•obtain and enforce patents, licenses or other proprietary protection for our products and technologies;

•formulate, manufacture, market and sell any product that we develop;

•develop and maintain products that reach the market first and are technologically superior to or are of lower cost than other products in the market; and

•recruit subjects into our clinical trials in a timely fashion.

MANUFACTURING

We currently rely heavily on ~~contract manufacturing organizations, or~~ CMOs to produce our preclinical and clinical product candidates in accordance with FDA and EMA mandated regulations, also known as current good manufacturing practices, or cGMPs. We employ a technical operations staff in the areas of process development, analytical development, quality control, quality assurance, project management, and manufacturing to facilitate appropriate oversight of our CMOs, support of our regulatory filings and execution of clinical ~~trials. In 2017,~~trials.

We believe that in-house manufacturing capability can provide a competitive advantage. To this end, we ~~expanded our services agreement with Brammer Bio MA, LLC to provide dedicated capacity to supply our preclinical~~have recently completed and ~~clinical programs. Additionally, we plan to build a~~brought online an AAV cGMP manufacturing facility in our ~~new~~headquarters building in Brisbane, ~~CA for which we are currently occupying the 2~~^nd ~~and 3~~^rd ~~floors. This facility will be~~California designed to manufacture Phase 1/2 clinical ~~trial~~study supplies for our ~~pipeline programs.~~gene therapy pipeline. We are also building cell therapy manufacturing facilities in Brisbane, California and in Valbonne, France that we expect to become operational by the end of 2021.

Even after these in-house facilities are operational, we intend to continue to rely on CMOs for the manufacture of our product candidates for any Phase 3 clinical trials, and if approved, for commercial supply. We believe this balanced approach to manufacturing, investing in internal ~~capacity/~~capacity and capabilities while strengthening our commitment to external capacity, will enable us to meet our anticipated pipeline needs.

Additionally, in 2019 we signed an expanded services agreement with Brammer Bio MA, a Thermo Fisher Scientific, Inc. subsidiary, or Brammer, which provided us with access to dedicated AAV manufacturing capacity up to 2000-L bioreactor scale capable of handling large-scale, commercial-grade runs for products such as ST-920, our gene therapy product candidate for Fabry disease. The agreement also allows us to leverage Brammer’s viral vector manufacturing know-how in our Brisbane manufacturing facility that we believe will provide a seamless transition from early development to late-stage clinical trials and commercial-scale manufacturing.

We currently leverage three distinct manufacturing platforms: AAV vector production for our genome ~~editing~~engineering and gene therapy product candidates, HSPC modification for some of our cell therapy product candidates and engineered T cell therapies. We use a commercial scale baculovirus manufacturing platform to manufacture AAV vectors for genome editing and gene therapy, with each AAV vector packaging a different transgene specific to the target indication or ZFN. The manufacturing process for our HSPC cell therapy product candidates utilizes the patient’s own HSPCs. These HSPCs are transfected using mRNA to produce ZFNs that target specific DNA sites, resulting in modified HSPCs. The third platform utilizes our ZFN technology to transform CAR-Tregs for autologous and

allogeneic cell therapies. With the acquisition of ~~TxCell,~~Sangamo France, we also added capabilities to manufacture ~~regulator T-cells~~regulatory T cells in therapeutic quantities to be used to treat ~~auto-immune~~inflammatory and autoimmune disorders.

GOVERNMENT REGULATION

We operate within the heavily regulated ~~pharmaceutical framework~~biopharmaceutical industry and much of our operations, including nonclinical and clinical trials, development, manufacturing, commercialization, marketing and reimbursement are subject to regulatory approvals. Relevant regulatory authorities include, but are not limited to, the FDA, the EMA, Commission of the European Union, or EU, ~~member state~~Member State agencies, including the UK Medicines and Healthcare Products Regulatory Agency, or MHRA.

Product Regulation

In the United States, the FDA regulates biologic products including gene therapy and human cellular therapy products under the Federal Food, Drug, and Cosmetic Act, or the FDCA, the Public Health Service Act, or the PHSA, and regulations and guidance implementing these laws. The FDCA, PHSA and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involving biologic products. Applications to the FDA are required before conducting human clinical testing of biologic products and in the ~~European Union~~EU, approval must be obtained from the EMA. FDA approval also must be obtained before marketing of biologic products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.

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Accelerated Assessment

A number of agencies, including the FDA and the EMA, have ~~accelerated approval~~expedited development programs, including for innovative products and in areas of high unmet medical need, such as PRIME in the EU. These programs require a certain level of evidence demonstrating safety and efficacy in patients from ~~early stage~~early-stage clinical trials. Entry into one of these ~~accelerated schemes~~expedited programs may result in assistance with the scientific opinion and faster approval timelines. Some of these programs may offer joint approval and reimbursement advice. It is noted that even applications in an ~~accelerated assessment scheme~~expedited development program may be assessed under standard timelines, where the regulatory authority deems ~~it necessary to address more questions.~~

that the program may no longer meet the requirements for priority review.

U.S. Biologic Products Development Process

Our product candidates must be approved by the FDA before they may be legally marketed in the United States. The process required by the FDA before a biologic product candidate may be marketed in the United States generally involves the following:

•completion of preclinical laboratory tests and in vivo studies in accordance with the FDA’s current Good Laboratory Practice, or GLP, regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations;

•submission to the FDA of an ~~application for an~~ IND ~~exemption,~~application, which allows human clinical trials to begin unless FDA objects within 30 days;

•approval by an independent institutional review board, or IRB, reviewing each clinical site before each clinical trial may be initiated;

•performance of adequate and ~~well‑controlled~~well-controlled human clinical trials according to the FDA’s Good Clinical Practice, or GCP, regulations, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biologic product candidate for its intended use;

•preparation and submission to the FDA of a biologics license application, or BLA, for marketing approval that includes substantial evidence of safety ~~purity~~ and ~~potency~~efficacy from results of nonclinical testing and clinical trials;

•review of the product by an FDA advisory committee, if applicable;

•satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biologic product candidate is produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the biologic product candidate’s identity, safety, strength, quality, potency and purity;

•potential FDA ~~audit~~inspection of the nonclinical and clinical trial sites that generated the data in support of the BLA; and

•payment of user fees, if applicable, and FDA review and approval, or licensure, of the BLA.

Before testing any biologic product candidate in humans, including a gene therapy product candidate, the product candidate must undergo preclinical testing. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as in vivo studies to assess the potential safety and activity of the product candidate and to establish a rationale for therapeutic use. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.

Concurrent with clinical trials, companies usually must complete ~~some long‑term~~additional preclinical testing, ~~such as~~that may include animal tests of reproductive adverse events and carcinogenicity, and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

Human gene transfer protocols are subject to the FDA’s oversight and other clinical trial regulations, and oversight at the local level as set forth in National Institutes of Health, or NIH, Guidelines. Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial. Compliance with the NIH Guidelines is mandatory for investigators at institutions receiving NIH funds for research involving recombinant DNA. However, many companies and other institutions, not otherwise subject to the NIH Guidelines, voluntarily follow them.

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The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA also may impose clinical holds on a biologic product candidate at any time before or during clinical trials due to safety concerns or ~~non‑compliance.~~non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical studies to begin, or that, once begun, issues will not arise that suspend or terminate such studies.

EU Drug Development Process

Similar to the United States, the EU regulatory framework sets both EU-wide and national, Member State-specific requirements for the development and approval of medicinal products. Article 8(3) of Directive 2001/83/EC sets out the contents of a marketing authorization, or MA, application and all the information that must be submitted for the evaluation of a medicinal product. Certain preclinical (also termed “non-clinical”) data is required in order to enable clinical trials and later be used in dossier for a marketing authorization application. All studies should take place in accordance with GLP and all applicable EMA, Commission and European Pharmacopoeia guidelines on preclinical studies, including guidance on quality, non-clinical and clinical aspects of medicinal products containing genetically modified cells.

The requisite amount of preclinical data enables the design of a clinical trial, from Phase I1 (first-in-human clinical trials) through to Phases II2 and ~~III,~~3, which are safety and efficacy ~~and dosing studies and similar~~studies. Similar restrictions and requirements apply as in the USUnited States regarding preclinical data ~~approvals for~~to support trials using viral vectors. The preclinical tests should establish parameters such as toxicity, pharmacodynamics and pharmacokinetic properties, as well as the quality of the gene ~~transfer~~therapy medicinal products. Due to the particular nature of gene therapy medicinal products, it is recognized ~~that~~ that it may not always be possible for the non-clinical safety studies to be in conformity with the principles of GLP and a proper justification should be submitted where a pivotal non-clinical safety study has not been conducted under GLP rules.

Clinical studies are crucial to obtaining the required data and the requirements governing the conduct of clinical trials are further analyzed below.

All medicinal products and advanced therapy medicinal products, or ATMPs, must be manufactured in accordance with the guidelines on Good Manufacturing Practice, or GMP, and in a GMP licensed facility, which can be subject to GMP inspections.

Human Clinical Trials Under an IND

Clinical trials involve the administration of the biologic product candidate to ~~healthy volunteers or~~ patients under the supervision of qualified investigators which generally are physicians not employed by, or under, the control of the trial sponsor. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent.

Further, each clinical trial must be reviewed and approved by an IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers items such as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject, or their legal representative, reviews and approves the study protocol, and must monitor the clinical trial until completed.

Human clinical trials typically are conducted in three sequential phases that may overlap or be combined:

•Phase 1.The biologic product candidate initially is introduced into a small number of human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early understanding of its effectiveness. Phase 1 clinical trials of gene and cell therapies are typically conducted in patients rather than healthy volunteers.

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•Phase 2.The biologic product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

•Phase 3.Phase 3 clinical trials are commonly referred to as “pivotal” studies, which typically denotes a study which presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a biologic product. In Phase 3 studies, the biologic product candidate is administered to an expanded patient population, generally at multiple geographically dispersed clinical trial sites in adequate and ~~well‑controlled~~well-controlled clinical trials to generate sufficient data to statistically confirm the ~~potency~~efficacy and safety of the product for approval. These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide an adequate basis for product labeling.

~~Post‑approval~~

Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for ~~long‑term~~long-term safety ~~follow‑up.~~follow-up. Sometimes approval for a product is conditional upon the completion of post-marketing clinical studies.

During all phases of clinical development, regulatory agencies (such as the FDA, the EMA and other comparable regulatory agencies) require extensive monitoring and auditing of all clinical activities, clinical data and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA.

Written IND safety reports must be promptly submitted to the FDA ~~the NIH~~ and the investigators for: serious and unexpected adverse events; any findings from other trials, in vivo laboratory tests or in vitro testing that suggest a significant risk for human subjects; or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or ~~life‑threatening~~life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable ~~health~~safety risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic product candidate has been associated with unexpected serious harm to patients.

The FDA usually recommends that sponsors observe subjects for potential gene ~~therapy‑related~~therapy-related delayed adverse events for up to a ~~15‑year period, including a minimum of five years of annual examinations followed by 10 years of annual queries, either in person or by questionnaire.~~

15-year period.

In the EU, clinical trials almost always require approval from a national competent authority of the relevant Member State and an approval from an Ethics Committee. If the medicinal product is considered to be a genetically modified organism, or GMO, then GMO approval must also be obtained. There is no harmonization between Member States regarding the approach to and timelines of GMO approval, which ~~results~~may result in ~~significant challenges and time restrictions.~~

the submission of additional information, which may impact study initiation in a given country.

The conduct of clinical trials should follow the approved clinical trial protocol and be in accordance with the principles of GCP. Gene therapy medicinal products are in addition subject to the rules of GCP for ATMPs, ~~(currently in draft form),~~ which outline specific additional safeguards and requirements. Record retention requirements are increased for ATMPs ~~and~~as there are relevant long-term ~~follow up~~follow-up and human safety and traceability requirements.

Compliance with cGMP Requirements

Manufacturers of biologics must comply with applicable current Good Manufacturing Practices, or cGMP, regulations, including quality control and quality assurance and maintenance of records and documentation. Manufacturers and others involved in the manufacture and distribution of such products also must register their establishments with the FDA and certain state agencies. Both domestic and foreign manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing process. Any material changes to the manufacturing equipment, process or location of the approved manufacturing site must be reported to the relevant agency/authority. Establishments may be subject to periodic, unannounced inspections by government authorities (including regulatory agencies) to ensure compliance with cGMP requirements and other laws. Discovery of problems may result in a government entity placing restrictions on a product, manufacturer or holder of an approved BLA, and may extend to requiring withdrawal of the product from the market, issue warning or similar letters or seeking civil, criminal or administrative sanctions against the company. The

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FDA will not approve a BLA unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specification.

Concurrent with clinical trials, companies ~~usually complete additional preclinical studies and must also~~ develop additional information about the physical and biological characteristics of the ~~biologic~~ product candidate as well as finalize a process for manufacturing the product candidate in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents or of causing other adverse events with the use of biologic products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other requirements, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biologic product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the biologic product candidate does not undergo unacceptable deterioration over its shelf life.

For a product candidate that is also a human cellular or tissue product, the FDA also requires compliance with current Good Tissue Practices, or cGTPs. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues and cellular and tissue-based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.

U.S. Review and Approval Processes

The results of the preclinical tests and clinical trials, together with detailed information relating to the product’s Chemistry, Manufacturing and Controls, or CMC, and proposed labeling, among other things, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee. The FDA adjusts the PDUFA user fees on an annual basis. The PDUFA also imposes an annual program fee for approved biologics. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small ~~business.~~

business or for a product indication for orphan diseases.

The FDA reviews a BLA within 60 days of submission to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In that event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an ~~in‑depth,~~in-depth, substantive review of the BLA.

The FDA reviews the BLA to determine, among other things, whether the proposed product candidate is safe and ~~potent, or~~ effective, for its intended use ~~has an acceptable purity profile~~ and whether the product candidate is being manufactured in accordance with cGMP to assure and preserve the product candidate’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biologic products or biologic products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the product approval process, the FDA also will determine whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the product candidate. REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the

potential risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecular entity. A REMS could include medication guides, physician communication plans and elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.

Before approving a BLA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the product candidate unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product candidate within required specifications. Additionally, before approving a BLA, the FDA typically will inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements.

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On the basis of the BLA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the biologic product with specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter.

If a product candidate receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a REMS, or otherwise limit the scope of any approval. In addition, the FDA may require ~~post‑marketing~~post-marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biologic product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

The FDA has agreed to specified performance goals in the review of BLAs under the PDUFA. One such goal is to review standard BLAs in 10 months after the FDA accepts the BLA for filing, and priority BLAs in six months, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

EU Review and Approval Process

Before a medicinal product can be placed on the market in the EU, it must have received an MA. This could either be at national or EU level under a mutual recognition, decentralized or centralized procedure. Our product candidates are innovative treatments, which will bear the classification of ~~ATMP and/or orphan status.~~ATMP. As such, the appropriate authorization procedure is the centralized procedure, which involves an MA being granted by the European Commission following a positive opinion by the EMA. A centralized MA is simultaneously valid in all EU Member States and the European Economic Area, or EEA, (Iceland, Liechtenstein and Norway). A centralized MA also results in a single set of product information (patient information leaflet, labelling and summary of product characteristics) for all EU Member States.

The timeline for the grant of a centralized MA since the time of the application is 210 days for the assessment of the application (including “clock stops” for the applicant to prepare answers to the questions from the EMA). The Committee for Medicinal Products for Human Use, or the CHMP, may either provide a positive or negative opinion. Following a positive opinion, the European Commission will usually issue its legally binding MA after 67 days. A negative opinion may be appealed by the applicant who must submit a request for re-examination within 60 days. There is the possibility for accelerated timelines of drug applications for eligible applicants, which can reduce the timeline to 150 days, if the applicant can produce sufficient justification.

If the MA application contains less comprehensive than the required standard as at the time of the application, when there are public health grounds and often in the case of orphan medicinal products, the EMA may recommend to the European Commission that it issues a different type of an MA, as follows: (a) a Conditional MA (valid for one year and renewable), when the medicinal product shows a positive benefit-risk balance and targets an unmet medical need and it is expected that the applicant will be able to provide comprehensive data in due course; or (b) an MA under ‘exceptional circumstances’, when it is not expected that the applicant will be able to provide comprehensive efficacy and safety data (often for very rare indications).

Manufacturing Regulation in Europe

Various requirements apply to the manufacturing and placing on the EU market of medicinal products. The manufacturing of medicinal products in the EU requires a manufacturing authorization, and the manufacturing authorization holder must comply with various requirements set out in the applicable EU laws, regulations and guidance, including EU cGMP standards. Similarly, the distribution of medicinal products into and within the EU is subject to compliance with the applicable EU laws, regulations and guidelines, including the requirement to hold appropriate authorizations for distribution granted by the competent authorities of the EU member states. Marketing authorization holders may be subject to civil, criminal or administrative sanctions, including suspension of manufacturing authorization, in case of non-compliance with the EU or EU member states’ requirements applicable to the manufacturing of medicinal products.

~~Post‑approval~~

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Post-approval Requirements

Rigorous and extensive FDA regulation of biologic products continues after approval, particularly with respect to cGMP requirements. Manufacturers are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation. Other ~~post‑approval~~post-approval requirements applicable to biologic products include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, ~~record‑keeping~~record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information and complying with electronic record and signature requirements. After a BLA is approved, the product also may be subject to official lot release. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA, together with a release protocol, showing a summary of the history of manufacture of the lot and the results of all tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products before releasing the lots for distribution. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency and effectiveness of biologic products.

Failure to comply with the FDA’s post-approval regulations can result in withdrawal of product approval and licensure.

A sponsor also must comply with the FDA’s or appropriate national authority’s advertising and promotion requirements, such as the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as ~~“off‑label~~“off-label use”). Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

Orphan ~~designation~~

~~We maintain product candidates that have obtained FDA~~ and ~~EU orphan~~RMAT designation ~~(see “Therapeutic Product Development” section above). These products~~

Products that are intended for treating rare conditions that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment ~~drug.~~drug, may qualify for orphan designation. In the EU, these rare conditions are defined as having a prevalence of no more than five in every 10,000 people in the EU. Once a medicinal product with orphan designation obtains a marketing approval, it can benefit from a marketing exclusivity period in respect of the specific orphan indication for which the drug has been approved for a period of seven years in the U.S. and for up to ~~ten~~10 years in the EU. This measure is intended at incentivizing the development of medicines for rare diseases. The product must be able to maintain its orphan designation, by reference to the criteria of (a) prevalence of the condition and (b) significant benefit of the product over competing products. If the manufacturer is no longer able to assert that the product meets the orphan designation criteria or is not able to provide sufficient quantities, it may lose the orphan market exclusivity.

Regenerative medicine advanced therapy, or RMAT, designation is intended to expedite review of a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates the potential to address unmet medical needs for such a disease or condition.

RMAT designation provides potential benefits that include more frequent meetings with the FDA to discuss the development plan for the product candidate, and eligibility for rolling review and priority review of the related BLA. Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites. However, RMAT designation does not change the FDA’s standards for product approval. Additionally, RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges.

Clinical Trial Data Disclosure

Many jurisdictions have mandatory clinical trial information obligations on sponsors. In the EU this is under the Transparency Regulation No. 1049/ 2001, EMA Policy 0043, EMA Policy 0070, as well as the new Clinical Trials Regulation No. 536/2014, all of which impose on sponsors the obligation to make publicly available certain information stemming from clinical studies. In the EU, the transparency framework provides for a wide right for (EU-based at the moment) interested parties to submit an access to documents request to the EMA for information included in the marketing authorization application dossier for approved medicinal products. Only very limited information is exempted from disclosure ~~i.e.~~(i.e., commercially confidential information, ~~(which~~which is construed increasingly ~~narrowly)~~narrowly and protected personal ~~data.~~data). It is possible for competitors to access and use this data in their own research and development programs anywhere in the world, once ~~this~~these data isare in the public domain.

~~Additional~~

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Regulation

of Our Operations

Although we currently do not have any products on the market, we may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without ~~limitation,~~limitation:

•the federal healthcare Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

•federal civil and criminal false claims laws, including the federal False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit, among other things, knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services;

•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, and individuals and entities that perform services for them that involve individually identifiable health information, known as business associates as well as covered subcontractors;

•the federal Physician Payments Sunshine Act created under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments and other transfers of value to physicians, currently defined to included doctors, dentists, optometrists, podiatrists and chiropractors, and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members. Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year;

•analogous state and ~~federal~~foreign laws and regulations, such as state anti-kickback ~~fraud, anti-bribery~~ and ~~abuse,~~ false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, require drug manufacturers to report information related to payments and other transfers of value to other healthcare providers and healthcare entities, marketing expenditures; or drug pricing; and/or ensure the registration of sales personnel; and

•state and foreign laws govern the privacy and security ~~and physician transparency laws and regulations,~~of health information in specified circumstances, many of which ~~may become more applicable if our product candidates~~differ from each other in significant ways and often are ~~approved and we begin commercialization.~~ not preempted by HIPAA, thus complicating compliance efforts.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to significant penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs, ~~individual~~ imprisonment, suspension or withdrawal of our marketing and commercialization in respect of our commercially approved products, and additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our financial results. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business. See “~~Risk Factors—~~“Risk Factors—Our current and future relationships with healthcare providers, customers and third-party payors ~~will be~~ subject us to applicable ~~anti-~~

~~kickback,~~anti-kickback, fraud and abuse, privacy, data security and other healthcare laws and regulations. If we fail to comply with such regulations, ~~which~~we could ~~expose us to criminal sanctions, civil~~face substantial penalties ~~contractual damages, reputational harm~~ and ~~diminished profits~~our business, results of operations, financial condition and ~~future earnings.~~prospects could be adversely affected.”

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Healthcare Reform

The ~~United States~~U.S. and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislative initiatives, such as the ~~Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010,~~ACA, to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing. The ACA and its implementing regulations, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including products similar to our product candidates, that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, created a new Patient Centered Outcomes Research Institute, which provides incentives to programs that increase the federal government’s comparative effectiveness research, established a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D, and created a licensure framework for follow-on biologic products.

There remain legal and political challenges to certain aspects of the ACA, as well as efforts to repeal or replace certain aspects of the ACA. Several bills affecting the implementation of certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017, or Tax Act, included a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. In addition, the Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.”

On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. The United States Supreme Court is currently reviewing this case, although it is unclear when a decision will be made.

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018, will remain in effect through 2029 unless additional Congressional action is taken. However, pursuant to COVID-19 pandemic relief legislation, these Medicare sequester reductions are suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic. In January 2013, the American Taxpayer Relief Act of 2012, or the ATRA, was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Also, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for pharmaceutical products. At the federal level, the Trump administration’s budget proposal for fiscal year 2021 included a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs. On March 10, 2020, the Trump administration sent “principles” for drug pricing to Congress, calling for legislation that would, among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D

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beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases. Further, the Trump administration released a “Blueprint” to lower drug prices and reduce out-of-pocket costs of drugs that contained proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out-of-pocket costs of drug products paid by consumers. On July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals. As a result, the FDA released a final rule on September 24, 2020, effective November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, the U.S. Department of Health and Human Services, or HHS, finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers. On November 20, 2020, CMS issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021. On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule. It is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In the United States, the EU and other potentially significant markets for our product candidates, government authorities and third-party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices. Furthermore, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

See “Risk Factors—Recently enacted and future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect the prices we may obtain.”

Pricing, Coverage and Reimbursement

Pricing and reimbursement of a therapeutic product will largely determine the affordability of the product, and whether the product is prescribed and supplied to patients and private insurance companies may take into account government reimbursement methodologies. Due to these proposed and enacted laws, as well as other actions, significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval, particularly for novel products. In both domestic and foreign markets, sales and reimbursement of any approved products will depend, in part, on the extent to which third-party payors, such as government health programs, commercial insurance and managed healthcare organizations provide coverage, and establish adequate reimbursement levels, for such products. Third-party payors are increasingly challenging the prices charged for medical products and services and imposing controls to manage costs. Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the FDA-approved products for a particular indication. Additionally, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. If third-party payors do not consider our products to be cost-effective compared to other therapies, these payors may not cover our products after approved as a benefit under their plans or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis. See “Risk Factors—Even if we are able to commercialize our product candidates, the products may not receive coverage and adequate reimbursement from third-party payors in the United States and in other countries in which we seek to commercialize our products, which could harm our business.”

In the EU, pricing and reimbursement are the prerogative of Member States. Therefore, the requirements around reimbursement of medicinal products can vary widely. Each Member State can follow its own approach, subject to common rules of transparency, competition, and freedom of trade and movement in the EU. Many Member States, including France, Germany and the United Kingdom, follow a health technology assessment, or HTA, procedure for medicinal products in order to assess the cost-effectiveness of a product which could then be recommended for reimbursement under the national health services. There is increasingly exchange of information concerning HTAs on a voluntary basis among EU Member States. In

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the United Kingdom, the National Institute for Health and Care Excellence is the body which conducts HTAs and issues guidance to be followed by the regional health bodies called clinical commissioning groups.

~~EMPLOYEES~~

Environmental Regulation

U.S. federal and state laws regarding safe working conditions, environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business. These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. We may incur significant costs to comply with such laws and regulations now or in the future. If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmental laws and regulations that continued compliance therewith will not have a material effect on our business. We cannot predict, however, how changes in these laws and regulations may affect our future operations.

Privacy Regulation

We are required to comply with privacy and data security laws in the United States and in other foreign jurisdiction in which we operate, such as the EU General Data Protection Regulation, or GDPR, and the California Consumer Privacy Act of 2018, or CCPA, which apply to the collection, use, disclosure, transfer, or other processing of personal data.

The collection, use, disclosure, transfer or other processing of personal data regarding individuals in the EU, including personal health data, is subject to the GDPR, which became effective on May 25, 2018. The GDPR, which is wide-ranging in scope, imposes several requirements on us relating to, among other things, the control over personal data by individuals to whom the personal data relates; notice we must provide to individuals regarding our processing of their personal data; the documentation we must maintain; the security and confidentiality of the personal data; data breach notification; and the use of third-party processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of personal data out of the EU. The post-Brexit trade and cooperation agreement between the United Kingdom and the EU provides that transfers of personal data from the EU to the United Kingdom will not be treated as restricted transfers to a non-EU country for a period of up to six months from January 1, 2021. However, unless the EU Commission makes an “adequacy finding” with respect to the United Kingdom before the end of that transition period, from that date the United Kingdom will be a “third country” under the GDPR, and transfers of personal data from the European Economic Area to the United Kingdom will require an “adequacy mechanism,” such as the Standard Contractual Clauses. The GDPR authorizes the imposition of large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenue of the noncompliant company, whichever is greater. The GDPR requirements related to international data transfers apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries such as Sangamo France, including employee information. The GDPR has increased our responsibility and potential liability in relation to personal data that we process compared to prior EU law, particularly in light of our acquisition of Sangamo France, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business.

Despite our ongoing efforts to bring our practices into compliance with the GDPR, we may not be successful either due to various factors within our control or other factors outside our control. It is possible that local data protection authorities may interpret the GDPR in different ways, leading to potential inconsistencies in the requirements we must meet in different EU member states. Any failure or alleged failure (including as a result of deficiencies in our policies, procedures or measures relating to privacy, data security, marketing or communications) by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards or regulatory guidance relating to privacy or data security may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity.

In the United States, California adopted the CCPA, which became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered businesses to provide new disclosures to California consumers (as that word is broadly defined in the CCPA), provide such consumers new ways to opt-out of certain sales of their personal information and allow for a new cause of action for data breaches. It remains unclear how the CCPA will be interpreted, but as currently written, it will likely impact our business activities and exemplifies the vulnerability of our business not only to cyber threats but also to the evolving regulatory environment related to personal data. As we expand our operations, the CCPA may increase our compliance costs and potential liability.

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The CCPA itself will be expanded substantially effective January 1, 2023, as a result of California voters approving the California Privacy Rights Act of 2020, or CPRA, on the November 2020 ballot, which will, among other things, establish the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines. Some observers have noted that the CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Other states are beginning to pass similar laws.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly. See “Risk Factors—Our current and future relationships with healthcare providers, customers and third-party payors subject us to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations. If we fail to comply with federal, state and foreign laws and regulations, including healthcare, privacy and data security laws and regulations, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.”

HUMAN CAPITAL MANAGEMENT

Our Mission & Our Employees

At Sangamo, we are committed to translating ground-breaking science into genomic medicines that transform patients’ lives. We are a passionate group of biotechnology professionals based in the United States, France and the United Kingdom with years of experience and technical expertise, committed to developing best-in-class genomic medicines. We embrace collaboration, discipline and efficiency while welcoming fresh ideas and stimulating personal development. We encourage and embrace diversity and believe it enhances our work towards one common goal: to transform the lives of the patients we aim to serve.

We view our employees as one of our most valuable assets in serving our mission. We compete in the highly competitive biotechnology industry, and attracting, retaining and developing a diverse group of talented employees is crucial to our strategy and our ability to compete effectively. We need to grow the size of our organization in order to support our current research, product development, manufacturing and regulatory efforts and our plans for commercializing our wholly-owned product candidates when approved. This growth is critical to our success. There currently is a shortage of skilled individuals with substantial experience discovering, developing and manufacturing genomic medicines, which is likely to continue. As a result, competition for these individuals is intense and the turnover rate can be high. We face substantial competition among numerous biopharmaceutical companies and academic institutions for individuals with these skills.

Our Values

We believe success comes when we and our employees align our core values with our mission to translate our ground-breaking science into genomic medicines that transform patients’ lives. Our core values are:

•Patient Centric: Patient welfare is the rule against which we measure our actions and decisions. Before making decisions affecting patients, we work to understand their needs and experiences. Our focus on patients is a source of competitive advantage: it sharpens our research and development efforts and guides us to develop important medicines.

•Teamwork & Accountability: We seek appropriate input across our company to make better decisions and achieve our goals. We treat one another with respect and expect a great deal of each other. We honor our commitments.

•Innovation & Excellence: The bold pursuit of technological advancement and scientific breakthrough is our foundation. We are also a company where individuals can flourish, grow and develop their expertise. We celebrate our successes and the personal and professional accomplishments of our colleagues.

•Urgency & Efficiency: We make decisions quickly and thoughtfully; we decentralize decision making authority appropriately to foster ownership and action. We define our priorities clearly, communicate them and move forward decisively. We commit to achieving or surpassing performance objectives, and we celebrate exceeding the expectations of our colleagues and stakeholders.

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Our Management of Human Capital

We recently hired our first Chief People Officer in September 2020 to lead our human resources function and to expand our programs to recruit, retain and develop our employees. As of ~~February 15, 2019,~~December 31, 2020, our global human resources function was comprised of nine full time human resources professionals.

To manage our human resources, we track and report internally on key talent metrics including headcount by business unit and country, historical headcount growth, turnover, new hires and terminations, open roles and employee demographics including gender, race and ethnicity. Our senior executives use these metrics to assist with resource planning, recruitment and retention initiatives and design of compensation and benefits programs. We share these metrics quarterly with the Compensation Committee of our Board of Directors to assist it in fulfilling its duties to (a) establish our enterprise compensation philosophy, (b) administer our compensation and benefit plans, (c) evaluate the performance of our executive officers and key employees and (d) review and monitor management development and succession plans.

As of December 31, 2020, we had ~~302 full-time employees. Approximately 247 of~~413 full time employees located in the United States, France and the United Kingdom. Of these employees, 349 are located in ~~California, six of these employees~~the United States, primarily in the San Francisco Bay Area, 57 are located in ~~London, UK~~Valbonne, France and the remaining 7 are located near London, United Kingdom. Of these employees, 185 were primarily engaged in research and development activities, 140 were primarily engaged in technical operations and manufacturing and 88 were primarily engaged in general and administrative activities. We also engage the services of independent contractors and consultants as needed for special or temporary projects or specific expertise.

Our Commitment to Diversity, Equity & Inclusion

We strongly believe in a diverse workplace where all Sangamo employees can thrive in an inclusive environment free from discrimination, harassment, bias and prejudice. We aim to treat all individuals with respect and dignity and to provide all Sangamo employees with equal opportunity and fair treatment based on merit. By embracing diversity and inclusion, we create an organization committed to working together to develop innovative solutions in support of the Sangamo mission consistent with our values. At Sangamo, we cultivate a culture and environment where different backgrounds and perspectives are not only respected and heard, but embraced and celebrated. Not only is a diverse, equitable and inclusive mindset and culture critical to an engaged and committed workplace, but it is also imperative to understanding and meeting the needs of the patients we seek to help with our medicines.

In 2020, with the support of our Board of Directors and Chief Executive Officer, we convened a Diversity, Equity and Inclusion, or DEI, working group comprised of a diverse group of employees tasked with designing and implementing specific initiatives to promote greater diversity, equity and inclusion at Sangamo worldwide, including potential amendments to our company values to reflect our commitment to these ideals and the launch of a corporate social responsibility scorecard tracking our DEI initiatives. We also have engaged an experienced DEI consultant to help survey our employee population and advise us on the design and planning of new DEI initiatives based on this input and external benchmarking. In 2021, we expect to implement these measures, institute new DEI tracking and benchmarking and increase our focus on DEI in recruitment and retention initiatives.

As of December 31, 2020, women accounted for the following approximate percentages of our full-time employees: 51% globally; 48% in the United States; 65% in France and 71% in the United Kingdom. As of December 31, 2020, our employee records indicate that approximately 57% of our full-time U.S. employees identify as non-white.

Our Compensation & Benefits

Given the highly competitive nature of our industry and the importance of recruitment and retention to our success, we strive to furnish our employees with what we believe is a very competitive and comprehensive total rewards package of compensation, benefits and services. This package includes at or above-market pay; healthcare benefits for employees and family members; a health savings account for eligible U.S. employees with above market employer contributions; generous paid time off benefits; family leave; flexible work schedules; contributions to retirement and/or pension plans; mental health benefits and onsite services. In addition, we offer every full-time employee globally the benefit of equity ownership in the company through stock option grants and/or restricted stock units. Our U.S. employees are ~~located~~also eligible to participate in ~~France. None~~an employee stock purchase plan, which offers the opportunity to purchase our common stock at a discount of at least 15%.

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Our Efforts to Address the COVID-19 Pandemic

Employee safety and wellbeing is of paramount importance to us in any year and was of particular focus in 2020 in light of the evolving COVID-19 pandemic. In response to the pandemic, we have supported our employees ~~located~~and government efforts to curb the COVID-19 pandemic through safety and communication efforts and investments, which include:

•Creating a COVID-19 task force responsible for establishing COVID-19, safety protocols and regularly communicating updates to all employees;

•A strict working from home policy in ~~California or London are represented by a collective bargaining organization or covered by a collective bargaining agreement, nor~~the U.S., in which all work that can be done from home, must be done from home;

•Decreasing density and increasing physical distancing in our facilities for employees working onsite using scheduling adjustments and flexibility;

•Mandatory weekly COVID-19 testing for all onsite employees in our U.S. facilities;

•Robust cleaning protocols across all locations;

•Provision of masks to all onsite employees and strict masking requirements;

•Rigorous procedures to address actual and suspected COVID-19 cases and potential exposure; and

•Prohibition of all domestic and international non-essential travel for all employees.

Additionally, from time to time we have ~~we experienced work stoppages. Our employees located in France are represented by~~instituted additional programs during the ~~Confédération Française de l'Encadrement - Confédération Générale des Cadres. We believe that our relations with~~pandemic to support our employees, including monthly subsidies to all employees for home office expenses and upgrades, mental well-being private coaching and therapy services.

Trademarks & Tradenames

SANGAMO®, Better Therapeutics By Design®, ZFP Therapeutic® and Engineering Genetic Cures® are ~~good.~~

~~AVAILABLE INFORMATION~~

our registered trademarks in the United States and Sangamo Therapeutics™ and Pioneering Genetic Cures™ are our trademarks. All other trademarks or trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.

Available Information

Our website is located at www.sangamo.com. This Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available ~~(free~~free of ~~charge)~~charge on our website as soon as reasonably practicable after we electronically file this material with, or furnish it to, the Securities and Exchange Commission, or SEC. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.

In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

ITEM 1A – RISK FACTORS

Our business involves significant risks, some of which are described below. Before making investment indecisions regarding our common stock, involves significant risk. This Form 10-K contains forward-looking information based on our current expectations. Because our actual results may differ materially from any forward-looking statements made by or on our behalf, this section includes a discussion of important factors that could affect our actual future results, including, but not limited to, our revenues, expenses, net loss and net loss per share. Youyou should carefully consider ~~the information described in the following risk factors, together with~~these risks, as well as the other information ~~appearing elsewhere in this report, before making an investment decision regarding our common stock. Unless otherwise indicated or the context suggests otherwise, references~~ in this Annual Report on Form 10-K, ~~to “Sangamo,~~including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ~~“we,” “us,” and “our” refer to Sangamo Therapeutics, Inc. and our~~ ~~consolidated subsidiaries, including TxCell S.A.,~~The occurrence of any of the events or ~~TxCell~~

~~Risks Relating to Development, Commercialization and Regulatory Approval of our Products and Technology~~

~~Our success depends substantially on the results of clinical trials of our lead therapeutic programs, and we may not be able to demonstrate safety and efficacy of our product candidates.~~

We do not have any products that have gained regulatory approval. Our failure to enroll sufficient patients to conduct the trials, demonstrate safety or obtain positive clinical trial results, or our inability to meet the expected timeline of clinical trials or release of data for these programs, woulddevelopments described below could have a material adverse effect on our business, results of operations, ~~and~~ financial ~~conditions, which may cause a significant decline in our~~condition, prospects and stock price.

~~Our ability to conduct clinical trials successfully~~ In such event, the market price of our common stock could decline, and ~~on a timely basis for these programs is subject to a number~~you could lose all or part of your investment. In addition, there are also additional risks ~~including but~~not described below that are either not ~~limited~~presently known to ~~the following:~~

•~~disagreement with the design~~us or ~~implementation~~that we currently deem immaterial, and these additional risks could also materially impair our business, operations or market price of our ~~clinical trials;~~

•~~the ability~~common stock.

Risks Relating to ~~identify~~Research, Development, Regulatory Approval and ~~recruit sufficient number~~Commercialization of ~~acceptable patients to complete enrollment of trials;~~

•~~failure to demonstrate that a product candidate is safe~~Our Product Candidates and ~~effective for its proposed indication;~~

•~~the occurrence of unexpected adverse events or toxicity;~~

•~~disagreement with the U.S. Food and Drug Administration, or FDA, or foreign regulatory authorities,~~Technologies

Our success depends substantially on ~~the interpretation of data from preclinical studies or our~~ clinical trial ~~results;~~

•~~failure of clinical trials to meet the level of statistical significance required for approval;~~

•~~the insufficiency of data collected from clinical trials~~results demonstrating safety and efficacy of our product candidates to ~~support~~ the ~~submission and filing~~satisfaction of a ~~biologics license application, or~~ ~~BLA, or other submission or~~regulatory authorities. We may be unable to obtain positive clinical trial results and regulatory ~~approval;~~

•~~changes in the approval policies or regulations that render our preclinical and clinical data insufficient~~approvals for ~~approval;~~

•~~failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility;~~

•~~defects in the preparation and manufacturing~~any of our product ~~candidates;~~

•~~failure by third parties, including vendors, manufacturers~~candidates.

We are a clinical-stage biotechnology company with no approved products and ~~clinical trial organizations, to provide timely and adequate supplies and services;~~

•~~development of similar gene therapies by our competitors;~~

•~~unexpected costs and expenses and lack of sufficient funding for these programs; and~~

•~~loss of licenses to critical intellectual properties.~~

no product revenues. We have ongoing ~~Phase 1/2~~ clinical trials evaluating product candidates ~~for the treatment~~that use our platform technologies in gene therapy and cell therapy and we

Table of ~~hemophilia A (SB-525), hemophilia B (SB-FIX), MPS I (SB-318), MPS II (SB-913), and beta-thalassemia (ST-400). We also plan to initiate a P~~Contents~~hase 1/2 clinical trial of TxCell’s first CAR-Treg~~ ~~(which is a regulatory T cell, or Treg, genetically modified with a chimeric antigen receptor, or CAR)~~ ~~investigational product candidate for solid organ transplant, or TX-200, in 2019.~~

~~Even if we are able to complete~~ ~~our~~ ~~Phase 1/2 clinical trials~~ ~~for these programs successfully, we will~~ ~~be required to conduct~~

anticipate initiating additional clinical trials ~~with larger patient populations, before~~in the future on other product candidates. We are substantially dependent on the results of these clinical trials, and there is no guarantee that final results of clinical trials conducted on our product candidates now or in the future will demonstrate the safety and efficacy of any of our product candidates. In addition, none of our product candidates have obtained regulatory approval. Obtaining positive clinical trial results and regulatory approvals is expensive, lengthy, challenging and unpredictable and may never occur for any of our product candidates. If we fail to obtain positive clinical trial results and regulatory approvals for our product candidates, our anticipated revenues from our product candidates and our prospects for profitability would be adversely affected, which would likely cause the market price of our common stock to significantly decline.

Conducting clinical trials and obtaining regulatory approvals is complex and exposes our business to numerous risks, including potential unexpected costs and delays.

We must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates to the satisfaction of regulatory authorities in order to obtain regulatory approvals necessary ~~regulatory approval to commercialize~~ ~~any products, which~~ ~~involves significantly greater resources, commitments and expertise.~~ for commercialization. We ~~also~~ have limited experience in conducting later stage clinical trials and may not possess the necessary resources and expertise to complete such trials. ~~Therefore, we may be required~~ ~~to scale up our operations~~Clinical trials are expensive, lengthy and ~~enter into collaborative relationships with pharmaceutical companies that could assume responsibility for late-stage development and commercialization.~~ ~~In this regard, while we have entered into collaborative agreements to provide funding and assistance in the development of certain product candidates through the clinical trial process, there is no~~unpredictable. We cannot guarantee that ~~we will be able to enter into future collaborative relationships with third parties that can provide us with the funding and expertise for later stage trials.~~ ~~In addition, there is no guarantee that~~ any ~~positive results achieved in our Phase 1/2~~ clinical trials will be ~~indicative~~conducted as planned or completed on schedule, if at all. A failure of ~~long-term efficacy~~one or more clinical trials can occur at any stage. Events that may prevent successful or timely completion of clinical development and ~~safety~~regulatory approval include, among others:

•delays in ~~later stage~~reaching a consensus with regulatory authorities on clinical ~~trials. If a larger patient population does not demonstrate an~~trial design;

•delays in reaching agreement on acceptable ~~safety~~terms with prospective clinical research organizations, or CROs, and ~~efficacy profile,~~clinical trial sites;

•delays in opening clinical trial sites or if ~~any positive results~~obtaining required institutional review board, or IRB, or independent ethics committee approval at each clinical trial site;

•delays in recruiting and enrolling suitable patients to participate in our ~~Phase 1/2~~clinical trials;

•delays in clinical trial activities due to the evolving COVID-19 global pandemic and the diversion of healthcare resources to fight the pandemic, such as the delays that have previously impacted clinical trial timelines for our Fabry and TX200 programs;

•imposition of clinical holds by regulatory authorities as a result of serious adverse events or after an inspection of clinical trial operations or trial sites;

•failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements;

•failure to perform in accordance with the Good Clinical Practice regulations of the U.S. FDA, or applicable regulatory guidelines in the EU and other countries;

•delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites, including delays by third parties with whom we have contracted to perform certain of those functions, or as a result of manufacturing or formulation changes to our product candidates;

•delays in having patients complete participation in a trial or return for post-treatment follow-up;

•clinical trial sites or patients dropping out of a trial;

•selections of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data;

•occurrences of serious adverse events or other safety concerns associated with product candidates that are viewed to outweigh their potential benefits, result in approval delays or other regulatory restrictions, or harm our reputation;

•occurrences of serious adverse events or other safety concerns in clinical trials of the same class of agents conducted by other sponsors;

•failures to demonstrate that product candidates are ~~not reproducible,~~safe and effective for their proposed indication;

•changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

•unexpected costs and expenses and lack of sufficient funding to develop our ~~products may not receive approval from the FDA~~ ~~or foreign regulatory authorities, which could have a material adverse effect on our business that would cause our stock price~~product candidates; and

•losses of licenses to ~~decline significantly.~~

~~In addition, we~~critical intellectual properties.

We have not yet reached agreement with regulatory authorities on the complete development pathway for ~~our~~certain product ~~candidates. As~~candidates, and such authorities have the ability to change decisions or guidance with respect to approvable endpoints, particularly as the technology continues to develop in these areas. For example, we are aware of another company developing a ~~result, we have not yet determined what endpoints would~~gene therapy to treat hemophilia A that the FDA recommended complete its Phase 3 study and submit two-year follow-up safety and efficacy data on all study participants notwithstanding the company’s contention that it and the FDA had previously agreed on the extent of data necessary to support ~~approval for certain of our programs.~~ a BLA.

Due to the novelty of certain ~~programs, such as SB-913~~product candidates and ~~SB-318,~~their technologies, the endpoints needed to support regulatory approvals ~~may~~will likely be different ~~than~~from those originally anticipated. ~~For example,~~Any inability to successfully complete preclinical and clinical development of our product candidates, or complete such trials in ~~order~~the time frames anticipated, could result in additional costs to ~~support~~us or impair our ability to generate revenues from product sales or achieve regulatory ~~approval for SB-913~~ and ~~SB-318,~~commercialization milestones and royalties, or shorten any periods during which we may ~~be required to detect certain levels~~have exclusivity.

Table of enzymes in patients. In this regard, in September 2018, we announced preliminary safety and efficacy data from the Phase 1/2 clinical trial evaluating SB-913, or the CHAMPIONS study. In cohort 2 of the CHAMPIONS study, at 16 weeks post-dosing, mean reductions were observed in total urinary glycosaminoglycans, or GAGs (which is a key biomarker of MPS II disease pathophysiology), dermatan sulfate, and heparan sulfate of 51%, 32%, and 61%, respectively. Due to the sensitivity of the assay we used to measure plasma iduronate-2-sulfatase, or IDS, enzyme levels, we were unable to detect IDS in any of the patients over the 16 weeks following treatment with SB-913. In February 2019, we announced interim results of the CHAMPIONS Study. A newly developed sensitive quantitative assay (lower limit of quantification of 0.78 nmol/hour/mL) was used to measure plasma IDS activity for these interim results. Small increases in IDS enzyme activity compared to baseline were recorded in the two patients receiving the mid-dose and in one patient receiving the high-dose. At 24 weeks post-dosing, these measurements remained within the expected range for baseline values (less than 10 nmol/hour/mL, as compared to the normal range, which is estimated at greater than 82 nmol/hour/mL). While the newly developed, more sensitive assay was able to detect IDS at lower levels, there can be no guarantee that we will be able to continue to be able to detect IDS in patients or otherwise show direct evidence of efficacy or gene editing. Moreover, we also may never see a clinical benefit to patients from SB-913. This may delay or preclude any regulatory approvals for SB-913.

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Even if a product candidate ~~were to~~ successfully ~~obtain~~obtains approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. Also, any regulatory approval of our product candidates, once obtained, may be withdrawn. If we are unable to obtain and maintain regulatory ~~approval~~approvals for ~~one of~~ our product candidates in one or more jurisdictions, or if any approval contains significant limitations, we ~~may~~would not be able to ~~obtain sufficient funding~~generate anticipated revenues and may struggle to ~~continue the development of that product or generate revenues attributable to that product candidate. Also, any regulatory approval of~~become profitable, which would have an adverse effect on our ~~current or future product candidates, once obtained, may be withdrawn.~~

business operations and financial conditions.

Success in research and preclinical studies or early clinical ~~trials~~trial results may not be indicative of results obtained in later trials. Likewise, preliminary, initial or interim data from clinical trials ~~should be considered carefully and with caution since the final data~~ may be materially different from ~~the preliminary data, particularly as more patient data become available.~~

final data.

Results from research and preclinical studies or ~~previous~~early clinical trials are not necessarily predictive of future clinical trial results, and interim results of a clinical trial are not necessarily indicative of final results. Our product candidates may fail to show the desired safety and efficacy in clinical ~~development~~trials despite demonstrating positive results in preclinical studies or having successfully advanced through initial clinical trials or preliminary stages of clinical trials. ~~In addition, from~~From time to time, we have and may in the future publish or report preliminary, initial or interim data. Preliminary, initial or ~~preliminary~~interim data from our clinical trials ~~such as the preliminary data we announced from the CHAMPIONS study~~ and the Phase 1/2 clinical trial evaluating SB-525, or the Alta Study, as well as the interim data recently announced for the CHAMPIONS study and the Phase 1/2 clinical trial evaluating SB-318, or the EMPOWERS Study~~. Interim or preliminary data from clinical trials that we may conduct~~those of our collaborators may not be indicative of the final results of the trial and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and/or more patient data become available. ~~Interim~~ In this regard, such data may show initial evidence of clinical benefit, but as patients continue to be followed and more patient data becomes available, there is a risk that any therapeutic effects will not be durable in patients and/or ~~preliminary~~will decrease over time, or cease entirely. Preliminary, initial or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from ~~the~~such preliminary, initial or interim ~~or preliminary~~ data. As a result, ~~interim~~preliminary, initial or ~~preliminary~~interim data should be considered carefully and with caution until the final data are available.

~~We have ongoing~~ For example, there can be no assurance that the steady-state FVIII levels shown in the preliminary follow-up data presented in December 2020 by Pfizer and us from the Phase 1/2 Alta study of giroctocogene fitelparvovec will persist in future follow-up or any other data from the Alta study, or that giroctocogene fitelparvovec will ultimately demonstrate a clinical ~~trials evaluating product candidates for~~benefit in the ~~treatment~~final results of ~~hemophilia A (SB-525), hemophilia B (SB-FIX), MPS I (SB-318), MPS II (SB-913), and beta-thalassemia (ST-400), and there~~the Alta study or in the Phase 3 AFFINE clinical trial of giroctocogene fitelparvovec.

There is no guarantee that ~~we can achieve positive final safety and efficacy results in~~any of our ~~Phase 1/2~~pending clinical trials ~~for these product candidates. Moreover, the interim results recently announced for SB-913 and SB318 casts doubt with regard to whether there~~ will be ~~evidence~~successful. Many of ~~a clinical benefit of~~

~~either~~our product ~~candidate. Furthermore, these programs (other than TX-200 that we acquired through the TxCell Acquisition) are novel~~ ~~in-vivo~~ ~~gene therapy or genome editing therapies that utilize adeno-associated viral, or AAV, vector to deliver therapeutic levels of zinc finger nuclease, or~~candidates currently use our ZFP technology platform, including ZFN ~~into the patient~~’~~s blood stream. The AAV delivery system~~and ZPT-TF technologies, which has not yet yielded any approved therapeutic products. Moreover, many of our product candidates are preclinical and have never demonstrated any clinical benefit. In addition, our viral delivery systems continue to evolve and have not been ~~validated~~used in ~~human~~any approved products. If our product candidates using our ZFP technology platform and viral delivery systems are not able to demonstrate the safe, effective and durable results we are hoping to see in clinical trials, ~~previously, and if such delivery system does not meet the safety criteria or cannot produce the desirable efficacy results we expect,~~ we may be forced to suspend or terminate ~~the affected program.~~

~~There~~development of some or all of our product candidates or seek alternative technologies to develop or deliver product candidates.

In addition, there is a high failure rate for ~~drugs, biologic products and cell therapies~~product candidates proceeding through clinical trials. Many companies in the ~~pharmaceutical and biotechnology~~biopharmaceutical industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. ~~In addition, we may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policy during the period of our product candidate development.~~ Any such ~~delays~~setbacks could ~~materially and~~ adversely affect our business, financial condition, results of operations and prospects.

Our ~~potential products~~product candidates are subject to a lengthy and ~~uncertain~~unpredictable regulatory approval process in each jurisdiction where approval is sought.

A regulatory authority such as the FDA or the ~~European Medicines Agency, or~~ EMA must approve any human therapeutic product before it can be marketed in ~~such jurisdiction.~~the jurisdiction it governs. The process for receiving regulatory approval is ~~long~~lengthy and ~~uncertain,~~unpredictable, and a ~~potential~~ product candidate may not withstand the rigors of testing under the ~~regulatory approval processes.~~

process. Before commencing clinical trials in humans in the United States, we must submit an ~~Investigational New Drug application, or~~ IND, to the FDA. Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials. In the ~~European Union,~~EU, for example, a clinical trial authorization, ~~application,~~ or CTA, must be submitted for each clinical protocol to each country’s national health authority and an independent ethics committee. Only after an IND becomes effective and/or the applicable CTA has been accepted may clinical trials ~~begin~~.begin. See “Business—Government Regulation” for details regarding the regulatory approval processes applicable to our product candidates. While ~~we have stated our intention~~there is some overlap, the regulatory requirements to submit additional IND and CTA applications in the future, this is only a statement of intent, and we may not be able to do so because the associated product candidates may not meet the necessary preclinical requirements. In addition, there can be no assurance that, once submitted, an IND or CTA will result in the actual initiation ofconduct clinical trials orand seek marketing approval vary by jurisdiction. There is no guarantee that wethe safety studies and other data generated will be ~~able~~sufficient to ~~meet our targeted timeline for the initiation of clinical trials. Clinical~~ ~~trials are subject~~permit us to oversight by institutional review boards, or IRBs, and the applicable regulatory authority. In addition, our proposed clinical studies in the United States may require review from the Recombinant DNA Advisory Committee, or RAC, which is the advisory board to the NIH focusing onconduct clinical trials ~~involving gene transfer.~~

~~Clinical trials:~~

•~~must~~in all jurisdictions where planned, or once generated, that such clinical trial data will be ~~conducted~~sufficient to obtain marketing approval in ~~conformance with the FDA~~’s good clinical practices, within the guidelines of the International Council for Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, or ICH, and other applicable regulations;

•~~must meet requirements for IRB oversight;~~

•~~must follow Institutional Biosafety Committee, or IBC, and NIH RAC guidelines where applicable;~~

•~~must meet requirements for informed consent;~~

•~~are subject~~all jurisdictions in which we intend to ~~continuing FDA or similar foreign government oversight;~~

•~~may require oversight by a Data Monitoring Committee, or DMC;~~

•~~may require large numbers of test subjects; and~~

•may be suspended by a commercial partner, the FDA, applicable foreign regulatory authorities or us at any time if it is believed that the subjects participating in these trials are being exposed to unacceptable health risks or if the FDA or applicable foreign regulatory authorities find ~~deficiencies in our INDs or their foreign equivalents or the conduct of these trials.~~

seek such approval. If we are not able to obtain the necessary regulatory ~~approval~~approvals to conduct our clinical trials and commercialize our ~~products~~product

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candidates, or if such ~~approval is~~approvals are delayed or suspended, our business, prospects and market price of our common stock would be adversely affected.

We may not be able to identify, qualify and enroll sufficient patients for our clinical trials or complete our clinical trials in a timely manner, which could delay or prevent us from proceeding with the development of our product candidates.

Identifying, qualifying and enrolling patients in clinical trials of our product candidates, and completing these clinical trials, is critical to our success. Patient enrollment and trial completion is affected by factors including:

•size of the patient population and process for identifying patients;

•design of the trial protocol;

•eligibility and exclusion criteria;

•perceived risks and benefits of the product candidate under study;

•perceived risks and benefits of genomic approaches to treatment of diseases;

•availability of competing therapies and clinical trials;

•potential delays related to the evolving COVID-19 global pandemic and the diversion of healthcare resources to fight the pandemic;

•severity of the disease under investigation;

•availability of genetic testing for potential patients;

•proximity and availability of clinical trial sites for prospective patients;

•required and desired characteristics of patients;

•ability to obtain and maintain patient consent;

•risk that enrolled patients will drop out before completion of the trial;

•patient referral practices of physicians; and

•ability to monitor patients adequately during and after treatment.

The timing of our clinical trials depends on our ability to recruit patients to participate as well as completion of required follow-up periods. There are also a number of other product candidates in development by our competitors, who compete for the same limited patient populations. If we are not able to enroll the necessary number of patients in a timely manner, we may not be able to complete our clinical trials on our desired timelines or at all. If fewer patients are willing to participate in our clinical trials because of negative publicity from adverse events related to genomic medicines, competitive clinical trials for similar patient populations or for other reasons, the timelines for conducting clinical trials of our product candidates may be delayed. These delays could result in increased costs, limitation or termination of clinical trials, and delays in product development timelines. If we are forced to expand to additional jurisdictions to address these challenges, it could impose additional costs, delays and risks. If we are not successful in conducting our clinical trials as planned, it would have ~~a material~~an adverse effect on our business, financial condition, results of operations, prospects and ~~trading~~market price of our common stock.

We may encounter difficulties ~~that may delay, suspend or scale back our efforts to advance additional early~~in advancing product candidates from research programs ~~through~~to preclinical ~~development, IND~~ and ~~foreign equivalent submissions and into~~ clinical development.

We intend to advance ~~early~~our product candidates from research programs through preclinical development and to submit new INDs, CTAs and equivalent filings in ~~foreign regulatory~~other jurisdictions necessary to ~~commence and~~ conduct human clinical trials evaluating ~~the preclinical candidates in~~ our ~~pipeline.~~product candidates. The preparation and submission of ~~INDs~~ ~~and their foreign equivalents~~applications to conduct clinical trials requires us to conduct rigorous and time-consuming preclinical testing and studies and prepare documentation relating to, among other things, the toxicity, safety, manufacturing, chemistry and clinical ~~protocol~~protocols of our product candidates. We may experience unforeseen difficulties that could delay or otherwise prevent us from executing this strategy successfully. For example, we may encounter problems in the manufacturing of ~~our products~~a product candidates and may fail to demonstrate consistency in the formulation of ~~the drug.~~a product candidate. Our preclinical tests may produce negative or inconclusive results, which may lead us to ~~decide,~~decide, or which may lead regulators ~~may~~to require us, to conduct additional preclinical testing. If we cannot obtain positive results in preclinical testing, we may decide to abandon ~~the projects~~a product candidate altogether. In addition, our ability to complete and submit ~~certain IND applications~~ ~~and foreign equivalent filings depends~~such applications to conduct clinical trials may depend on the support of our ~~partners~~collaborators and the timely performance of their obligations under relevant collaboration agreements. If our ~~partners~~collaborators are not able to perform such obligations or if they choose to slow down or delay the ~~progress,~~development of a product candidate, we may not be able to ~~prepare and~~ submit the ~~intended INDs~~ ~~or their foreign equivalents~~ clinical trial applications on a timely basis or at all. Furthermore, the submission of ~~several INDs~~ ~~and their foreign equivalents~~applications to conduct clinical trials involves significant cost and labor, and we maymay not have sufficient resources and personnel to complete the filing of all intended ~~INDs~~ ~~and their foreign equivalents,~~applications, which may force us to scale back the number of ~~INDs and their foreign equivalents~~applications or forego potential ~~INDs and foreign equivalents~~applications that we believe are promising. Any delay, suspension or reduction of our efforts to pursue our preclinical and ~~IND~~clinical development strategy could have ~~a material~~an adverse effect on our business and cause the market price of our common stock ~~price~~ to decline.

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Special regulatory designations, such as RMAT, or orphan drug designations, may not ~~successfully identify, acquire, develop~~be available for our product candidates or ~~commercialize new potential product candidates.~~

~~Part of our business strategy is~~may not lead to ~~expand~~a faster development or regulatory review or approval process.

We have received RMAT, designation for our product candidate ~~pipeline by identifying and validating new product candidates, which we may develop ourselves, in-license or otherwise acquire from others.~~ ~~For example, through the TxCell Acquisition,~~ ~~we recently acquired the rights among others~~ to ~~TxCell’s first CAR-Treg product candidate, TX-200, and its CAR-Treg technology and know-how. In this regard, we intend to use our ZFN gene editing technolo~~gy to potentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune diseases, and expect that the TxCell Acquisition will accelerate our entry into the clinic with a CAR-Treg therapy. However, we are new to the field of immunology and ~~to the use of CARs with Tregs, and we may not be successful at developing a~~ ~~CAR-Treg therapy that can be used in patients. Moreover, we may not achieve the expected accelerated development timeline. If we are unable to suc~~cessfully develop and obtain regulatory approval for TX-200 or other CAR-Treg therapies and effectively commercialize them, or if we are unable to achieve the expected accelerated development timeline, we may not realize the anticipated benefits from the TxCell Acquisition, resulting in possible impairments or other charges or losses which may materially and adversely affect our results of operations and financial condition.

In addition, in the event that our existing product candidates do not receive regulatory approval or are not successfully commercialized, then the success of our business will depend on our ability to continue to expand our product pipeline through in-licensing or other acquisitions. We may be unable to identify relevant product candidates. If we do identify such product candidates, we may be unable to reach acceptable terms with any third party from which we desire to in-license or acquire them. Even if we are able to successfully identify and acquire such product candidates, we may not be able to successfully manage the risks associated with integrating acquired or in-licensed product candidates or technologies or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing transaction. Further, while we seek to mitigate risks and liabilities of potential acquisitions and in-licensing transactions through, among other things, due diligence, there may be risks and liabilities that such due diligence efforts fail to discover, that are not disclosed to us, or that we inadequately assess. Any failure in identifying and managing these risks and uncertainties effectively, including in connection with the TxCell Acquisition, would have a material adverse effect on our business.treat severe hemophilia A. Additionally, ~~we may not realize the anticipated benefits of such transactions~~ ~~for a variety of reasons, including the possibility~~ ~~that~~ acquired product candidates, such as TX-200, prove not to be safe or effective in clinical trials, the integration of an acquired product candidate, technology or business gives rise to unforeseen difficulties and expenditures, or that the ~~expected benefits will not otherwise be realized or will not be realized within the expected timeframe.~~

~~We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.~~

~~Before obtaining marketing approval from regulatory authorities for the sale~~some of our product candidates, including our product candidate to treat Fabry disease, have also been granted Orphan Drug Designation by the FDA, and some have also been designated Orphan Medicinal Products by the EMA. Regulatory authorities in some jurisdictions, including the United States and the EU, may designate drugs for relatively small patient populations as orphan drugs. For additional information regarding these special regulatory designations, see “Business—Government Regulation.”

If we ~~must conduct extensive clinical trials to demonstrate~~request such designations for our other current or future product candidates, there can be no assurances that the ~~safety and efficacy of~~FDA or the ~~product candidates. Clinical testing is expensive, time consuming and uncertain as to outcome. We cannot guarantee that~~EMA will grant any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

•~~delays in reaching a consensus with regulatory authorities on trial design;~~

•~~delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;~~

•~~delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site;~~

•~~delays in recruiting suitable subjects to participate in our clinical trials;~~

•~~imposition of a clinical hold by regulatory authorities as a result of a serious adverse event or after an inspection of our clinical trial operations or trial sites;~~

•~~failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements;~~

•~~failure to perform in accordance with FDA good clinical practices, or GCP, or applicable regulatory guidelines in the European Union and other countries;~~

•~~delays in the testing, validation, manufacturing and delivery~~ of our product candidates such designations. Additionally, such designations do not guarantee that any regulatory agency will accelerate regulatory review of, or ultimately approve, those product candidates, nor does it limit the ability of any regulatory agency to ~~the clinical sites, including delays by third parties with whom we have contracted~~grant such designations to ~~perform certain~~product candidates of ~~those functions;~~

•~~delays in having subjects complete participation in a trial or return for post-treatment follow-up;~~

•~~clinical trial sites or subjects dropping out of a trial;~~

•~~selection of clinical endpoints~~other companies that ~~require prolonged periods of clinical observation or analysis of the resulting data;~~

•~~occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;~~

•~~occurrence of serious adverse events in trials of~~treat the same ~~class of agents conducted by other sponsors; or~~

•~~changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.~~

~~Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair~~indications as our ~~ability to generate revenues from~~ product ~~sales, regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes~~candidates prior to our product candidates ~~we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays~~receiving exclusive marketing approval. Such designations can also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business, financial condition, results of operations and prospects.

~~Additionally,~~be revoked. RMAT designation can be revoked if the ~~results of our~~criteria for eligibility cease to be met as clinical ~~trials are inconclusive~~data emerges. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if ~~there are safety concerns or serious adverse events associated with our product candidates, we may:~~

•~~be delayed in obtaining marketing approval for our product candidates, if at all;~~

•~~obtain approval for indications or patient populations that are not as broad as intended or desired;~~

•~~obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;~~

•~~be subject~~the manufacturer is unable to ~~changes in the way the product is administered;~~

•~~be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;~~

•~~have regulatory authorities withdraw, or suspend, their approval~~assure sufficient quantity of the product ~~or impose restrictions on its distribution in~~to meet the ~~form of a modified risk evaluation and mitigation strategy;~~

•~~be subject to the addition of labeling statements, such as warnings or contraindications;~~

•~~be sued; or~~

•~~experience damage to our reputation.~~

We may not be able to find acceptable patients or may experience delays in enrolling patients for our clinical trials, which could delay or prevent us from proceeding with clinical trials of our product candidates.

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on our ability to recruit patients to participate as well as completion of required follow-up periods. For example, hemophilia trials often take longer to enroll due to the availability of existing treatments. We have only recently begun to enroll patients into the Phase 1/2 clinical trials evaluating SB-FIX for the treatment of hemophilia B, SB-318 for the treatment of MPS I and ST-400 for the treatment of beta-thalassemia. If we are not able to enroll the necessary numberneeds of patients ~~in a timely manner, we may not be able to complete~~with the ~~clinical trial. We may face similar challenges~~rare disease or delays in our other or potential future clinical trials. If patients are unwilling to participate in our gene therapy studies because of negative publicity from adverse events related to the biotechnology or gene therapy fields, competitive clinical trials for similar patient populations or for other reasons, the timeline for

recruiting patients, conducting studies and obtaining regulatory approval of our product candidates may be delayed. These delays could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our product candidates or termination of the clinical trials altogether.

We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete our clinical trials in a timely manner. Patient enrollment and trial completion is affected by factors including:

•~~size of the patient population and process for identifying subjects;~~

•~~design of the trial protocol;~~

•~~eligibility and exclusion criteria;~~

•~~perceived risks and benefits of the product candidate under study;~~

•~~perceived risks and benefits of gene therapy-based approaches to treatment of diseases;~~

•~~availability of competing therapies and clinical trials;~~

•~~severity of the disease under investigation;~~

•~~availability of genetic testing for potential patients;~~

•~~proximity and availability of clinical trial sites for prospective subjects;~~

•~~ability to obtain and maintain subject consent;~~

•~~risk that enrolled subjects will drop out before completion of the trial;~~

•~~patient referral practices of physicians; and~~

•~~ability to monitor subjects adequately during and after treatment.~~

Our current product candidates are being developed to treat rare conditions. We may not be able to initiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by regulatory authorities. We may need to expand the conduct of our clinical trials to foreign countries so that we may be better able to access and enroll subjects. Our ability to successfully initiate, enroll and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

•~~difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;~~

•~~different standards for the conduct of clinical trials;~~

•~~absence in some countries of established groups with sufficient regulatory expertise for review of gene therapy protocols;~~

•~~our inability to locate qualified local consultants, physicians and partners; and~~

•~~the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment.~~

If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations and prospects.

condition.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the approved indications or commercial potential, or result in significant negative consequences following any potential marketing approval.

During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their study doctor. Often, it is not possible to determine whether or not the product candidate being studied caused these conditions, particularly as many of the diseases we are studying have complex comorbidities. If clinical experience indicates that ~~our~~a product ~~candidates have~~candidate has side effects or cause serious or ~~lif~~e-~~threatening~~life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would severely harm our business, prospects, operating results and financial condition.

There have been several significant adverse side effects in gene therapy treatments in the past, including reported cases of leukemia and death seen in other trials using other genomic therapies. Gene therapy is still a relatively new approach to disease treatment and additional adverse side effects could develop. There also is the potential risk of significantly delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material. Possible adverse side effects that could occur with treatment with gene therapy products include an immunologic reaction early after administration that, while not necessarily adverse to the ~~patient~~’spatient’s health, could substantially limit the effectiveness of the treatment.

~~As we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates, we cannot predict the timing of any future revenue from these product candidates.~~

We cannot commercialize any of our product candidates to generate revenue until the appropriate regulatory authorities have reviewed and approved the marketing applications for the product candidates. We cannot ensure that the regulatory agencies will complete their review processes in a timely manner or that we will obtain regulatory approval for any product candidate that we or our collaborators develop. Satisfaction of regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of substantial resources. Regulatory approval processes outside the United States include all of the risks associated with the FDA approval process. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action or changes in FDA policy during the period of product development, clinical trials and FDA regulatory review.

We may be unable to obtain additional orphan drug designations or orphan drug exclusivity for any product. If our competitors are able to obtain orphan drug exclusivity for products that constitute the same drug and treat the same indications as our product candidates, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.

Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an Orphan Drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the European Union, the European Medicines Agency’s Committee for Orphan Medicinal Products grants such designation to promote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the European Union. Additionally, orphan designation is granted for products intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug or biologic product.

Our four most advanced product candidates, SB-525, SB-FIX, SB-318 and SB-913 have all been granted Orphan Drug Designation by the FDA, and SB-525 and SB-318 and SB-913 have also been designated Orphan Medicinal Products by the ~~European Medicines Agency, or~~ EMA. If we request such designation for our other current or future product candidates, there can be no assurances that the FDA or the EMA will grant any of our product candidates such designation. Additionally, such designation does not guarantee that any regulatory agency will accelerate regulatory review of, or ultimately approve, that product candidate, nor does it limit the ability of any regulatory agency to grant such designation to product candidates of other companies that treat the same indications as our product candidates prior to our product candidates receiving exclusive marketing approval.

Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor receives such approval before we do (regardless of our orphan drug designation), we will be precluded from receiving marketing approval for our product for the applicable exclusivity period. The applicable period is seven years in the United States and 10 years in the European Union. The exclusivity period in the United States can be extended by six months if the BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competition because different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA may subsequently approve another drug for the same condition if the FDA concludes that the latter drug is

not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the European Union, marketing authorization may be granted to a similar medicinal product for the same orphan indication if:

•the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior;

•~~the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or~~

•~~the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.~~

Commercialization of our technologies will depend, in part, on strategic partnering with other companies. If we are not able to find partners in the future or if our partners do not diligently pursue product development efforts, we may not be able to develop our technologies or product candidates, which could slow our growth and decrease the value of our stock.

We expect to rely, to some extent, on our strategic partners to provide funding in support of our research and to perform independent research and preclinical and clinical testing. Our technology is broad-based, and we do not currently possess the resources necessary to fully develop and commercialize potential products that may result from our technologies or the resources or capabilities to complete the lengthy marketing approval processes that may be required for the products. Therefore, we plan to rely on strategic partnerships to help us develop and commercialize our products. We have entered into collaborative agreements to provide funding and assistance in the development of certain product candidates through the clinical trial process. For example, we have an agreement with ~~Kite~~ ~~for potential engineered cell therapies for cancer, two separate agreements with~~ ~~Pfizer, one for SB-525 for hemophilia A, and another for~~ ~~amyotrophic lateral sclerosis and frontotemporal lobar degeneration linked to mutations of the~~ ~~C9ORF72~~ ~~gene, and an agreement with~~ ~~Bioverativ~~ ~~for our beta-thalassemia and~~ ~~sickle cell disease~~ ~~product candidates.~~

If we are unable to find additional partners or if the partners we are unable or unwilling to advance our programs, or if they do not diligently pursue product approval, this may slow our progress and adversely affect our ability to generate revenues. In addition, our partners may sublicense or abandon development programs or we may have disagreements or disputes with our partners, which would cause associated product development to slow or cease. In addition, the business or operations of our partners may change significantly through restructuring, acquisition or other strategic transactions or decisions that may negatively impact their ability to advance our programs.

There can be no assurance that we will be able to establish further strategic collaborations for our products. We may require significant time to secure collaborations or partners because we need to effectively market the benefits of our technology to these future collaborators and partners, which may direct the attention and resources of our research and development personnel and management away from our primary business operations. Further, each collaboration or partnering arrangement will involve the negotiation of terms that may be unique to each collaborator or partner. These business development efforts may not result in a collaboration or partnership.

The loss of partnering agreements may delay or terminate the potential development or commercialization of products we may derive from our technologies, but it may also delay or terminate our ability to test our product candidates. If any partner fails to conduct the collaborative activities successfully or in a timely manner, the preclinical or clinical development or commercialization of the affected product candidates or research programs could be delayed or terminated.

Under typical partnering agreements, we would expect to receive revenue for the research and development of our product candidates based on achievement of specific milestones, as well as royalties based on a percentage of sales of the commercialized products. Achieving these milestones will depend, in part, on the efforts of our partner as well as our own. If we, or any partner, fail to meet specific milestones, then the partnership may be terminated, which could reduce our revenues. For more information on risks relating to our third-party collaborative agreements, see “~~Risks Relating to our Relationships with Collaborators and Strategic Partners.~~”

~~We may be unable to license gene transfer technologies that we may need to commercialize our zinc finger protein technology.~~

~~In order to regulate or modify a gene in a cell, the~~ ~~zinc finger protein, or~~ ZFP, must be efficiently delivered to the cell. We have licensed certain gene transfer technologies for our ZFP in research including AAV and mRNA technology. We are evaluating these systems and other technologies that may need to be used in the delivery of ZFP into cells for ~~in vitro~~ ~~and~~ ~~in vivo~~ applications. However, we may not be able to license the gene transfer technologies required to develop and commercialize our product candidates. We have not developed our own gene transfer technologies, and we rely on our ability to enter into license agreements to provide us with rights to the necessary gene transfer technology. Our approach has been to license appropriate technology as required. The inability to obtain a license to use gene transfer technologies with entities which own such technology on reasonable commercial

~~terms, if at all, could delay or prevent the preclinical evaluation, drug development collaborations, clinical testing, and/or commercialization of our therapeutic product candidates.~~

~~Our gene regulation and genome editing technology is relatively new, and if we are unable to use this technology in all our intended applications, it would limit our revenue opportunities.~~

Our technology involves a relatively new approach to gene regulation and genome editing. Although we have generated ZFPs for thousands of gene sequences, we have not created ZFPs for all gene sequences and may not be able do so, which could limit the usefulness of our technology. In addition, while we have demonstrated the function of engineered ~~ZFNs and ZFP transcription factors, or~~ ZFP TFs, in mammalian cells, yeast, insects, plants and animals, we have not yet demonstrated clinical efficacy of this technology in a controlled clinical trial in humans, and the failure to do so could restrict or preclude our ability to develop commercially viable products. If we, and our collaborators or strategic partners, are unable to extend our results to new commercially important genes, experimental animal models, and human clinical studies, we may be unable to use our technology in all its intended applications.

The expected value and utility of our ZFNs and ZFP TFs is in part based on our belief that the targeted editing of genes or specific regulation of gene expression may enable us to develop a new therapeutic approach as well as to help scientists better understand the role of genes in disease, and to aid their efforts in drug discovery and development. We also believe that ZFP-mediated targeted genome editing and gene regulation will have utility in agricultural applications. There is only a limited understanding of the role of specific genes in all these fields. Life sciences companies have developed or commercialized only a few products in any of these fields based on results from genomic research or the ability to regulate gene expression. We, our collaborators or our strategic partners, may not be able to use our technology to identify and validate drug targets or to develop commercial products in the intended markets.

Effective delivery of ZFNs and ZFP TFs into the appropriate target cells and tissues is critical to the success of the therapeutic applications of our ZFP technology. In order to have a meaningful therapeutic effect, product candidates based must be delivered to sufficient numbers of cells in the targeted tissue. The ZFN or ZFP TF must be present in that tissue for sufficient time to effect either modification of a therapeutically relevant gene or regulation of its expression. In our current clinical and preclinical programs, we administer these product candidates as a nucleic acid that encodes the ZFN or ZFP TF. We use different formulations to deliver the ZFN or ZFP TF depending on the required duration of expression, the targeted tissue and the indication that we intend to treat, including our proprietary AAV delivery system. However, there can be no assurances that we will be able to effectively deliver our ZFNs and ZFP TFs to produce a beneficial therapeutic effect.

~~In February 2019, we announced our development of second generation, potentially more potent ZFN constructs designed to increase editing efficiency.~~ ~~In vitro~~ ~~data of these second-generation ZFNs were reviewed by FDA. The~~ ~~in vitro~~ data showed three potential advantages for use in the clinic: (1) a five to thirty-fold improvement in efficiency and potency due to structural changes; (2) the ability to function equally well in the patients who have a single nucleotide polymorphism in the target locus in the albumin gene (approximately 20% of the population); (3) improvements in specificity. The second generation ZFNs already being manufactured and we expect to be ready to use them in the clinic later this year; however, there can be no assurances that we will be able to effectively deliver this second-generation ZFN to produce a beneficial therapeutic effect. Additional data from our in vivo genome editing programs will be assessed before potential integration plans for the second-generation ZFNs are finalized.

We are conducting proprietary research to discover new product candidates. These programs increase our financial risk of product failure, may significantly increase our research expenditures, and may involve conflicts with future collaborators and strategic partners.

Our proprietary research programs consist of research that is funded solely by us or by grant funding and in which we retain exclusive rights to therapeutic products generated by such research. This is in contrast to certain of our research programs that may be funded by corporate partners in which we may share rights to any resulting products. Conducting proprietary research programs may not generate corresponding revenue and may create conflicts with our collaborators or strategic partners over rights to our intellectual property with respect to our proprietary research activities. Any conflict with our collaborators or strategic partners could reduce our ability to enter into future collaborations or partnering agreements and negatively impact our relationship with existing collaborators and partners that could reduce our revenue and delay or terminate our product development. As we continue to focus our strategy on proprietary research and therapeutic development, we expect to experience greater business risks, expend significantly greater funds and require substantial commitments of time from our management and staff.

~~Even if our technology proves to be effective, it still may not lead to commercially viable products.~~

Even if we, our collaborators or strategic partners are successful in using our ZFP technology in drug discovery, protein production, therapeutic development or other areas in which we have licensed our technology, such as plant agriculture, they may not be able to commercialize the resulting products or may decide to use other methods competitive with this technology. To date, no

company has received marketing approval or has developed or commercialized any therapeutic or agricultural products based on our ZFP technology. Should our technology fail to provide safe, effective, useful or commercially viable approaches to the discovery and development of these product candidates, this would significantly limit our business and future growth and would adversely affect our value.

Even if our product development efforts are successful and even if the requisite regulatory approvals are obtained, our products may not gain market acceptance among physicians, patients, healthcare ~~payers~~payors and the medical community.

Even if we obtain regulatory approval for any of our product candidates that we may develop or acquire in the future, the ~~applicable~~approved product may not gain market acceptance among physicians, healthcare payors, patients or the medical community. Market acceptance of ~~any of our product candidates for which we receive approval~~approved products depends on a number of factors, including:

•the efficacy and safety of ~~such~~the product ~~candidates~~ as demonstrated in clinical trials;

•the clinical indications and patient populations for which the product ~~candidate~~ is approved;

•acceptance by physicians, ~~major cancer~~ treatment centers and patients of the ~~drug~~product as a safe and effective treatment;

•the adoption of novel ~~gene~~genomic therapies by physicians, hospitals and third-party payors;

•the potential and perceived advantages of the product ~~candidates~~ over alternative treatments;

•the safety of the product ~~candidates~~ seen in a broader patient group, including its use outside the approved indications;

•any restrictions on product use together with other medications;

•the prevalence and severity of any side effects;

•product labeling or product insert requirements of the FDA or other regulatory authorities;

•the timing of market introduction of ~~our products~~the product as well as competitive products;

•the development of manufacturing and distribution processes for ~~our product candidates;~~

the product;

•the cost of treatment in relation to alternative treatments;

•the availability of coverage and adequate reimbursement and the willingness of patients to pay out-of-pocket in the absence of coverage or inadequacy of reimbursement by third-party payors and government authorities;

•relative convenience and ease of administration; and

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•the effectiveness of our sales and marketing efforts and those of our collaborators.

If any of our product candidates are approved but fail to achieve market acceptance among physicians, patients, healthcare payors or treatment centers, we will not be able to generate significant revenues from the approved product, which would compromise our ability to become profitable.

Even if we are able to commercialize ~~our product candidates, the~~any approved products, such products may not receive coverage and adequate reimbursement from third-party payors in the United States and in other countries in which we seek to commercialize ~~our products,~~them, which could harm our business.

Our ability to commercialize any product successfully will depend, in part, on the extent to which coverage and adequate reimbursement for these products and related treatments will be ~~available from government health administration authorities, private health insurers and other organizations.~~

available. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, determine which medications they will cover and establish reimbursement ~~levels. A primary~~levels, which can affect demand for, or the price of, any approved product. Given the nature of the product candidates that we are developing, some patients may require treatment only one-time (e.g., single dose administration), and there is substantial uncertainty about the pricing structure for such products, and the level of coverage and reimbursement that will be available for a shift to single-dose treatment as compared to chronic therapy over a patient’s lifetime. If other companies establish a new pricing structure or business model, including payment based on demonstration of long-term efficacy, our ability to price or obtain reimbursement for our products may be adversely affected. If such pricing structure or business model do not adequately fund the costs of our research and development, manufacturing and commercialization efforts, our business may be adversely affected.

In addition to uncertainty about the potential pricing structure for certain of our product candidates, cost containment is a recurrent trend in the healthcare ~~industry is cost containment.~~industry. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for ~~particular~~certain medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Third-party payors may also seek additional clinical evidence, beyond the data required to obtain regulatory approval, demonstrating clinical benefits and value in specific patient populations before covering our products for those patients. We cannot be sure that coverage and adequate reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. ~~Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain regulatory approval.~~ If reimbursement is not available or is available only at limited levels, we may ~~not~~ be ~~able~~unable to successfully commercialize any product candidate for which we obtain regulatory approval.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors in the United States often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies, but also have their own methods and approval process apart from Medicare determinations. Our inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we develop could have ~~a material~~an adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Recently enacted and future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect the prices we may obtain.

The regulations that govern, among other things, regulatory approvals, coverage, pricing and reimbursement for new drug products vary widely from country to country. In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities and affect our ability to successfully sell any product candidates for which we obtain regulatory approval. In particular, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the Affordable Care Act, was enacted, which substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The Affordable Care Act and its implementing regulations, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including products similar to our product candidates, that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, created a new Patient Centered Outcomes Research Institute, which provides incentives to programs that increase the federal government’s comparative effectiveness research, established a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (and 70% commencing January 1, 2019) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’~~s outpatient drugs to be covered under Medicare Part D, and created a licensure framework for follow-on biologic products.~~

Some of the provisions of the Affordable Care Act have yet to be fully implemented, and there have been legal and political challenges to certain aspects of the Affordable Care Act. Since January 2017, President Trump has signed two executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the Affordable Care Act. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the Affordable Care Act. While Congress has not passed repeal legislation, two bills affecting the implementation of certain taxes under the Affordable Care Act have been signed into law. The Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “~~individual mandate~~”. Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain Affordable Care Act-mandated fees. Further, the Bipartisan Budget Act of 2018, among other things, amends the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commo nly referred to as the “donut hole”. More recently, in July 2018, the Centers for Medicare & Medicaid Services, or CMS, published a final rule permitting further collections and payments to and from certain Affordable Care Act qualified health plans and health insurance issuers under the Affordable Care Act risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. ~~Congress may consider other legislation to repeal, or repeal and~~ ~~replace, other elements of the Affordable Care Act.~~

Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018, will remain in effect through 2027 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American

Taxpayer Relief Act of 2012, or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Also, there has been heightened governmental scrutiny recently over ~~pharmaceutical~~biopharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for ~~pharmaceutical products, some of which are included in the Trump administration~~’s budget proposal for fiscal year 2019. Additionally, the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The U.S. Department of Health and Human Services has begun the process of soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existing authority. Although a number of these, and other potential, proposed measures will require authorization through additional legislation to become effective. Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.biopharmaceutical products. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, have been designed to encourage importation from other countries and bulk purchasing.

~~There have been,~~ For a discussion of health reform activity and ~~likely will continue to be, legislative~~the current pricing framework, see “Business—Government Regulation—Healthcare Reform” and ~~regulatory proposals at the foreign, federal~~“—Pricing, Coverage and ~~state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future.~~ Reimbursement.”

The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

•the demand for our product candidates, if we obtain regulatory approval;

•our ability to set a price that we believe is fair for our products;

•our ability to generate revenue and achieve or maintain profitability;

•the level of taxes that we are required to pay; and

•the availability of capital.

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Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be.

In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third-party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices. Furthermore, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

~~Price controls may be imposed in foreign markets, which may adversely affect our future profitability.~~

In some countries, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we, or our collaborators, may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement or

pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

Even if we complete the necessary preclinical and clinical studies, we cannot predict when or if we will obtain regulatory approval to commercialize a product candidate or the approval may be for a more narrow indication than we expect.

We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if our product candidates demonstrate safety and efficacy in clinical studies, the regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory advisory group or authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studies and the review process. Regulatory agencies also may approve a treatment candidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our treatment candidates. For example, the development of certain product candidates for pediatric use is an important part of our current business strategy, and if we are unable to obtain regulatory approval for the desired age ranges, our business may suffer.

Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.

Even if we obtain regulatory approval in a jurisdiction, the regulatory authority may still impose significant restrictions on the indicated uses or marketing of our product candidates or impose ongoing requirements for potentially costly post-approval studies, post-market surveillance or patient or drug restrictions. For example, the FDA typically advises that patients treated with gene therapy undergo follow-up observations for potential adverse events for a 15-year period. Additionally, the holder of an approved BLA is ~~obligated~~required to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. The holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and ~~are~~is subject to FDA review and periodic inspections, in addition to other potentially applicable federal and state ~~laws.~~

~~In addition, products are subject~~laws, to ~~payment of annual program user fees and continual review and periodic inspections by the FDA and other regulatory authorities for~~ensure compliance with ~~good manufacturing practices, or GMP,~~cGMP and adherence to commitments made in the BLA.

If we or a regulatory agency discovers previously unknown problems with a product such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

Moreover, ~~if any of our product candidates is approved, our~~ product labeling, advertising and promotion for any approved product will be subject to regulatory requirements and continuing regulatory review. The FDA and foreign regulatory authorities strictly regulate the promotional claims that may be made about drug and biologic products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling.

~~If we fail~~Failure to comply with such requirements, when and if applicable, ~~regulatory requirements following approval of any of our product candidates, a regulatory agency may:~~

•~~issue a warning letter asserting that we are in violation of the law;~~

•~~seek an injunction or impose civil or criminal penalties or monetary fines;~~

•~~suspend or withdraw regulatory approval;~~

•~~suspend any ongoing clinical studies;~~

•~~refuse to approve a pending marketing application, such as a BLA or supplements~~could subject us to a ~~BLA submitted by us;~~

•~~seize product;~~number of actions ranging from warning letters to product seizures or

•~~refuse to allow us to enter into supply contracts, including government contracts.~~

significant fines, among other actions. See “Business—Government Regulation—U.S. Review and Approval Processes” for more information.

Any government investigation of alleged violations of ~~law~~laws or regulations could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues.

~~Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.~~

In addition to regulations in the United States, to market and sell our products in the European Union, many Asian countries and other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. Clinical trials accepted in one country may not be accepted by regulatory authorities in other countries. In addition, many countries outside the United States require that a product be approved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular country may not receive reimbursement approval in that country. We may not be able to obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries

Our employees or jurisdictions or by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market. If we are unable to obtain approval of any of our product candidates by the FDA or regulatory authorities in the European Union, Asia or elsewhere, the commercial prospects of that product candidate may be significantly diminished, our business prospects could decline and this could materially adversely affect our business, results of operations and financial condition.

~~Our current and future relationships with healthcare providers,~~ customers and third-party payors subject us to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations. If we fail to comply with federal, state and foreign laws and regulations, including healthcare, privacy and data security laws and regulations, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain regulatory approval. Our current and future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute our products. As a biotechnology company, even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ ~~rights are and will be applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate include the following:~~

•the federal healthcare Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

•federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions, prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit, among other things, knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services;

•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, and individuals and entities that perform services for them that involve individually identifiable health information, known as business associates;

•the federal Physician Payments Sunshine Act created under the Affordable Care Act requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the CMS information related to payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;

•analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; some state laws require pharmaceutical companies to comply with the pharmaceutical industry’~~s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal~~

government, require drug manufacturers to report information related to payments and other transfers of value to other healthcare providers and healthcare entities, or marketing expenditures; and/or ensure the registration and compliance of sales and medical personnel; and

•state and foreign laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies, healthcare providers and other third parties, including charitable foundations, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, personal imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs.

In addition, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the European Union. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of European Union Member States, such as the U.K. Bribery Act. Infringement of these laws could result in substantial fines and imprisonment. Moreover, payments made to physicians in certain European Union Member States must be publicly disclosed. Agreements with physicians often must also be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual European Union Member States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the European Union Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to the EU General Data Protection Regulation, or the GDPR, which became effective on May 25, 2018. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the control over personal data by individuals to whom the personal data relates, the information provided to the individuals, the documentation we must maintain, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union, provides an enforcement authority and authorizes the imposition of large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the non-compliant company, whichever is greater. The GDPR requirements apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries such as TxCell, including employee information. The GDPR has increased our responsibility and potential liability in relation to personal data that we process compared to prior European Union law, particularly in light of the TxCell Acquisition, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business. However, despite our ongoing efforts to bring our practices into compliance with the GDPR, we may not be successful either due to various factors within our control or other factors outside our control. It is also possible that local data protection authorities may have different interpretations of the GDPR, leading to potential inconsistencies amongst various European Union Member States. Any failure or alleged failure (including as a result of deficiencies in our policies, procedures or measures relating to privacy, data security, marketing or communications) by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity. In addition, new regulation, legislative actions or changes in interpretation of existing laws or regulations regarding data privacy and security (together with applicable industry standards) may increase our costs of doing business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the United States, the European Union and other jurisdictions, such as the California Consumer Privacy Act of 2018 that will go into effect beginning January 1, 2020, and we cannot determine the impact such future laws, regulations and standards will have on our business.

~~Our employees~~contractors may engage in misconduct or other improper activities, including noncompliance with research, development, manufacturing or regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk of ~~employee~~ fraud or other misconduct by our employees and contractors, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. ~~Employee misconduct~~Misconduct by our employees and contractors could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter ~~employee~~such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, personal imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our ~~operations..~~

~~Product liability lawsuits against us could~~operations.

We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on other programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

We have limited resources and may forego or delay pursuit of certain research programs or product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to ~~incur substantial liabilities~~fail to capitalize on viable commercial products or profitable market opportunities or pursue collaborations rather than retain sole responsibility for development. Our current and future research and development programs for product candidates may not yield any commercially viable products. The evaluation of the commercial potential or target market for a particular product candidate is forward-looking and based upon assumptions involving, for example and not limited to, ~~limit commercialization~~market evolution, advances in disease

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standard of care, competition and reimbursement. This reliance on assumptions means that, if our assumptions prove to be inaccurate or incomplete, we may ~~develop.~~

~~We face an inherent risk~~pursue opportunities that end up having a number of ~~product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any products~~competitors that we may develop. Product liability claims may be brought against us by subjects enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims thatare more advanced than our product candidates, or ~~products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:~~

•~~decreased demand for any product candidates or products that~~ we may ~~develop;~~

•~~termination~~relinquish valuable rights to a product candidate through strategic collaboration, licensing or other royalty arrangements in cases where it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. We may also allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration or that does not prove to have viable commercial opportunities. Any failure to use our financial and human resources efficiently could harm our business and operations.

ZFP technology is novel and has never been used to develop any approved, commercially viable therapeutic products.

Our ZFP technology is a novel technology which to date has not yielded any approved commercially viable therapeutic products, and there can be no guarantee that our product development efforts using ZFP technology will be fruitful. We have invested heavily in development of this technology, and our failure to develop approved, commercially viable products using ZFP technology would significantly limit our business and prospects and would adversely impact the market value of our common stock.

Risks Relating to Manufacturing

We are building manufacturing facilities for clinical trial ~~sites or entire trial programs;~~

•~~injury to our reputation and significant negative media attention;~~

•~~withdrawal of clinical trial participants;~~

•~~significant costs to defend the related litigation;~~

•~~substantial monetary awards to trial subjects or patients;~~

•~~loss of revenue;~~

•~~diversion of management and scientific resources from our business operations; and~~

•~~the inability to commercialize any products that we may develop.~~

supplies. We currently hold product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

We currently rely on third parties to conduct some or all aspects of manufacturing of our product candidates for preclinical and clinical development. If one of our third-party manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts, to find new suppliers or manufacturers.

~~We currently~~ have limited experience ~~in clinical-scale~~ manufacturing of our product candidates and we rely upon third-party contract manufacturing organizations to manufacture and supply drug product for our preclinical and clinical studies. The manufacture of pharmaceutical products in compliance with the FDA’~~s current good manufacturing practices, or cGMP, requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.~~

Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced cGMP requirements, other federal and state regulatory requirements and foreign regulations. If our manufacturers were to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to provide study biologics in our clinical studies would be jeopardized. Any delay or interruption in the supply of clinical study materials could delay the completion of our clinical studies, increase the costs associated with maintaining our clinical study programs and, depending upon the period of delay, require us to commence new studies at significant additional expense or terminate the studies completely.

All manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our product candidates may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. The FDA or similar foreign regulatory agencies may also implement new standards at any time, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and standards. Failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical studies, regulatory submissions, approvals or commercialization of our product candidates, entail higher costs or impair our reputation.

Our current agreements with our suppliers do not provide for the entire supply of the drug product necessary for all anticipated clinical studies or for full scale commercialization. If we and our suppliers cannot agree to the terms and conditions for them to provide the drug product necessary for our clinical and commercial supply needs, we may not be able to manufacture the product candidate until a qualified alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our product candidates.

The number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any product candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us.

~~We are building a manufacturing facility that could support future clinical production of our product candidates. We have no experience as a company manufacturing pharmaceutical~~biopharmaceutical products, and there can be no assurance that we will be able to ~~build a~~maintain compliant manufacturing ~~facility or, if built, we will be able to successfully~~facilities, build additional facilities and manufacture ~~any of~~ our product ~~candidates.~~

candidates as intended.

We expect to ~~utilize~~use both contract manufacturing organizations, or CMOs, and our own ~~facility~~facilities to meet our projected needs for clinical trial supply. ~~We intend to expand our manufacturing capacity by designing and building a~~In 2020, we completed the construction of an AAV manufacturing facility ~~that~~in our Brisbane, California headquarters building to manufacture Phase 1/2 clinical study supplies for our gene therapy product candidates and we ~~plan~~are building additional facilities in our headquarters building and in Valbonne, France to ~~initially use~~manufacture supplies for our cell therapy product candidates. We expect the cell therapy facilities to ~~support our clinical supply needs. To meet~~be operational by the end of 2021. Building these ~~objectives we will need~~facilities requires us to transition manufacturing processes and know-how of our product candidates from our CMOs to our own ~~facility.~~facilities. Transferring manufacturing processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time. In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. Additional studies may also need to be conducted to support the transfer of certain manufacturing processes and process improvements. We cannot be certain that all relevant know-how and data has been adequately incorporated into the manufacturing process until the completion of studies ~~(and the related evaluations)~~and evaluations intended to demonstrate the comparability of material previously produced by CMOs with that generated by our ~~CMOs.~~facilities. Although some of our employees have experience in the manufacturing of ~~pharmaceutical~~biopharmaceutical products from prior employment at other companies, we, as a company, have no prior experience in ~~pharmaceutical~~biopharmaceutical product manufacturing, and operating ~~this facility would~~these facilities will require us to comply with complex regulations and to continue to hire and retain experienced scientific, quality control, quality assurance and manufacturing personnel. Designing and building a manufacturing ~~facility~~facilities has been and will continue to be time-consuming and expensive, and we may experience delays or cost overruns. In addition, government approvals ~~would be~~are required for us to operate a manufacturing ~~facility~~facilities and ~~can be~~are time-consuming to ~~obtain.~~obtain and maintain. As a manufacturer of ~~pharmaceutical~~biopharmaceutical products, we also ~~would~~will be required to demonstrate and maintain cGMP compliance. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Furthermore, establishing manufacturing operations ~~may~~will require a reallocation of other resources, particularly the time and attention of our senior management. Even if we are able to establish our own manufacturing capabilities, we could encounter challenges in operating the manufacturing ~~facility~~facilities in compliance with cGMP, regulatory or other applicable requirements, resulting in potential negative consequences, including regulatory actions, which could undermine our ability to ~~utilize this facility~~use these facilities for our own

manufacturing needs. Any failure or delay in the development of our manufacturing capabilities could adversely impact the development of our product candidates.

The manufacture, storage and transport of our product candidates is complex, expensive, highly regulated and risky, which could hamper their commercial viability.

There are significant risks associated with manufacturing, ~~for clinical~~storing and ~~commercial use. Manufacturing biological components at the appropriate scale and quality is complex and difficult.~~

~~There are risks associated with manufacturing~~transporting our product candidates including, among others, cGMP compliance, cost overruns, technical problems with process scale-up, specialized facilities, process reproducibility, stability issues, lot consistency, yields and timely availability of highly specific raw materials. Even ifthough product batches released for use in clinical trials undergo sample testing, some defects may only be identified following release. In addition, process deviations or unanticipated effects of approved process changes may result in these intermediate products

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not complying with stability requirements or specifications. Also, our product candidates must be stored and transported at temperatures within a certain range. If these environmental conditions deviate, our product candidates’ remaining shelf-lives could be impaired or their efficacy and safety ~~data from our clinical trials would otherwise support regulatory approval~~could be adversely affected, making them no longer suitable for ~~a product candidate, there is no assurance that we or any third-party manufacturer will be able to manufacture our~~ use. Moreover, product candidates to specifications at levels necessary to support or maintain regulatory approval by the FDA or other regulatory authorities. In addition, we may not be able to manufacture our product candidates in sufficient quantities to meet the requirements for a potential launch or to meet potential future demand. If we or our third-party manufacturers are unable to produce sufficient quantities of the approved product for commercialization, either on a timely basis or at all, our commercialization efforts would be impaired, which would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

~~We face uncertainties and risks associated with the manufacture of our product candidates. Our product candidates~~that are biologics ~~and their manufacture involves~~involving complex processes, including the development of cell lines or cell systems to produce the biologic, with the challenge of significant variability. ~~Further, there~~There are difficulties in growing large quantities of such cells, consistently and sufficiently isolating certain types of cells and harvesting and purifying the biologic produced by them. The cost to manufacture biologics is generally far higher than traditional small molecule chemical compounds, and the manufacturing process can be difficult to reproduce. ~~There~~

Moreover, manufacturing, storing and transporting our product candidates is subject to strict regulatory standards, which adds additional production risk. Even if efficacy and safety data from our clinical trials would otherwise support regulatory approval of a product candidate, there is no assurance that we or our CMOs will be able to manufacture our product candidates to specifications at levels necessary to support or maintain regulatory approval by the FDA or other regulatory authorities.

Thus, there is no guarantee we will be successful in establishing a larger-scale commercial manufacturing process for our ~~pipeline~~ product candidates or obtaining the needed manufacturing capacity. Due to ~~the high cost to manufacture, inherent uncertainty related to~~these manufacturing ~~costs, and uncertainty in our patient population,~~challenges, there is risk that some of our product candidates ~~may not be commercially viable.~~

~~We do not currently have the infrastructure or capability to manufacture, market and sell therapeutic products on a commercial scale.~~

In order for us to commercialize our therapeutic products directly, we would need to develop, or obtain through outsourcing arrangements, the capability to manufacture, market and sell our products on a commercial scale. Currently, we do not have the ability nor the financial resources to establish the infrastructure and organizations needed to execute these functions, including such infrastructure needed for the commercialization of any product based on our ZFP technology, which can be complex and costly. If we are unable to establish adequate manufacturing, sales, marketing and distribution capabilities, we will not be able to directly commercialize our therapeutics products, which would limit our future growth.

~~If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.~~

We do not currently have an organization for the sale, marketing and distribution of pharmaceutical products and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. In order to market any products that may be approved by the FDA and comparable foreign regulatory authorities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. There are significant risks involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of any approved products. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenues and may not become profitable. We will be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without an internal commercial organization or the support of a third party to perform sales and marketing functions, we may be unable to compete successfully against these more established companies. If we are not successful in commercializing our current or future product candidates either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we would incur significant additional losses.

~~We will need to grow the size of our organization, and we may experience difficulties in managing this growth.~~

As of February 15, 2019, we had 302 full-time employees. We need to grow the size of our organization in order to support our continued development and potential commercialization of our product candidates. In particular, we will need to add substantial numbers of additional personnel and other resources to support our development and potential commercialization of our product candidates. In addition, we may not be able to attract or retain employees with the appropriate levels of experience and to skills to accomplish our objectives. As our development and commercialization plans and strategies continue to develop, or as a result of any

future acquisitions, our need for additional managerial, operational, manufacturing, sales, marketing, financial and other resources will increase. Our management, personnel and systems currently in place may not be adequate to support this future growth. Future growth would impose significant added responsibilities on members of management, including:

•~~managing our preclinical studies and clinical trials effectively;~~

•~~identifying, recruiting, maintaining, motivating and integrating additional employees;~~

•~~managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;~~

•~~improving our managerial, development, operational, information technology, and finance systems; and~~

•~~expanding our facilities.~~

As our operations expand, we will also need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and preclinical studies and clinical trials effectively and hire, train and integrate additional management, research and development, manufacturing, administrative and sales and marketing personnel. Our failure to accomplish any of these tasks could prevent us from successfully growing our company

~~Risks Relating to our Industry~~

~~If our competitors develop, acquire, or market technologies or products that are more effective than ours, this would reduce or eliminate our commercial opportunity.~~

Any products that we or our collaborators or strategic partners develop by using our ZFP technology platform will enter into highly competitive markets. Even if we are able to generate products that are safe and effective for their intended use, competing technologies may prove to be more effective or less expensive, which, to the extent these competing technologies achieve market acceptance, will limit our revenue opportunities. In some cases, competing technologies have proven to be effective and less expensive. Competing technologies may include other methods of regulating gene expression or modifying genes. ZFNs and ZFP TFs have broad application in the life sciences industry and compete with a broad array of new technologies and approaches being applied to genetic research by many companies. Competing proprietary technologies with our product development focus include but are not limited to:

•~~For genome editing and gene therapy products:~~

•~~recombinant proteins;~~

•~~other gene therapy/cDNAs;~~

•~~antisense;~~

•~~siRNA and microRNA approaches, exon skipping;~~

•~~small molecule drugs;~~

•~~monoclonal antibodies;~~

•~~CRISPR/Cas technology; and~~

•~~TALE proteins, meganucleases, and MegaTALs.~~

•~~Our non-therapeutic applications compete against similar technologies:~~

•~~For protein production:~~ ~~gene amplification, CRISPR/Cas technology, TALE technology, insulator technology, and mini-chromosomes;~~

•~~For target validation:~~ ~~antisense, siRNA, TALE technology and CRISPR/Cas technology;~~

•~~For plant agriculture:~~ ~~recombination approaches, mutagenesis approaches, TALE technology, CRISPR/Cas technology, mini-chromosomes; and~~

•~~For transgenic animals:~~ ~~somatic nuclear transfer, embryonic stem cell, TALE, CRISPR/Cas technology and transposase technologies.~~

~~In addition to possessing competing technologies, our competitors include pharmaceutical and biotechnology companies with:~~

•~~substantially greater capital resources than ours;~~

•~~larger research and development staffs and facilities than ours; and~~

•~~greater experience in product development and in obtaining regulatory approvals and patent protection.~~

~~These organizations also compete with us to:~~

•~~attract qualified personnel;~~

•~~attract parties for acquisitions, joint ventures or other collaborations; and~~

•~~license the proprietary technologies of academic and research institutions that are competitive with our technology, which may preclude us from pursuing similar opportunities.~~

Accordingly, our competitors may succeed in obtaining patent protection or commercializing products before us. In addition, any products that we develop may compete with existing products or services that are well established in the marketplace.

~~Our product candidates are based on novel technologies, which makes it difficult to predict the timing and costs of development and of subsequently obtaining regulatory approval.~~

We have concentrated our research and development efforts on genome editing, gene therapy, gene regulation and cell therapy. The regulatory approval process for novel product candidates such as ours is unclear and may be lengthier and more expensive than the process for other, better-known or more extensively studied product candidates.

~~Adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of our product candidates.~~

These regulatory review committees and advisory groups, and any new guidelines they promulgate, may lengthen the regulatory review process, require us to perform additional preclinical studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our current or future product candidates or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. These additional processes may result in a review and approval process that is longer than we otherwise would have expected. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects would be harmed. Even if our product candidates are approved, we expect that the FDA will require us to submit follow-up data regarding our clinical trial subjects for a number of years after any approval. If this follow-up data shows negative long-term safety or efficacy outcomes for these patients, the FDA may revoke its approval or change the label of our products in a manner that could have an adverse impact on our business.

In addition, adverse developments in clinical trials of gene therapy or cell therapy products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of our product candidates. The FDA only recently approved the first ~~in vivo~~ ~~gene therapy, LUXTURNA, and only two~~ ~~in vivo~~ ~~gene therapy products, uniQure N.V.~~’~~s Glybera and GlaxoSmithKline~~’s Strimvelis, have received marketing authorization from the EMA. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates.

Our gene therapy approach utilizes vectors derived from viruses, which may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.

~~Gene therapy remains a novel technology, with only one~~ ~~in vivo~~ ~~gene therapy product approved for a genetic disease to date in the United States and only two~~ ~~in vivo~~ gene therapy products for genetic diseases approved to date in the European Union. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. In particular, our success will depend upon physicians who specialize in the treatment of genetic diseases targeted by our product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available. More restrictive government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop. For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death seen in other trials using other vectors. Serious adverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ ~~products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity,~~

could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

~~Laws or public sentiment may limit the production of genetically modified agricultural products, and these laws could reduce our partner’s ability to sell such products.~~

Genetically modified products are currently subject to public debate and heightened regulatory scrutiny, either of which could prevent or delay production of agricultural products. We have exclusive right to use our ZFP technology to modify the genomes or alter the nucleic acid or protein expression of plant cells, plants or plant cell cultures. The field-testing, production and marketing of genetically modified plants and plant products are subject to federal, state, local and foreign governmental regulation. Regulatory agencies administering existing or future regulations or legislation may not allow production and marketing of our genetically modified products in a timely manner or under technically or commercially feasible conditions. In addition, regulatory action or private litigation could result in expenses, delays or other impediments to our product development programs or the commercialization of resulting products.

The FDA currently applies the same regulatory standards to foods developed through genetic engineering as those applied to foods developed through traditional plant breeding. Genetically engineered food products, however, will be subject to pre-market review if these products raise safety questions or are deemed to be food additives. Governmental authorities could also, for social or other purposes, limit the use of genetically modified products created with our gene regulation technology.

Even if the regulatory approval for genetically modified products developed using our ZFP technology is obtained, our success will also depend on public acceptance of the use of genetically modified products including drugs, plants, and plant products. Claims that genetically modified products are unsafe for consumption or pose a danger to the environment may influence public attitudes. Our genetically modified products may not gain public acceptance. The subject of genetically modified organisms has received negative publicity in the United States and particularly in Europe, and such publicity has aroused public debate. The adverse publicity in Europe could lead to greater regulation and trade restrictions on imports of genetically altered products. Similar adverse public reaction or sentiment in the United States to genetic research and its resulting products could result in greater domestic regulation and could decrease the demand for our technology and products.

~~Risks Relating to our Finances~~

~~We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.~~

We have generated operating losses since we began operations in 1995. Our net losses for the years ended December 31, 2018, 2017 and 2016 were $68.9 million, $54.6 million and $71.7 million, respectively. The extent of our future losses and the timing of profitability are uncertain, and we expect to incur losses for the foreseeable future. We have been engaged in developing our ZFP technology since inception, which has and will continue to require significant research and development expenditures. To date, we have generated our funding from issuance of equity securities, revenues derived from collaboration agreements, other strategic partnerships in non-therapeutic applications of our technology, federal government research grants and grants awarded by research foundations. As of December 31, 2018, we had an accumulated deficit of $562.7 million. Since our initial public offering in 2000, we have generated an aggregate of approximately $648.7 million in gross proceeds from the sale of our equity securities. We expect to continue to incur additional operating losses for the next several years as we continue to advance our product candidates. If the time required to generate significant product revenues and achieve profitability is longer than we currently anticipate or if we are unable to generate liquidity through equity financing or other sources of funding, we may be forced to curtail or suspend our operations.

~~We may be unable to raise additional capital, which would harm our ability to develop our technology and product candidates.~~

We have incurred significant operating losses and negative operating cash flows since inception and have not achieved profitability. We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure and research and product development activities. While we believe our financial resources will be adequate to fund our current operations for at least the next twelve months, we will need to raise substantial additional capital to fund the development, manufacturing and potential commercialization of our product candidates. We regularly consider fund raising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of potential products, a process that could cost in excess of hundreds of millions of dollars per product. We may experience difficulties in accessing the capital market due to external factors beyond our control such as volatility in the equity markets for emerging biotechnology companies and general economic and market conditions both in the United States and abroad. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will materially adversely affect our business and our

ability to develop our technology and products candidates and to realize the anticipated benefits of the TxCell Acquisition. Furthermore, any sales of additional equity securities may result in dilution to our stockholders and any debt financing may include business and financial covenants that restricts our operations.

~~We are at the development phase of operations and may not succeed or become profitable.~~

We began operations in 1995, are in the early phases of product development for the most advanced candidates in our therapeutics pipeline, and we have incurred significant losses since inception. To date, our revenues have been generated from collaboration agreements, other collaborations in non-therapeutic applications of our technology, federal government research grants and grants awarded by research foundations. Our focus on higher-value therapeutic product development and related collaboration requires us to incur substantial expenses associated with product development. In addition, the preclinical or clinical failure of any single product may have a significant effect on the actual or perceived value of our stock. Our business is subject to all of the risks inherent in the development of a new technology, which includes the need to:

•~~attract and retain qualified scientific and technical staff and management, particularly scientific staff with expertise to develop our early-stage technology into therapeutic products;~~

•~~obtain sufficient capital to support the expense of developing our technology platform and developing, testing and commercializing products;~~

•~~develop a market for our products; and~~

•~~successfully transition from a company with a research focus to a company capable of supporting commercial activities.~~

~~Comprehensive U.S. tax reform legislation could increase the tax burden on our orphan drug programs and adversely affect our business and financial condition.~~

The U.S. government enacted comprehensive tax legislation in 2017 that includes significant changes to the taxation of business entities. These changes include, among others, (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interest expense and net operating loss carryforwards, (iii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with certain rules designed to prevent erosion of the U.S. income tax base) and (iv) a one-time tax on accumulated offshore earnings held in cash and illiquid assets, with the latter taxed at a lower rate. Further, the comprehensive tax legislation, among other things, reduces the orphan drug tax credit from 50% to 25% of qualifying expenditures. When and if we become profitable, this reduction in tax credits may result in an increased federal income tax burden on our orphan drug programs as it may cause us to pay federal income taxes earlier under the revised tax law than under the prior law and, despite being partially off-set by a reduction in the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, may increase our total federal tax liability attributable to such programs.

Notwithstanding the reduction in the corporate income tax rate, the overall impact of this comprehensive tax legislation resulted in an overall reduction in our deferred tax assets, and our business and financial condition could still be adversely affected as additional guidance and regulations are issued with respect to the original tax law change. In addition, it is uncertain if and to what extent various states will conform to this comprehensive tax legislation. The impact of this comprehensive tax legislation on holders of our common stock is also uncertain and could be adverse. Investors should consult with their legal and tax advisors with respect to this comprehensive tax legislation and the potential tax consequences of investing in or holding our common stock.

~~Risks Relating to our Relationships with Collaborators and Strategic Partners~~

If conflicts arise between us and our collaborators or strategic partners, these parties may act in their self-interest, which may limit our ability to implement our strategies and otherwise harm our business and prospects.

If conflicts arise between our corporate or academic collaborators or strategic partners and us, the other party may act in its self-interest, which may limit our ability to implement our strategies. Some of our academic collaborators and strategic partners are conducting multiple product development efforts within each area that is the subject of the collaboration with us. Our collaborators or strategic partners may develop, either alone or with others, products in related fields that are competitive with the products or potential products that are the subject of these collaborations. Competing products, either developed by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of partner support for our product candidates.

Some of our collaborators or strategic partners could also become our competitors in the future. Our collaborators or strategic partners could develop or invest in competing products, preclude us from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely, or fail to devote sufficient resources to the development and commercialization of product candidates covered by the applicable agreement.

In addition, conflicts could arise between us and our collaborators resulting from disputes regarding our or our collaborators’ or strategic partners’ performance under the applicable agreement, including disputes arising from alleged breaches of our agreements with our collaborators and strategic partners. For example, we have certain confidentiality obligations to our collaborators and strategic partners under our agreements with them, and it is possible that, in connection with the data security incident we disclosed in April 2018, we could be subject to ~~claims that we have breached our confidentiality obligations, which~~inventory outages, reputational damage and product liability risks, and result in additional expense and delays to clinical trials and commercialization. Supply interruptions or shortages could result in ~~damages payable by us and/or the affected collaborator or strategic partner seeking to terminate its agreement with us.~~

~~Any of these developments could harm our product development efforts and otherwise adversely affect our business and prospectus.~~

~~Our collaborators and strategic partners may control aspects of our clinical trials, which could result in delays and other obstacles in the commercialization of our proposed products.~~

We depend on third-party collaborators and strategic partners to design and conduct our clinical trials for some of our therapeutic programs. As a result, we may not be able to conduct these programs in the manner or on the time schedule we currently contemplate, which may negatively impact our business operations. In addition, if any of these collaborators or strategic partners withdraws support for our programs or proposed products or otherwise impair their development; our business could be negatively affected.

For example, under our agreements with Kite, Pfizer and Bioverativ, they have control and broad discretion over all or certain aspects of the clinical development and commercialization of any product developed under the agreement, and we will have little, if any, influence on how these programs will be conducted. Our lack of control over the clinical development in such agreements could cause delays or other difficulties in the development and commercialization of our product candidates, which may prevent us from completing the intended IND filings in a timely fashion and receiving any milestone, royalty payments and other benefits under the agreement. In addition, under their respective agreements, our third-party collaborators have certain rights to terminate the agreements by providing us with advance notices, therefore, the actual milestone payments that we may receive under these agreements may be substantially lower than the full amounts provided for under these agreements.

Our collaborators or strategic partners may decide to adopt alternative technologies or may be unable to develop commercially viable products with our technology, which would negatively impact our revenues and our strategy to develop these products.

Our collaborators or strategic partners may adopt alternative technologies, which could decrease the marketability of ZFP technology. Additionally, because many of our collaborators or strategic partners are likely to be working on more than one development project, they could choose to shift their resources to projects other than those they are working on with us. If they do so, this would delay our ability to test our technology and would delay or terminate the development of potential products based on our ZFP technology. Further, our collaborators and strategic partners may elect not to develop products arising out of our collaborative and strategic partnering arrangements or to devote sufficient resources to the development, manufacturing, marketing or sale of these products. If they terminate the collaborative relationship with us, we will be required to seek the support of other partners or collaborators. We may not have sufficient resources and expertise to develop these programs by ourselves, and we may not be able to identify a suitable partner or negotiate a favorable collaboration agreement to allow us to continue the development of these programs. If any of these events occur, we may not be able to develop our technologies or commercialize our products.

If the licensed products under our non-therapeutic license agreements are not successfully commercialized, or our third-party licensees terminate our agreements, our ability to generate revenue under these license agreements may be limited.

We have a number of collaboration agreements with third parties whereby we licensed our ZFP technologies to develop products in non- therapeutic fields, such as laboratory research reagents, protein pharmaceuticals, and, transgenic animals, as well as plant agriculture

We cannot be certain that we or our collaboration partners will succeed in the development of commercially viable products in these non-therapeutic fields of use, and there is no guarantee that we or our collaboration partners will achieve the milestones set forth in the respective license agreements. To the extent we or our collaboration partners do not succeed in developing and commercializing products or if we or our collaboration partners fail to achieve such milestones, our revenues and benefits under the license agreements will be limited. In the event our third party licensees decide to terminate the license agreements, our ability to generate revenue under such license agreements will cease.

~~Our collaborations with outside scientists may be subject to change, which could limit our access to their expertise.~~

We work with scientific advisors and collaborators at academic research institutions. These scientists are not our employees and may have other commitments that would limit their availability to us. Although our scientific advisors generally agree not to do competing work, if a conflict of interest between their work for us and their work for another entity arises, we may lose their services.

Although our scientific advisors and academic collaborators sign agreements not to disclose our confidential information, it is possible that some of our valuable proprietary knowledge may become publicly known through them, which may cause competitive harm to our business.

~~Risks Relating to our Intellectual Property~~

Because it is difficult and costly to protect our proprietary rights, and third parties may have filed patent applications that are similar to ours, we cannot guarantee the proprietary protection of our technologies and products.

~~Our commercial success may depend in part on obtaining and enforcing patent protection for our technology and successfully defending any of our patents that may be challenged.~~ Obtaining and enforcing pharmaceutical and biotechnology patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and can involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date. Accordingly, we cannot predict the breadth of claims that may issue from any patent applications that we own or license.

We are a party to various license agreements that grant us rights under specified patents and patent applications. We are also party to various license agreements by which we grant third parties rights under specified patents and patent applications. Our current licenses contain performance obligations. If we fail to meet those obligations, the licenses could be terminated. If we are unable to continue to license these technologies on commercially reasonable terms, or at all, we may be forced to delay or terminate aspects of our product development and research activities.

With respect to our present and any future sublicenses, because our rights derive from those granted to our sublicensor, we are subject to the risk that our sublicensor may fail to perform its obligations under the master license or fail to inform us of useful improvements in, or additions to, the underlying intellectual property owned by the original licensor.

We are unable to exercise the same degree of control over intellectual property that we license from third parties as we exercise over our internally developed intellectual property. We do not control the prosecution of certain of the patent applications that we license from third parties; therefore, the patent applications may not be prosecuted as we desire or in a timely manner.

~~The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:~~

•~~we or our licensors were the first to make the inventions covered by each of our pending patent applications;~~

•~~we or our licensors were the first to file patent applications for these inventions;~~

•~~the patents of others will not have an adverse effect on our ability to do business;~~

•~~others will not independently develop similar or alternative technologies or reverse engineer any of our products, processes or technologies;~~

•~~any of our pending patent applications will result in issued patents;~~

•~~any patents issued or licensed to us, our collaborators or strategic partners will provide a basis for commercially viable products or will provide us with any competitive advantages;~~

•~~any patents issued or licensed to us will not be challenged and invalidated by third parties; or~~

•~~we will develop additional products, processes or technologies that are patentable.~~

Others have filed and in the future are likely to file patent applications that are similar to ours. We are aware that there are academic groups and other companies that are attempting to develop technology that is based on the use of zinc finger, TALE, CRISPR/Cas and other DNA-binding proteins, and that these groups and companies have filed patent applications. Several patents with claims directed to this technology have issued, although we have no current plans to use the claimed inventions. If these or other patent applications issue as patents, it is possible that the holder of any patent or patents granted on these applications may bring an infringement action against us, our collaborators, or strategic partners claiming damages and seeking to enjoin commercial activities relating to the affected products and processes. The costs of litigating the claim could be substantial regardless of outcome. Moreover, we cannot predict whether we, our collaborators, or strategic partners would prevail in any actions. In addition, if the relevant patent claims were upheld as valid and enforceable and our products or processes were found to infringe a patent or patents, we or our collaborators may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, and we may be prevented from making, using, or selling the relevant product or process unless we or our collaborators could obtain a license or were able to design around the patent claims. We can give no assurance that such a license would be available to us or our

collaborators on commercially reasonable terms, or at all, or that we would be able to successfully design around the relevant patent claims. There may be significant litigation in the genomics or cell therapy industry regarding patent and other intellectual property rights, which could subject us to litigation. If we become involved in litigation, it could consume a substantial portion of managerial and financial resources.

We rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets, however, are difficult to protect. While we require employees, academic collaborators and consultants to enter into confidentiality agreements, we may not be able to adequately protect our trade secrets or other proprietary information or enforce these confidentiality agreements.

Our collaborators, strategic partners, and scientific advisors have rights to publish data and information in which we may have rights. If we cannot maintain the confidentiality of our technology and other confidential information in connection with our collaborations and strategic partnerships, then we may not be able to receive patent protection or protect our proprietary information.

~~If we. are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in the intended markets.~~

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our product candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates or prevent others from designing around our claims. ~~Our competitors may be able to circumvent our patents by developing similar or alternative product candidates in a non-infringing manner.~~ ~~Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.~~

If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, future products. We have filed several patent applications covering our product candidates recently. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful challenge to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patent applications, an interference or derivation proceeding in the United States can be initiated by a third party to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

~~Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.~~

Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date or from the filing date of the corresponding international application. Various extensions may be available. However, the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

~~If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed.~~

We rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures have been and may in the future be breached, and we may not have adequate remedies for any breach. See also the risk factor titled, “~~Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.~~” ~~In addition, our trade secrets may otherwise become known or be independently discovered by competitors.~~

Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’~~s disclosure policies may change in the future, if at all.~~

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

~~Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.~~

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, ~~ex parte reexaminations, post-grant review, and~~ ~~inter partes~~ review proceedings before the U.S. Patent and Trademark Office, or U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization, and such parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. For example, we are aware of certain patents held by a third party related to certain vector manufacturing methods that are currently being used in certain of our product candidates. We have not yet finalized the commercial scale manufacturing process for any of our product candidates. If our commercial scale manufacturing process utilizes these vector manufacturing methods, and if these third-party patents are in fo rce at the time of commercialization, we may need to use or develop a non-infringing manufacturing method or seek a license to these patents. In any event, if any third-party patents were held by a court of competent jurisdiction to cover the manufacturing methods of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license, or until such patents expires. In either case, such a license may not be available on commercially reasonable terms or at all. The inability to obtain required licenses on reasonable commercial terms, if at all, could delay or prevent the preclinical evaluation, drug development collaborations, clinical testing, and/or commercialization of the affected product candidates. Moreover, because patent applications can take many years to

issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have material adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.

~~We may not be successful in obtaining or maintaining necessary rights to gene or cell therapy product components and processes for our development pipeline through acquisitions and in-licenses.~~

Presently, we believe we have rights to the intellectual property, through licenses from third parties and under patents that we own, to develop our gene and cell therapy product candidates. Because our programs may involve additional product candidates such as our recently acquired TX-200 product candidate and potential future CAR-Treg therapies that may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify on commercially reasonable terms, if at all. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, we sometimes collaborate with U.S. and foreign academic institutions to accelerate our preclinical research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.

~~If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions~~negative impacts to our business, ~~relationships with our licensors, we could lose license rights that are important to our business.~~

~~We are a party to a number of intellectual property license agreements that are important to our business~~prospects and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone, royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market ~~products covered by the license.~~

We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist that might be enforced against our current product candidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may arise regarding intellectual property subject to a licensing agreement, including:

•~~the scope of rights granted under the license agreement and other interpretation-related issues;~~

•~~the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;~~

•~~the sublicensing of patent and other rights under our collaborative development relationships;~~

•~~our diligence obligations under the license agreement and what activities satisfy those diligence obligations;~~

•~~the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and~~

•~~the priority of invention of patented technology.~~

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates ~~, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects. As an example, TxCell has exclusively licensed the~~ ~~right to the CAR for use in TX-200 from the University of British Columbia, or UBC.~~ ~~Should UBC terminate this license agreement, we~~ may have to develop or acquire the appropriate CAR which would extend our anticipated development timeline and add expense, and which could result in our failure to realize the anticipated benefits of the TxCell Acquisition.

~~We may be involved in lawsuits or similar proceedings to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.~~

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable, in whole or in part, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly and could put our patent applications at risk of not issuing. Moreover, if we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, ~~inter partes~~ review and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product candidate. ~~For example, TxCell has exclusively licensed the~~ rights to technology related to redirected Treg cells from the Yeda Research and Development Company, or Yeda. A patent included in this exclusive license agreement with Yeda was granted in Europe in July 2016. Subsequent to this grant, the patent was opposed by several parties in May 2017 and revoked in November 2018. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection could have a material adverse impact on our business.

Interference or derivation proceedings provoked by third parties or brought by us or declared by the U.S. PTO may be necessary to determine the priority of inventions or other matters of inventorship with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology. Our defense of litigation, interference, derivation, or other proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

~~We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.~~

We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the U.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.

~~Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.~~

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States or in other jurisdictions in which we seek patent protection could increase the uncertainties and costs surrounding the prosecution of ~~patent applications and the enforcement or defense of issued patents. The United States enacted~~ ~~the Leahy-Smith America Invents Act, or the America Invents Act,~~ which includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the U.S. PTO during patent prosecution and additional procedures to attack the validity of a patent by U.S. PTO administered post-grant

~~proceedings, including post-grant review,~~ ~~inter partes~~ review, and derivation proceedings. Because of a lower evidentiary standard in U.S. PTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a U.S. PTO proceeding sufficient for the U.S. PTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. In addition, the challenged patents are not accorded the presumption of validity as they are in Federal District Court. Accordingly, a third party may attempt to use the U.S. PTO procedures to invalidate our patent claims that would not ha~~ve been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents~~ ~~Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our~~ ~~owned or in-licens~~ed ~~patent applications and the enforcement or defense of our~~ ~~owned or in-licensed~~ ~~issued patents, all of which could have a material adverse effect on our business~~, financial condition, results of operations, and prospects. Moreover, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, th~~is combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, the U.S. PTO,~~ and similar legislative, judicial and regulatory bodies in other jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

~~We may not be able to protect our intellectual property rights throughout the world.~~

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

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

~~Risks Relating to our Business Operations~~

~~Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.~~

We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, store, process and transmit large amounts of sensitive information, including intellectual property, proprietary business information, personal information and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of our information technology infrastructure) to third parties, and as a result, we manage a number of third-party vendors who may or could have access to our computer networks or our confidential information. In addition, many of those third parties in turn subcontract or outsource some of their responsibilities to third parties. As a result, our information technology systems, including the functions of third parties that are involved or have access to those systems, is very large and complex. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and exposures, the size, complexity, accessibility and distributed nature of our information technology systems, and the large amounts of sensitive information stored on those systems, make such systems potentially vulnerable to unintentional or malicious, internal and external attacks on our technology environment. Potential vulnerabilities can exploited from inadvertent or intentional actions of our employees, third-party vendors, business partners, or by malicious third parties. Attacks of this nature are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise, including organized criminal groups, “hacktivists,” nation states and others. In addition to the extraction of sensitive

information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. In addition, the prevalent use of mobile devices increases the risk of data security incidents.

Significant disruptions of our, our third-party vendors’ and/or business partners’ information technology systems or other similar data security incidents could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, sensitive information, which could result in financial, legal, regulatory, business and reputational harm to us. For example, in April 2018, we announced a data security incident involving the compromise of a senior executive’s company email account. Upon learning of the incident on March 28, 2018, external network security experts were promptly engaged, and the incident response team worked diligently to investigate the incident. We also promptly notified federal law enforcement of the incident. The investigation concluded that the incident was limited to the compromise of the senior executive’s company email account for approximately 11 weeks. The investigation did not reveal any evidence that our network or other information technology systems were otherwise compromised in connection with the incident or that the incident resulted in the disclosure of or access to personal information about patients or other individuals besides the holder of the company email account that was affected. However, proprietary, confidential and other sensitive information of ours and that of other entities was accessed and may have been compromised as a result of the incident. Unforeseen developments related to this incident could occur, which could have a further adverse impact on us. We do not maintain cyber liability insurance and will therefore have no coverage for any losses resulting from this data security incident. Any litigation or regulatory review arising from this incident could result in significant legal exposure to us. In addition, information technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war and telecommunication and electrical failures, could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

While we aware of the company email incident described above, there is no way of knowing with certainty whether we have experienced any other data security incidents that have not been discovered. While we have no reason to believe this to be the case, attackers have become very sophisticated in the way they conceal access to systems, and many companies that have been attacked are not aware that they have been attacked. Any event, including the company email incident described above, that leads to unauthorized access, use or disclosure of personal information, including but not limited to personal information regarding our patients or employees, could disrupt our business, harm our reputation, compel us to comply with applicable federal and/or state breach notification laws and foreign law equivalents, subject us to time consuming, distracting and expensive litigation, regulatory investigation and oversight, mandatory corrective action, require us to verify the correctness of database contents, or otherwise subject us to liability under laws, regulations and contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs to us, and result in significant legal and financial exposure and/or reputational harm. In addition, any failure or perceived failure by us or our vendors or business partners to comply with our privacy, confidentiality or data security-related legal or other obligations to third parties, or any further security incidents or other inappropriate access events that result in the unauthorized access, release or transfer of sensitive information, which could include personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against us by advocacy groups or others, and could cause third parties, including clinical sites, regulators or current and potential partners, to lose trust in us or ~~we could be subject to claims by third parties that we have breached our~~ ~~privacy- or confidentiality-related obligations, which could materially and adversely affect our business and prospects.~~ In addition, failure to maintain effective internal accounting controls related to security breaches and cybersecurity in general could impact our ability to produce timely and accurate financial statements and subject us to regulatory scrutiny. Moreover, data security incidents and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. While we have implemented security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or further security incidents.

~~We may not realize the anticipated benefits of the TxCell Acquisition or be able to successfully integrate the acquired TxCell operations.~~

The TxCell Acquisition involves numerous uncertainties and risks, and has required, and will continue to require, significant efforts and expenditures, including with respect to integrating the acquired TxCell operations with our operations. We may not be able to accomplish this integration process smoothly or successfully. The integration of certain of the acquired TxCell operations will take time and will require the dedication of significant management resources, which may temporarily distract our management’s attention from the routine business of the combined company. ~~In any event, we may encounter unexpected difficulties, or incur unexpected costs, in connection with our transition activities and integration efforts, which include:~~

•

~~the potential disruption of our historical core business;~~

•

t~~he risk that our relative lack of~~ ~~historical experience in CAR-Treg~~ ~~development and developing product candidates and technology for immunological diseases~~ ~~will not allow us to advance the development~~ of ~~CAR-Treg therapies, including TX-200, on the timeframes we expect, or at all;~~

•

~~the strain on, and need to continue to expand, our existing operational, technical, financial and administrative infrastructure;~~

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~~the difficulties in assimilating employees and corporate cultures;~~

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~~the difficulties in effectively managing transition and integration activities given the distance between our headquarters and U.S.-based management team and TxCell’s offices in France;~~

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~~the failure to retain key managers and other personnel, including the employees from the acquired TxCell business who might experience uncertainty about their future roles with us;~~

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~~the challenges in controlling additional costs and expenses in connection with and as a result of the TxCell Acquisition;~~

•

~~the diversion of our management’s attention to integration of operations and corporate and administrative infrastructures; and~~

•

~~any unanticipated liabilities for activities of or related to TxCell or its operations, technologies or product candidates.~~

If any of these factors impairs our ability to integrate successfully, we may be required to spend time or money on integration activities that otherwise would be spent on the development and expansion of our business. If we fail to integrate or otherwise manage the acquired TxCell business successfully and in a timely manner, the combined company’s potential to achieve the anticipated long-term strategic benefits of the TxCell Acquisition could be compromised and resulting operating inefficiencies could increase costs and expenses more than we planned, could negatively impact the market price of our common stock and could otherwise distract us from execution of our strategy. Failure to maintain effective financial controls and reporting systems and procedures could also adversely affect our ability to produce timely and accurate financial statements. ~~In addition, while we intend to avail ourselves of the French tax credit for certain research and development related expenses, we may not receive the anticipated amount~~ ~~and we may also be required to make corrective actions upon any audit by the French tax authority with respect to such tax credit.~~

In any event, there can be no assurance that we will integrate or otherwise manage the acquired TxCell business successfully or otherwise do so without experiencing operating inefficiencies or control deficiencies. In addition, because the historical business operations of TxCell differ from our historical business operations, and the combined company has a different business mix than our historical business, we face different operational risks and challenges and the complexity of our company has increased. Significant management time and effort is required to effectively manage the increased complexity of our company following the TxCell Acquisition, and our failure to successfully do so could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

~~If we are unable to acquire 100% of the equity interests of TxCell, our business, financial condition and results of operations could be adversely affected.~~

Although we completed the TxCell Acquisition, we may not be able to acquire the remaining ordinary shares of TxCell for some period of time, if ever. As of February 15, 2019, we have acquired a total of 25,047,671 ordinary shares of TxCell, representing approximately 98.2% of the outstanding share capital and voting rights of TxCell. Until such time, if ever, that we acquire 100% of the equity interests of TxCell, we will need to consider the rights of, and duties owed to, the minority shareholders of TxCell under French law when making future decisions that might impact TxCell, its business or its operations, which could adversely affect our business and ou~~r ability to realize the anticipated benefits of the TxCell Acquisition.~~

~~We plan to continue to operate the acquired TxCell business in France, which may expose us to unanticipated costs or events.~~

~~TxCell’s historical operations have been based in France and~~ ~~we plan to continue to operate the acquired TxCell business in France. Our operation of the acquired TxCell business in France involves significant risks, including:~~

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~~difficulty hiring and retaining appropriate personnel due to intense competition for such limited resources;~~

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~~disruptions in relations with our employees, including legacy TxCell employees; and~~

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~~compliance with regulatory requirements, including local French employment regulations and organized labor in France.~~

~~In addition, as a result of our~~ ~~operations in France, we have~~ become more exposed to fluctuations in currency exchange rates between the Euro and the U.S. dollar. Given the volatility of currency exchange rates, there is no assurance that we will be able to effectively manage currency transaction and/or conversion risks. To date, we have not entered into derivative instruments to offset the impact of foreign exchange fluctuations, which fluctuations could have a material adverse effect on our financial condition and results of operations. In any event, difficulties resulting from these and other risks related to our anticipated operations in France could expose us to increased expenses, impair our development efforts, adversely affect our financial condition and results of operations, and harm our competitive position.

~~We are also exposed to general risks associated with our operations outside of the United States, which could adversely affect our business.~~

In addition to our French operations as a result of the TxCell Acquisition, we also have operations and conduct business in other countries outside the United States, and have a UK subsidiary. We may plan to expand these activities or in to additional countries in the future. Consequently, we are, and will continue to be, subject to risks inherent with operating in foreign countries, in addition to those specific risks associated with TxCell, which include:

~~the increased complexity and costs inherent in managing international operations, including in geographically disparate locations;~~

~~diverse regulatory, financial and legal requirements, and any future changes to such requirements, in one or more countries where we are located or do business;~~

~~differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls;~~

~~adverse tax consequences, including changes in applicable tax laws and regulations;~~

~~applicable trade laws, tariffs, export quotas, custom duties or other trade restrictions, and any changes to them;~~

~~economic weakness, including inflation, or political or economic instability in particular foreign economies and markets;~~

~~compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;~~

~~foreign currency fluctuations, which could result in increased operating expenses or reduced revenues, and other obligations incident to doing business or operating in another country;~~

~~liabilities for activities of, or related to, our international operations;~~

~~challenges inherent in efficiently managing employees in diverse geographies, including the need to adapt systems, policies, benefits and compliance programs to differing labor and other regulations;~~

~~workforce uncertainty in countries where labor unrest is more common than in the United States; and~~

~~laws and regulations relating to data security and the unauthorized use of, or access to, commercial and personal information.~~

Our foreign operations also expose us to risks associated with “Brexit.” In June 2016, UK voters approved a referendum to withdraw the UK's membership from the EU, which is commonly referred to as "Brexit". In March 2017, the UK government initiated the exit process under Article 50 of the Treaty of the European Union, commencing a period of up to two years for the UK and the other EU member states to negotiate the terms of the withdrawal, such period ending on March 29, 2019 unless extended. There has been limited progress so far in the negotiations and continued uncertainty in the UK government and Parliament, which increases the possibility of the UK exiting the EU on March 29, 2019 without a formal withdrawal agreement in place and of resulting significant market and economic disruption. We have operations in the UK and in Fra nce, which is in the EU, and as a result, we face risks associated with the potential uncertainty and disruptions that may lead up to and follow Brexit, including with respect to volatility in exchange rates and interest rates and potential material changes to the regulatory regime applicable to our operations in the UK. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory age ncies and financial markets. For example, depending on the terms of Brexit, the UK could also lose access to the single EU market and to the global trade deals negotiated by the EU on behalf of its members. ~~Any of these effects of Brexit, and others we cannot anticipate or that may evolve over time, could adversely affect our business, results of operations and financial condition.~~

If we use chemical, biological ~~and~~or hazardous materials in a manner that causes injury or violates laws, we may be liable for damages.

Our research and development activities involve the controlled use of potentially harmful biological materials as well as hazardous materials, chemicals, and various radioactive compounds typically employed in the study of molecular and cellular biology. We routinely use cells in culture and gene delivery vectors, and we employ small amounts of radioisotopes in trace experiments. Although we maintain up-to-date licensing and training programs, we cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling, or disposal of these materials. In the event of contamination or injury, we could be held liable for damages that result, and any liability could exceed our resources. We currently carry insurance covering certain claims arising from our use of these materials. However, if we are unable to maintain our insurance coverage at a reasonable cost and with adequate coverage, our insurance may not cover any liability that may arise. We are subject to federal, state, and local laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products.

Failure to ~~attract, retain,~~comply with these laws and ~~motivate skilled personnel~~regulations could result in fines, penalties and ~~cultivate key academic collaborations will delay~~additional liabilities and restrictions on our operations.

We currently have limited experience in clinical-scale manufacturing of our product candidates, and we rely in large part upon third-party CMOs to manufacture and supply drug product for our preclinical studies and clinical trials. Although we are in the process of establishing manufacturing facilities in Brisbane, California and Valbonne, France, these facilities will only manufacture limited quantities of our product candidates for our early-stage clinical trials. We intend to continue to rely on third parties for the manufacture of product candidates for later stage clinical trials, and for commercial-scale manufacturing for any approved product. The manufacture of biopharmaceutical products in compliance with the FDA’s cGMP requires significant expertise and capital investment, including the development ~~programs~~of advanced manufacturing techniques and process controls. Manufacturers of biopharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced cGMP requirements, other federal and state regulatory requirements and foreign regulations. If our ~~research and development efforts.~~

~~Our success depends on our continued ability~~manufacturers were to ~~attract, retain, and motivate highly qualified management and scientific personnel and~~encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to ~~develop~~conduct later-stage clinical trials could be jeopardized. Any delay or interruption in the supply of clinical trial materials could delay the completion of our clinical trials, increase the costs associated with developing our product candidates and, ~~maintain important relationships~~depending upon the period of delay, require us to commence new clinical trials at significant additional expense or terminate the clinical trials completely.

We and our CMOs must comply with ~~leading research~~cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and ~~academic institutions~~the maintenance of records and ~~scientists. Competition~~documentation. We and our CMOs may be unable to comply with these cGMP requirements and with other FDA, state and

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foreign regulatory requirements. The FDA or similar foreign regulatory agencies may also implement new standards at any time or change their interpretation and enforcement of existing standards for ~~skilled~~manufacture, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and ~~qualified personnel~~standards. Failure to comply with these requirements may result in fines and ~~academic~~civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products and ~~other research collaborations is intense.~~we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our product candidates, entail higher costs or impair our reputation.

Our current agreements with our CMOs do not provide for the entire supply of the drug product necessary for all anticipated clinical trials or for full scale commercialization. If we ~~lose~~and our CMOs cannot agree to the ~~services~~terms and conditions for them to provide the drug product necessary for our clinical and commercial supply needs, we may not be able to manufacture the product candidate until a qualified alternative manufacturer is identified, which could also delay the development of, ~~personnel~~and impair our ability to commercialize our product candidates.

The number of third-party CMOs with the necessary ~~skills, including the members of our senior management team,~~manufacturing and regulatory expertise and facilities is limited, and it could ~~significantly impede the achievement of our research~~be expensive and ~~development objectives.~~ ~~In addition, we expect to rely on the experience and expertise of TxCell’s~~ ~~historical management team and other key personnel in the development of TX-200 and potential future~~ ~~CAR-Treg therapies. If we were to lose the services of~~take a significant ~~portion~~amount of time to arrange for alternative CMOs, which could have an adverse effect on our business. New manufacturers of any product candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate. Obtaining the necessary FDA approvals or ~~key individuals~~other qualifications under applicable regulatory requirements and ensuring non-infringement of ~~this team, such development~~third-party intellectual property rights could result in a significant interruption of supply and ~~our business~~ could ~~be adversely affected. Moreover, if we fail~~require the new manufacturer to ~~negotiate~~bear significant additional ~~acceptable collaborations with academic and other research institutions and scientists, or if our existing collaborations are unsuccessful, our development programs~~costs which may be ~~delayed or may not succeed.~~

~~Third~~passed on to us.

We and third parties on which we rely ~~and we~~ may be adversely affected by natural disasters and catastrophic or other events outside of our control, and our business continuity and disaster recovery plans may not adequately protect us from a serious ~~disaster.~~

disaster or event.

Natural disasters could severely disrupt our operations and our facilities, including our current and planned manufacturing facilities in Brisbane, California and Valbonne, France and the manufacturing facilities of our CMOs, and any disruption would likely have a ~~material adverse effect~~negative impact on our business, financial condition, results of operations and prospects. If a natural disaster, pandemic or epidemic, including the evolving COVID-19 pandemic, political crisis, power outage or any other event that is out of our control occurred that prevented us or third parties on which we rely from using all or a significant portion of our ~~headquarters,~~or their facilities, that damaged critical infrastructure or that otherwise disrupted our or their operations, it may be difficult or, in certain cases, impossible for us to continue our business and operations for a substantial period of time. The disaster recovery and business continuity plans we have in place currently are limited and may not prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have ~~a material~~an adverse effect on our business, financial condition, results of operations and prospects.

Such disasters or events occurring at facilities of third parties on which we rely could also negatively impact our business and operations.

Risks Relating to our ~~Common Stock~~Industry

Our product candidates are based on novel genomic medicine technologies, which makes it difficult to predict the timing and ~~Corporate Organization~~

~~Our stock price has been volatile~~costs of development and of subsequently obtaining regulatory approval.

We have concentrated our research and development efforts on genomic medicine, consisting of gene therapy, gene-edited cell therapy and genome engineering. The regulatory approval process for novel product candidates such as ours is unclear and may ~~continue~~be lengthier and more expensive than the process for other, better-known or more extensively studied product candidates.

Adverse developments in clinical trials of genomic medicines conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of our product candidates.

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we will be ~~volatile, which could~~required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. These additional processes may result in ~~substantial losses~~a review and approval process that is longer than we otherwise would have expected. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects would be harmed. Even if our product candidates are approved, we expect that the FDA will require us to submit follow-up data regarding our clinical trial patients for ~~investors.~~

~~Our stock price has been volatile~~a number of years after any approval. If this follow-up data shows negative long-term safety or efficacy outcomes for these patients, the FDA may revoke its approval or change the label of our products in a manner that could have an adverse impact on our business.

In addition, adverse developments in clinical trials of genomic medicines conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of our product candidates. The FDA and ~~may continue~~EMA have only very recent and limited experience in the approval of in vivo gene therapy products. As a result, it is difficult to ~~be volatile, which could cause stockholders~~determine how long it will take or how much it will cost to ~~incur substantial losses. An active public market~~obtain regulatory approvals for our ~~common stock may not~~product candidates.

If we or our competitors develop, acquire, or market technologies or products that are more effective than ours, our financial condition and ability to successfully market or commercialize our product candidates or be ~~sustained,~~profitable would be adversely affected.

The biopharmaceutical industry is highly competitive and subject to significant and rapid technological change. We are aware of several companies focused on other methods for editing cells, editing genes and regulating gene expression and a growing number of commercial and academic groups pursuing the ~~market price~~development of genome engineering technology. The field of genomic medicine is highly competitive, and we expect competition to persist and intensify in the future from a number of different sources, including biopharmaceutical companies, academic and research institutions, and government agencies that will seek to develop competing products as well as technologies that will compete with our ~~common stock may continue to be highly volatile. The market price of~~ZFP technology platform. For example, in genome engineering and gene therapy products, competing proprietary technologies with our ~~common stock has fluctuated significantly in response to various factors, some of which~~product development focus include but are ~~beyond our control, including but~~ not limited to, ~~the following:~~

•~~announcements by us or collaborators providing updates~~recombinant proteins, other gene therapy/cDNAs, antisense, siRNA and microRNA approaches, exon skipping, small molecule drugs, monoclonal antibodies, CRISPR/Cas technology and TALE proteins, meganucleases, and MegaTALs. See “Business—Competition” for more information on the ~~progress or development status of product candidates;~~

•~~data from clinical trials;~~

•~~initiation or termination of clinical trials;~~

•~~changes in market valuations of similar companies;~~

•~~overall market and economic conditions, including the equity markets for emerging biotechnology companies;~~

•~~deviations in our results of operations from the guidance given by us;~~

•~~announcements by us~~competition we may face.

Any products that we or our ~~competitors~~collaborators or strategic partners develop will enter into highly competitive markets. Even if we are able to generate products that are safe and effective for their intended use, competing technologies may prove to be more effective or less expensive, which, to the extent these competing technologies achieve market acceptance, will limit our revenue opportunities. In some cases, competing technologies have proven to be effective and less expensive. Competing technologies may include other methods of regulating gene expression or modifying genes. ZFNs and ZFP-TFs have broad application in the life sciences industry and compete with a broad array of new ~~or enhanced products,~~ technologies ~~or services or significant contracts,~~and approaches being applied to genetic research by many companies.

In addition to possessing competing technologies, our competitors include biopharmaceutical companies with:

•substantially greater capital resources than ours;

•larger research and development staffs and facilities than ours; and

•greater experience in product development and in obtaining regulatory approvals and patent protection.

These organizations also compete with us to attract qualified personnel, attract parties for acquisitions, ~~strategic relationships,~~ joint ventures or ~~capital commitments;~~

•~~announcement~~other collaborations and license the proprietary technologies of ~~changes~~academic and research institutions that are competitive with our technology, which may preclude us from pursuing similar opportunities. Accordingly, our competitors may succeed in obtaining patent protection or commercializing products before us. Even if our product candidate is more effective, it may be disadvantaged if it is not first to market. In addition, any products that we develop may compete with existing products or services that are well established in the marketplace. Further, some of our product candidates in development are designed for use once. Any success in developing single-dose therapeutics could cause us to lose potential recurring revenues from therapeutics that are designed to be taken over a patient’s lifetime.

The evolving COVID-19 pandemic could continue to adversely impact our business and operations byand the business and operations of our collaborators, manufacturers and ~~partners,~~other business partners.

In March 2020, the World Health Organization declared the novel coronavirus, or ~~changes~~COVID-19, outbreak a pandemic,

and since such time, actions taken around the world to help mitigate the spread of COVID-19 have included varying restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses, including in the

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three countries where we have most of our day-to-day operations, the United States, France and the United Kingdom. Our business has been directly impacted by pandemic restrictions aimed at reducing the spread of the disease, including multiple California executive orders, several semi-coordinated San Francisco Bay Area orders, several other state and additional local orders across the country and similar orders outside the United States, which, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel.

•~~regulatory developments;~~

•~~changes,~~laboratories. In the United States, employees who are able to fulfill their job duties working from home are required to work from home, and have been doing so since March 2020. These protocols and modifications have slowed our productivity and disrupted our business to a moderate degree and are likely to continue doing so through 2021. For example, we have experienced periodic short-term disruptions to our onsite laboratory and manufacturing operations while addressing positive cases of COVID-19 by ~~one or more of our security analysts, in recommendations, ratings or coverage of our stock;~~

•~~additions or departures of key personnel;~~

•~~future sales of our common stock or other securities by us, management or directors, liquidation of institutional funds that comprised large holdings of our stock; and decreases in our cash balances.~~

Actual or potential sales of our common stock by our employees, including our executive officers, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negatively by other investors.

~~In accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended,~~onsite workers, and our ~~policies regarding stock transactions,~~laboratory and manufacturing operations could experience longer term disruptions in the future in the event of a ~~number~~significant outbreak of COVID-19 among our employees, including executive officers and members of our board of directors, have adopted and may continue to adopt stock trading plans pursuant to which they have arranged to sell shares of our common stockonsite workers. Moreover, from time to time, we have been required to reorganize and prioritize our research resources to mitigate moderate COVID-19 impacts arising from travel restrictions, laboratory density restrictions and laboratory supply constraints. If our research programs encounter longer-term disruptions, it could impact our ability to support our biopharmaceutical partners as contemplated in our collaboration agreements and could result in adjustments to our research timelines, although we do not believe that the short-term disruptions to date have resulted in any such impacts.

Additionally, our Phase 1/2 STAAR clinical study evaluating ST-920, our wholly-owned gene therapy product candidate for the treatment of Fabry disease, has experienced delays in its timeline due to COVID-19 impacts and the diversion of healthcare resources to fight the pandemic. For example, the clinical trial site in the ~~future. Generally, sales under~~UK for this study has not been able to open due to the significant prevalence of COVID-19 in the UK. Additionally, we have experienced delays in recruiting, enrolling and dosing patients for this study at our US trial sites, due in some part to the understandable hesitation of patients to travel by plane to trial sites not within driving distance and to enter medical facilities during the pandemic and in other part to trial sites prioritizing COVID-19 clinical care over research activities such ~~plans~~as the STAAR study. Moreover, we have experienced some short-term delays in sourcing the necessary raw materials to manufacture supplies for the STAAR study due to COVID-19 impacts. We estimate that these challenges have set back our STAAR study timelines three to six months. While we currently still expect to share initial clinical study data by the end of 2021, this timeline could be revised if COVID-19 impacts to our enrollment and dosing of patients and to our sourcing of raw materials for this study intensify because of vaccination delays, new COVID-19 variants or unexpected events.

In addition, our STEADFAST clinical study evaluating TX200, our wholly-owned CAR-Treg cell therapy product candidate for the treatment of kidney transplant rejection, has experienced delays in its commencement timeline due to COVID-19 impacts related to manufacturing and technology transfer challenges with our CMOs. We estimate that these challenges have set back our commencement timeline by approximately three months. While we currently still expect to initiate this clinical study by the end of 2021, this timeline could be revised if COVID-19 impacts result in additional delays.

With respect to our partnered programs, the timelines for the studies and trials managed by our ~~executive officers~~collaborators are also subject to potential delay in the future if these studies and ~~directors require public filings. Actual~~trials experience similar challenges that we have experienced in our STAAR and STEADFAST studies.

While we have been working with our collaborators, clinical trial sites and CMOs to minimize any impact of COVID-19 on clinical trials and research and development operations conducted by us and our collaborators, we do expect that at least some of our programs will nonetheless experience delays and disruptions in the future due to COVID-19 impacts on the operations of us and our business partners. These delays and disruptions have in the past and could in the future relate to clinical site initiation, patient recruitment and enrollment or dosing of patients. Some patients and clinical trial staff may not be able or willing to comply with clinical trial protocols if quarantines impede movement or interrupt healthcare services.

It is uncertain when restrictions will be fully lifted, and if so, when we will be able to resume pre-pandemic work routines. Imposition of government orders, including quarantine and shelter-in-place orders related to COVID-19 or other infectious diseases, is expected to continue to impact personnel at our laboratories and our third-party manufacturing facilities in the United States and other countries, for the foreseeable future, and could impact the availability or cost of materials, which would disrupt our supply chain. Many of our third-party manufacturers which we use for the supply of materials for product candidates or other materials necessary to manufacture product to conduct preclinical tests and clinical trials are located in countries heavily affected by the COVID-19 pandemic, and should they experience disruptions in the future, such as temporary closures or suspension of services, we would likely experience delays in advancing these tests and trials.

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While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, it could continue to result in significant disruption of global financial markets, impairing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the COVID-19 pandemic could materially affect our business and the value of our common stock.

The extent to which the COVID-19 pandemic impacts our business, our clinical development and regulatory efforts will depend on future developments that remain highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration and severity of the pandemic, travel restrictions, quarantines and social distancing requirements in the United States, France, United Kingdom and other countries, business closures or business disruptions and the effectiveness and timeliness of actions taken in the United States, France, United Kingdom and other countries to contain and treat the disease, including the effectiveness and timing of vaccination programs in the United States and worldwide. Accordingly, we do not yet know the full extent of potential delays or impacts on our business, sales of our ~~common stock by such persons~~products, our clinical and regulatory activities, healthcare systems or the global economy as a whole. However, these effects could ~~cause~~have material adverse impacts on our business, financial condition, results of operations and growth prospects.

In addition, to the ~~price~~extent the evolving COVID-19 pandemic continues to adversely affect our business and results of ~~our common stock to fall or prevent~~operations, it ~~from increasing for numerous reasons.~~

~~Future sales and issuances~~may also have the effect of ~~our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution~~heightening many of the ~~percentage ownership~~other risks and uncertainties described in this “Risk Factors” section.

Negative public opinion and increased regulatory scrutiny of ~~our stockholders and could cause our stock price to fall.~~

~~Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders~~genomic medicines may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

~~Our stock price is also influenced by~~damage public perception of the safety of our product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.

Genetically modified products are currently subject to public debate and heightened regulatory scrutiny. Gene therapy remains a novel technology, with only two in vivogene therapy products approved for a genetic disease to date in the United States and ~~government regulation~~only a few in vivo gene therapy products for genetic diseases approved to date in the EU. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of ~~potential products.~~

~~Reports~~the public or the medical community. For example, reports of serious adverse events in a retroviral gene transfer trial for infants with X-linked severe combined immunodeficiency (X-linked SCID) in France and subsequent FDA actions putting related trials on hold in the United States had a significant negative impact on the public perception and stock price of certain companies involved in gene ~~therapy. Stock prices of these companies declined~~therapy, whether or not the specific company was involved with retroviral gene transfer, ~~for the treatment of infants with X-linked SCID,~~ or whether the specific ~~company~~’scompany’s clinical trials were placed on hold in connection with these events. Other ~~potential~~ adverse events could occur in the field of ~~gene therapy may occur in the future~~genomic medicine that could result in ~~greater governmental regulation of our potential products and~~increased regulatory scrutiny, potential regulatory delays ~~relating to the testing~~ or ~~approval of our potential products. These external events may have a~~ negative impact on public perception ~~of our business,~~genomic medicines, which could cause our stock price to decline.

In particular, our success will depend upon physicians who specialize in the treatment of genetic diseases targeted by our product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.

Even if the regulatory approval for genetically modified products developed using our technology is obtained, our success will also depend on public acceptance of the use of genetically modified products including medicines, plants and plant products. Claims that genetically modified products are unsafe for consumption or pose a danger to the environment may influence public attitudes. Our genetically modified products may not gain public acceptance. More restrictive government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop. For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death seen in other trials using other vectors. Serious adverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

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Our current and future relationships with healthcare providers, customers and third-party payors subject us to applicable anti-kickback, fraud and abuse, privacy, data security and other healthcare laws and regulations. If we fail to comply with such regulations, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain regulatory approval. Arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute our products. As a biotechnology company, even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse, transparency, health privacy and security and patients’ rights are and will be applicable to our business. For details regarding the restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate see “Business—Government Regulation—Additional Regulation”.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Scrutiny has also increased, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. If our operations or if any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws or applicable regulations, we and they could be subjected to significant civil, criminal and administrative enforcement actions, see “Business—Government Regulation—Additional Regulation”.

Further, we are required to comply with privacy and data security laws, such as the GDPR and the CCPA, and after January 1, 2023, the California Privacy Rights Act, which apply to the collection, use, disclosure, transfer, or other processing of personal data. For more information regarding these regulations, see “Business—Government Regulation—Privacy Regulation”. To comply with the GDPR restrictions on the transfer of personal data from Europe, we have relied on Standard Contractual Clauses. However, a July 2020 decision of the EU’s highest court has called into question this practice, and UK authorities may similarly question the viability of the Standard Contractual Clauses as a mechanism for the lawful transfer of personal data outside of that country. Moreover, there is uncertainty regarding how ‘Brexit’ will impact these practices. If we are unable to implement safeguards necessary to ensure that our transfers of personal data from and within Europe are lawful, we will face increased exposure to regulatory actions, substantial fines, and injunctions against processing personal data from Europe, and could be required to increase our data processing capabilities in Europe at significant expense. Restrictions on our ability to transfer personal data from Europe could impact our clinical trial activities in Europe and limit our ability to collaborate with CROs and other third parties subject to European data protection laws. Other countries may adopt restrictions similar to the GDPR, which could further impact our operations.

Any failure or alleged failure (including as a result of deficiencies in our policies, procedures or measures relating to privacy, data security, marketing or communications) by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity. In addition, new regulation, legislative actions or changes in interpretation of existing laws or regulations regarding privacy and data security (together with applicable industry standards) may increase our costs of doing business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data security in the United States, the EU and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards will have on our business.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face inherent risks of product liability exposure related to the testing of our product candidates in human clinical trials and will face even greater product liability risks if we commercially sell any approved products. Product liability claims may be brought against us by subjects enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

•decreased demand for any product candidates or products that we may develop;

•termination of clinical trial sites or entire trial programs;

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•injury to our reputation and significant negative media attention;

•withdrawal of clinical trial participants;

•significant costs to defend the related litigation;

•substantial monetary awards to clinical trial patients;

•loss of revenue;

•diversion of management and scientific resources from our business operations; and

•the inability to commercialize any products that we may develop.

We currently hold product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

Risks Relating to our Finances

We have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.

We have generated operating losses since we began operations in 1995. The extent of our future losses and the timing of profitability are uncertain, and we expect to incur losses for the foreseeable future. We have been engaged in developing our ZFP technology since inception, which has and will continue to require significant research and development expenditures. To date, we have generated our funding from issuance of equity securities, revenues derived from collaboration agreements, other strategic partnerships in non-therapeutic applications of our technology, federal government research grants and grants awarded by research foundations. We expect to continue to incur additional operating losses for the next several years as we continue to develop our product candidates. If the time required to generate significant product revenues and achieve profitability is longer than we currently anticipate or if we are unable to generate liquidity through equity financing or other sources of funding, we may be forced to curtail or suspend our operations.

We may be unable to raise additional capital on favorable terms, if at all, which would harm our ability to develop our technology and product candidates and could delay or terminate some or all of our programs. Future sales and issuances of equity securities could also result in substantial dilution to our stockholders.

We have incurred significant operating losses and negative operating cash flows since inception and have not achieved profitability. We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure and research and product development activities. While we believe our available cash, cash equivalents and marketable securities as of December 31, 2020, when combined with additional capital raises and expected revenues from collaborations, strategic partners and research grants, will be adequate to fund our currently planned operations through at least the next 12 months from the date the financial statements in this Annual Report on Form 10-K are issued, we will need to raise substantial additional capital to fund the development, manufacturing and potential commercialization of our product candidates. We regularly consider fund raising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of our product candidates, a process that could cost in excess of hundreds of millions of dollars per product. We may experience difficulties in accessing the capital markets due to external factors beyond our control, such as volatility in the equity markets for emerging biotechnology companies and general economic and market conditions both in the United States and abroad. For example, our ability to raise additional capital may be adversely impacted by global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide, which could be impacted by the evolving COVID-19 pandemic. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will adversely affect our business and our ability to develop our technology and products candidates.

To the extent we raise additional capital by issuing equity securities, including sales pursuant to our at-the-market offering program with Jefferies LLC, our stockholders may experience substantial dilution. We may issue common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. New investors could gain rights superior to our existing stockholders.

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Our ability to use net operating losses to offset future taxable income may be subject to limitations.

Although a certain amount of our federal net operating loss carryforwards carry forward indefinitely (but are subject to a percentage limitation), a significant amount of our federal and all of our state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2024 and 2029, respectively. The net operating loss carryforwards subject to expiration could expire unused and be unavailable to offset future income tax liabilities. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change in its equity ownership value over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We have experienced an ownership change in the past and we may also experience additional ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. For example, California has imposed limits on the usability of California state net operating losses to offset California taxable income in tax years beginning after 2019 and before 2023. As a result, if we earn net taxable income, we may be unable to use all or a material portion of our net operating loss carryforwards and other tax attributes, which could potentially result in increased future tax liability to us and adversely affect our future cash flows.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The ~~trading~~ market ~~for~~price of our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. In the event securities or industry analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Risks Relating to our Reliance on Third Parties

If conflicts arise with our contractors, collaborators or other business partners, these conflicts may limit our ability to implement our strategies and may harm our business and prospects.

If conflicts arise with our contractors, collaborators or other business partners, the other party will likely act in its self-interest, which may limit our ability to implement our strategies. For example, some of our collaborators are conducting multiple product development efforts within each area that is the subject of their collaboration with us. Our collaborators may develop, either alone or with others, product candidates in related fields that are competitive with the product candidates that are the subject of their collaborations with us. Competing products, either developed by the collaborators or to which the collaborators or have rights, may result in the withdrawal of their support for our product candidates.

Some of our collaborators could also become our competitors in the future. Our collaborators could develop or invest in competing products, preclude us from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, terminate or breach their agreements with us unexpectedly or prematurely, or fail to devote sufficient resources to the development and commercialization of product candidates covered by the collaboration.

Any of these conflicts could harm our product development efforts and otherwise adversely affect our business and prospects.

Our collaborators control certain aspects of our product development efforts, including certain of our clinical trials, which could result in unanticipated delays and other obstacles in the commercialization of our product candidates.

We depend on collaborators to design and conduct certain of our clinical trials for some of our product candidates. As a result, these clinical trials may not be conducted in the manner or on the timeline we desire, which may negatively impact our

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product development efforts. In addition, if any of these collaborators withdraws support for our product candidates or otherwise impairs their development, our business could be negatively affected.

Our lack of control over aspects of product development in our agreements with Novartis, Biogen, Kite, Sanofi, Takeda and Pfizer could cause delays or other difficulties in the development and commercialization of our product candidates, which may prevent us from completing the intended IND filings in a timely fashion and receiving any milestone, royalty payments and other benefits under the agreement. In addition, under their respective agreements, our third-party collaborators have certain rights to terminate the agreements by providing us with advance notices, therefore, the actual milestone payments that we may receive under these agreements may be substantially lower than the full amounts provided for under these agreements.

Our collaborators licensing our ZFP technologies may decide to adopt alternative technologies or products or may be unable or unwilling to develop commercially viable products with our ZFP technologies, which would negatively impact our revenues and our strategy to develop product candidates using ZFP technologies.

Several of our collaborations leverage our ZFP technology platform. These collaborators may elect to adopt alternative technologies in the future, which could decrease the value of our ZFP technology platform and impede the development of product candidates using the platform. Additionally, because many of our collaborators are likely to be working on more than one development project, they could choose to shift their resources to projects other than those they are working on with us. If they do so, this would delay our ability to test and develop our ZFP technology platform and would delay or terminate the development of our product candidates using the platform. Further, our collaborators may elect not to develop product candidates arising out of our collaborations or not to devote sufficient resources to the development, manufacturing, marketing or sale of these product candidates. If they terminate the collaborations with us and we wish to continue developing the product candidates, we will be required to seek the support of other collaborators or develop the products ourselves. We may not be able to identify a suitable partner or negotiate a favorable collaboration agreement, and we may not have sufficient resources and expertise internally, to allow us to continue the development of these product candidates.

Commercialization of our technologies will depend, in part, on collaborations with other companies. If we are not able to find collaborators in the future or if our collaborators do not diligently pursue product development efforts, we may not be able to develop our technologies or product candidates, which could slow our growth and decrease the market value of our common stock.

We do not have financial resources ourselves to fully develop, obtain regulatory approval for and commercialize our product candidates. We rely significantly on our collaborations with other biopharmaceutical companies to provide funding for our research and development efforts, including preclinical studies and clinical tests, and expect to rely significantly on such collaborations to provide funding for the lengthy regulatory approval processes required to commercialize our product candidates.

For example, we have collaborations with Novartis to develop product candidates to treat certain neurodevelopment disorders, including autism and intellectual disability; with Biogen to develop product candidates to treat tauopathies including Alzheimer’s disease, alpha-synuclein related diseases including Parkinson’s disease and other neurological diseases; with Kite to develop product candidates to treat cancer; with Pfizer to develop product candidates to treat hemophilia A and amyotrophic lateral sclerosis and frontotemporal lobar degeneration linked to mutations of the C9ORF72 gene; and with Sanofi to develop product candidates to treat beta thalassemia and sickle cell disease.

If we are unable to secure additional collaborations or if our collaborators are unable or unwilling to diligently advance the development, regulatory approval and commercialization of our product candidates, our growth may slow and adversely affect our ability to generate funding for development of our technologies and product candidates. In addition, our collaborators may sublicense or abandon development programs with little advance notice, or we may have disagreements or disputes with our collaborators, which would cause associated product development to slow or cease. In addition, the business or operations of our collaborators may change significantly through restructurings, acquisitions, other strategic transactions that may negatively impact their ability to advance our programs. The evolving COVID-19 pandemic could similarly impact our ability to realize the expected benefits of our collaborations due to the impacts of the pandemic on our collaborators and their business and operations.

Under typical collaborations, we expect to receive revenue for the research and development of our product candidates based on achievement of specific milestones, as well as royalties based on a percentage of sales of any commercialized products. Achieving these milestones will depend, in part, on the efforts of our collaborators as well as our own efforts. If we or any collaboration partner fails to meet specific milestones, then the collaboration agreement may be terminated, which could

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reduce our revenues. In addition, if sales of commercialized products fail to meet expectations, we could receive lower royalties than expected.

Risks Relating to our Intellectual Property

Because it is difficult, time consuming and costly to obtain, maintain and enforce patent protections for our technologies and product candidates, and because third parties may have made inventions that are similar to ours, we may not be able to secure optimal patent protections of our technologies and product candidates.

Our commercial success may depend in part on obtaining, maintaining and enforcing patent protection for our technologies and product candidates and successfully defending any of our patents that may be challenged. Obtaining and enforcing biopharmaceutical patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications in all desired jurisdictions, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner or at all. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent positions of biopharmaceutical companies can be highly uncertain and can involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date. Accordingly, we cannot predict the breadth of claims that may issue from any patent applications that we own or license, nor are we able to predict whether any third-party patents might issue with claims that are relevant to our product candidates or technologies. Even if patents do successfully issue and even if such patents cover our technologies and product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Furthermore, if third parties have made similar inventions, there are multiple ways they could impact the coverage of our own applications.

The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

•we or our licensors were the first to make the inventions covered by each of our pending patent applications;

•we or our licensors were the first to file patent applications for these inventions;

•the patents of others will not have an adverse effect on our ability to do business;

•others will not independently develop similar or alternative technologies or reverse engineer any of our products, processes or technologies;

•any of our pending patent applications will result in issued patents;

•any patents issued or licensed to us, our collaborators or strategic partners will provide a basis for commercially viable products or will provide us with any competitive advantages;

•any patents issued or licensed to us will not be challenged and invalidated by third parties;

•the laws in the U.S. and foreign countries will not change or be interpreted in a way that modifies our patent rights or impacts our ability to enforce or maintain our patent rights; or

•we will develop additional products, processes or technologies that are patentable.

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prevail in any actions. In addition, if the relevant patent claims were upheld as valid and enforceable and our products or processes were found to infringe a patent or patents, we or our collaborators may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, and we may be prevented from making, using, or selling the relevant product or process unless we or our collaborators could obtain a license or were able to design around the patent claims. We can give no assurance that such a license would be available to us or our collaborators on commercially reasonable terms, or at all, or that we would be able to successfully design around the relevant patent claims. There may be significant litigation in the genomics or cell therapy industry regarding patent and other intellectual property rights, which could subject us to costly, lengthy and distracting litigation with unpredictable results.

Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time and may vary based on jurisdiction.

If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be adversely affected, and our business would be harmed.

We rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, collaborators, partners and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures have been and may in the future be breached, and we may not have adequate remedies for any breach. See also the risk factor titled, “Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.” In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors, collaborators, partners and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have an adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information.

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property both in the United States and abroad. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could adversely affect our business, results of operations and financial condition.

We may not be successful in obtaining or maintaining necessary rights to product components, platforms and processes for our development pipeline through acquisitions and in-licenses.

Presently, we believe we have rights to the intellectual property, through licenses from third parties and under patents that we own, to develop our gene and cell therapy product candidates. Because our programs may involve additional product candidates, such as TX200 and potential future CAR-Treg therapies that may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify on commercially reasonable terms, if at all. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights, including from other companies and academic institutions, that we may consider attractive. Other companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We are a party to a number of intellectual property license agreements that are important to our business and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone, royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.

In many cases, patent prosecution of our in-licensed technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry.

The agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have an adverse effect on our business, financial condition, results of operations and prospects. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could

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have an adverse effect on our business, financial conditions, results of operations and prospects. As an example, Sangamo France has exclusively licensed the right to the CAR for use in TX200 from the University of British Columbia, or UBC. Should UBC terminate this license agreement, we may have to develop or acquire the appropriate CAR which would extend our anticipated development timeline and add expense, and which could result in our failure to realize the anticipated benefits of the acquisition of Sangamo France.

We may be involved in patent or intellectual property lawsuits or similar disputes involving patents under our control or patents of third parties claiming infringement, which lawsuits could be expensive, time-consuming and impair or prevent development and commercialization activities.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, ex parte reexaminations, post-grant review and inter partes review proceedings before the U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization, and such parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. For example, we are aware of certain patents held by third parties related to certain vector and vector manufacturing methods that are related to certain of our product candidates. We have not yet finalized the commercial scale manufacturing process for any of our product candidates. If our commercial scale manufacturing process utilizes these vector manufacturing methods, and if these third-party patents are valid and in force at the time of commercialization, we may need to challenge these patents, use or develop non-infringing alternatives or seek a license to these patents. In any event, if any third-party patents were held by a court of competent jurisdiction to cover our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block or hinder our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations or processes for manufacture or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license, or until such patents expires. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe.

Defense of these claims, regardless of their merit, would involve substantial litigation expense, could expose proprietary information and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

Competitors may also infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable, in whole or in part, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly and could put our patent applications at risk of not issuing. Moreover, if we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product candidate. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection could have an adverse impact on our business.

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Interference or derivation proceedings provoked by third parties or brought by us or declared by the U.S. PTO may be necessary to determine the priority of inventions or other matters of inventorship with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could expose us to significant monetary damages, result in the loss of valuable intellectual property, require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology. Our defense of litigation, interference, derivation or other proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

We may be unable to license gene transfer technologies that we may need to commercialize our ZFP technology and potential products, if approved.

In order to regulate or modify a gene in a cell, the ZFP must be efficiently delivered to the cell. We have licensed certain gene transfer technologies for our ZFP in research, including AAV and mRNA technology, and we are evaluating these systems and other technologies that may need to be used in the delivery of ZFP into cells for in vitro and in vivo applications. We have not developed our own gene transfer technologies, and we rely on our ability to enter into license agreements to provide us with rights to the necessary gene transfer technology. Our approach has been to license appropriate technology as required. For example, we are aware of certain patents held by a third party related to certain vector manufacturing methods that are currently being used in certain of our product candidates. We have not yet finalized the commercial scale manufacturing process for any of our product candidates. If our commercial scale manufacturing process utilizes these vector manufacturing methods, and if these third-party patents are in force at the time of commercialization, we may need to use or develop a non-infringing manufacturing method or seek a license to these patents. However, we may not be able to license the gene transfer technologies on reasonable terms, if at all, required to develop and commercialize our product candidates. The inability to obtain a license to use gene transfer technologies with entities that own such technology on reasonable commercial terms, if at all, could delay or prevent the preclinical evaluation, drug development collaborations, clinical testing and/or commercialization of our therapeutic product candidates.

Risks Relating to our Business Operations

Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.

We are increasingly dependent on information technology systems and infrastructure to operate our business, which are large and complex. In the ordinary course of our business, we collect, store, process and transmit large amounts of sensitive information, including intellectual property, proprietary business information, personal data (including personal health information) and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of our information technology infrastructure) to third parties, and as a result, we manage a number of third-party vendors who may or could have access to our computer networks or our confidential information. Many of those third parties in turn subcontract or outsource some of their responsibilities to third parties. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and exposures, the size, complexity, accessibility and distributed nature of our information technology systems, and the large amounts of sensitive information stored on those systems, make such systems potentially vulnerable to unintentional or malicious, internal and external attacks

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on our technology environment. Attacks of this nature are increasing in their frequency, levels of persistence, sophistication and intensity. In addition, the effects of the COVID-19 pandemic have intensified our dependence on information technology systems as many of our critical business activities are currently being conducted remotely and our increased reliance on personnel working from home could increase our cybersecurity risk.

Significant disruptions of our, our third-party vendors’ and/or business partners’ information technology systems or other similar data security incidents could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, sensitive information, which could result in financial and reputational harm to us. For example, in April 2018, we announced a data security incident involving the compromise of a senior executive’s company email account. Our investigation of the incident did not reveal any evidence that our systems were otherwise compromised in connection with the incident or that personal data about patients or other individuals besides the executive were accessed or disclosed. However, proprietary, confidential and other sensitive information of ours and that of other entities was accessed and may have been compromised as a result of the incident. Unforeseen developments related to this incident could occur, which could have a further adverse impact on us. Any litigation or regulatory review or investigation arising from this incident could result in significant legal exposure to us. In addition, information technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war and telecommunication and electrical failures, could result in a material disruption of our facility, development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

While we are aware of the company email incident described above, there is no way of knowing with certainty whether we have experienced any other data security incidents that have not been discovered. While we have no reason to believe this to be the case, attackers have become very sophisticated in the way they conceal access to systems, and many companies that have been attacked are not aware that they have been attacked. Any delay in the discovery of an attack may result in increased expense and may harm our reputation. Any event, including the company email incident described above, that leads to unauthorized access, use or disclosure of personal data could, among other consequences, disrupt our business, harm our reputation, compel us to comply with applicable federal and/or state data breach notification laws and foreign law equivalents. In addition, failure to maintain effective internal accounting controls related to security breaches and cybersecurity in general could impact our ability to produce timely and accurate financial statements and subject us to regulatory scrutiny. While we have implemented security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or further security incidents.

We have business operations in France and the United Kingdom, which exposes us to additional costs and risks.

Our business operations in France and the United Kingdom subject us to certain additional costs and risks associated with doing business outside the United States, including:

•the increased complexity and costs inherent in managing international operations in geographically disparate locations;

•challenges of complying with diverse regulatory, financial and legal requirements, which are subject to change at any time;

•potentially adverse tax consequences, including changes in applicable tax laws and regulations;

•potentially costly trade laws, tariffs, export quotas, custom duties or other trade restrictions, and any changes to them;

•compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

•liabilities for activities of, or related to, our international operations;

•challenges inherent in efficiently managing employees in diverse geographies, including the need to adapt systems, policies, benefits and compliance programs to differing labor and other regulations;

•natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of health epidemics, including the evolving COVID-19 pandemic, and the resulting global economic and social impacts;

•workforce uncertainty in countries where labor unrest is more common than in the United States; and

•differing laws and regulations relating to data security and the unauthorized use of, or access to, commercial and personal information.

In addition, our international operations in France and the United Kingdom expose us to fluctuations in currency exchange rates between the Euro and the U.S. dollar and between the Pound Sterling and the U.S. dollar. Given the volatility of currency exchange rates, there is no assurance that we will be able to effectively manage currency transaction and/or conversion risks. To date, we have not entered into derivative instruments to offset the impact of foreign exchange fluctuations, which fluctuations could have an adverse effect on our financial condition and results of operations. In any event, difficulties resulting

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from these and other risks related to our operations outside of the United States could expose us to increased expenses, impair our development efforts, adversely affect our financial condition and results of operations and harm our competitive position.

We are in the process of growing the size of our organization globally, and we may experience difficulties in hiring, integrating and retaining qualified skilled employees.

We need to grow the size of our organization in order to support our research, product development, manufacturing and regulatory efforts, and such growth is critical to our success. We may not be able to hire, integrate and retain a sufficient number of qualified employees with the appropriate levels of experience and skills to accomplish our growth objectives. There currently is a shortage of skilled individuals with substantial experience discovering, developing and manufacturing genomic medicines, which is likely to continue. As a result, competition for these individuals is intense and the turnover rate can be high. We may not be able to hire, integrate and retain employees with these skills on acceptable terms given the competition among numerous biopharmaceutical companies and academic institutions for individuals with these skills. In addition, any negative or unexpected results in our preclinical or clinical trials or applications for marketing approval would make it more challenging to hire and retain qualified skilled employees. Moreover, the evolving COVID-19 pandemic has further challenged our ability to hire skilled employees. If we do not achieve our growth objectives, the progress of our research, development, manufacturing and regulatory efforts will slow down, which will adversely impact our business, financial condition, results of operations and prospects.

We are dependent on certain key members of our executive team and certain of our scientific, clinical development and manufacturing personnel, the loss of whose services may impede the progress of our research, development, manufacturing and regulatory efforts. While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees. We do not have “key person” insurance on any of our employees.

We may not be successful in our efforts to discover, license or acquire new potential product candidates and may fail to capitalize on product candidates with a greater commercial opportunity or for which there is a greater likelihood of success.

If our existing product candidates do not receive regulatory approval or are not successfully commercialized, then the success of our business will depend on our ability to continue to expand our product pipeline through discovery, in-licensing or acquisitions. We may be unable to do so. If we do identify potential product candidates for licensing or acquisition, we may be unable to reach acceptable terms with the licensors or sellers. Further, there may be risks and liabilities associated with the product candidates which our due diligence efforts fail to discover, that are not disclosed to us, that we inadequately assess, or that we are unable to manage effectively. Additionally, we may not realize the anticipated benefits of such licenses or acquisitions for a variety of reasons, including the possibility that the product candidates prove not to be safe or effective in clinical trials, that we are unable to successfully integrate the product candidate into our operations, or that the anticipated benefits will not otherwise be realized within the expected timeframe.

Additionally, because we have limited resources, we may forego or delay pursuit of opportunities with certain product candidates or indications that later prove to have greater commercial potential. Our spending on current and future research and development programs may not yield any commercially viable products. If we do not accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Alternatively, we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration arrangement.

Risks Relating to our Common Stock and Corporate Organization

Our stock price has been volatile and will likely continue to be volatile, which could result in substantial losses for investors, and could be influenced by public perception of genomic medicines and the biotechnology sector.

Our stock price has been volatile and may continue to be volatile, which could cause stockholders to incur substantial losses. An active public market for our common stock may not be sustained, and the market price of our common stock may continue to be volatile. The market price of our common stock has fluctuated significantly in response to various factors, some of which are beyond our control, including but not limited to the following:

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•announcements by us or collaborators providing updates on the progress or development status of product candidates or data from clinical trials;

•initiation or termination of clinical trials;

•changes in market valuations of similar companies;

•overall market and economic conditions, including the equity markets for emerging biotechnology companies;

•deviations in our results of operations from the guidance given by us;

•announcements by us or our competitors of new or enhanced products or technologies or significant contracts, acquisitions, strategic relationships, joint ventures or capital commitments;

•announcement of changes in business and operations by our collaborators, or changes to our existing collaboration agreements;

•changes in public opinions of genomic medicines;

•regulatory developments, including increased regulatory scrutiny of genomic medicines;

•changes, by one or more of our securities analysts, in recommendations, ratings or coverage of our stock;

•additions or departures of key personnel; and

•sales of our common stock or other securities by us, officers or directors, liquidation of institutional funds that comprised large holdings of our stock and decreases in our cash balances.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including very recently in connection with the evolving COVID-19 pandemic, which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, including potentially worsening economic conditions and other adverse effects or developments relating to the evolving COVID-19 pandemic, and political, regulatory and other market conditions, may negatively affect the market price of shares of our common stock, regardless of our actual operating performance.

Actual or potential sales of significant amounts of shares of our common stock into the market could cause the market price of our common stock to fall or prevent it from increasing for numerous reasons.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Our outstanding shares of common stock generally may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act, or to the extent the issuance of such shares has already been registered under the Securities Act and are held by non-affiliates of ours. While Biogen agreed not to sell any of the shares that we issued to Biogen in April 2020 until the first anniversary of the effectiveness of the Biogen collaboration, and to limit resales through the second anniversary, such restrictions are only temporary. Further, we also agreed, subject to certain limitations, to register for resale under the Securities Act any of the shares we issued to Biogen. We have also filed registration statements registering all shares of common stock that we may issue under our equity compensation plans. Such shares can be freely sold in the public market upon issuance, subject to volume limitations and black-out periods applicable to affiliates. Additionally, we are party to a sales agreement with Jefferies LLC which permits us from time to time at our discretion to sell up to $150.0 million of shares of our common stock in the public markets at prevailing market prices. As of February 19, 2021, we have sold 1,034,762 shares of our common stock under the sales agreement for net proceeds of approximately $15.7 million.

In addition, in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and our policies regarding stock transactions, certain of our employees, executive officers and directors have adopted, and may continue to adopt, stock trading plans pursuant to which they have arranged to sell shares of our common stock from time to time in the future. Generally, sales under such plans by our executive officers and directors require public filings. Our employees, executive officers, directors and affiliated stockholders also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information. Actual or potential sales of our common stock by such persons could be viewed negatively by other investors and could cause the price of our common stock to fall or prevent it from increasing.

We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.

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Anti-takeover provisions in our certificate of incorporation, Delaware law and our bylaws could make an acquisition of our company more difficult and could prevent attempts by our stockholders to remove or replace current management.

Anti-takeover provisions of Delaware law and in our certificate of incorporation and our bylaws may discourage, delay or prevent a change in control of our company, even if a change in control would be beneficial to our stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. In particular, under our certificate of incorporation our board of directors may issue up to 5,000,000 shares of preferred stock with rights and privileges that might be senior to our common stock, without the consent of the holders of the common stock. Moreover, without any further vote or action on the part of the stockholders, the board of directors would have the authority to determine the price, rights, preferences, privileges, and restrictions of the preferred stock. This preferred stock, if it is ever issued, may have preference over, and harm the rights of, the holders of common stock. Although the issuance of this preferred stock would provide us with flexibility in connection with possible acquisitions and other corporate purposes, this issuance may make it more difficult for a third party to acquire a majority of our outstanding voting stock.

Similarly, our authorized but unissued common stock is available for future issuance without stockholder approval. Our certificate of incorporation further provides that stockholders may not take action by written consent.

In addition, our amended and restated bylaws:

•establish advance notice requirements for nominations for election to the board of directors or proposing matters that can be acted upon at ~~stockholders~~’stockholders’ meetings; and

•prohibit stockholders from calling a special meeting of stockholders.

We are also subject to Section 203 of the General Corporation Law of the State of Delaware, which provides, subject to certain exceptions, that if a person acquires 15% of our voting stock, the person is an “~~interested stockholder~~”“interested stockholder” and may not engage in “~~business combinations~~”“business combinations” with us for a period of three years from the time the person acquired 15% or more or our voting stock. The application of Section 203 may, in some circumstances, deter or prevent a change in control of our company even when such change may be beneficial to our stockholders.

Our amended and restated bylaws ~~provide that a state or federal court located within the State of Delaware will be the~~designate exclusive ~~forum~~forums for the adjudication of certain disputes, which could limit our stockholders’ ability to ~~obtain~~bring claims in a ~~favorable~~ judicial forum it finds favorable for disputes with us or our directors, officers, or employees.

Our amended and restated bylaws provide that a state or federal court located within the State of Delaware is the sole and exclusive forum for:

•any derivative action or proceeding brought on our behalf;

•any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or stockholder of Sangamo to us or our stockholders;

•any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our charter or our bylaws, as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of the State of Delaware; and

•any action asserting a claim governed by the internal affairs doctrine.

~~This provision~~

Our amended and restated bylaws further ~~provides~~provide that a federal district court of the United State is the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. These provisions further provide that any person or entity that acquires any interest in shares of our capital stock will be deemed to have notice of and consented to ~~the~~these provisions.

These provisions ~~of such provision.~~

~~This provision~~ may limit a ~~stockholder~~’sstockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find ~~this provision~~any of these provisions to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our ~~business~~.

business.

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ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 2 – PROPERTIES

Our corporate headquarters occupies approximately ~~45,600~~87,700 square feet of office and research and development laboratory facilities in Brisbane, California, pursuant to a lease that expires in May 2029. We also lease approximately 54,200 square feet of research and office space ~~located~~ in Richmond, California, subject to leases that expire ~~beginning~~ in ~~August 2019 through~~ August 2026. We also ~~have a build-to-suit~~ lease ~~located in Richmond, California to occupy~~ approximately ~~41,400~~20,800 square feet of space that expires in December 2021. We also have a build-to-suit lease located in Brisbane, California that occupies approximately 87,700 square feet of space that expires in May 2029 for which we are currently occupying the 2^ndoffice, research and 3^rd ~~floors~~. ~~In addition, we have a property~~development space in Valbonne, France, ~~with approximately 14,036 square feet of research and office space~~subject to leases that ~~expires~~expire beginning in June ~~2022.~~

2025 through March 2028. We believe that our facilities are currently adequate to meet our needs. As we continue to expand our operations, we may need to lease or purchase additional facilities.

ITEM 3 – LEGAL PROCEEDINGS

We are not a party to any material pending legal proceeding. From time to time, we may be involved in legal proceedings arising in the ordinary course of business.

ITEM 4 – MINE SAFETY DISCLOSURES

Not Applicable.

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PART II

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

Market Information

Our common stock trades on the Nasdaq Global Select Market under the symbol ~~“SGMO”.~~

“SGMO.”

Holders

As of February ~~15, 2019,~~19, 2021, there were 5453 holders of record of our common stock. This number does not include “street ~~name”~~name,” or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees.

Dividends

We have not paid dividends on our common stock, and currently do not plan to pay any cash dividends in the foreseeable future.

Stock Performance Graph

The above Stock Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the ~~Securities and Exchange Commission,~~SEC nor shall such information be incorporated by reference into any future filing under the Securities Act ~~of 1933~~ or ~~Securities~~the Exchange Act, ~~of 1934,~~ each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

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I~~TEM~~

ITEM 6 – SELECTED FINANCIAL DATA

The following Selected Financial Data should be read in conjunction with “Item 7—7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8—8 – Financial Statements and Supplementary Data” included elsewhere in this Annual Report on Form 10-K.

~~Selected~~ Historical results are not necessarily indicative of future results.


	Year Ended December 31,
	2020		2019		2018		2017		2016
	(In thousands, except per share data)
Consolidated Statement of Operations Data:
Revenues	$	118,192	$	102,428	$	84,452	$	36,567	$	19,389
Operating expenses:
Research and development	180,647		145,922		114,866		65,728		65,618
General and administrative	67,097		61,686		46,736		27,200		26,330
Total operating expenses	247,744		207,608		161,602		92,928		91,948
Loss from operations	(129,552)		(105,180)		(77,150)		(56,361)		(72,559)
Interest and other income, net	8,775		9,761		8,261		1,793		887
Loss before income taxes	(120,777)		(95,419)		(68,889)		(54,568)		(71,672)
Income tax expense (benefit)	345		—		—		—		(14)
Net loss	(121,122)		(95,419)		(68,889)		(54,568)		(71,658)
Net loss attributable to non-controlling interest	(126)		(233)		(555)		—		—
Net loss attributable to Sangamo Therapeutics, Inc. stockholders	$	(120,996)	$	(95,186)	$	(68,334)	$	(54,568)	$	(71,658)
Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	$	(0.90)	$	(0.85)	$	(0.70)	$	(0.70)	$	(1.02)
Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	134,449		112,114		96,941		78,084		70,553


	As of December 31,
	2020		2019		2018		2017		2016
	(In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents, marketable securities, and interest receivable	$	692,988	$	384,988	$	400,508	$	244,560	$	142,759
Working capital	$	516,121	$	335,601	$	332,010	$	203,538	$	136,289
Total assets	$	938,550	$	637,516	$	590,395	$	286,741	$	157,891
Long-term portion of lease liabilities (¹)	$	38,396	$	41,192	$	27,689	$	24,738	$	3,945
Accumulated deficit	$	(777,981)	$	(656,985)	$	(562,696)	$	(495,479)	$	(440,911)
Total stockholders’ equity	$	497,366	$	432,739	$	367,257	$	187,900	$	136,195

(1) In 2019, we adopted Accounting Standards Update No. 2016-02 (Topic 842) “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities for operating leases with a lease term greater than one year. We adopted Topic 842 using the modified retrospective method. As such, results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840 “Leases.”

(2) Sangamo France was acquired in October 2018 and the results of operations have been included in the selected consolidated financial data since the date of acquisition (see Note 5 – Acquisition of Sangamo France in our Consolidated Financial ~~Data~~

Statements).

Year Ended December 31,

2018(1)

2017

2016

2015

2014

(In thousands, except per share data)

Statement of Operations Data:

Total revenues

$
84,452

$
36,567

$
19,389

$
39,539

$
45,870

Operating expenses:

Research and development

114,866

65,728

65,618

67,198

56,974

General and administrative

46,736

27,200

26,330

19,197

15,677

Total operating expenses

161,602

92,928

91,948

86,395

72,651

Loss from operations

(77,150
)

(56,361
)

(72,559
)

(46,856
)

(26,781
)
Interest and other income, net

8,261

1,793

887

431

364

Benefit from income taxes

—

—

14

5,722

—

Net loss

(68,889
)

(54,568
)

(71,658
)

(40,703
)

(26,417
)
Net loss attributable to non-controlling interest

(555
)

—

—

—

—

Net loss attributable to Sangamo Therapeutics, Inc. stockholders

$
(68,334
)

$
(54,568
)

$
(71,658
)

$
(40,703
)

$
(26,417
)
Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders

$
(0.70
)

$
(0.70
)

$
(1.02
)

$
(0.58
)

$
(0.39
)
Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders

96,941

78,084

70,553

69,757

67,022

As of December 31,

2018

2017

2016

2015

2014

(In thousands)

Balance Sheet Data:

Cash, cash equivalents, marketable securities, and interest
receivable

$
400,508

$
244,560

$
142,759

$
209,307

$
226,645

Working capital

332,010

203,538

136,289

192,485

169,997

Total assets

590,395

286,741

157,891

217,235

243,212

Accumulated deficit

(562,696
)

(495,479
)

(440,911
)

(369,253
)

(328,550
)
Total stockholders' equity

367,257

187,900

136,195

192,439

206,633

~~Note:~~

~~(1)~~

~~TxCell was acquired in October 2018 and the results of operations have been included in the selected consolidated financial data since the date of acquisition (see~~ ~~Note 6 – Acquisition of TxCell, S.A.~~ ~~to our consolidated financial statements).~~

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I~~TEM~~

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

The discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains trend analysis, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act, ~~of 1933,~~ as amended, and Section 21E of the ~~Securities~~ Exchange Act, ~~of 1934,~~ as amended. These forward-looking statements include, without limitation, statements containing the words “anticipates,” “believes,” ~~“anticipates,~~“continues,” “could,” “estimates,” “expects,” ~~“continue,~~“intends,” ~~“intend,~~“may,” ~~“plan,~~“plans,” “seeks,” “should,” “will,” and other words of similar import or the negative of those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the “Risk Factors” described in Part I, Item ~~1A.~~1A of this Annual Report on Form 10-K. You should read the following discussion and analysis along with the “Selected Financial Data” and the ~~financial statements~~Consolidated Financial Statements and notes attached to those statements included elsewhere in this report.

In addition, the section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 are not included in this Annual Report on Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 201 9, filed with the SEC on February 28, 2020.

Overview

We are a ~~clinical stage biotechnology~~clinical-stage genomic medicine company ~~focused on~~committed to translating ground-breaking science into ~~genomic~~ medicines that transform the lives of patients with ~~the potential~~serious diseases. We plan to ~~transform patients’ lives using our platform technologies in genome editing, gene therapy, gene regulation and cell therapy. We are focused~~deliver on ~~three therapeutic areas: inherited metabolic diseases, or IMDs, central nervous system diseases and inflammatory and autoimmune diseases.~~

~~We are a leader in the research and~~this mission through (i) development of ~~zinc finger proteins, or ZFPs, a naturally occurring class of proteins found in humans. We have used~~ our ~~knowledge~~clinical and ~~expertise to develop a proprietary technology platform in both genome editing~~preclinical product candidates, (ii) our novel science and gene regulation. ZFPs can be engineered to make zinc finger nucleases, or ZFNs, proteins that can be used to specifically modify DNA sequences by adding or knocking out specific genes, or genome editing, and ZFP transcription factors, or ZFP TFs, proteins that can be used to increase or decrease gene expression, or gene regulation. In the process of developing this platform, we have accrued significant scientific,(iii) our in-house manufacturing ~~and development capabilities and know-how that are generally applicable in the broader field of gene therapy and have capitalized this knowledge into a conventional gene therapy platform.~~

~~In the fourth quarter of 2018, we acquired 98.2% of the outstanding share capital and voting rights of TxCell S.A., or TxCell, which we refer to in this report~~capabilities.

Our current clinical-stage product candidates are:

•Giroctocogene fitelparvovec, also known as the TxCell Acquisition, for aggregate purchase consideration of approximately $80.4 million. As of December 31, 2018, the fair value of the remaining outstanding free shares was approximately $1.3 million. The total fair value of the net assets acquired was approximately $81.7 million (see Note 6 toSB-525, our ~~consolidated financial statements~~ ~~– Acquisition of TxCell, S.A.~~).

~~With the TxCell Acquisition, we can now accelerate our research and~~ ~~development of innovative, personalized T-cell immunotherapies for the treatment of inflammatory and autoimmune diseases with high unmet medical need.~~ ~~In this regard, we expect the TxCell Acquisition will accelerate our entry into the clinic with a CAR-Treg (which~~lead product candidate, is ~~a regulatory T cell, or Treg, genetically modified with a chimeric antigen receptor, or CAR) therapy. We are~~ evaluating the potential of the TX Cell platform in solid organ transplantation as well as a range of autoimmune diseases, such as multiple sclerosis, rheumatoid arthritis, inflammatory bowel diseases and inflammatory skin diseases. In addition, ~~we intend to use our ZFN gene editing technology to potentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune diseases.~~

~~We have an ongoing Phase 1/2 clinical trial evaluating SB-525,~~ a gene therapy for the treatment of hemophilia A ~~a bleeding disorder.~~and is currently being evaluated in the registrational Phase 3 AFFINE (efficAcy and saFety Factor vIii geNe thErapy) clinical trial. We ~~also have ongoing Phase 1/2 clinical trials evaluating three~~are developing giroctocogene fitelparvovec with our collaborator Pfizer Inc., or Pfizer;

•ST-920, our wholly-owned gene therapy product ~~candidates using our proprietary~~ ~~in vivo~~ ~~genome editing approach: SB-FIX~~candidate for the treatment of ~~hemophilia B, a bleeding disorder; SB-318,~~Fabry disease, is currently being evaluated in our Phase 1/2 STAAR clinical study;

•BIVV003, our cell therapy product candidate for the treatment of ~~Mucopolysaccharidosis Type I,~~sickle cell disease, or ~~MPS I;~~SCD, is currently being evaluated in our Phase 1/2 PRECIZN-1 clinical study. We are developing BIVV003 with our collaborator Sanofi S.A., or Sanofi; and ~~SB-913~~

•ST-400, our cell therapy product candidate for the treatment of ~~Mucopolysaccharidosis Type II,~~transfusion dependent beta thalassemia, is currently being evaluated in our Phase 1/2 Thales clinical study. We are developing ST-400 with our collaborator Sanofi.

In addition, we expect to initiate clinical studies for two additional product candidates in 2021:

•TX200, our wholly-owned Chimeric Antigen Receptor, or ~~MPS II. MPS I and MPS II are IMDs. We also have an ongoing Phase1/2 clinical trial evaluating ST-400, developed using our proprietary ZFN-mediated~~ ~~ex vivo~~CAR, engineered regulatory T cell, or CAR-Treg, cell therapy ~~platform,~~product candidate for the treatment of ~~beta-thalassemia, a blood disorder. We also plan to initiate a Phase 1/2 clinical trial of for TxCell’s first CAR-Treg investigational~~HLA-A2 mismatched kidney transplant rejection; and

•KITE-037, our allogeneic anti-CD19 CAR-T cell therapy product candidate for ~~solid organ transplant, or TX 200, in 2019.~~

~~In February 2018, we entered into a global collaboration and license agreement~~the treatment of cancer. We are developing KITE-037 with our collaborator Kite Pharma Inc., or Kite, a ~~wholly owned~~wholly-owned subsidiary of Gilead Sciences, Inc.,

Moreover, we are focusing our preclinical development in emerging areas for ~~the research, development and commercialization of potential engineered~~us including CAR-Treg cell therapies for ~~cancer. The Kite agreement became effective in April 2018 when the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,~~autoimmune disorders and genome engineering for neurological diseases. Indications for our other preclinical programs include neurodevelopmental disorders, cancer, inflammatory bowel disease, or IBD, tauopathies such as ~~amended~~Alzheimer’s and other customary closing conditions were completed. In this collaboration, we are working together with Kite on a research program under which we are designing ZFNs and AAVs to disrupt and insert certain genes in T cells and natural killer, or NK, cells, including the insertion of genes that encode chimeric antigen receptors, T-cell receptors, and NK-cell receptors directed to mutually agreed targets. Kite is responsible for all clinical development and commercialization of any resulting products.

In December 2017, we entered into a research collaboration and license agreement with Pfizer Inc., or Pfizer, for the development and commercialization of potential gene therapy products that use ZFP TFs to treatneurodegenerative diseases such as amyotrophic lateral sclerosis, or ALS, multiple sclerosis, or MS, and ~~frontotemporal lobar degeneration,~~Huntington’s disease, some of which we are developing with our collaborators Biogen MA, Inc. and Biogen International GmbH, which we refer to together as Biogen, Kite, Novartis Institutes for BioMedical Research, Inc., or ~~FTLD, linked~~Novartis, Pfizer and Takeda Pharmaceutical Company Limited, or Takeda.

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Our multiple collaborations with biopharmaceutical companies bring us important financial and strategic benefits and reinforce the potential of our research and development efforts and our zinc finger protein, or ZFP, technology platform. They leverage our collaborators’ therapeutic and clinical expertise and commercial resources with the goal to ~~mutations~~bring our medicines more rapidly to patients. We believe these collaborations reflect of the ~~C9ORF72~~ ~~gene. Under~~value of our ZFP technology platform and will potentially expand the addressable markets of our product candidates. To date, we have received approximately $815.0 million in upfront licensing fees, milestone payments, and proceeds from sale of our common stock to collaborators and have the right to earn up to $7.0 billion in future milestone payments from our collaborations, in addition to potential product royalties.

For additional information regarding our business, see “Business” in Part I, Item 1 of this ~~agreement,~~Annual Report on

Form 10-K.

Recent Business Highlights

•In December 2020, we ~~are working with~~and Pfizer onjointly announced updated follow-up data from the Phase 1/2 Alta study of giroctocogene fitelparvovec, an investigational gene therapy for the treatment of severe hemophilia A.

•In October 2020, we and Pfizer jointly announced that we dosed the first participant in the registrational Phase 3 AFFINE clinical trial of giroctocogene fitelparvovec.

•In August and September 2020, we dosed the first two patients in our Phase 1/2 STAAR study evaluating our ST-920 gene therapy product candidate to treat Fabry disease, a research program to identify, characterize and preclinically develop ZFP TFs that satisfy pre-agreed criteria. Pfizer is responsible for subsequent development, manufacturing and commercialization of licensed products.

rare inherited metabolic disease. In ~~May 2017,~~February 2021, we dosed the first patient in the second cohort.

•In July 2020, we entered into a ~~global~~ collaboration ~~and license~~ agreement with ~~Pfizer~~Novartis to develop and commercialize gene regulation therapies to treat three neurodevelopmental targets, including genes linked to autism spectrum disorder and intellectual disability.

•In February 2020, we entered into a collaboration agreement with Biogen to develop gene regulation therapies for Alzheimer’s, Parkinson’s, neuromuscular and other neurological diseases.

•In 2020, we brought in-house AAV manufacturing capabilities online in our Brisbane, California headquarters.

Estimated Impacts of Evolving COVID-19 Pandemic

In March 2020, the World Health Organization declared the novel coronavirus disease, or COVID-19, outbreak a global pandemic, and since such time, actions taken around the world to help mitigate the spread of COVID-19 have included varying restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses, including in the three countries where we have most of our day-to-day operations, the United States, France and the United Kingdom. Our business has been directly impacted by pandemic restrictions aimed at reducing the spread of the disease, including multiple California executive orders, several semi-coordinated San Francisco Bay Area orders, several other state and additional local orders across the country and similar orders outside the United States, which, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel.

To comply with these orders, we implemented an operating plan to continue business operations during the ongoing COVID-19 pandemic, including enhanced workplace safety protocols and modified working schedules in our laboratories. Employees who are able to fulfill their job duties working from home are required to work from home, and have been doing so since March 2020. These protocols and modifications have slowed our productivity and disrupted our business to a moderate degree and are likely to continue doing so through 2021. For example, we have experienced periodic short-term disruptions to our onsite laboratory and manufacturing operations while addressing positive cases of COVID-19 by onsite workers, and our laboratory and manufacturing operations could experience longer term disruptions in the future in the event of a significant outbreak of COVID-19 among our onsite workers. Moreover, from time to time, we have been required to reorganize and prioritize our research ~~development~~resources to mitigate moderate COVID-19 impacts arising from travel restrictions, laboratory density restrictions and ~~commercialization of SB-525,~~laboratory supply constraints. If our research programs encounter longer-term disruptions, it could impact our ability to support our biopharmaceutical partners as contemplated in our collaboration agreements and could result in adjustments to our research timelines, although we do not believe that the short-term disruptions to date have resulted in any such impacts.

Additionally, our Phase 1/2 STAAR clinical study evaluating ST-920, our wholly-owned gene therapy product candidate for ~~hemophilia A,~~the treatment of Fabry disease, has experienced delays in its timeline due to COVID-19 impacts and ~~closely~~the diversion of healthcare resources to fight the pandemic. For example, the clinical trial sites in the UK for this study have not been able to open due to the significant prevalence of COVID-19 in the UK. Additionally, we have experienced delays in recruiting, enrolling and dosing patients for this study at our US trial sites, due in some part to the understandable hesitation of patients to travel by plane to trial sites not within driving distance and to enter medical facilities during the pandemic and in other part to

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trial sites prioritizing COVID-19 clinical care over research activities such as the STAAR study. Moreover, we have experienced some short-term delays in sourcing the necessary raw materials to manufacture supplies for the STAAR study due to COVID-19 impacts. We estimate that these challenges have set back our STAAR study timelines three to six months. While we currently still expect to share initial clinical study data by the end of 2021, this timeline could be revised if COVID-19 impacts to our enrollment and dosing of patients and to our sourcing of raw materials for this study intensify because of vaccination delays, new COVID-19 variants or unexpected events.

In addition, our STEADFAST clinical study evaluating TX200, our wholly-owned CAR-Treg cell therapy product candidate for the treatment of kidney transplant rejection, has experienced delays in its commencement timeline due to COVID-19 impacts related ~~products. Under~~to manufacturing and technology transfer challenges with our CMOs. We estimate that these challenges have set back our commencement timeline by approximately three months. While we currently still expect to initiate this ~~agreement,~~clinical study by the end of 2021, this timeline could be revised if COVID-19 impacts result in additional delays.

With respect to our partnered programs, the timelines for the studies and trials managed by our collaborators are also subject to potential delay in the future if these studies and trials experience similar challenges that we have experienced in our STAAR and STEADFAST studies.

Going forward, we will continue to monitor the impact of COVID-19 on our operations, research commitments and clinical trials and those of our collaborators, clinical trial sites and CMOs. The magnitude of these impacts will depend, in part, on the length and severity of the COVID-19 pandemic and related government orders and restrictions, and how the pandemic limits the ability of us and our business partners to operate business in the ordinary course. Disruptions to these operations, and possibly more severe disruptions in the future that could arise due to the extension of government orders or new government orders applicable in the places we operate or our industry generally or to us and our facilities specifically, could impede our ability to conduct research in a timely manner, comply with our research obligations to our collaborators and advance the development of our therapeutic programs. These delays and disruptions could result in adverse material impacts to our business, operating results and financial condition.

We do not anticipate any material negative impact on our financial condition in 2021 as a result of the COVID-19 pandemic. We believe we are responsible for conducting the Phase 1/2 clinical trial and certain manufacturing activities for SB-525, while Pfizer is responsible for subsequent worldwide development, manufacturing, marketing and commercialization of SB-525. We and Pfizer may also collaboratewell positioned financially in the near term to execute on our wholly-owned and partnered research and ~~development~~clinical programs. We ended 2020 with $692.0 million in cash, cash equivalents and marketable securities and have raised an additional $15.7 million in cash through February 19, 2021 through sales of our common stock under our at-the-market offering program. Although we believe we are well capitalized currently, the effects of the evolving pandemic could result in disruption of global financial markets, impairing our ability to access capital, which could in the future negatively affect our liquidity. We do not currently anticipate any material impairments to the valuation of the financial assets or goodwill on our balance sheet as a result of COVID-19. We do not believe that the remote workplace arrangements we have implemented for our office-based employees have affected our financial reporting or control systems.

The extent to which the COVID-19 pandemic will impact our business, operations and financial condition, either directly or indirectly, will depend on future developments that remain highly uncertain at the present time. These developments include the ultimate duration and severity of the pandemic, the impacts of new COVID-19 variants, travel restrictions, quarantines and social distancing requirements in the United States, France, United Kingdom and other countries, business closures or business disruptions and the effectiveness and timeliness of actions taken in the United States, France, United Kingdom and other countries to contain and treat the disease, including the effectiveness and timing of vaccination programs. Although certain government orders and restrictions have eased, and phased re-openings are underway, it is not certain when such restrictions and orders will be fully lifted, and recent resurgences in number and rates of infections and the surge of new variants of the virus may result in the return of prior orders and restrictions or new quarantine and shelter-in-place orders or other restrictions. As our understanding of events evolves and additional ~~AAV-based gene therapy products~~information becomes available, we may materially change our guidance relating to our revenues, expenses and timelines for ~~hemophilia A.~~

manufacturing, clinical trials and research and development.

See also the section titled “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for additional information on risks and uncertainties related to the evolving COVID-19 pandemic.

Certain Components of Results of Operations

Our revenues have consisted primarily of revenues from upfront licensing fees, reimbursements for research services, milestones achievements and research grant funding. We ~~have also established a collaborative partnership with Bioverativ, Inc.,~~expect revenues to continue to fluctuate from period to period and there can be no assurance that new collaborations or ~~Bioverativ, a wholly owned subsidiary~~partner reimbursements will continue beyond their initial terms or that we are able to meet the milestones specified in these agreements.

Table of Sanofi Genzyme Corporation, to research, develop and commercialize therapeutic gene-edited cell therapy products in hemoglobinopathies, including beta-thalassemia and sickle cell disease, or SCD. Bioverativ is responsible for subsequent development, manufacturing and commercialization of licensed products.

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We have incurred net losses since inception and expect to incur losses infor at least the ~~future~~next several years as we continue our research and development activities. To date, we have funded our operations primarily through the issuance of equity securities and revenues from ~~corporate~~ collaborations and research grants.

Our revenues have consisted primarily of revenues from our corporate partners for ZFN and ZFP TF programs, contractual payments from strategic partners for research services and research milestones, and research grant funding. We expect revenues will continue to fluctuate from period to period and there can be no assurance that new collaborations or partner funding will continue beyond their initial terms or that we are able to meet the milestones specified in these agreements.

We expect to continue to devote substantial resources to research and development in the future and expect research and development expenses to increase in the next several years if we are successful in advancing our ~~gene therapy and our genome editing programs in the clinic and if we are able to progress our earlier stage~~ product candidates ~~into~~from research stage through clinical trials. Pursuant to the terms of ~~the~~our agreements with Biogen, Kite, Novartis, Pfizer and ~~Bioverativ,~~Sanofi, certain expenses related to research and development activities will be reimbursed to us. The reimbursement funds to be received from Biogen, Kite, Novartis, Pfizer and ~~Bioverativ~~Sanofi will be recognized as revenue as the related costs are incurred and collection is reasonably assured.

General and administrative expenses consist primarily of salaries and personnel related expenses for executive, finance and administrative personnel, stock-based compensation expenses, professional fees, allocated facilities expenses, patent prosecution expenses and other general corporate expenses. As we continue to advance our product candidates into and through the clinic, we expect the growth of our business to require increased general and administrative expenses.

For the year ended December 31, 2018, we incurred a consolidated net loss of $68.9 million, or $0.70 per share, compared to a consolidated net loss of $54.6 million, or $0.70 per share, for the same period in 2017. As of December 31, 2018, we had cash, cash equivalents, marketable securities and interest receivable totaling $400.5 million compared to $244.6 million as of December 31, 2017. As of December 31, 2018, we had an accumulated deficit of $562.7 million.

Critical Accounting Policies and Estimates

The accompanying discussion and analysis of our financial condition and results of operations are based upon our ~~consolidated financial statements~~Consolidated Financial Statements and the related disclosures, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these ~~financial statements~~Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our ~~consolidated financial statements~~Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following policies to be the most critical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions and judgments about matters that are inherently uncertain.

~~Revenue Recognition~~

~~Effective January 1, 2018, we adopted~~

We believe our critical accounting policies and estimates relating to revenue recognition, including the ~~provisions~~estimated fair value of ~~Accounting Standards Codification, or ASC, Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(“Topic 606”) resulting in a change to our accounting policy for revenue recognition. Topic 606 establishes a unified model to determine how revenue is recognized.~~

Contract revenues consist of strategic partnering collaboration agreements and research activity grants and licensing. Research and licensing agreements typically include upfront signing or license fees, cost reimbursements, research services, minimum sublicense fees, milestone payments and royalties on future licensee’s product sales. We have both fixed and variable consideration. Non-refundable upfront fees and funding of research and development activities are considered fixed, while milestone payments are identifiedcommon shares issued as variable consideration. Our research grants are typically multi-year agreements and provide for the reimbursement of qualified expenses for research and development as defined under the terms of the grant agreement. Revenues under grant agreements are recognized when the related qualified research expenses are incurred. Deferred revenue represents the portion of research or license payments received but not earned.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under its agreements, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurementpart of the transaction price and valuation of long-lives assets including goodwill and intangible assets are the ~~constraint~~more significant estimates and assumptions used in the preparation of our Consolidated Financial Statements.

For a complete description of our significant accounting policies, see Note 1 – Organization and Summary of Significant Accounting Policies in the accompanying notes to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on ~~variable consideration; (iv) allocation~~Form 10-K.

Revenue Recognition

We recognize revenues from research services generally as services are provided while revenues from non-refundable upfront fees are recognized over time either by measuring progress towards satisfaction of the ~~transaction price~~relevant performance obligation using the input method (i.e., cumulative actual costs incurred relative to total estimated costs) or on a straight-line basis when a performance obligation is expected to be satisfied evenly over a period of time (when there is a stand-ready obligation).

The estimation of measure of progress is complex, involves significant judgment, and is affected by our estimates of the total costs required to complete the performance obligations including the total internal personnel costs and external costs to be incurred as well as, in certain cases, the estimated stand-ready obligation period. Changes in these estimates can have a material effect on our revenue recognition.

For a further description of our revenue recognition, see Note 4 – Major Customers, Partnerships and Strategic Alliances in the accompanying notes to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Valuation of Long-lived Assets including Goodwill and Intangible Assets

We allocate the fair value of purchase consideration in a business combination to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated ~~selling prices; and (v) recognition~~fair values. Any excess of ~~revenue when (or as) we satisfy each performance obligation.~~

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Our performance obligations include license rights, development services, and services associated with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we expect to complete our performance obligations under the arrangement. If we cannot reasonably estimate when our performance obligations either are completed or become inconsequential, then revenue recognition is deferred until we can reasonably make such estimates. ~~We include the unconstrained amount of estimated variable~~purchase consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. ~~Revenue is then recognized~~ over the ~~remaining estimated period~~fair value of performance using the cumulative catch-up method. The estimated period of performance and project costs are reviewed quarterly and adjusted, as needed, to reflect our current assumptions regarding the timing of our deliverables.

As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. We used key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

During 2018, revenues related to our hemophilia A collaboration agreement with Pfizer and the collaboration agreement with Kite represented 45% and 30%, respectively, of our total revenues. During 2017, revenues related to Pfizer and Bioverativ represented 47% and 34%, respectively, of our total revenues. During 2016 revenue related to Bioverativ, with Dow AgroSciences (“DAS”) and Shire International GmbH, or Shire, a wholly owned subsidiary of Takeda Pharmaceutical Company Limited, or Shire, represented 46%, 26%, and 17%, respectively, of our total revenues. Receivables from collaborations are typically unsecured and are concentrated in the biopharmaceutical industry. Accordingly, we may be exposed to credit risk generally associated with biopharmaceutical companies or specific to our collaboration agreements. To date, we have not experienced any losses related to these receivables.

~~Funds received from third parties under contract or grant arrangements are~~net assets acquired is recorded as ~~revenue if we are deemed~~goodwill. Such valuations require management to ~~be the principal participant~~make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in ~~the arrangements because the activities under the contracts or grants are part of our development programs. Contract funds received~~valuing certain intangible assets include, but are not ~~refundable and are recognized when the related qualified~~limited to, future expected cash flows from acquired in-process research and development, ~~costs~~or IPR&D, projects. Management’s estimates of fair value are ~~incurred~~based upon assumptions believed to be reasonable, but which are inherently uncertain and ~~there~~unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to

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identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful lives, whereas any indefinite lived intangible assets, including goodwill, are not amortized. During the measurement period, which is ~~reasonable assurance that~~not to exceed one year from the ~~funds will be received. Funds received in advance are recorded as deferred revenue.~~

~~Business Combinations~~

~~In accordance with ASC Topic 805,~~ ~~Business Combinations~~,acquisition date, we ~~determine and allocate the purchase price of an acquired business~~may record adjustments to the ~~tangible and identifiable intangible~~ assets acquired and liabilities assumed, ~~based on their estimated fair values as~~with the corresponding offset to goodwill. Upon the conclusion of the ~~business combination date, including identifiable intangible assets that either arise from a contractual or legal right or~~measurement period, any subsequent adjustments are ~~separable from goodwill.~~ recorded to earnings.

We ~~base the estimated fair value of identifiable intangible assets acquired in a business combination on independent valuations that use information~~review goodwill and ~~assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use.~~ ~~We allocate any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill.~~

Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition.

~~Purchased Intangible Assets~~

Acquired intangible assets with indefinite useful lives are related to purchased in-process research and development (“IPR&D”), projects and are measured at their respective fair values as of the acquisition date. We do not amortize intangible assets with indefinite useful lives. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

We test IPR&D for impairment on an annual basis and in between annual tests if we become aware of any events or changes that would indicate that it is more likely than not that the fair values of the assets are below their carrying amounts. If the fair value exceeds the carrying value, then there is no impairment. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability test. We have not identified any such impairment losses to date.

~~Goodwill~~

Goodwill represents the excess of the cost of an acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired, less liabilities assumed. Goodwill is not subject to amortization, but is tested for impairment ~~on an annual basis and whenever~~at least annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value these assets below their carrying values. As of December 31, 2020, no impairment of goodwill or indefinite-lived intangible assets was identified.

Long-lived assets, including property and equipment and finite-lived intangible assets, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of ~~these~~such assets may not be recoverable.

~~Comparability~~

~~We adopted Topic 606 on January 1, 2018, resulting in~~ The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a ~~change to our accounting policy for revenue recognition. We used~~comparison of the ~~modified retrospective method and recognized the cumulative effect of initially applying Topic 606 as an adjustment~~carrying amounts to the ~~opening balances~~future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. If such review indicates that the carrying amount of ~~deferred revenues~~property and ~~accumulated deficit at January 1, 2018. Accordingly, comparative information has~~equipment and intangible assets is not ~~been adjusted and continues~~recoverable, the carrying amount of such assets is reduced to ~~be reported under previous accounting standards (see Note 1 to our consolidated financial statements~~ ~~- Organization and summary of~~fair value. We have not recorded any significant ~~accounting policies, for additional information).~~

~~As noted above, we completed~~impairment charges during the ~~TxCell Acquisition in the fourth quarter of 2018. The TxCell Acquisition was accounted for as a business combination in accordance with the guidance ASC Topic 805,~~ ~~Business Combinations~~. The operating results of TxCell after the acquisition date have been included in our consolidated financial statements. For the three months ended December 31, 2018, TxCell did not contribute any revenue. For the three months ended December 31, 2018, operating expenses related to TxCell were approximately $3.7 million.

years presented.

Results of Operations

Years Ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016~~

2018

Revenues

Year Ended December 31,

%

%

2018

2017

Change

Change

2017

2016

Change

Change

(In thousands, except percentage values)

Revenues:

Collaboration agreements

$
84,065

$
35,960

$
48,105

134
%

$
35,960

$
18,881

$
17,079

90
%
Research grants

387

607

(220
)

-36
%

607

508

99

19
%
Total revenues

$
84,452

$
36,567

$
47,885

131
%

$
36,567

$
19,389

$
17,178

89
%


	Year Ended December 31,
	(In thousands, except percentage values)
	2020		2019		Change		%		2019		2018		Change		%



Revenues	$	118,192	$	102,428	$	15,764	15	%	$	102,428	$	84,452	$	17,976	21	%

Total revenues consisted of revenues from collaboration agreements and research grants. We anticipate revenues over the next several years will be derived primarily from our collaboration agreements with Biogen, Kite, Novartis, Pfizer and ~~Bioverativ~~Sanofi as we continue to recognize ~~in revenues~~ upfront and milestone payments received under such agreements ~~overtime.~~

over time.

The increase of ~~$48.1~~$15.8 million in revenues ~~from collaborations~~ in ~~2018~~2020 compared to ~~2017 was primarily attributable to $25.5 million in revenue related to our agreement with Kite, $20.8 million related to the hemophilia A Pfizer Agreement, $2.2 million~~

related to the C9ORF72 Pfizer agreement, and $1.3 million related to our agreement with Bioverativ. During 2018, revenues related to our collaborative agreements with Pfizer, Kite and Bioverativ represented 45%, 30% and 16%, respectively, of total revenues.

~~The increase of $18.9 million in revenues from collaborations in 2017 compared to 2016~~2019 was primarily due to the recognition of upfront license fees of $21.4 million and $4.1 million under our collaboration agreements with Biogen and Novartis entered into in 2020, respectively. In addition, an increase of $6.2 million in recognition of upfront license fee related to our C9ORF72 collaboration agreement with Pfizer due to advancement of the program.

These increases were partially offset by a decrease of ~~$17.0~~$12.6 million in revenues related to ~~the~~our hemophilia A ~~Pfizer agreement and $3.4 million related to our~~collaboration agreement with ~~Bioverativ, partially offset by decreases~~Pfizer due to a decrease in activities following the IND transfer in December 2019, and a decrease of ~~$2.1 million in royalty revenue related to our agreement with DAS, $0.8 million related to research services provided to Shire, and $0.5~~$3.2 million in license ~~and royalty fees pursuant to~~revenue from our collaboration agreement with ~~Sigma-Aldrich Corporation. During 2017, revenues~~Sanofi primarily due to a change in estimate driven by a change in project scope and related ~~to our collaborative agreements with Pfizer and Bioverativ represented 47% and 34%, respectively, of total revenues.~~

Research grant revenues were $0.4 million, $0.6 million, and $0.5 million in 2018, 2017, and 2016, respectively. The changes in grant revenue from 2017 to 2018 and from 2016 and 2017 were not significant.

project cost.

Operating Expenses

	Year Ended December 31,
							%									%				Year Ended December 31,
	2018		2017		Change		Change			2017		2016		Change		Change				(In thousands, except percentage values)
	(In thousands, except percentage values)																			2020		2019		Change		%		2019		2018		Change		%
Operating expenses:																			Operating expenses:
Research and development	$	114,866	$	65,728	$	49,138		75	%	$	65,728	$	65,618	$	110		0	%	Research and development	$	180,647	$	145,922	$	34,725	24	%	$	145,922	$	114,866	$	31,056	27	%
General and administrative		46,736		27,200		19,536		72	%		27,200		26,330		870		3	%	General and administrative	67,097		61,686		5,411		9	%	61,686		46,736		14,950		32	%
Total expenses	$	161,602	$	92,928	$	68,674		74	%	$	92,928	$	91,948	$	980		1	%

Total operating expenses																			Total operating expenses	$	247,744	$	207,608	$	40,136	19	%	$	207,608	$	161,602	$	46,006	28	%

Research and Development Expenses

Research and development expenses consisted primarily of compensation related expenses, including stock-based compensation, laboratory supplies, preclinical and clinical studies, manufacturing clinical supply, contracted research, allocated facilities and information technology expenses.

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The increase of ~~$49.1~~$34.7 million in research and development expenses in ~~2018~~2020 compared to 2019 was primarily ~~due~~driven by a $20.0 million increase in compensation expense as a result of increased headcount to ~~increases~~support our programs, clinical trials and start-up of ~~$23.9~~our internal manufacturing operations, a $14.2 million increase in allocated facility overhead costs as we ramped up our internal manufacturing operations, and a $2.1 million increase in preclinical, clinical, ~~trial~~research and manufacturing ~~expenses as our programs move further into the clinic. We also had increase of $9.9 million in salaries and benefits expense, $3.8 million in lab~~ supply expenses, $3.2 million in stock compensation expense, $2.7 million in research and pre-clinical expense, $1.3 million facilities expense and $1.0 million in other operational and professional services.expenses. These increases were ~~primarily~~partially offset by a decrease of $1.7 million in travel and corporate costs due to the growth of our business to support the continued advancement of our product candidates into clinical trials, main increases were in our IMD and Hemophilia clinical programs which increased approximately $26.2 million and $8.3 million, respectively.

~~The increase of $0.1 million~~COVID-19 travel restrictions. Stock-based compensation expense included in research and development expenses ~~in 2017~~ was ~~primarily due to increases of $5.5~~$13.5 million ~~in salaries~~ and ~~benefits, $1.1~~$10.1 million ~~in clinical trial~~for the years ended December 31, 2020 and manufacturing expenses related to our hemophilia B and MPS programs, and $1.1 million in facility and operating expenses. This was primarily offset by decreases of $3.4 million in preclinical expenses, $2.5 million in lab supply expenses, $1.4 million in stock-based compensation expense, and $0.3 million in other professional services.

2019, respectively.

The table below shows research and development expenses related to our clinical and preclinical programs.

Year Ended

December 31,

Programs

2018

2017

2016

(In thousands)

Human Therapeutic Programs

   Hemophilia clinical programs

$
23,006

$
14,715

$
7,521

   IMD clinical programs

37,668

11,428

9,046

   Beta-thalassemia clinical program

12,317

11,354

—

   HIV (SB-728) clinical programs

1,612

2,473

4,271

Non-human Therapeutic Programs

   Preclinical and research programs

39,779

25,414

43,682

   Other clinical programs and non-therapeutic programs

484

344

1,098

Total research and development expenses

$
114,866

$
65,728

$
65,618

As shown in the table below, preclinical and research programs contributed $50.7 million of the increase in our research and development expenses primarily due to advancement of our technical platform and our wholly-owned preclinical programs, and our CNS programs partnered with Biogen and Novartis in 2020, offset by a decrease of $16.0 million in our clinical programs in 2020 as compared to 2019, primarily driven by a decrease in activities following the IND transfer for our giroctocogene fitelparvovec program in 2019.


	Year Ended December 31,
	(In thousands)
Programs	2020		2019		2018
Clinical Programs:
Inherited metabolic disorders clinical programs	$	59,030	$	61,845	$	37,668
Beta thalassemia clinical program	8,672		13,634		12,317
HIV clinical programs	3,289		1,762		1,612
Hemophilia clinical programs	3,108		12,805		23,006
Subtotal	74,099		90,046		74,603
Preclinical Programs:
Wholly-owned programs and early research activities	79,193		37,760		28,018
CNS programs	21,073		5,721		3,916
Oncology programs	6,214		12,281		7,845
Other	68		114		484
Subtotal	106,548		55,876		40,263
Total research and development expenses	$	180,647	$	145,922	$	114,866

The length of time required to complete our development programs and our development costs for those programs may be impacted by the scope and timing of enrollment in clinical trials for our product candidates, our decisions to pursue development programs in other therapeutic areas, and whether we pursue development of our product candidates with a partner or collaborator or independently. For example, our product candidates are being developed in multiple therapeutic areas, and we do not yet ~~know how~~know-how many of those therapeutic areas we will continue to pursue. Furthermore, the scope and number of clinical trials required to obtain regulatory approval for each pursued therapeutic area is subject to the input of the applicable regulatory authorities, and we have not yet sought such input for all potential therapeutic areas that we may elect to pursue, and even after having given such input, applicable regulatory authorities may subsequently require additional clinical studies prior to granting regulatory approval based on new data generated by us or other companies, or for other reasons outside of our control. As a condition to any regulatory approval, we may also be subject to post-marketing development commitments, including additional clinical trial requirements. As a result of the uncertainties discussed above, we are unable to determine the duration of or ~~complete~~completion costs associated with our development programs.

In any event, our potential therapeutic products are subject to a lengthy and uncertain regulatory process that may not result in our receipt of any necessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. In addition, clinical trials of our product candidates may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval. A discussion of the risks and uncertainties with respect to our research and development activities, including completing the development of our product candidates, and the consequences to our business, financial position and growth prospects can be found in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

General and Administrative Expenses

The increase of ~~$19.5~~$5.4 million in ~~2018~~general and administrative expenses in 2020 compared to 2019 was primarily due to ~~increases~~an increase of ~~$5.0~~$7.3 million in headcount driven compensation costs, and an increase of $6.3 million in professional ~~services to support compliance initiatives and expansion strategies, $4.7 million in salaries and benefits, and $2.4 million in stock-based compensation in connection~~ fees associated

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with ~~headcount growth, $1.8 million in other corporate expenses and $1.7 million in facilities and depreciation. The~~our 2020 business activities. These increases were ~~primarily due to the growth of our business to support the continued advancement of our product candidates into clinical trials.~~

The increase of $0.9 million in 2017 was primarily due to increases of $1.5 million in legal expenses, $1.5 million in corporate expenses, including rebranding in connection with our name change, $1.0 million in salaries and benefits, and $1.0 million in facility expenses. This increase was primarilypartially offset by a decrease of ~~$4.5~~$7.4 million in ~~stock-based~~allocated facility overhead costs, and a decrease of $1.1 million in travel related expenses due to COVID-19 travel restrictions. Stock-based compensation expense ~~as 2016~~ included ~~approximately $4.1~~in general and administrative expenses was $12.2 million ~~of stock-based compensation expense recognized in connection with~~and $9.2 million for the ~~transition of our former chief executive officer.~~

years ended December 31, 2020 and 2019, respectively.

Interest and other income, net

~~Interest~~

The decrease of $1.0 million in interest and other income, net in 2020 compared to 2019 was ~~$8.3~~primarily due to a decrease of $5.1 million in ~~2018, $1.8~~interest income reflecting the decline in market interest rates. This decrease was partially offset by an increase of $3.1 million in ~~2017,~~foreign exchange gains as a result of favorable foreign exchange rates and ~~$0.9~~an increase of $1.1 million in ~~2016 and primarily consisted of interest income resulting from our treasury strategy.~~

~~Benefit from income taxes~~

~~Benefit from~~other income.

Income tax expense

Provision for income taxes was ~~$0.0~~$0.3 million, zero, and zero for 2020, 2019 and 2018, ~~2017, and 2016. We recognized an immaterial amount of~~respectively. The income tax ~~expense/benefit during each of these years.~~

expense for 2020 was primarily due to an increase in the long-term liability associated with uncertain tax positions, foreign income taxes and state income taxes. This expense was partially offset by a foreign deferred tax benefit.

As of December 31, ~~2018,~~2020, we had net operating loss carryforwards for federal and state income tax purposes of approximately ~~$535.0~~$622.6 million and ~~$161.0~~$261.7 million, respectively. The federal net operating loss generated before 2018 will begin to expire in 2024 and will keep expiring through 2037, if not utilized. Federal net operating losses generated in 2018 will carry forward indefinitely. If not utilized, the state net ~~federal and state~~ operating loss carryforwards will begin to expire in ~~2018 and 2017, respectively.~~2029. We also have federal and state research tax credit carryforwards of ~~$12.2~~$21.9 million and ~~$13.0~~$18.3 million, respectively. The federal research credits ~~began~~will begin to expire in ~~2018~~2021, while the state research credits have no expiration date. Utilization of our net operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before use. Due to the carryforwards related to the net operating losses and research and development tax credits, we do not expect to pay any U.S. federal taxes related to income in the near future.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act ("Tax Reform") into legislation. The Tax Reform made significant changes to the U.S. corporate income tax law including, but not limited to, (1) reducing the U.S. federal corporate tax

~~rate to 21% from 35% and (2) requiring a one-time mandatory transition tax on previously deferred foreign earnings of U.S. subsidiaries. Under ASC Topic 740,~~ ~~Income Taxes~~, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is the date the bill becomes law.

In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No.118 (“SAB 118”) to provide guidance on the application of the Tax Reform when a company does not have the necessary information available, prepared, or analyzed in reasonable to detail to reflect the effects of the Tax Reform. SAB 118 provides guidance for companies under the three scenarios (1) measurement of certain income tax effects is complete, (2) measurement of certain income tax effect can be reasonably estimated, and (3) measurement of certain income tax effects cannot be reasonably estimated. Companies are to complete the accounting under ASC 740 in regards to the Tax Reform within a measurement period that does not extend one year from the date of enactment (i.e., December 22, 2018). We completed the accounting assessment with regards to the tax effects associated with the enactment of the Tax Reform. Our assessment resulted in no changes from the original estimates provided for the year ended December 31, 2017.

Liquidity and Capital Resources

Liquidity

Since inception, we have incurred significant net losses, and we have funded our operations primarily through the issuance of equity securities, payments from corporate collaborators and strategic partners and research grants.

As of December 31, 2020, we had cash, cash equivalents and marketable securities totaling $692.0 million compared to $384.3 million as of December 31, 2019 with the increase primarily attributable to our collaboration with and sale of our common stock to Biogen, which became effective and closed in April 2020, and our collaboration with Novartis, which became effective in July 2020 and included an upfront fee. Our most significant use of capital ~~pertains to funding our preclinical~~was for employee compensation and ~~clinical~~external research and development ~~programs,~~expenses, such as ~~well as salaries~~manufacturing, clinical trials and ~~benefits for employees.~~

~~As of December 31, 2018, we had cash, cash equivalents, marketable securities and interest receivable totaling $400.5 million compared~~preclinical activity related to ~~$244.6 million as of December 31, 2017, with the increase primarily attributable to $215.8 million net proceeds from~~ our ~~April 2018 issuance of common stock and $150.0 million from our February 2018 collaboration and license agreement with Kite, which became effective in April 2018.~~therapeutic programs. Our cash and investment balances are held in a variety of ~~interest bearing~~interest-bearing instruments, including ~~obligations of U.S. government agencies, U.S. Treasury debt securities,~~commercial paper, money market funds, corporate debt securities, certificates of deposit, asset-backed securities, and ~~money market funds.~~U.S. government-sponsored entity debt securities. Cash in excess of immediate requirements is invested in accordance with our investment policy with a view toward capital preservation and liquidity.

Since the beginning of 2017, we have received significant amounts of capital as upfront payments under our collaboration agreements. In addition, our collaboration agreements provide for the payment of development, regulatory, and commercial milestones. For example, in May ~~2017,~~2020, we received an upfront license fee of $125.0 million from Biogen upon the effectiveness of our collaboration and license agreement for the research, development and commercialization of gene regulation therapies for the treatment of neurological diseases. And in August 2020, we received an upfront license fee of $75.0 million from Novartis upon the effectiveness of our collaboration and license agreement for the development and commercialization of gene regulation therapies for the treatment of neurodevelopment disorders. For more information, see “Business – Collaborations” in Part I, Item 1 of this Annual Report on Form 10-K.

In August 2020, we entered into an ~~amended and restated sales agreement~~Open Market Sale Agreement with ~~Cowen and Company,~~Jefferies LLC, ~~(“Cowen”) pursuant to which we may offer and sell, in our sole discretion, shares of common stock having an aggregate offering price~~or Jefferies, providing for the sale of up to ~~$75.0~~$150.0 million ~~through Cowen acting as our sales agent (“the ATM Facility”). Sales~~ of our common stock ~~if any, will be made at market prices by any method that is deemed~~from time to ~~be an “at the market offering” as defined~~time in ~~Rule 415~~‘at-the-market’ offerings under ~~the Securities Act~~our existing shelf registration statement. As of ~~1933, as amended. We~~February 19, 2021, we have ~~not~~ sold ~~any~~1,034,762 shares of our common stock under the ~~ATM Facility. As~~sales agreement for net proceeds of ~~December 31, 2018, the full~~ ~~$75.0 million provided for under the ATM Facility remained available for sale, subject~~approximately $15.7 million.

While we expect our rate of cash usage to ~~certain conditions as specified~~increase in the ~~agreement.~~

future, in particular to support our product development endeavors, we currently believe that our available cash, cash equivalents and marketable securities, when combined with

~~Since the beginning of 2017, we have received significant amounts of capital as upfront payments under the following~~ collaboration arrangements: $70.0 million received in May 2017 from Pfizer under our hemophilia A agreement, $12.0 million received in January 2018 from Pfizer under our C9ORF72 agreement, and $150.0 million received in April 2018 under our collaboration agreement with Kite. Our collaboration agreements provide for the payment of development, regulatory, and commercial milestones. For more information see “Business – Collaborations” in Part I of this Annual Report on Form 10-K.

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additional capital raises and expected revenues from collaborations, strategic partnerships and research grants, will be adequate to fund our currently planned operations through at least the next 12 months from the date the financial statements are issued. During this period of uncertainty and volatility related to the evolving COVID-19 pandemic, we will continue to monitor our liquidity.

Cash ~~Flow~~

Flows

Operating ~~activities.~~ ~~Net cash provided by (used in) operating~~ activities ~~primarily reflects our net operating losses adjusted for non-cash items including stock-based compensation expense.~~

Net cash provided by operating activities was ~~$37.2~~$169.9 million in 2018 compared to net cash provided by operating activities of $11.2 million in 2017. The increase in net cash provided by operating activities in 2018 was primarily due to the increase in deferred revenues due to the $150.0 million upfront license payment from Kite and stock-based compensation for the period offset by the net loss.

~~Net cash provided by operating activities was $11.2 million in 2017~~2020 compared to net cash used in operating activities of ~~$65.9~~$144.4 million in ~~2016.~~2019. The increase ~~in net cash provided by operating activities in 2017~~ was primarily ~~due~~attributable to ~~the~~favorable changes in working capital of $325.6 million driven by an increase in deferred revenues ~~related to~~of $252.2 million, reflecting the ~~$70.0 million upfront payment from~~cash received under the ~~hemophilia A agreement with Pfizer.~~

Biogen and Novartis collaboration agreements, and a decrease in accounts receivable of $63.9 million. This increase was partially offset by an increase in our net loss of $25.7 million.

Investing ~~activities.~~activities

Net cash used in investing activities was ~~$178.1~~$271.6 million in ~~2018. Net cash used in investing activities was $77.4~~2020, and $59.8 million in ~~2017. Net cash provided by investing activities was $18.1 million in 2016.~~2019. The increase ~~in net cash used in 2018~~ was primarily due to a net increase of $217.3 million in the ~~TxCell Acquisition. Additional cash flows from investing activities for all periods were primarily related to purchases, and maturities~~purchase of marketable securities, partially offset by a decrease of $6.0 million in purchases of property and ~~also includes deposits on cash related to lease commitments.~~

equipment.

Financing ~~activities.~~activities

Net cash provided by financing activities was ~~$231.7~~$153.1 million in ~~2018, $97.5~~2020, and $142.0 million in ~~2017, and $0.3 million in 2016. Net cash provided by financing activities~~2019.The increase was primarily attributable to $215.8 million net proceeds from our April 2018 issuance of common stock and $16.2 million in proceeds from the exercise of stock options. Net cash provided by financing activities in 2017 was primarily attributableattributed to the ~~completion~~$145.4 million estimated fair value of ~~an underwritten public offering~~the Biogen Shares issued in April 2020, net of ~~our common stock of $78.1~~$2.9 million ~~net~~ of issuance costs, and $16.6 million in proceeds from the exercise of stock options. Net cash provided by financing activities in 2016 was primarily attributable to $1.1 million proceeds from the exercise of stock options, primarilypartially offset by ~~$0.8~~$136.3 million received in ~~taxes paid~~2019 related to ~~net share settlement of equity awards.~~

our April 2019 underwritten public offering.

Operating Capital and Capital Expenditure Requirements

We anticipate continuing to incur operating losses for at least the next several years. While we expect our rate of cash usage to increase in the future, in particular to support our product development endeavors, we currently believe that ~~the~~our available cash resources, ~~as well as funds received~~when combined with additional capital raises and expected revenues from ~~corporate collaborators,~~collaborations, strategic partners and research grants, will ~~enable us~~be adequate to ~~maintain~~fund our currently planned operations through at least the next ~~twelve~~12 months from the date the financial statements are issued. Although we believe we are well capitalized currently, the effects of the ongoing COVID-19 pandemic could result in significant disruption of global financial markets, impairing our ability to access capital, which could in the future negatively affect our liquidity. Future capital requirements beyond the next 12 months will be substantial and ~~if our capital resources are insufficient to meet future capital requirements,~~ we will need to raise substantial additional capital to fund the development, manufacturing and potential commercialization of our ~~operations~~product candidates through equity or debt financing. In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of our product candidates, a process that could cost in excess of hundreds of millions of dollars per product. We regularly consider ~~fund raising~~fund-raising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. Additional capital may not be available on terms acceptable to us, or at all. If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business and our ability to advance our product candidate pipeline would be harmed. Furthermore, any sales of additional equity securities, including ~~any~~ sales ~~under~~pursuant to our ~~ATM Facility,~~at-the-market financing offering programs, may result in dilution to our stockholders, and any debt financing may include covenants that restrict our business.

Our future capital requirements will depend on many ~~forward looking~~forward-looking factors, including the following:

•the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates;

•the outcome, timing and cost of regulatory approvals;

•the success of our collaboration agreements;

•delays that may be caused by changing regulatory requirements;

•the number of product candidates that we pursue;

•the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;

•the timing and terms of future in-licensing and out-licensing transactions;

•the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;

•the cost of procuring clinical and commercial supplies of our product candidates;

•the extent to which we acquire or invest in businesses, products or ~~technologies;~~technologies, including the costs associated with such acquisitions and

investments; and

•the ~~possible~~ costs of potential disputes and litigation.

~~Off Balance~~

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Off-Balance Sheet Arrangements

We do not have any ~~off balance~~off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Contractual Obligations ~~and Commercial Commitments~~

As of December 31, ~~2018,~~2020, we had contractual obligations and commercial commitments as follows (in thousands):

	Payments Due by Period
			Less Than		1-3		4-5		More Than			Payments Due by Period
Contractual Obligations	Total		1 Year		Years		Years		5 Years		Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		More Than 5 Years
Operating leases	$	56,418	$	3,671	$	17,600	$	5,649	$	29,498	Operating leases	$	53,422	$	6,191	$	13,607	$	14,053	$	19,571
License obligations		1,318		223		625		200		270	License obligations	958		178		290		280		210
Manufacturing obligations		8,862		8,862		—		—		—	Manufacturing obligations	21,507		14,605		6,902		—		—
Total contractual obligations	$	66,598	$	12,756	$	18,225	$	5,849	$	29,768	Total contractual obligations	$	75,887	$	20,974	$	20,799	$	14,333	$	19,781

Operating leases consist of base rents for facilities we occupy in Brisbane, California; Richmond, ~~California, Brisbane, California~~California; and Valbonne, France.

License obligations ~~consist of~~includes an ongoing license maintenance ~~fees~~fee associated with ~~cancelable~~cancellable in-licensed patent agreements.

Manufacturing obligations include the following non-cancelable material contractual commitments under manufacturing-related supplier arrangements as of December 31, 2020 (in thousands):

Party

Total

Expiry date

Brammer

7,736

December 2022

Lonza Netherlands, B.V.

13,771

December 2022

Total manufacturing obligations

21,507

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates to our cash, cash equivalents and ~~investments.~~marketable securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and capturing a market rate of return based on our investment policy parameters and market conditions. We select investments that maximize interest income to the extent possible within these guidelines. To achieve our goals, we maintain a portfolio of cash equivalents and investments in securities of high credit quality and with varying maturities to match projected cash needs.

The securities in our investment portfolio are not leveraged and are classified as available-for-sale. The majority of these available-for-sale ~~and~~securities are ~~due to their~~ short-term in nature and subject to minimal interest rate risk. Our investments currently consist of ~~U.S. Treasury~~commercial paper, money market funds, corporate debt securities, certificates of deposit, asset-backed securities and U.S. government-sponsored ~~enterprise securities and corporate notes.~~entity debt securities. Our investment policy, approved by our Board of Directors, limits the amount we may invest in any one type of investment issuer, thereby reducing credit risk concentrations. All investments have a fixed interest rate and are carried at market value, which approximates cost. We do not use derivative financial instruments in our investment portfolio. We do not believe that a change in interest rates would have a material negative impact on the value of our investment portfolio.

Foreign Currency Exchange Risk

We have operations in the United States as well as in Europe. The functional currency of each foreign subsidiary is ~~generally~~ the local ~~currency~~.currency. We are exposed to foreign currency risk, primarily through operations of our subsidiaries in Europe which conduct business primarily in Euros. We record gains and losses within our stockholders’ equity due to the translation of ~~the European branches’~~our subsidiaries’ financial statements into U.S. dollars.

A 10% strengthening/(weakening) in the rates used to translate the results of our foreign subsidiaries would have increased/(decreased) net loss for the year ended December 31, ~~2018~~2020 by approximately ~~$0.4~~$2.1 million and would not have materially impacted our operating loss.

Additionally, we incur foreign currency transaction gains and losses related to the level of activity between the ~~U.S.~~United States and Europe. In ~~2018,~~2020, we ~~realized~~incurred foreign currency transaction ~~losses, net~~gains of ~~$0.6~~$2.2 million. A 10% unfavorable change in the Euro and U.S. dollar exchange rate on December 31, ~~2018~~2020 would have had an immaterial impact on foreign currency transaction ~~losses~~gains for ~~2018.~~

2020.

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As of December 31, 2020 and 2019, we maintained cash balances of approximately $16.8 million and $22.6 million, respectively, denominated in a foreign currency in the United States. A hypothetical 10% change in foreign exchange rates would have increased/(decreased) net loss for the year ended December 31, 2020 by approximately $1.7 million and would not have materially impacted our operating loss.

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I~~TEM~~

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SANGAMO THERAPEUTICS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	~~Page~~
		Page
Report of Independent Registered Public Accounting Firm			78 80
Consolidated Balance Sheets			79 82
Consolidated Statements of Operations			80 83
Consolidated Statements of Comprehensive Loss			81 84
Consolidated Statements of Stockholders’ Equity			82 85
Consolidated Statements of Cash Flows			83 86
Notes to Consolidated Financial Statements			84 87

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors ~~and Stockholders~~ of Sangamo Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sangamo Therapeutics, Inc. (the Company) as of December 31, ~~2018~~2020 and ~~2017,~~2019, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period ended December 31, ~~2018,~~2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2018~~2020 and ~~2017,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2018,~~2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated ~~March 1, 2019~~February 24, 2021 expressed an unqualified opinion thereon.

~~Adoption of New Accounting Standard~~

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue as a result of the adoption of Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” as amended, effective January 1, 2018 using the modified retrospective method.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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						Estimation of Fair value of shares sold to Biogen

Description of the Matter						As described in Note 4 to the consolidated financial statements, in 2020, the Company entered into a collaboration and license agreement with Biogen MA, Inc. and Biogen International GmbH (together, “Biogen”) for the research, development and commercialization of gene regulation therapies for the treatment of neurological diseases. Concurrent with the execution of the Biogen collaboration agreement, the Company entered into a stock purchase agreement pursuant to which Biogen agreed to purchase 24.4 million shares of the Company's common stock for an aggregate purchase price of approximately $225.0 million, a price which exceeded the fair value of the shares at the time of the purchase. Since the purchase price exceeded the fair value of the common shares issued in this transaction, management had to estimate the fair value of these shares using an option pricing model to reflect certain holding period restrictions and other unique terms of the agreement. The fair value of these shares was estimated to be $145.4 million, and the $79.6 million excess consideration was included in the transaction price of the collaboration and license agreement. Auditing the estimated fair value of the shares issued in this transaction was complex as management had to use significant judgment in selecting the valuation methodology and estimating the significant unobservable inputs used in the valuation model. The use of a different valuation methodology and inputs could significantly affect the fair value assigned to the common shares thereby impacting the total transaction price of the collaboration and license agreement and ultimately the amount of revenue that is recognized under this agreement.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for this new collaboration agreement, including management’s review controls over development of the significant unobservable inputs that affected the determination of the fair value of the common shares issued to Biogen. To test the fair value of the common shares, our audit procedures included, among others, evaluating the Company’s valuation methodology and the significant unobservable inputs and testing the mathematical accuracy of the Company’s valuation calculations. We involved our valuation specialists to assist us with evaluating the Company’s valuation methodology and assessing the reasonableness of the inputs by comparing them to information available from third-party sources and market data. We also independently developed fair value estimates with the assistance of our valuation specialists and compared them to the Company’s valuation results.

/s/ ERNST & YOUNG LLP

We have served as the Company’s auditor since 1997.

Redwood City, California

~~March 1, 2019~~

February 24, 2021

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SANGAMO THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	December 31,			December 31,
	2018			2017				December 31, 2020		December 31, 2019
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	140,418		$	49,826		Cash and cash equivalents	$	131,329	$	80,428

Marketable securities		259,715			193,482		Marketable securities	510,094		282,046
Interest receivable		375			240		Interest receivable	1,035		682
Accounts receivable		4,673			3,343		Accounts receivable	5,224		36,909
Prepaid expenses and other current assets		5,340			1,506		Prepaid expenses and other current assets	11,986		5,408
Total current assets		410,521			248,397		Total current assets	659,668		405,473

Marketable securities, non-current		—			1,012		Marketable securities, non-current	50,530		21,832
Property and equipment, net		78,723			31,066		Property and equipment, net	41,324		29,926
Intangible assets		54,866			—		Intangible assets	58,128		53,156
Goodwill		40,044			1,585		Goodwill	42,798		39,273
Operating lease right-of-use assets							Operating lease right-of-use assets	71,045		77,289
Other non-current assets		2,741			1,181		Other non-current assets	13,557		9,067
Non-current restricted cash		3,500			3,500
Restricted cash							Restricted cash	1,500		1,500
Total assets	$	590,395		$	286,741		Total assets	$	938,550	$	637,516
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable and accrued liabilities	$	21,457		$	11,035
Accounts payable							Accounts payable	$	12,553	$	6,671
Other accrued liabilities							Other accrued liabilities	18,612		10,885
Accrued compensation and employee benefits		9,490			5,479		Accrued compensation and employee benefits	20,738		13,605
Deferred revenues		47,564			28,345		Deferred revenues	91,644		38,711
Total current liabilities		78,511			44,859		Total current liabilities	143,547		69,872
Deferred revenues, non-current		108,273			29,244		Deferred revenues, non-current	245,045		81,432
Build-to-suit lease obligation		27,689			24,738
Long-term portion of lease liabilities							Long-term portion of lease liabilities	38,396		41,192
Deferred income tax		6,705			—		Deferred income tax	7,185		6,570
Non-current liabilities		1,960			—
Other non-current liabilities							Other non-current liabilities	7,011		5,711
Total liabilities		223,138			98,841		Total liabilities	441,184		204,777
Commitments and contingencies							Commitments and contingencies	0		0
Stockholders' equity:
Common stock, $0.01 par value; 160,000,000 shares authorized, 102,187,471 and 85,598,534 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively		1,022			856
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, and 0 shares issued or outstanding							Preferred stock, $0.01 par value, 5,000,000 shares authorized, and 0 shares issued or outstanding	0		0
Common stock, $0.01 par value; 320,000,000 shares authorized, 142,063,203 and 115,972,708 shares issued and outstanding at December 31, 2020 and 2019, respectively							Common stock, $0.01 par value; 320,000,000 shares authorized, 142,063,203 and 115,972,708 shares issued and outstanding at December 31, 2020 and 2019, respectively	1,421		1,160
Additional paid-in capital		929,632			682,809		Additional paid-in capital	1,269,375		1,090,828
Accumulated deficit		(562,696	)		(495,479	)	Accumulated deficit	(777,981)		(656,985)
Accumulated other comprehensive loss		(1,440	)		(286	)
Total Sangamo Therapeutics Inc. stockholders' equity		366,518			187,900
Accumulated other comprehensive income (loss)							Accumulated other comprehensive income (loss)	5,419		(2,449)
Total Sangamo Therapeutics, Inc. stockholders’ equity							Total Sangamo Therapeutics, Inc. stockholders’ equity	498,234		432,554
Non-controlling interest		739			—		Non-controlling interest	(868)		185
Total stockholders' equity		367,257			187,900
Total liabilities and stockholders' equity	$	590,395		$	286,741
Total stockholders’ equity							Total stockholders’ equity	497,366		432,739
Total liabilities and stockholders’ equity							Total liabilities and stockholders’ equity	$	938,550	$	637,516

See accompanying Notes to Consolidated Financial Statements.

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SANGAMO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


	Year Ended December 31,										Year Ended December 31,
	2018			2017			2016				2020		2019		2018
Revenues:
Collaboration agreements	$	84,065		$	35,960		$	18,881
Research grants		387			607			508
Total revenues		84,452			36,567			19,389

Revenues										Revenues	$	118,192	$	102,428	$	84,452
Operating expenses:										Operating expenses:
Research and development		114,866			65,728			65,618		Research and development	180,647		145,922		114,866
General and administrative		46,736			27,200			26,330		General and administrative	67,097		61,686		46,736
Total operating expenses		161,602			92,928			91,948		Total operating expenses	247,744		207,608		161,602
Loss from operations		(77,150	)		(56,361	)		(72,559	)	Loss from operations	(129,552)		(105,180)		(77,150)
Interest and other income, net		8,261			1,793			887		Interest and other income, net	8,775		9,761		8,261
Loss before income taxes		(68,889	)		(54,568	)		(71,672	)	Loss before income taxes	(120,777)		(95,419)		(68,889)
Benefit from income taxes		—			—			14
Income tax expense										Income tax expense	345		0		0
Net loss		(68,889	)		(54,568	)		(71,658	)	Net loss	(121,122)		(95,419)		(68,889)
Net loss attributable to non-controlling interest		(555	)		—			—		Net loss attributable to non-controlling interest	(126)		(233)		(555)
Net loss attributable to Sangamo Therapeutics, Inc. stockholders	$	(68,334	)	$	(54,568	)	$	(71,658	)	Net loss attributable to Sangamo Therapeutics, Inc. stockholders	$	(120,996)	$	(95,186)	$	(68,334)
Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	$	(0.70	)	$	(0.70	)	$	(1.02	)	Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	$	(0.90)	$	(0.85)	$	(0.70)
Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders		96,941			78,084			70,553		Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	134,449		112,114		96,941

See accompanying Notes to Consolidated Financial Statements.

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SANGAMO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)


	Year Ended December 31,										Year Ended December 31,
	2018			2017			2016				2020		2019		2018
Net loss	$	(68,889	)	$	(54,568	)	$	(71,658	)	Net loss	$	(121,122)	$	(95,419)	$	(68,889)
Foreign currency translation adjustment		(1,148	)		—			—		Foreign currency translation adjustment	8,345		(1,573)		(1,148)
Net pension losses		(21	)		—			—		Net pension losses	(193)		(28)		(21)
Change in unrealized (loss) gain on available-for-sale securities		(4	)		(306	)		20
Change in unrealized (loss) gain on marketable securities, net of tax										Change in unrealized (loss) gain on marketable securities, net of tax	(284)		592		(4)
Comprehensive loss		(70,062	)		(54,874	)		(71,638	)	Comprehensive loss	(113,254)		(96,428)		(70,062)
Comprehensive loss attributable to non-controlling interest		(574	)		—			—		Comprehensive loss attributable to non-controlling interest	(126)		(233)		(574)
Comprehensive loss attributable to Sangamo Therapeutics Inc.	$	(69,488	)	$	(54,874	)	$	(71,638	)
Comprehensive loss attributable to Sangamo Therapeutics, Inc.										Comprehensive loss attributable to Sangamo Therapeutics, Inc.	$	(113,128)	$	(96,195)	$	(69,488)

The functional currency of the Company’s foreign subsidiaries is primarily the Euro. Monetary assets and liabilities denominated in foreign currencies are translated to U.S. dollars using the exchange rates at the balance sheet date. Foreign currency translation adjustments are recorded as a component of Other Comprehensive Income within stockholders’ equity. Revenues and expenses from our foreign subsidiaries are translated using the monthly average exchange rates in effect during the period in which the transactions occur. Foreign currency transaction gains and losses are recorded in Interest and Other Income, net, on our Consolidated Statements of Operations.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (“Topic 230”~~). The Company adopted Topic 230 in the beginning of 2018, which requires the statement of cash flows to explain the change during the period relating to total cash, cash equivalents, and restricted cash. The Company adopted this standard using the retrospective transition method by restating its consolidated statements of cash flows to include restricted cash of $3.5 million as of January 1, 2018 and in the ending cash, cash equivalents, and restricted cash balances for the year ended December 31, 2018. The restricted cash balance consists of a letter of credit for $3.5 million established as a deposit for the Brisbane build-to-suit lease. Net cash flows for the year ended December 31, 2017, changed as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts presented on the consolidated statements of cash flows.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the consolidated statements of cash flows that sum to the total of the same amounts in the statement of cash flows for the years ended December 31, 2018 and 2017, respectively (in thousands):

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements ~~(Topic~~(ASC Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”), which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC Topic 606 when the counterparty is a customer. In addition, ~~Topic 808~~ASU 2018-18 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. ~~This guidance will be~~ASU 2018-18 is effective for all interim and annual reporting periods beginning after December 15, 2019. On January 1, 2020, the Company adopted ASU 2018-18. The adoption of ASU 2018-18 did not have a material impact on the Company’s Consolidated Financial Statements.

~~Newly created shares are issued upon exercises of options. There were no shares subject to Sangamo’s right of repurchase as of December 31, 2018.~~ The ~~intrinsic value of options exercised was $27.0 million, $12.3 million and $0.1 million during 2018, 2017 and 2016, respectively.~~

At December 31, 2018, the aggregate intrinsic values of outstanding and exercisable options were $24.5 million and $12.7 million, respectively. The aggregate intrinsic value of options vested and expected to vest as of December 31, 2018, 2017 and 2016 was $24.5 million, $71.7 million and $0.0 million, respectively.

~~The following table summarizes information with respect to stock options outstanding at December 31, 2018:~~

~~During 2018, 2017 and 2016, the Company awarded 346,055, 12,600, and 60,000 RSUs, respectively. The RSUs awarded in 2018, 2017 and 2016 had an average grant date~~weighted-average estimated fair value per ~~award~~share of ~~$17.87, $15.85~~options granted during 2020, 2019 and ~~$5.16, respectively. These awards generally vest as follows: one-third of~~2018 was $5.25, $6.37, and $11.39, respectively, based upon the ~~award will vest~~assumptions used in ~~a series of three successive equal annual installments.~~the Black-Scholes valuation model. The ~~aggregate fair value of RSUs vested during 2018, 2017 and 2016 was $0.6 million, $1.2 million and $4.8 million, respectively.~~

RSUs that vested in 2018, 2017 and 2016 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 20,193, 42,243, and 165,181 for 2018, 2017 and 2016, respectively, and were based on the value of the RSUs on their respective issuance dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were $0.3 million, $0.7 million and $0.8 million in 2018, 2017 and 2016, respectively and are reflected as a financing activity within the accompanying consolidated statements of cash flows. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.

As of December 31, 2018, there were 9,491,418 shares reserved for future awards under the Company’s 2013 Plan and 3,006,964 shares of common stock reserved for future issuance under the Purchase Plan.

~~The domestic and foreign components of loss before income taxes were as follows (in thousands):~~

~~The difference between the benefit for income taxes and the amount computed by applying the federal statutory income tax~~ ~~rate~~ ~~(21%)~~ ~~to loss before taxes is explained as follows (in thousands):~~

~~Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts~~assumptions used for ~~income tax purposes. Significant components of the Company’s deferred tax assets are as follows (in thousands):~~

In October 2018, the Company acquired TxCell incorporated in France. The Company recorded goodwill and intangible assets as part of accounting for the acquisition of TxCell. There is no corresponding tax basis for the goodwill or intangible assets. A portion of the intangible assets acquired were for the use in a particular research and development project IPR&D and are considered indefinite-lived assets with no tax basis.

~~The changes in~~estimating the fair value of the ~~unrealized gain/loss on securities investment are recorded~~employee stock options were as ~~a component~~follows:

The ~~valuation allowance increase (decreased) by $45.3 million, $(28.9) million and $23.8 million~~assumptions used for estimating the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, Sangamo had net operating loss carryforwards for federal and state income tax purposes of approximately $535.0 million and $161.0 million, respectively. If not utilized, the net federal and state operating loss carryforwards will expire in 2018 and 2017, respectively. The Company’s French NOL is $130.0 million which carries over indefinitely. The Company also has federal and state research tax credit carryforwards of $12.2 million and $13.0 million, respectively. The federal research credits began to expire in 2018 while the state research credits have no expiration date. Utilizationfair value of the Company’s net operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before utilization.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act ("Tax Reform") into legislation. The Tax Reform makes significant changes to the U.S. corporate income tax law including, but not limited to, (1) reducing the U.S. federal corporate tax rate to 21% from 35% and (2) requiring a one-time mandatory transition tax on previously deferred foreign earnings of U.S. subsidiaries. Under ASC Topic 740, the effects of changes in tax rates and lawsESPP purchase rights are recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is the date the bill becomes law. In the current year the Company has accounted for additional provisions that impact the Company including but not limited to “global intangible low-taxed income (“GILTI”). The Company has completed an analysis for FDII and GILTI and due to the results of the Company, there is currently no impact for these provisions. In addition, the Company’s GILTI policy election is to treat GILTI as ~~a period cost if and when incurred and does not plan on calculating the deferred impact on GILTI.~~

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax Reform. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Reform enactment date for companies to complete the accounting under ASC Topic 740 for the year ended December 31, 2017. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Reform for which the accounting under ASC Topic 740 is complete. The Company has finished their analysis as of the measurement period closing of December 22, 2018 after application of law changes were reviewed by the Company. There were no subsequent adjustments as the conclusions have remained the same.

The Company intends to reinvest the earnings of its non-U.S. subsidiaries in those operations. The Company does not provide for U.S. income taxes on the earnings of foreign subsidiaries because the Company intends to reinvest such earnings offshore indefinitely. However, if these funds were repatriated, the Company would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable. It is not practicable to estimate the amount of the deferred tax liability associated with the repatriation of cash due to the complexity of its hypothetical calculation.

The Company files federal and state income tax returns with varying statutes of limitations. The tax years from 2002 forward remain open to examination due to the carryover of net operating losses or tax credits. The Company also files UK and French income tax returns, and the tax years from 2008 and thereafter remain open in the UK and 2015 and thereafter in France are still subject to examination.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2018, the Company had no accrued interest and/or penalties. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. In the event that any unrecognized tax benefits are recognized, the effective tax rate will not be affected.

~~The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):~~

December 31,

2018

2017

2016

Beginning balance

$
5,659

$
5,045

$
8,330

Additions based on tax positions related to the current year

636

622

1,023

Additions for tax positions of prior years

(7
)

(8
)

27

Reductions for tax positions of prior years

—

—

(4,335
)
Ending balance

$
6,288

$
5,659

$
5,045

follows:


	Year Ended December 31,
	2020	2019	2018
Risk-free interest rate	1.53-2.80%	1.53-2.42%	2.16-2.80%
Expected term (in years)	0.5-2.0	0.5-2.0	0.5-2.0
Expected dividend yield of stock	0	0	0
Expected volatility	51.02-91.96%	51.02-91.96%	73.21-83.25%

~~NOTE 11 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES~~

~~Accounts payable and accrued liabilities consist of the following (in thousands):~~

December 31 ,

2018

2017

Accounts payable

$
3,355

$
16

Accrued research and development expenses

10,999

7,898

Accrued professional fees

1,930

1,318

Deferred rent

204

417

Other

4,969

1,386

Total accounts payable and accrued liabilities

$
21,457

$
11,035

NOTE 1210 – EMPLOYEE BENEFIT PLAN

The Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code covering all full-time employees (“Sangamo 401(k) Plan”). The Sangamo 401(k) Plan is intended to qualify under Section 401 of the Internal Revenue Code.

The Company matched employee contributions equal to 50% for the first 8% in ~~2018~~2020, 2019 and ~~2017 and 6% in 2016,~~2018, up to a limit of $4,000 in ~~2018~~2020, 2019 and ~~2017, and $3,000 in 2016.~~2018. Matching funds are fully vested when contributed. Contributions to the Sangamo 401(k) Plan by the Company were ~~$0.8~~$1.2 million, ~~$0.5~~$0.9 million, and ~~$0.3~~$0.8 million for the years ended December 31, 2020, 2019 and 2018, ~~2017~~respectively.

NOTE 11 – INCOME TAXES

The domestic and foreign components of loss before income taxes were as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Domestic	$	(126,624)	$	(77,354)	$	(65,695)
Foreign	5,847		(18,065)		(3,194)
Loss before income taxes	$	(120,777)	$	(95,419)	$	(68,889)

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The income tax expense consisted of the following (in thousands):


	Year Ended December 31,
	2020		2019		2018
Income tax expense:
Current:
Federal	$	0	$	0	$	0
State	133		0		0
Foreign	686		0		0
Subtotal	819		0		0
Deferred:
Federal	0		0		0
State	0		0		0
Foreign	(474)		0		0
Subtotal	(474)		0		0
Income tax expense	$	345	$	0	$	0

The difference between the income tax expense and the amount computed by applying the federal statutory income tax rate to loss before income taxes is explained as follows (in thousands):


	Year Ended December 31,
	2020		2019		2018
Tax at federal statutory rate	$	(25,363)	$	(20,038)	$	(14,467)
State taxes, net	(3,168)		(9,597)		(2,849)
Foreign rate differential	376		(665)		(177)
Global Intangible Low-Taxed Income	1,335		0		0
Non-deductible stock-based compensation	4,232		2,817		(2,729)
Research credits	(3,657)		(3,429)		(1,005)
Change in valuation allowance	26,537		29,655		20,271
Other	53		1,257		956
Income tax expense	$	345	$	0	$	0

In March and December 2020, in response to the COVID-19 pandemic, the CARES Act and the Consolidated Appropriations Act, 2021 were passed into law and provide additional economic stimulus to address the impact of the COVID-19 pandemic. The Company does not expect any significant benefit to its income tax provision as a result of this legislation.

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Table of Contents

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2020		2019
Assets:
Deferred tax assets:
Net operating loss carryforwards	$	164,276	$	133,765
Research and development tax credit carryforwards	27,679		21,459
Stock-based compensation	5,321		4,194
Deferred revenue	20,681		32,171
Fixed assets	10,525		11,282
Lease liability	10,251		11,722
Accruals and reserves	430		675
Other	308		151
Total deferred tax asset	239,471		215,419
Valuation allowance	214,351		187,724
Deferred tax assets	25,120		27,695
Liabilities:
Intangible assets	(14,321)		(13,609)
Operating lease right-of-use assets	(17,510)		(20,656)
Deferred tax liabilities	(31,831)		(34,265)
Total net deferred tax liabilities	$	(6,711)	$	(6,570)

The deferred tax assets and liabilities based on tax jurisdictions are presented on the Consolidated Balance Sheet as follows (in thousands):


	December 31,
	2020		2019
Deferred tax assets (included in Other non-current assets on the Consolidated Balance Sheet)	$	474	$	0
Deferred tax liabilities	(7,185)		(6,570)
Net deferred tax liabilities	$	(6,711)	$	(6,570)

In October 2018, the Company acquired Sangamo France. The Company recorded goodwill and intangible assets as part of accounting for the acquisition of Sangamo France. There is no corresponding tax basis for the goodwill or intangible assets. A portion of the intangible assets acquired were for the use in a particular research and development project and are considered indefinite-lived assets with no tax basis.

The changes in the fair value of the unrealized gain (loss) on marketable securities are recorded as a component of accumulated other comprehensive income (loss), net of a provision for income taxes.

A valuation allowance is recorded when it is more likely than not that all or some portion of the deferred income tax assets will not be realized. The Company regularly assesses the need for a valuation allowance against its deferred income tax assets by considering both positive and negative evidence related to whether it is more likely than not that the Company’s deferred income tax assets will be realized. In evaluating the Company’s ability to recover its deferred income tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. Accordingly, based upon the Company’s analysis of these factors the net deferred tax assets have been substantially offset by a valuation allowance. The valuation allowance increased by $26.6 million, $29.6 million and $45.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2020, Sangamo had net operating loss carryforwards for federal and state income tax purposes of approximately $622.6 million and $261.7 million, respectively. The federal net operating loss generated before 2018 will begin to expire in 2024 and will keep expiring through 2037, if not utilized. Federal net operating loss generated in 2018 will carry forward indefinitely. If not utilized, the state net operating loss carryforwards will begin to expire in 2029, respectively. The Company’s French net operating loss carryforward balance is $145.9 million, which carries over indefinitely. The Company

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Table of Contents

also has federal and state research tax credit carryforwards of $21.9 million and $18.3 million, respectively. The federal research credits will begin to expire in 2021, while the state research credits have no expiration date. Utilization of the Company’s net operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before utilization.

The Company’s policy is to reinvest the earnings of its non-U.S. subsidiaries in those operations. The Company does not provide for U.S. taxes on the earnings of foreign subsidiaries because the Company intends to reinvest such earnings offshore indefinitely. However, if these funds were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes. Due to the cumulative losses generated in foreign countries there are no earnings to repatriate.

The Company files federal and state income tax returns with varying statutes of limitations. The tax years from 2002 forward remain open to examination due to the carryover of net operating losses or tax credits. The Company also files United Kingdom and French income tax returns, and the tax years from 2008 and thereafter remain open in the United Kingdom and 2016 and thereafter in France are still subject to examination.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2020, the Company had 0 accrued interest and/or penalties. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. In the event that any unrecognized tax benefits are recognized, the effective tax rate will not be affected.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):


	December 31,
	2020		2019		2018
Beginning balance	$	11,630	$	6,288	$	5,659
Additions based on tax positions related to the current year	2,834		5,393		636
Additions for tax positions of prior years	1,982		0		0
Reductions for tax positions of prior years	(3,554)		(51)		(7)
Ending balance	$	12,892	$	11,630	$	6,288

NOTE 12 – RELATED PARTY TRANSACTION

The Company acquired 185,400 and 52,700 vested free shares from a former executive of Sangamo, pursuant to the exercise of the Free Shares Options for approximately $0.4 million and $0.1 million of cash, during the years ended December 31, 2020 and 2019, respectively.

NOTE 13 – QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table sets forth certain unaudited quarterly financial data for the eight quarters ended December 31, ~~2018.~~2020. The unaudited information set forth below has been prepared on the same basis as the audited information contained herein and includes all adjustments necessary to present fairly the information set forth. The operating results for any quarter are not indicative of results for any future period. All ~~data is~~amounts are in thousands except per share ~~data.~~

amounts.

2018

2017

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Revenues

$
12,637

$
21,416

$
23,562

$
26,837

$
3,425

$
8,253

$
11,812

$
13,077

Expenses

33,634

40,556

39,803

47,609

20,217

21,021

24,847

26,843

Net loss

(20,187
)

(16,640
)

(12,843
)

(19,219
)

(16,632
)

(12,491
)

(12,354
)

(13,091
)
Net loss attributable to non-controlling interest

—

—

—

(555
)

—

—

—

—

Net loss attributable to Sangamo Therapeutics, Inc.

(20,187
)

(16,640
)

(12,843
)

(18,664
)

(16,632
)

(12,491
)

(12,354
)

(13,091
)
Basic and Diluted Net loss per share attributable to Sangamo Therapeutics, Inc.

(0.23
)

(0.17
)

(0.13
)

(0.18
)

(0.23
)

(0.17
)

(0.15
)

(0.15
)


	2020								2019
	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Revenues	$	13,076	$	21,553	$	57,763	$	25,800	$	8,071	$	17,548	$	21,958	$	54,851
Operating expenses	$	57,598	$	59,450	$	61,464	$	69,232	$	51,968	$	51,052	$	51,206	$	53,382
Net (loss) income	$	(42,974)	$	(35,965)	$	(1,508)	$	(40,675)	$	(42,203)	$	(30,356)	$	(27,361)	$	4,501
Net (loss) income attributable to non-controlling interest	$	(61)	$	(36)	$	42	$	(71)	$	(53)	$	(72)	$	(54)	$	(54)
Net (loss) income attributable to Sangamo Therapeutics, Inc.	$	(42,913)	$	(35,929)	$	(1,550)	$	(40,604)	$	(42,150)	$	(30,284)	$	(27,307)	$	4,555
Basic and diluted net (loss) income per share attributable to Sangamo Therapeutics, Inc.	$	(0.37)	$	(0.26)	$	(0.01)	$	(0.29)	$	(0.41)	$	(0.26)	$	(0.24)	$	0.04

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NOTE 14 – ~~BUILD-TO-SUIT LEASES~~

~~Brisbane Build-to-Suit Lease~~

SUBSEQUENT EVENTS

In November 2017, the Company entered into a long-term property lease which includes construction by the lessor of a building with approximately 87,700 square feet of space, in Brisbane, California. Substantial completion of the building is estimated to occur in the first half of 2019. The lease agreement expires in May 2029, approximately ten years after substantial completion of the building. A letter of credit for $3.5 million was established as the deposit and is classified within other non-current assets in the consolidated financial statements. The Company has two options to extend the lease term for up to a combined additional ten years.

The Company is deemed, for accounting purposes only, to be the owner of the entire project including the building shell, even though it is not the legal owner as a result of the cold shell condition of the building and involvement in the construction process. In connection with the Company’s accounting for this transaction, the Company capitalized the costs of construction as a build-to-suit property within property and equipment, net, and recognize a corresponding build-to-suit lease obligation, including interest. Fair

~~109~~

value of the building was estimated at $20.9 million using comparable market prices per square foot for similar space for public real estate transactions in the surrounding area and is considered a Level 2 fair value measurement. As of December 31, 2018, $2.0 million was capitalized related to interest with a corresponding build-to-suit lease obligation recognized related to this lease for the building and $41.8 million was capitalized related to the construction.

~~Point Pinole Build-to-Suit Lease~~

In December 2015, the Company entered into a long-term property lease which includes construction by the lessor of a building with approximately 41,400 square feet of space, in Richmond, California. Substantial completion of the building was accomplished in December 2016 at which time the lease commenced.

Construction was completed on the facility and a portion of the monthly lease payment gets allocated to land rent and recorded as an operating lease expense and the non-interest portion of the amortized lease payments to the landlord related to the rent of the building is applied to reduce the build-to-suit lease obligation.

The Company is deemed, for accounting purposes only, to be the owner of the entire project including the building shell, even though it is not the legal owner. In connection with the Company’s accounting for this transaction, the Company capitalized the costs of construction as a build-to-suit property within property and equipment, net, and recognized a corresponding build-to-suit lease obligation for the same amount. As of December 31, 2016, $3.9 million of costs were capitalized in buildings with a corresponding build-to-suit lease obligation recognized related to this lease.

~~In February 2019, the Company terminated the long term property lease, and will account for the termination in accordance with the new lease standard in~~ the first quarter of ~~2019.~~

2021 through February 19, 2021, the Company sold 1,034,762 shares of its common stock for gross proceeds of approximately $16.1 million from an at-the-market offering program under an Open Market Sale Agreement℠ with Jefferies dated August 5, 2020. After deducting sales commissions and expenses, net cash proceeds through February 19, 2021 under the at-the-market offering are approximately $15.7 million.

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision of our principal executive officer and acting principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules ~~13a-15(e)~~13a-15€ and 15d-15(e) of the Exchange Act) as of December 31, ~~2018.~~2020. Based on that evaluation, as of December 31, ~~2018,~~2020, our principal executive officer and acting principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Inherent Limitations on Controls and Procedures

Our management, including the principal executive officer and acting principal financial officer, does not expect that our disclosure controls and procedures and our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, for our company have been or will be detected. As these inherent limitations are known features of the disclosure and financial reporting processes, it is possible to design into the processes safeguards to reduce, though not eliminate, these risks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is based in part upon certain

~~110~~

assumptions about the likelihood of future events. While our disclosure controls and procedures and our internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining an adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our management, including our principal executive officer and acting principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in the “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on an evaluation under that framework, our management concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, ~~2018.~~

2020.

The effectiveness of our internal control over financial reporting as of December 31, ~~2018~~2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

~~In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their final assessment~~

117

Table of internal control over financial reporting for the first fiscal year in which the acquisition occurred. Our management’s evaluation of internal control over financial reporting excluded the internal control activities of TxCell S.A., or TxCell, which we acquired on October 1, 2018, as discussed in Note 6 to our Consolidated Financial Statements, “~~Acquisition of TxCell, S.A.~~”. We have included the financial results of TxCell in the consolidated financial statements from the date of acquisition. Total operating expenses and net loss subject to TxCell’s internal control over financial reporting represented 2% and 5% of our consolidated results for the fiscal year ended December 31, 2018. Total assets subject to TxCell’s internal control over financial reporting ~~constituted~~ ~~3% of our consolidated total assets as of December 31, 2018.~~

Contents

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, ~~2018~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~111~~

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors ~~and Stockholders~~ of Sangamo Therapeutics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Sangamo Therapeutics, Inc.’s internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Sangamo Therapeutics, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018,~~2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of TxCell S.A., which is included in the 2018 consolidated financial statements of the Company and ~~constituted~~ 3% of total assets as of December 31, 2018 and 2% and 5% of operating expenses and net loss, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of TxCell S.A.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the ~~2018~~2020 consolidated financial statements of the Company and our report dated ~~March 1, 2019~~February 24, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

/s/ ERNST & YOUNG LLP

Redwood City, California

~~March 1, 2019~~

~~112~~

February 24, 2021

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I~~TEM~~

ITEM 9B – OTHER INFORMATION

~~None~~

None.

PART III

Certain information required by Part III is omitted from this Report on Form 10-K because we intend to file our definitive Proxy Statement for our next Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, or the ~~2019~~2021 Proxy Statement, no later than April 30, ~~2019,~~2021, and certain information to be included in the ~~2019~~2021 Proxy Statement is incorporated herein by reference.

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is to be included in our ~~2019~~2021 Proxy Statement as follows:

•The information relating to our directors and nominees for director is to be included in the section entitled ~~“Proposal No. 1: Election~~“Election of Directors;”

•The information relating to our executive officers is to be included in the section entitled “Executive Officers;”

•The information relating to our audit committee and audit committee financial expert ~~and~~is to be included in the section entitled “Election of Directors – Audit Committee;”

•The information relating to the procedures by which stockholders may recommend nominees to our Board of Directors is to be included in the section entitled ~~“Corporate Governance~~“Questions and ~~Board Matters;~~Answers About These Proxy Materials and Voting;” and

•The information regarding compliance with Section 16(a) of the Exchange Act is to be included in the section entitled ~~“Section~~“Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance.~~Reporting.”

Such information is incorporated herein by reference to our ~~2019~~2021 Proxy Statement, provided that if the ~~2019~~2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

ITEM 11 – EXECUTIVE COMPENSATION

The information required by this item is to be included in our ~~2019~~2021 Proxy Statement under the sections entitled “Executive Compensation,” “Director Compensation,” ~~“Corporate Governance and Board Matters—~~“Election of Directors—Compensation Committee Interlocks and Insider Participation” and ~~“Corporate Governance and Board Matters—~~“Report of the Compensation Committee ~~Report”~~of the Board of Directors” and is incorporated herein by reference, provided that if the ~~2019~~2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item with respect to equity compensation plans is to be included in our ~~2019~~2021 Proxy Statement under the section entitled “Equity Compensation Plan Information” and the information required by this item with respect to security ownership of certain beneficial owners and management is to be included in our ~~2019~~2021 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial Owners and Management” and in each case is incorporated herein by reference, provided that if the ~~2019~~2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is to be included in our ~~2019~~2021 Proxy Statement under the sections entitled “Certain Relationships and Related Transactions” and ~~“Corporate Governance and Board Matters—~~“Election of Directors—Board Independence” and is incorporated herein by reference, provided that if the ~~2019~~2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

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ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is to be included in our ~~2019~~2021 Proxy Statement under the section entitled ~~“Proposal No. 2: Ratification~~“Ratification of Independent Registered Public Accounting Firm” and is incorporated herein by reference, provided that if the ~~2019~~2021 Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.

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PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are included as part of this Annual Report on Form 10-K:

1. Financial Statements—See Index to Consolidated Financial Statements in Item 8.

2. Financial Statement Schedules—Not Applicable.

3. Exhibits

~~Exhibit~~ ~~Number~~
Exhibit Number		Description of Document
2.1		Share Purchase Agreement dated July 20, 2018 among the Company and the Selling TxCell Shareholders named on the signature page thereto (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed July 23, 2018).
2.2		Amendment Agreement to the Share Purchase Agreement dated October 1, 2018 between the Company and TxCell S.A. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 6, 2018).
2.3		Tender Offer Agreement dated July 20, 2018 between the Company and TxCell S.A. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed July 23, 2018).
2.4		Amendment No. 1 to the Tender Offer Agreement dated October 1, 2018 between the Company and TxCell S.A. (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed November 6, 2018).
3.1		Seventh Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10 -Q filed August 9 , 20 17 ).
3.2		Fourth Certificate of Amendment of the Seventh Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed ~~August 9, 2017)~~May 22, 2020).
~~3.2~~ 3.3		~~Third~~Fourth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed ~~June~~December 15, ~~2018)~~20 20 ).
4.1		Description of Capital Stock.
4.2		Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed January 6, 2017).
10.1(+)		Amended and Restated 2013 Stock Incentive Plan (the “2013 Plan”) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 10, 2018).
10.2(+)		Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 22,2020).
10.3(+)		2018 Equity Incentive Plan French Stock-Options Sub-Plan (the “French Options Sub-Plan”) (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed March 1, 2019).
10.4(+)		2018 Equity Incentive Plan French Restricted Stock Unit Award Sub-Plan (the “French RSU Sub-Plan”) (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).
10.5(+)		2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8, ~~(File No. 333-225552)~~ filed ~~June 11, 2018)~~October 15, 2020).
~~10.3(+~~10.6(+)		~~2018 Equity Incentive Plan French Stock-Options Sub-Plan (the “French Options Sub-Plan”).~~
~~10.4(+)~~	~~2018 Equity Incentive Plan French Restricted Stock Unit Award Sub-Plan (the “French RSU Sub-Plan”).~~
~~10.5(+)~~	Form of Restricted Stock Unit Award Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.6(+~~10.7(+)		Form of Notice of Grant of Stock Option under the 2013 Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.7(+~~10.8(+)		Form of Stock Option Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.8(+~~10.9(+)		Form of Notice of Grant of Stock Option – Director Initial Grant under the 2013 Plan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.9(+~~10.10(+)		Form of Notice of Grant of Stock Option – Director Annual Grant under the 2013 Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.10(+~~10.11(+)		Form of Automatic Stock Option Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed June 14, 2013).
~~10.11(+~~10.12(+)		Form of Stock Option Grant Notice and Form of Option Agreement (U.S. employees) under the 2018 Plan (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed June 15, 2018).

~~114~~

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~~Exhibit~~ ~~Number~~
Exhibit Number		Description of Document
~~10.12(+~~10.13(+)		Form of Stock Option Grant Notice and Form of Option Agreement (non-employee directors) under the 2018 Plan (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K filed June 15, 2018).
~~10.13(+~~10.14(+)		Form of Stock Option Grant Notice and Form of Option Agreement (U.K. employees) under the 2018 Plan (incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K filed June 15, 2018).
~~10.14(+~~10.15(+)		Form of Stock Option Grant Notice (French employees) under the 2018 Plan and the French Options ~~Sub-Plan.~~Sub-Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed March 1, 2019).
~~10.15(+~~10.16(+)		Form of Stock Option Agreement (French Employees) under the 2018 Plan and the French Options ~~Sub-Plan.~~Sub-Plan (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed March 1, 2019).
~~10.16(+~~10.17(+)		Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (U.S. employees) under the 2018 Plan (incorporated by reference to Exhibit 99.5 to the Company’s Current Report on Form 8-K filed June 15, 2018).
~~10.17(+~~10.18(+)		Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (non-employee directors) under the 2018 Plan (incorporated by reference to Exhibit 99.6 to the Company’s Current Report on Form 8-K filed June 15, 2018).
~~10.18(+~~10.19(+)		Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (U.K. employees) under the 2018 Plan (incorporated by reference to Exhibit 99.7 to the Company’s Current Report on Form 8-K filed June 15, 2018).
~~10.19(+~~10.20(+)		Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (French employees) under the 2018 Plan and the French RSU Sub-Plan. (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).
~~10.20(+~~10.21(+)		Amended and Restated Severance ~~Plan.~~Plan (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).
~~10.21(+~~10.22(+)		Amended and Restated Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 10, 2018).
~~10.22(+~~10.23(+)		Form of ~~Indemnification~~Indemnity Agreement (incorporated by reference to Exhibit ~~10.2~~10.3 to the Company’s Quarterly Report on Form 10-Q filed ~~August 6, 2015)~~May 11,2020).
~~10.23(+~~10.24(+)		Employment Agreement between the Company and Alexander (Sandy) Macrae, dated May 17, 2016 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 4, 2016).
~~10.24(+~~10.25(+)		Employment Agreement between the Company and ~~Kathy Yi, dated~~Sung Lee effective as of October 31, 2019 (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed February 28, 2020).
10.26(+)		Letter Agreement between the Company and Sung Lee dated as of January 22, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 28, 2021).
10.27(+)		Employment Agreement between the Company and Gary Loeb effective as of June 6, 2019 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed February 28, 2020)
10.28(+)		Employment Agreement between the Company and Rolf Andrew (Andy) Ramelmeier effective as of November 1, 2017 (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K filed February 28, 2020 ).
10.29(+)		Letter Agreement Regarding Andrew Ramelmeier Special Bonus (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 5, 2020).
10.30(+)		Employment Agreement between the Company and Stéphane Boissel, effective October 1, 2018 (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K filed March 1, 2019).
10.31(+)		Employment Agreement between the Company and Adrian Woolfson, effective January 21 , 2019 (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K filed March 1, 2019).
10.32(+)		Employment Agreement between the Company and Mark McClung effective as of April 13, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed ~~May 10, 2017)~~August 5, 2020).
~~10.25(+~~10.33(+)		~~Employment Agreement between the Company and Edward Conner, dated November 1, 2016 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed May 10, 2017).~~
~~10.26(+)~~	~~Employment Agreement between the Company and Heather D. Turner, effective February 12, 2018.~~
~~10.27(+)~~	~~Employment Agreement between the Company and Stéphane Boissel, effective October 1, 2018.~~
~~10.28(+)~~	~~Employment Agreement between the Company and Adrian Woolfson, effective January 21 2019.~~
~~10.29~~	Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 23, 1997 (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (Reg. No. 333-30314), as amended, filed February 24, 2000).

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~~10.30~~ Exhibit Number			Description of Document
10.34			First Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated March 12, 2004 (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed February 23, 2005).
~~10.31~~ 10.35			Second Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated March 15, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2013).
~~10.32~~ 10.36			Third Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated August 1, 2013 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2013).
~~10.33~~ 10.37			Fourth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated June 10, ~~2016.~~2016 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).

~~115~~

~~Exhibit~~ ~~Number~~	~~Description of Document~~
~~10.34~~ 10.38		Fifth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated July 10, ~~2017.~~2017 (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).
~~10.35~~ 10.39		Sixth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 11, 2018 (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed August 8, 2018).
~~10.36~~ 10.40		Seventh Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 20, 2020 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed August 5, 2020).
10.41		Eighth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 29, 2020 (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed August 5, 2020).
10.42		Lease Agreement between the Company and Marina Boulevard Property, LLC dated November 3, 2017 (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed March 1, 2018).
~~10.37~~ 10.43		First Amendment to Lease Agreement between the Company and Marina Boulevard Property, LLC dated January 1, ~~2019.~~2019 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K (File No. 000-30171), filed with the SEC on March 1, 2019).
~~10.38~~ 10.44		~~Amended and Restated Sales~~Open Market Sale Agreement between the Company and ~~Cowen~~Jefferies LLC, dated ~~May 26, 2017~~August 5,2020 (incorporated by reference to Exhibit 1.1 to the Company’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed ~~May 26, 2017)~~August 5,2020).
~~10.39†~~ 10.45†		Amended and Restated Collaboration and License Agreement between the Company and Shire International GmbH, dated September 1, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed October 30, 2015).
~~10.40†~~ 10.46†		Global Research, Development and Commercialization Collaboration and License Agreement between the Company and Biogen MA Inc. (Bioverativ Inc.), dated January 8, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 7, 2014).
~~10.41†~~ 10.47†		Letter Amendment to Global Research, Development and Commercialization Collaboration and License Agreement between the Company and Biogen MA Inc. (Bioverativ Inc.), dated December 14, 2015 (incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K filed February 18, 2016).
~~10.42†~~ 10.48†		Letter Agreement and Waiver between the Company and Biogen MA Inc. (Bioverativ Inc.), dated March 24, 2016 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 5, 2016).
~~10.43†~~ 10.49†		Collaboration and License Agreement between the Company and Pfizer Inc., dated May 10, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2017).
~~10.44†~~ 10.50⁑		Letter Amendment, dated December 17, 2019, to the Collaboration and License Agreement between the Company and Pfizer Inc., dated May 10, 2017 (incorporated by reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K filed February 28, 2020).
10.51†		Research Collaboration and License Agreement between the Company and Pfizer Inc., dated December 28, 2017 (incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K filed March 1, 2018).
~~10.45†~~ 10.52†		Amendment No. 1 to Research Collaboration and License Agreement between the Company and Pfizer Inc., dated March 21, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed May 8, 2019).

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Exhibit Number			Description of Document
10.53⁑			Amendment No. 2 to Research Collaboration and License Agreement between the Company and Pfizer Inc., dated July 3 1, 2020 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2020).
10.54†			Amended and Restated Collaboration and License Agreement between the Company and Kite Pharma, Inc., dated September 11, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 6, 2019).
10.55⁑			Collaboration and License Agreement among the Company, Biogen MA, Inc. and Biogen International GmbH, dated February ~~20, 2018~~26, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May ~~5, 2018)~~11, 2020).
~~21.1~~ 10.56			Stock Purchase Agreement between the Company and Biogen MA, Inc., dated February 26, 2020 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 11, 2020).
10.57⁑			Collaboration and License Agreement between the Company and Novartis Institutes for BioMedical Research, Inc., dated July 27, 2020 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2020).
21.1			Subsidiaries of the Company
23.1			Consent of Independent Registered Public Accounting Firm.
24.1			Power of Attorney (included on signature page).
31.1			Rule 13a-14(a) Certification of Principal Executive Officer.
31.2			Rule 13a-14(a) Certification of Principal Financial Officer.
32.1*			Certification Pursuant to 18 U.S.C. Section 1350.
~~101.INS~~
101.INS			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			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104

†	Confidential treatment has been granted for certain information contained in this document pursuant to an order of the Securities and Exchange Commission. Such information has been omitted and filed separately with the Securities and Exchange Commission.

~~(+)~~

~~Indicates management contract or compensatory plan or arrangement.~~

~~116~~

The ~~certifications attached as Exhibit 32.1 accompany this~~cover page from Sangamo’s Annual Report on Form 10-K ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of~~for the ~~Sarbanes-Oxley Act of 2002,~~year ended December 31, 2020, is formatted in Inline XBRL and ~~shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.~~

it is contained in Exhibit 101

________________________

† Confidential treatment has been granted for certain information contained in this document pursuant to an order of the SEC. Such information has been omitted and filed separately with the SEC.

⁑Certain portions of this exhibit (indicated by “[*]”) have been omitted in accordance with 17 CFR § 229.601(b).

(+) Indicates management contract or compensatory plan or arrangement.

* The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

ITEM 16 – FORM 10-K SUMMARY

None.

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Table of Contents~~SIGNA~~T~~URES~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on ~~March 1, 2019.~~

~~Date: March 1, 2019~~

February 24, 2021.


Date: February 24, 2021
			SANGAMO THERAPEUTICS, INC.
			By:	/ S / ALEXANDER D. MACRAE
~~By:~~			/ S ~~/ ALEXANDER~~ M~~ACRAE~~
		Alexander D. Macrae
	President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander D. Macrae ~~Kathy Y. Yi,~~ and ~~Heather Turner,~~Gary Loeb, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

~~Signature~~

~~Title~~

~~Date~~

Signature

Title

Date

/ S / A~~LEXANDER~~ M~~ACRAE~~

ALEXANDER D. MACRAE

President, Chief Executive Officer ~~(Principal~~
(Principal Executive Officer) and Director

~~March 1, 2019~~

February 24, 2021

Alexander D. Macrae

/ S / SUNG H. LEE

Acting Principal Financial Officer
(Principal Financial Officer)

February 24, 2021

Sung H. Lee

/ S / ~~Kathy Y. Yi~~

PRATHYUSHA DURAIBABU

~~Executive~~ Vice President, Finance and
~~Chief Financial~~ Principal Accounting Officer (Principal ~~Financial and~~ Accounting Officer)

~~March 1, 2019~~

February 24, 2021

~~Kathy Y. Yi~~

Prathyusha Duraibabu

/ S / H. S~~TEWART~~ P~~ARKER~~

STEWART PARKER

Director and ~~Chairman~~Chairwoman of the Board

~~March 1, 2019~~

February 24, 2021

H. Stewart Parker

/ S / ROBERT F. CAREY

Director

February 24, 2021

/ S / ~~Robert F. Carey~~

~~Director~~

~~March 1, 2019~~

Robert F Carey

/ S / KENNETH J. HILLAN, M.B., CH.B.

Director

February 24, 2021

/ S ~~/ STEPHEN~~ ~~G. DILLY~~Kenneth J. Hillan, M.B., ~~M.B.B.S, P~~H.D

~~Director~~

~~March 1, 2019~~

Ch.B.

~~Stephen G. Dilly, M.B.B.S, Ph.D~~

/ S / JAMES R. MEYERS

Director

February 24, 2021

James R. Meyers

/s/ ~~Roger Jeffs,~~ S / JOHN MARKELS, PH.D

.D.

Director

~~Director~~

~~March 1, 2019~~

February 24, 2021

~~Roger Jeffs, Ph.D~~

John Markels, Ph.D.

/s/ S~~TEVEN~~ ~~J. MENTO, P~~H.D

/ SAIRA RAMASASTRY

Director

~~Director~~

~~March 1, 2019~~

February 24, 2021

~~Steven J. Mento, Ph.D~~

Saira Ramasastry

/ S / KAREN SMITH, M.D, PH.D., M.B.A., L.L.M.

Director

February 24, 2021

/ S ~~/ SAIRA~~ R~~AMASASTRY~~

~~Director~~

~~March 1, 2019~~

~~Saira Ramasastry~~

/ S / ~~Joseph S. Zakrzewski~~

~~Director~~

~~March 1, 2019~~

~~Joseph S. Zakrzewski~~

/ S / ~~Karen Smith, M.D,~~ PH~~.D, M.B.A., L.L.M.~~

~~Director~~

~~March 1, 2019~~

Karen Smith, M.D., ~~Ph.D,~~Ph.D., M.B.A., L.L.M.

/ S / JOSEPH S. ZAKRZEWSKI

Director

February 24, 2021

Joseph S. Zakrzewski


Title of ~~Each Class~~ each class	Trading Symbol(s)	Name of ~~Each Exchange~~each exchange on ~~Which Registered~~ which registered
Common Stock, ~~$0.01~~ par value $0.01 per share	SGMO	Nasdaq Global Select Market

			~~Page~~
					Page
		PART I

Item 1.					Business		4 5

Item 1A.			Risk Factors			28 40

Item 1B.			Unresolved Staff Comments			64 66
Item 2.		Properties					66
~~Item 2.~~			~~Properties~~		64

Item 3.			Legal Proceedings			64 66

Item 4.			Mine Safety Disclosures			64 66

	PART II

Item 5.			Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			65 67

Item 6.			Selected Financial Data			67 68

Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			68 69

Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			76 77

Item 8.			Financial Statements and Supplementary Data			77 79

Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			~~110~~ 117

Item 9A.			Controls and Procedures			~~110~~ 117

Item 9B.			Other Information			~~113~~ 120

	PART III

Item 10.			Directors, Executive Officers and Corporate Governance			~~113~~ 120

Item 11.			Executive Compensation			~~113~~ 120

Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			~~113~~ 120

Item 13.			Certain Relationships and Related Transactions, and Director Independence			~~113~~ 120

Item 14.			Principal Accounting Fees and Services			~~113~~ 121

	PART IV

Item 15.			Exhibits, Financial Statement Schedules			~~114~~ 122

Item 16.			Form 10-K Summary	125
		~~117~~ SIGNATURES


	Year Ended December 31,										Year Ended December 31,
	2018			2017			2016				2020		2019		2018
Operating Activities:										Operating Activities:
Net loss	$	(68,889	)	$	(54,568	)	$	(71,658	)	Net loss	$	(121,122)	$	(95,419)	$	(68,889)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:										Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,359			1,498			997		Depreciation and amortization	5,682		3,930		2,359
Amortization of (discount) premium on marketable securities		(5,829	)		(673	)		221
Foreign currency transaction losses, net		602			—			—
Amortization of discount on marketable securities										Amortization of discount on marketable securities	(825)		(4,708)		(5,829)
Amortization and other changes in right-of-use assets										Amortization and other changes in right-of-use assets	7,687		5,677		0
Gain on free shares										Gain on free shares	(63)		(488)		0

Net loss on disposal of property and equipment		—			12			—		Net loss on disposal of property and equipment	222		68		0
Stock-based compensation		14,677			9,089			15,057		Stock-based compensation	25,708		19,330		14,677
Benefit from income taxes		—			—			(14	)

Net loss on lease termination										Net loss on lease termination	0		218		0
Build-to-suit leases		966			80			99		Build-to-suit leases	—		0		966

Net changes in operating assets and liabilities:										Net changes in operating assets and liabilities:
Interest receivable		(135	)		(16	)		83		Interest receivable	(353)		(307)		(135)
Accounts receivable		(1,330	)		1,629			(2,144	)	Accounts receivable	31,685		(32,236)		(1,330)
Prepaid expenses and other assets		(2,828	)		(669	)		(1,112	)	Prepaid expenses and other assets	(10,411)		(6,660)		(2,828)
Accounts payable and accrued liabilities		(6,372	)		3,219			(2,335	)

Accounts payable and other accrued liabilities										Accounts payable and other accrued liabilities	10,703		(4,192)		(6,372)
Accrued compensation and employee benefits		2,604			2,594			137		Accrued compensation and employee benefits	6,877		4,129		2,604
Deferred revenues		99,364			48,984			(5,214	)	Deferred revenues	216,546		(35,693)		99,364
Non-current liabilities		1,963			—			—
Long-term portion of lease liabilities										Long-term portion of lease liabilities	(3,761)		(1,800)		0
Other non-current liabilities										Other non-current liabilities	1,300		3,749		1,963
Net cash provided by (used in) operating activities		37,152			11,179			(65,883	)	Net cash provided by (used in) operating activities	169,875		(144,402)		36,550
Investing Activities:										Investing Activities:
Acquisition of TxCell, net of cash acquired		(75,647	)		—			—
Acquisition, net of cash acquired										Acquisition, net of cash acquired	0		0		(75,647)
Purchases of marketable securities		(451,239	)		(252,328	)		(218,640	)	Purchases of marketable securities	(570,779)		(443,711)		(451,239)
Maturities of marketable securities		391,845			178,675			237,497		Maturities of marketable securities	314,570		404,847		391,845
Purchases of property and equipment		(43,065	)		(3,751	)		(732	)	Purchases of property and equipment	(14,714)		(20,675)		(43,065)
Net cash (used in) provided by investing activities		(178,106	)		(77,404	)		18,125
Purchase of additional Sangamo France shares										Purchase of additional Sangamo France shares	(704)		(262)		0

Net cash used in investing activities										Net cash used in investing activities	(271,627)		(59,801)		(178,106)
Financing Activities:										Financing Activities:
Proceeds from public offering of common stock, net of issuance costs		215,758			81,573			—		Proceeds from public offering of common stock, net of issuance costs	0		136,308		215,758
Proceeds from issuance of common stock in connection with the Biogen collaboration agreement, net of issuance costs										Proceeds from issuance of common stock in connection with the Biogen collaboration agreement, net of issuance costs	142,526		0		0
Taxes paid related to net share settlement of equity awards		(254	)		(654	)		(776	)	Taxes paid related to net share settlement of equity awards	(765)		(422)		(254)
Proceeds from issuance of common stock		16,205			16,571			1,113
Proceeds from issuance of common stock under employee stock purchase plan										Proceeds from issuance of common stock under employee stock purchase plan	2,015		2,044		1,484
Proceeds from exercise of stock options and restricted stock units										Proceeds from exercise of stock options and restricted stock units	9,324		4,099		14,721
Net cash provided by financing activities		231,709			97,490			337		Net cash provided by financing activities	153,100		142,029		231,709
Effects of changes in foreign exchange rates		(163	)		—			—
Net increase in cash, cash equivalents, and restricted cash		90,592			31,265			(47,421	)
Effect of exchange rate changes on cash and cash equivalents										Effect of exchange rate changes on cash and cash equivalents	(447)		184		439
Net increase (decrease) in cash, cash equivalents, and restricted cash										Net increase (decrease) in cash, cash equivalents, and restricted cash	50,901		(61,990)		90,592
Cash, cash equivalents, and restricted cash, beginning of period		53,326			22,061			69,482		Cash, cash equivalents, and restricted cash, beginning of period	81,928		143,918		53,326
Cash, cash equivalents, and restricted cash, end of period	$	143,918		$	53,326		$	22,061		Cash, cash equivalents, and restricted cash, end of period	$	132,829	$	81,928	$	143,918
Supplemental disclosure of non-cash investing activities:
Non controlling interest for acquisition of TxCell	$	1,313		$	—		$	—
Property and equipment included in accrued liabilities	$	4,953		$	1,214		$	—
Supplemental cash flow disclosures:										Supplemental cash flow disclosures:
Non-controlling interest for acquisition										Non-controlling interest for acquisition	$	0	$	0	$	1,313
Property and equipment included in unpaid liabilities										Property and equipment included in unpaid liabilities	$	4,569	$	2,114	$	4,953
Build-to-suit leases included in build-to-suit liabilities	$	2,950		$	20,793		$	3,876		Build-to-suit leases included in build-to-suit liabilities	$	0	$	0	$	2,950
Right-of-use assets obtained in exchange for lease obligations										Right-of-use assets obtained in exchange for lease obligations	$	1,333	$	31,291	$	0

Balance as of December 31, 2017	$	1,585
Goodwill acquired		38,995
Foreign currency translations adjustment		(536	)
Balance as of December 31, 2018	$	40,044

	Impact of Topic 606 Adoption on Consolidated Balance Sheet as of January 1, 2018
(in thousands)	As reported under Topic 606			Adjustments			Balances without adoption of Topic 606
Deferred revenue, current portion	$	29,626		$	1,281		$	28,345
Deferred revenue, noncurrent portion		26,846			(2,398	)		29,244
Accumulated deficit		(494,362	)		1,117			(495,479	)

☒
☒			ANNUAL 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

	Year Ended December 31,
	2018(1)			2017			2016			2015			2014
	(In thousands, except per share data)
Statement of Operations Data:
Total revenues	$	84,452		$	36,567		$	19,389		$	39,539		$	45,870
Operating expenses:
Research and development		114,866			65,728			65,618			67,198			56,974
General and administrative		46,736			27,200			26,330			19,197			15,677
Total operating expenses		161,602			92,928			91,948			86,395			72,651
Loss from operations		(77,150	)		(56,361	)		(72,559	)		(46,856	)		(26,781	)
Interest and other income, net		8,261			1,793			887			431			364
Benefit from income taxes		—			—			14			5,722			—
Net loss		(68,889	)		(54,568	)		(71,658	)		(40,703	)		(26,417	)
Net loss attributable to non-controlling interest		(555	)		—			—			—			—
Net loss attributable to Sangamo Therapeutics, Inc. stockholders	$	(68,334	)	$	(54,568	)	$	(71,658	)	$	(40,703	)	$	(26,417	)
Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders	$	(0.70	)	$	(0.70	)	$	(1.02	)	$	(0.58	)	$	(0.39	)
Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders		96,941			78,084			70,553			69,757			67,022

	Year Ended
	December 31,
Programs	2018		2017		2016
			(In thousands)
Human Therapeutic Programs
Hemophilia clinical programs	$	23,006	$	14,715	$	7,521
IMD clinical programs		37,668		11,428		9,046
Beta-thalassemia clinical program		12,317		11,354		—
HIV (SB-728) clinical programs		1,612		2,473		4,271
Non-human Therapeutic Programs
Preclinical and research programs		39,779		25,414		43,682
Other clinical programs and non-therapeutic programs		484		344		1,098
Total research and development expenses	$	114,866	$	65,728	$	65,618

											Accumulated
	Common Stock				Additional						Other			Non-			Total
					Paid-in			Accumulated			Comprehensive			Controlling			Stockholders'
	Shares		Amount		Capital			Deficit			Income/ (Loss)			Interest			Equity
Balances at December 31, 2015		70,354,608	$	703	$	560,989		$	(369,253	)	$	—		$	—		$	192,439
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax		314,583		3		(484	)		—			—			—			(481	)
Issuance of common stock under employee stock purchase plan		202,711		3		815			—			—			—			818
Stock-based compensation		—		—		15,057			—			—			—			15,057
Comprehensive loss:
Net unrealized gain on marketable securities, net of tax		—		—		—			—		20							20
Net loss		—		—		—			(71,658	)		—			—			(71,658	)
Comprehensive loss		—		—		—			—			—						(71,638	)
Balances at December 31, 2016		70,871,902		709		576,377			(440,911	)		20						136,195
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax		2,101,489		21		15,078			—			—			—			15,099
Issuance of common stock under employee stock purchase plan		253,994		2		816			—			—			—			818
Issuance of common stock under public offering, net of issuance costs		12,371,149		124		81,449												81,573
Stock-based compensation		—		—		9,089			—			—			—			9,089
Comprehensive loss:
Net unrealized loss on marketable securities, net of tax		—		—		—			—			(306	)		—			(306	)
Net loss		—		—		—			(54,568	)		—						(54,568	)
Comprehensive loss		—		—		—			—			—			—			(54,874	)
Balances at December 31, 2017		85,598,534		856		682,809			(495,479	)		(286	)		—			187,900
Cumulative-effect adjustment of ASC Topic 606 on January 1, 2018				—		—			1,117			—			—			1,117
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax		2,103,727		20		14,447			—			—			—			14,467
Issuance of common stock under employee stock purchase plan		328,710		4		1,480			—			—			—			1,484
Issuance of common stock under public offering, net of issuance costs		14,156,500		142		215,616			—			—			—			215,758
Stock-based compensation		—		—		14,677			—			—			—			14,677
Additional paid-in capital for Acquisition of TxCell		—		—		603			—			—			—			603
Non-controlling interest upon Acquisition of TxCell		—		—		—			—			—			1,313			1,313
Comprehensive loss:
Foreign currency translation adjustment		—		—		—			—			(1,129	)		(19	)		(1,148	)
Net pension losses		—		—		—			—			(21	)		—			(21	)
Net unrealized loss on marketable securities, net of tax		—		—		—			—			(4	)		—			(4	)
Net loss		—		—		—			(68,334	)		—			(555	)		(68,889	)
Comprehensive loss		—		—		—			—			—			—			(70,062	)
Balances at December 31, 2018		102,187,471	$	1,022	$	929,632		$	(562,696	)	$	(1,440	)	$	739		$	367,257


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balances at December 31, 2017	85,598,534	$	856	$	682,809	$	(495,479)	$	(286)	$	0	$	187,900
Cumulative-effect adjustment of ASC Topic 606 on January 1, 2018	—	—		—		1,117		—		—		1,117
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax	2,103,727	20		14,447		—		—		—		14,467
Issuance of common stock under employee stock purchase plan	328,710	4		1,480		—		—		—		1,484
Issuance of common stock under public offering, net of issuance costs	14,156,500	142		215,616		—		—		—		215,758
Stock-based compensation	—	—		14,677		—		—		—		14,677
Additional paid-in capital for acquisition of Sangamo France	—	—		603		—		—		—		603
Non-controlling interest upon acquisition of Sangamo France	—	—		—		—		—		1,313		1,313
Foreign currency translation adjustment	—	—		—		—		(1,129)		(19)		(1,148)
Net pension losses	—	—		—		—		(21)		—		(21)
Net unrealized loss on marketable securities, net of tax	—	—		—		—		(4)		—		(4)
Net loss	—	—		—		(68,334)		—		(555)		(68,889)
Balances at December 31, 2018	102,187,471	1,022		929,632		(562,696)		(1,440)		739		367,257
Cumulative-effect adjustment of ASC Topic 842 on January 1, 2019	—	—		—		897		—		—		897
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax	885,873	9		3,668		—		—		—		3,677
Issuance of common stock under employee stock purchase plan	249,364	2		2,042		—		—		—		2,044
Issuance of common stock under public offering, net of issuance costs	12,650,000	127		136,181		—		—		—		136,308
Stock-based compensation	—	—		19,330		—		—		—		19,330
Acquisition of additional shares of Sangamo France	—	—		—		—		—		(321)		(321)
Issuance costs related to Sangamo France acquisition	—	—		(25)		—		—		—		(25)
Foreign currency translation adjustment	—	—		—		—		(1,573)		0		(1,573)
Net pension losses	—	—		—		—		(28)		—		(28)
Net unrealized gain on marketable securities, net of tax	—	—		—		—		592		—		592
Net loss	—	—		—		(95,186)		—		(233)		(95,419)
Balances at December 31, 2019	115,972,708	1,160		1,090,828		(656,985)		(2,449)		185		432,739
Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax	1,395,956	14		8,545		—		—		—		8,559
Issuance of common stock under employee stock purchase plan	274,382	3		2,012		—		—		—		2,015
Issuance of common stock in connection with the Biogen collaboration agreement, net of issuance costs	24,420,157	244		142,282		—		—		—		142,526
Stock-based compensation	—	—		25,708		—		—		—		25,708
Acquisition of additional shares of Sangamo France	—	—		—		—		—		(927)		(927)
Foreign currency translation adjustment	—	—		—		—		8,345		—		8,345
Net pension losses	—	—		—		—		(193)		—		(193)
Net unrealized loss on marketable securities, net of tax	—	—		—		—		(284)		—		(284)
Net loss	—	—		—		(120,996)		—		(126)		(121,122)
Balances at December 31, 2020	142,063,203	$	1,421	$	1,269,375	$	(777,981)	$	5,419	$	(868)	$	497,366

	Impact of Topic 606 Adoption on Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2018
(in thousands, except per share amounts)	As reported under Topic 606			Adjustments			Balances without adoption of Topic 606
Collaboration revenue	$	84,065		$	(13,558	)	$	70,507
Net loss		(68,334	)		(13,558	)		(81,892	)
Net loss per share - basic and diluted:		(0.70	)		(0.14	)		(0.84	)


	December 31, 2018									December 31, 2020
	Fair Value Measurements									Fair Value Measurement
	Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Assets:									Assets:
Cash equivalents:									Cash equivalents:
Money market funds	$	103,291	$	103,291	$	—	$	—	Money market funds	$	53,165	$	53,165	$	0	$	0

Total		103,291		103,291		—		—	Total	53,165		53,165		0		0
Marketable securities:									Marketable securities:
Commercial paper securities		177,224		—		177,224		—
Commercial paper									Commercial paper	213,533		0		213,533		0
Corporate debt securities		63,870		—		63,870		—	Corporate debt securities	59,574		0		59,574		0
Certificates of deposit									Certificates of deposit	12,311		0		12,311		0
Asset-backed securities									Asset-backed securities	17,908		0		17,908		0
U.S. government-sponsored entity debt securities		18,621		—		18,621		—	U.S. government-sponsored entity debt securities	257,298		0		257,298		0
Total		259,715		—		259,715		—	Total	560,624		0		560,624		0
Total cash equivalents and marketable securities	$	363,006	$	103,291	$	259,715		—	Total cash equivalents and marketable securities	$	613,789	$	53,165	$	560,624	$	0
Liabilities:
Free share liability	$	154		—		—	$	154
Total	$	154		—		—	$	154

Free shares asset									Free shares asset	$	70	$	0	$	0	$	70

	December 31, 2017
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	24,290	$	24,290	$	—	$	—
Commercial paper securities		4,595		—		4,595		—
Total		28,885		24,290		4,595		—
Marketable securities:
Commercial paper securities		110,247		—		110,247		—
Corporate debt securities		75,755		—		75,755		—
U.S. government-sponsored entity debt securities		8,492		—		8,492		—
Total		194,494		—		194,494		—
Total cash equivalents and marketable securities	$	223,379	$	24,290	$	199,089	$	-


	December 31, 2019
	Fair Value Measurement
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	30,496	$	30,496	$	0	$	0
Commercial paper	2,999		0		2,999		0
Total	33,495		30,496		2,999		0
Marketable securities:
Commercial paper	155,368		0		155,368		0
Corporate debt securities	95,017		0		95,017		0
U.S. government-sponsored entity debt securities	53,493		0		53,493		0
Total	303,878		0		303,878		0
Total cash equivalents and marketable securities	$	337,373	$	30,496	$	306,877	$	0

Free shares asset	$	236	$	0	$	0	$	236

~~Free Shares Liability assumptions:~~		~~December 31, 2018~~
~~Sangamo Stock Price (USD)~~		~~11.48~~
~~TxCell Stock Price (EUR)~~		~~2.58~~
~~EUR/ USD Exchange Rate~~		~~0.873~~
~~Sangamo Stock Price (USD) Volatility Estimate~~		~~79.90%~~
~~TxCell Stock Price (EUR) Volatility Estimate~~		~~8.59%~~
~~EUR/ USD Exchange Rate Volatility Estimate~~		~~7.66%~~
~~Risk Free Rate~~		~~Varies by expected exercise date~~


	December 31,
Free Shares valuation assumptions:	2020			2019
Sangamo stock price (USD)	$	15.61		$	8.68
Sangamo France stock price (EUR)	€	3.85		€	2.14
EUR/ USD exchange rate	0.82			0.91
Estimated correlation Sangamo and Sangamo France stock prices	100.0		%	100.0		%
Sangamo stock price (USD) volatility estimate	88.9		%	72.5		%
Sangamo France stock price (EUR) volatility estimate	88.9		%	72.5		%
EUR/ USD exchange rate volatility estimate	6.3		%	6.6		%
Risk free rate and cost of debt by expected exercise date	Varies			Varies

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	Cost		Gains		(Losses)			Fair Value
December 31, 2018
December 31, 2020										December 31, 2020
Cash equivalents:										Cash equivalents:
Money market funds	$	103,291	$	—	$	—		$	103,291	Money market funds	$	53,165	$	0	$	0	$	53,165

Total		103,291		—		—			103,291	Total	53,165		0		0		53,165
Available-for-sale securities:
Commercial paper securities		177,353		—		(129	)		177,224
Marketable securities:										Marketable securities:
Commercial paper										Commercial paper	213,500		41		(8)		213,533
Corporate debt securities										Corporate debt securities	59,575		16		(17)		59,574
Certificates of deposit										Certificates of deposit	12,311		0		0		12,311
Asset-backed securities										Asset-backed securities	17,905		10		(7)		17,908
U.S. government-sponsored entity debt securities										U.S. government-sponsored entity debt securities	257,284		19		(5)		257,298
Total										Total	560,575		86		(37)		560,624
Total cash equivalents and marketable securities										Total cash equivalents and marketable securities	$	613,740	$	86	$	(37)	$	613,789

December 31, 2019										December 31, 2019
Cash equivalents:										Cash equivalents:
Money market funds										Money market funds	$	30,496	$	0	$	0	$	30,496
Commercial paper										Commercial paper	2,998		1		0		2,999
Total										Total	33,494		1		0		33,495
Marketable securities:										Marketable securities:
Commercial paper										Commercial paper	155,230		145		(7)		155,368
Corporate debt securities		63,981		—		(111	)		63,870	Corporate debt securities	94,905		115		(3)		95,017
U.S. government-sponsored entity debt securities		18,640		—		(19	)		18,621	U.S. government-sponsored entity debt securities	53,411		91		(9)		53,493
Total		259,974		—		(259	)		259,715	Total	303,546		351		(19)		303,878
Total cash equivalents and available-for-sale securities	$	363,265	$	—	$	(259	)	$	363,006
December 31, 2017
Cash equivalents:
Money market funds	$	24,290	$	—	$	—		$	24,290
Commercial paper securities		4,595		—		—			4,595
Total		28,885		—		—			28,885
Available-for-sale securities:
Commercial paper securities		110,365		—		(118	)		110,247
Corporate debt securities		75,886		—		(131	)		75,755
U.S. government-sponsored entity debt securities		8,498		—		(6	)		8,492
Total		194,749		—		(255	)		194,494
Total cash equivalents and available-for-sale securities	$	223,634		—	$	(255	)	$	223,379
Total cash equivalents and marketable securities										Total cash equivalents and marketable securities	$	337,040	$	352	$	(19)	$	337,373


	Total






Balance at beginning of year	$	185
Fair value of additional shares acquired	(927)
Loss attributable to non-controlling interest	(126)
Balance at end of year	$	(868)

	October 1, 2018
Consideration transferred	$	45,911
Fair value of non-controlling interest		35,829
Fair value of TxCell	$	81,740

Cash		4,779
Current assets		2,427
Property and equipment		1,857
IPR&D		55,019
Other assets		155
Current liabilities		(9,761	)
Assumed debt liabilities		(4,933	)
Deferred tax liability, net		(6,798	)
Fair value of net identifiable assets acquired		42,745

Goodwill		38,995
Total fair value of net assets acquired	$	81,740

	Total
Non-controlling interest at January 1, 2018	$	—
Non-controlling interest at acquisition		35,829
Shares acquired post acquisition		(34,516	)
Non-controlling interest of acquired entity		1,313
Foreign currency effect		(19	)
Loss attributable to non-controlling interest		(555	)
Non-controlling interest at December 31, 2018	$	739

	December 31 ,
	2018			2017
Laboratory equipment	$	11,466		$	7,572
Furniture and fixtures		3,840			1,494
Leasehold improvements		3,640			3,425
Buildings		3,876			3,876
Total		22,822			16,367
Less: accumulated depreciation and amortization		(9,310	)		(6,951	)
Construction in progress		65,211			21,650
	$	78,723		$	31,066


Fiscal Year:
2019	$	3,671
2020		5,950
				Total
2021		6,042	2021	$	6,191
2022		5,608	2022	6,756
2023		5,649	2023	6,851
2024			2024	6,995
2025			2025	7,058
Thereafter		29,498	Thereafter	19,571
Total minimum payments	$	56,418
Total lease payments			Total lease payments	53,422
Less:			Less:
Imputed interest			Imputed interest	(11,336)
Total			Total	$	42,086

Reported as of December 31, 2020:			Reported as of December 31, 2020:
Operating lease liabilities - current (included in Other accrued liabilities on the Consolidated Balance Sheet)			Operating lease liabilities - current (included in Other accrued liabilities on the Consolidated Balance Sheet)	$	3,690
Operating lease liabilities - long-term			Operating lease liabilities - long-term	38,396
Total			Total	$	42,086


	Number of Shares	Weighted- Average Exercise per Share Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
				(In years)	(In thousands)
Options outstanding at December 31, 2019	9,829,287	$	10.71
Options granted	4,563,425	$	8.09
Options exercised	(1,162,268)	$	8.02
Options canceled	(1,751,746)	$	10.19
Options outstanding at December 31, 2020	11,478,698	$	10.02	7.80	$	69,616
Options vested and expected to vest at December 31, 2020	11,478,698	$	10.02	7.80	$	69,616
Options exercisable at December 31, 2020	5,127,517	$	10.71	6.48	$	29,025


	Number of Shares	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
		(In years)	(In thousands)
RSUs outstanding at December 31, 2019	862,850
RSUs awarded	2,517,101
RSUs released	(324,305)
RSUs forfeited	(384,118)
RSUs outstanding at December 31, 2020	2,671,528	1.19	$	41,689
RSUs vested and expected to vest at December 31, 2020	2,671,528	1.19	$	41,689

				Weighted-
				Average		Weighted-Average		Aggregate
	Number of			Exercise per		Remaining		Intrinsic
	Shares			Share Price		Contractual Term		Value
						(In years)		(In thousands)
Options outstanding at December 31, 2017		8,287,456		$	7.77
Options granted		3,115,078		$	17.78
Options exercised		(2,028,328	)	$	7.12
Options canceled		(648,114	)	$	11.15
Options outstanding at December 31, 2018		8,726,092		$	11.23		7.35	$	24,468
Options vested and expected to vest at December 31, 2018		8,726,092		$	11.23		7.35	$	24,468
Options exercisable at December 31, 2018		3,699,150		$	8.91		5.39	$	12,702

	Options Outstanding and Exercisable				Options Exercisable
	Number of				Number of
	Shares of				Shares of
	Common Stock		Weighted-Average		Common Stock
	subject to		Remaining		subject to		Weighted-Average
Range of Exercise Price	options		Contractual Life		options		Exercise Price
			(In years)
$2.55 - $3.20		352,920	7.56			91,772	$	3
$3.50 - $3.50		1,171,546		8.00		520,209	$	4
$3.55 - $5.70		894,224	5.06			589,511	$	5
$5.72 - $7.20		915,176	7.42			610,840	$	7
$7.70 - $9.99		897,995	6.18			566,601	$	9
$10.16 - $12.72		936,327	6.91			403,714	$	12
$12.80 - $15.00		1,213,226	6.37			694,173	$	14
$15.11 -$19.80		758,250	8.74			216,830	$	16
$20.05 - $20.05		1,003,728	9.06			—	$	-
$20.85 - $24.95		582,700	9.08			5,500	$	21
		8,726,092		7.35		3,699,150	$	9

	Number			Weighted-Average
	of			Remaining		Aggregate Intrinsic
	Shares			Contractual Term		Value
				(In years)		(In thousands)
RSUs outstanding at December 31, 2017		80,172
RSUs awarded		346,055
RSUs released		(55,592	)
RSUs forfeited		(47,934	)
RSUs outstanding at December 31, 2018		322,701			1.25		3,705
RSUs vested and expected to vest at December 31, 2018		322,701			1.25	$	3,705