~March 31, 2021. The net increase was primarily due to the following:

~~General and administrative expenses~~ increased by ~~$1.9~~$0.3 million ~~during the three months ended June 30, 2021~~primarily as a result of a decrease in costs incurred in transferring technical know-how to ~~$5.9~~our contract manufacturing supplier.

•

The increase in personnel-related costs of $1.2 million was primarily due to ~~the following:~~

•

an increase of $0.9 million in personnel-related costs due to a $0.6 million increase in stock-based compensation expense and a $0.3 million increase in salary and benefit costs as a result of increased headcount.

a $0.1 million increase in stock-based compensation expense and a $1.1 million increase in salary and benefit costs as a result of increased headcount in our research and development function.

•

~~an increase in professional and consultant fees of $0.2 million primarily due to the timing of services performed.~~

•

The increase in laboratory and consumable materials expenses was not significant.

•

~~an increase of $1.1 million in facility-related and other costs primarily due to an increase in insurance expense as a public company for the full quarter ended June 30, 2021.~~

•

Platform-related external services and other costs decreased by $0.1 million as a result of lower consulting, equipment and information technology costs.

~~The above increases were partially offset by:~~

20•

a decrease of $0.4 million in patent-related costs due to reduced legal costs related to intellectual property protections, primarily consisting of patent application and maintenance costs in the United States and internationally.

Table of Contents

~~Interest Income~~

~~Interest income for the three months ended June 30, 2021, was relatively unchanged in comparison to the same period in 2020.~~

~~Comparison of the Six Months Ended June 30, 2021 and 2020~~

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

SIX MONTHS ENDED
JUNE 30,

2021

2020

CHANGE

(in thousands)

Revenue:

Collaboration revenue

$
9,993

$
12,390

$
(2,397
)
Operating expenses:

Research and development

32,422

23,905

8,517

General and administrative

12,054

9,527

2,527

Total operating expenses

44,476

33,432

11,044

Loss from operations

(34,483
)

(21,042
)

(13,441
)
Other income (expense):

Interest income

20

477

(457
)
Other income (expense), net

(6
)

(4
)

(2
)
Total other income, net

14

473

(459
)
Net loss

$
(34,469
)

$
(20,569
)

$
(13,900
)

~~Revenue~~

Collaboration revenue decreased by $2.4 million to $10.0 million for the six months ended June 30, 2021, compared to $12.4 million for the six months ended June 30, 2020. The decrease in revenue was primarily due to the following:

•

a decrease of $3.0 million to $9.1 million from $12.1 million in revenue recognized under the 2018 Roche Agreement due to a change in estimate (made as of December 2020) of the expected performance period of one of the performance obligations under the 2018 Roche Agreement, resulting in lower revenues being recognized in the first half of 2021.

~~The above decrease was partially offset by:~~

•

an increase of $0.5 million in revenue recognized under the 2017 Roche Agreement during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, was due to a decrease in remaining expected costs required to complete the performance obligations under the 2017 Roche Agreement.

~~Research and Development Expenses~~

SIX MONTHS ENDED
JUNE 30,

2021

2020

CHANGE

(in thousands)

Direct research and development expenses by program:

SQZ-PBMC-HPV

$
7,127

$
7,593

$
(466
)
SQZ-AAC-HPV

2,110

2,429

(319
)
APC—other

5,214

965

4,249

Other programs

4,501

1,493

3,008

Unallocated research and development expenses:

Personnel related (including stock-based compensation)

8,674

6,738

1,936

Facility related

2,565

2,602

(37
)
Laboratory and consumable materials

596

530

66

Platform-related external services and other

1,635

1,555

80

Total research and development expenses

$
32,422

$
23,905

$
8,517

~~Table of Contents~~

Research and development expenses increased by $8.5 million to $32.4 million for the six months ended June 30, 2021, compared to $23.9 million for the six months ended June 30, 2020. The net increase was primarily due to the following:

•

~~SQZ-PBMC-HPV costs decreased by $0.5 million primarily as a result of our transferring certain externally performed services in-house, as well as due to the timing of our manufacturing costs.~~

•

~~SQZ-AAC-HPV costs decreased by $0.3 million primarily as a result of the timing of materials and manufacturing costs.~~

•

~~APC-other costs increased by $4.2 million due to higher manufacturing costs incurred.~~

•

an increase of $2.0 million in personnel-related costs was primarily due to a $1.3 million increase in salary and benefit costs as a result of increased headcount and salary costs in our research and development function, and a $0.7 million increase in stock-based compensation expense.

•

~~Facility-related, laboratory and consumable, platform-related external services and other were all relatively flat.~~

General and Administrative Expenses


	SIX MONTHS ENDED JUNE 30,							THREE MONTHS ENDED MARCH 31,
	2021		2020		CHANGE			2022	2021	CHANGE
	(in thousands)							(in thousands)
Personnel related (including stock-based compensation)	$	5,934	$	4,169	$	1,765		$3,481	$2,909	$572
Professional and consultant fees		1,876		2,851		(975	)
Patent related		814		893		(79	)
Professional, consultant and patent related costs								1,745	1,524	221
Facility related and other		3,430		1,614		1,816		1,686	1,687	(1)
Total general and administrative expenses	$	12,054	$	9,527	$	2,527		$6,912	$6,120	$792

General and administrative expenses increased by ~~$2.5~~$0.8 million during the three months ended March 31, 2022 to $6.9 million, compared to $6.1 million for the ~~six~~three months ended ~~June 30, 2021 to $12.1 million, compared to $9.5 million for the six months ended June 30, 2020.~~March 31, 2021. The increase was primarily due ~~to the following:~~to:

•

~~an increase of $1.8~~•

an increase of $0.6 million in personnel-related costs ~~due to a $1.3 million increase in stock-based compensation expense and a $0.5 million increase in salary and benefit costs as a result of increased headcount.~~

•

~~an increase of $1.8 million in facility-related and other costs primarily due to an increase in insurance expense as a public company for the six-month period ended June 30.~~

~~The above increases were partially offset by:~~

•

~~a decrease of $1.0 million in professional and consultant fees as the costs incurred in the prior year period were incurred to support our preparation to become a public company.~~

•

a decrease of $0.1 million in patent-related costs due to reduced legal costs related to intellectual property protections, primarily consisting of patent application and maintenance costs in the United States and internationally.

~~Interest Income~~

~~Interest income for the six months ended June 30, 2021, was less than $0.1 million as compared to $0.5 million for the six months ended June 30, 2020. The decrease in interest income was~~ due to ~~the decrease~~a $0.3 million increase in ~~average interest rates during the respective periods.~~stock-based compensation expense and a $0.3 million increase in salary and benefit costs as a result of increased headcount and higher salary costs.

Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for the next several years, if at all. Through ~~June 30, 2021,~~March 31, 2022, we have funded our operations ~~from the sales of our common and preferred stock, upfront and milestone~~primarily with payments ~~under our~~received in connection with collaboration agreements, ~~with Roche,~~proceeds from equity and debt financing, most recently, with proceeds from our IPO and ~~Follow-on~~Follow-On Offering. ~~In November 2020, we completed our IPO pursuant to which we received aggregate net proceeds of approximately $72.9 million from the sale of common stock.~~ In February 2021, we completed the Follow-on Offering pursuant to which we received aggregate net proceeds of approximately ~~$55.6~~$56.4 million from the sale of common stock. As of ~~June 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$185.1~~$122.9 million.

The following table summarizes our sources and uses of cash for each of the periods presented:

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, operating activities used ~~$40.2~~$20.4 million of cash, primarily resulting from our net loss of ~~$34.5~~$21.0 million and changes in our operating assets and liabilities of ~~$14.7~~$4.1 million, partially offset by net non-cash charges of ~~$8.9~~$4.7 million. Net cash used by changes in our operating assets and liabilities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 consisted primarily of a ~~$9.8~~$2.9 million decrease in deferred revenue, a ~~$4.6~~$2.4 million decrease in operating lease liabilities, a ~~$2.0~~$0.9 million increase in prepaid expenses and other current assets, a $1.7 million increase in accrued expenses, all of which were partially offset by a $3.0 million decrease in accounts receivable. The decrease in deferred revenue during the three months ended March 31, 2022 was due to the revenue we recognized in that same period under the 2018 Roche Agreement.

During the three months ended March 31, 2021, operating activities used $20.6 million of cash, primarily resulting from our net loss of $15.4 million and changes in our operating assets and liabilities of $9.6 million, partially offset by net non-cash charges of $4.4 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2021 consisted primarily of a $5.5 million decrease in deferred revenue, a $2.3 million decrease in operating lease liabilities, a $2.6 million decrease in accrued expenses and a ~~$0.4~~$1.6 million increase in prepaid expenses and other current assets, all of which were partially offset by a $1.9 million decrease in accounts receivable. The decrease in deferred revenue during the ~~six~~three months ended ~~June 30,~~March 31, 2021 was due to the revenue we recognized in that same period under the 2018 Roche Agreement.

During the six months ended June 30, 2020, operating activities used $8.9 million of cash, primarily resulting from our net loss of $20.6 million, partially offset by net non-cash charges of $6.9 million and changes in our operating assets and liabilities of $4.8 million. Net cash provided by changes in our operating assets and liabilities for the six months ended June 30, 2020 consisted primarily of an $11.5 million increase in deferred revenue due to our receipt of a $20.0 million milestone payment, partially offset by the related revenue we recognized in that same period, under the 2018 Roche Agreement as well as a decrease of $0.2 million in prepaid expenses and other current assets, partially offset by a $4.3 million decrease in operating lease liabilities and a $2.7 million decrease in accrued expenses.

In all periods presented, other changes in prepaid expenses and other current assets, accounts receivable, accounts payable, accrued expenses and other liabilities not described above were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments. In all periods presented, decreases in operating lease liabilities were primarily due to our recurring payments made under recorded operating lease liabilities, including those arising from embedded leases.

During the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, net cash used in investing activities for each period was ~~$0.5~~$0.2 million, consisting of purchases of property and equipment.

During the six months ended June 30, 2020, net cash provided by investing activities was $42.2 million, consisting of maturities of marketable securities of $43.0 million, partially offset by purchases of property and equipment of $0.8 million.

The purchases of property and equipment in each period were primarily for equipment purchases and leasehold improvements related to the expansion of our research and development activities and the growth of our business.

During the ~~six~~three months ended ~~June 30,~~March 31, 2022, net cash provided by financing activities was $29 thousand consisting of proceeds from stock option exercises during the period.

During the three months ended March 31, 2021, net cash provided by financing activities was ~~$55.5~~$55.4 million, consisting of net proceeds from the Follow-on Offering in February 2021, of $56.4 million, in addition to proceeds of ~~$1.0~~$0.3 million from stock option exercises during the ~~period,~~quarter, offset by the payment of ~~$1.9~~$1.3 million of IPO and Follow-on Offering costs.

During the six months ended June 30, 2020, net cash provided by financing activities was $42.0 million, consisting primarily of net proceeds from our issuances of Series D preferred stock, partially offset by payments of issuance costs related to Series D preferred stock that we issued and sold in December 2019.

We expect that our expenses will increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. The timing and amount of our operating and capital expenditures will depend largely on:

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements ~~through~~into the ~~first~~second half of 2023. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ~~a current common stockholder’s interest~~existing stockholders' interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution 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 grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we would be required to delay, scale back or discontinue our research, 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.

There have been no material changes to our contractual obligations from those described in our ~~2020~~2021 Form 10-K. For additional information, see Note 108 and 9 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our ~~2020~~2021 Form 10-K. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies from those described in the ~~2020~~2021 Form 10-K.

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

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

As of ~~June 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$185.1~~$122.9 million, which consisted of cash and money market funds. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of these balances, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and cash equivalents.

We are not currently exposed to significant market risk related to changes in interest rates or foreign currency exchange rates. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. Our operations may be subject to inflation in the future.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934). Based on that evaluation, our Principal Executive Officer and Principal

Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~June 30, 2021.~~March 31, 2022.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended ~~June 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Investing in our common stock involves a high degree of risk. In addition to the other information in this Quarterly Report on Form 10-Q, including our interim condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Results of Operations and Financial Condition”, you should carefully consider the factors described in the section titled “Risk Factors” in our ~~2020~~2021 Form 10-K. There have been no material changes to our risk factors as previously disclosed in our ~~2020~~2021 Form 10-K.

On October 29, 2020, the SEC declared effective our registration statement on Form S-1 (File No. 333-249422), as amended, filed in connection with our IPO, or the Registration Statement. Pursuant to the Registration Statement, we registered the offer and sale of 5,073,529 shares of our common stock with a proposed maximum aggregate offering price of approximately $91.3 million. On November 3, 2020, we issued and sold 4,411,765 shares of our common stock at a price to the public of $16.00 per share. Upon completion of the IPO on November 3, 2020, we received net proceeds of approximately $65.6 million, after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which were $2.6 million. On November 12, 2020, in connection with the full exercise of the over-allotment option granted to the underwriters of our IPO, we issued and sold 661,764 additional shares of common stock at a price of $16.00 per share, generating additional net proceeds of $9.8 million after deducting underwriting discounts of $0.7 million.

The net proceeds of approximately $72.5 million have been invested in money market funds. There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus relating to the Registration Statement, filed with the SEC on October 30, 2020 pursuant to Rule 424(b)(4).

Exhibit

Number

Description

Form

File No.

Exhibit

Filing

Date

Filed/

Furnished

Herewith

Description

Form

File No.

Exhibit

Filing

Date

Filed/

Furnished

Herewith

3.1

Restated Certificate of Incorporation of SQZ Biotechnologies Company.

8-K

001-39662

3.1

11/04/2020

Restated Certificate of Incorporation of SQZ Biotechnologies Company.

8-K

001-39662

3.1

11/04/2020

3.2

Amended and Restated Bylaws of SQZ Biotechnologies Company.

S-1/A

333-249422

3.4

10/26/2020

Amended and Restated Bylaws of SQZ Biotechnologies Company.

S-1/A

333-249422

3.4

10/26/2020

4.1

Amended and Restated Investors’ Rights Agreement, dated as of December 19, 2019, as amended.

S-1

333-252889

4.1

02/09/2021

Amended and Restated Investors’ Rights Agreement, dated as of December 19, 2019, as amended.

S-1

333-252889

4.1

02/09/2021

4.2

Specimen Stock Certificate.

S-1/A

333-249422

4.2

10/26/2020

Specimen Stock Certificate.

S-1/A

333-249422

4.2

10/26/2020

31.1

Certification of Principal Executive 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.

Certification of Principal Executive Officer and 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.

31.2

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 to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

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

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101)

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.


Delaware		46-2431115
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Arsenal Yards Blvd, Suite 210 Watertown, MA		02472
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	SQZ	New York Stock Exchange


		Page
	Forward-Looking Statements		1
PART I.	FINANCIAL INFORMATION		2
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets		2
	Condensed Consolidated Statements of Operations and Comprehensive Loss		3
	Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~ Stockholders’ Equity (~~Deficit~~	)		4
	Condensed Consolidated Statements of Cash Flows		65
	Notes to Unaudited Condensed Consolidated Financial Statements		76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1814
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2923
Item 4.	Controls and Procedures		2923
PART II.	OTHER INFORMATION		3025
Item 1.	Legal Proceedings		3025
Item 1A.	Risk Factors		3025
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3126
Item 3.	Defaults Upon Senior Securities		3126
Item 4.	Mine Safety Disclosures		3126
Item 5.	Other Information		3126
Item 6.	Exhibits		3227
Signatures			3328


	THREE MONTHS ENDED JUNE 30,			THREE MONTHS ENDED MARCH 31,
	2021	2020	CHANGE	2022	2021	CHANGE
	(in thousands)			(in thousands)
Direct research and development expenses by program:
SQZ-PBMC-HPV	$2,938	$3,468	$(530)	$1,903	$4,189	$(2,286)
SQZ-AAC-HPV	1,051	1,704	(653)	1,357	1,059	298
APC—other	4,185	520	3,665
SQZ-eAPC-HPV				3,332	1,029	2,303
Other programs	2,620	809	1,811	2,491	1,885	606
Unallocated research and development expenses:
Personnel related (including stock-based compensation)	4,475	3,474	1,001	5,359	4,199	1,160
Facility related	1,423	1,086	337	1,411	1,142	269
Laboratory and consumable materials	335	193	142	325	262	63
Platform-related external services and other	655	783	(128)	832	975	(143)
Total research and development expenses	$17,682	$12,037	$5,645	$17,010	$14,740	$2,270

	~~SQZ Biotechnologies Company~~

~~Date: August 4, 2021~~	~~By:~~SQZ Biotechnologies Company

Date: May 10, 2022	By:	/s/ Armon Sharei, Ph.D.
		Armon Sharei, Ph.D.
		President and Chief Executive Officer

~~Date: August 4, 2021~~	~~By:~~	~~/s/ Teri Loxam~~
		~~Teri Loxam~~
		~~Chief Financial Officer~~


☒	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

	COMMON STOCK
	SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ EQUITY
Balances at March 31, 2021		27,881,111		28		311,425		(142,168	)		169,285
Issuance of common stock upon exercise of stock options		150,293		—		660		—			660
Stock-based compensation expense		—		—		1,829		—			1,829
Net loss		—		—		—		(19,070	)		(19,070	)
Balances at June 30, 2021		28,031,404	$	28	$	313,914	$	(161,238	)	$	152,704

	CONVERTIBLE PREFERRED STOCK				COMMON STOCK				ADDITIONAL		ACCUMULATED OTHER						TOTAL
	SHARES		AMOUNT		SHARES		AMOUNT		PAID-IN CAPITAL		COMPREHENSIVE INCOME (LOSS)			ACCUMULATED DEFICIT			STOCKHOLDERS’ DEFICIT
Balances at March 31, 2020		14,963,274	$	147,351		1,737,907	$	2	$	3,400	$	146		$	(86,831	)	$	(83,283	)
Issuance of Series D convertible preferred stock, net of issuance costs of $8		1,940,945	$	27,006		—		—		—		—			—			—
Issuance of common stock upon exercise of stock options		—		—		18,111		—		32		—			—			32
Stock-based compensation expense		—		—		—		—		754		—			—			754
Net loss		—		—		—		—		—		—			(9,986	)		(9,986	)
Unrealized gains on marketable securities, net of tax of $0		—		—		—		—		—		(83	)		—			(83	)
Balances at June 30, 2020		16,904,219	$	174,357		1,756,018	$	2	$	4,186	$	63		$	(96,817	)	$	(92,566	)

	JUNE 30, 2021			DECEMBER 31, 2020
Other information:
Weighted-average remaining lease term (in years)		6.4			6.7
Weighted-average discount rate		7.4	%		7.2	%

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company