1. Description of business and liquidity

Business

Monte Rosa Therapeutics, Inc. is a biotechnology company developing a portfolio of novel small molecule precision medicines that employ the body’s natural mechanisms to selectively degrade therapeutically-relevant proteins. As used in these condensed consolidated financial statements, unless the context otherwise requires, references to the Company or Monte Rosa refer to Monte Rosa Therapeutics, Inc. and its wholly owned subsidiaries Monte Rosa Therapeutics AG and Monte Rosa Therapeutics Securities Corp. Monte Rosa Therapeutics AG, a Swiss operating company, was incorporated under the laws of Switzerland in April 2018. Monte Rosa Therapeutics, Inc. was incorporated in Delaware in November 2019. The Company is headquartered in Boston, Massachusetts with research operations in both Boston and Basel, Switzerland.

Liquidity considerations

Since inception, the Company has devoted substantially all its efforts to business planning, research and development, recruiting management and technical staff, and raising capital and has financed its operations primarily through the issuance of convertible preferred shares and public offerings of the Company's common stock.

The Company’s continued discovery and development of its product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

As of ~~March 31,~~June 30, 2023, the Company had an accumulated deficit of $~~262.6~~297.8 million. The Company has incurred losses and negative cash flows from operations since inception, including net losses of $~~32.0~~67.2 million and $~~23.9~~50.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future as the Company continues to develop its product candidates. The Company currently expects that its cash, cash equivalents, and marketable securities of $~~231.7~~203.1 million as of ~~March 31,~~June 30, 2023 will be sufficient to fund operating expenses and capital requirements for at least 12 months from the date the ~~first~~second quarter interim condensed consolidated financial statements are issued. However, additional funding will be necessary to fund future discovery research, pre-clinical and clinical activities. The Company will seek additional funding through public financings, debt financings, collaboration agreements, strategic alliances and licensing arrangements. Although it has been successful in raising capital in the past, there is no assurance that the Company will be successful in obtaining such additional financing on terms acceptable to it, if at all, and the Company may not be able to enter into collaborations or other arrangements. If the Company is unable to obtain funding, it could be forced to delay, reduce or eliminate its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect the Company’s business prospects, even the ability to continue operations.

2. Summary of significant accounting policies

Basis of presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP, and are stated in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates, or ASUs, of the Financial Accounting Standards Board, or FASB. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Financial Information

The Company’s condensed consolidated financial statements included herein have been prepared in conformity with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. In the Company’s opinion, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

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The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Recently issued accounting pronouncements

The Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jumpstart Our Business Startups Act, or the JOBS Act.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (i) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for the Company for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact adoption of ASU 2020-06 will have on its financial statements and disclosures.

Recently adopted accounting pronouncements

On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13. The guidance is effective for fiscal years beginning after December 15, 2022. The adoption of the standard was immaterial to the accompanying condensed consolidated financial statements.

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3. Fair value measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):


	As of March 31, 2023								As of June 30, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Current assets
Money market funds	$	36,151	$	—	$	—	$	36,151	$	38,434	$	—	$	—	$	38,434
Pension plan assets		—		4,650		—		4,650		—		5,785		—		5,785
Corporate debt securities		—		148,714		—		148,714		—		129,702		—		129,702
U.S Treasury securities		—		31,173		—		31,173		—		26,337		—		26,337
Total assets measured at fair value	$	36,151	$	184,537	$	—	$	220,688	$	38,434	$	161,824	$	—	$	200,258

Money market funds are highly liquid investments and are actively traded. The pricing information on the Company’s money market funds are based on quoted prices in active markets for identical securities. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

The fair value of pension plan assets has been determined as the surrender value of the portfolio of active insured members held within the Swiss Life Collective BVG Foundation collective investment fund and are classified within Level 2 of the fair value hierarchy.

Marketable securities consist of corporate debt securities and U.S. Treasury securities which are classified as available-for-sale pursuant to ASC 320, Investments—Debt and Equity Securities. Marketable securities are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets. The fair values of these investments are estimated by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities based on historical data and other observable inputs.

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There were no transfers among Level 1, Level 2 or Level 3 categories in the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022.

4. Marketable Securities

Marketable securities as of ~~March 31,~~June 30, 2023 consisted of the following (in thousands):


	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Description
Corporate debt securities	$	148,738	$	59	$	(83	)		148,714	$	130,001	$	3	$	(302	)		129,702
U.S Treasury securities		31,252		4		(83	)		31,173		26,403		—		(66	)		26,337
Total	$	179,990	$	63	$	(166	)	$	179,887	$	156,404	$	3	$	(368	)	$	156,039

As of ~~March 31,~~June 30, 2023, the Company held 4338 marketable securities, 1727 of which were in an unrealized loss position. The aggregate fair value of securities in a loss position is $~~70.5~~114.9 million. There were no individual securities that were in a significant unrealized loss position as of ~~March 31,~~June 30, 2023. The Company evaluates securities for other-than-temporary impairments based on quantitative and qualitative factors, and considers the decline in market value as of ~~March 31,~~June 30, 2023, to be primarily attributable to the then current economic and market conditions. The Company neither intends to sell these investments nor concludes that it is more-likely-than-not that the Company will have to sell them before recovery of their carrying values. The Company also believes that it will be able to collect both principal and interest amounts due to it at maturity.

5. Property and Equipment, net

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


	March 31, 2023			December 31, 2022			June 30, 2023			December 31, 2022
Laboratory equipment	$	18,042		$	17,766		$	20,992		$	17,766
Computer hardware and software		499			499			1,002			499
Furniture and fixtures		388			388			1,099			388
Leasehold improvements		2,659			2,660			20,752			2,660
Construction in process		19,080			12,013			54			12,013
Total property and equipment, at cost	$	40,668		$	33,326		$	43,899		$	33,326
Less: accumulated depreciation		(7,402	)		(6,251	)		(8,564	)		(6,251	)
Property and equipment, net	$	33,266		$	27,075		$	35,335		$	27,075

~~Depreciation~~The following table summarizes depreciation expense ~~for the three months ended March 31, 2023 and 2022 was $~~incurred (in thousands):~~1.2~~


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Depreciation expense	$	1,391	$	889	$	2,542	$	1,642

6. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31,		December 31,		June 30,		December 31,
	2023		2022		2023		2022
Compensation and benefits	$	3,173	$	5,624	$	4,462	$	5,624
Accrued research and development		3,234		3,936		4,196		3,936
Other		3,836		5,020		2,456		5,020
Total other current liabilities	$	10,243	$	14,580	$	11,114	$	14,580

7. Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use, or ROU, assets and operating lease liabilities in the condensed consolidated balance sheets. The Company has no finance leases as of ~~March 31,~~June 30, 2023.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at

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commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, management estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company uses its

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incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

~~Summer Street Lease~~

~~In September 2020, the Company entered into an operating lease agreement to lease~~ ~~16,748~~ square feet of office and laboratory space at 645 Summer Street, Boston, Massachusetts or the Summer Street Lease with OPG MP Parcel Owner (DE) LLC or the Landlord. The original term of the Summer Street Lease expires in ~~March 2026~~. On May 5, 2022, the Company entered into an Agreement for Termination of Lease with the Landlord which, subject to the Landlord executing a lease with a new tenant, provides the Company with the option to terminate the existing Summer Street Lease. On August 8, 2022, the termination condition was met. As a result, the operating lease ROU asset and operating lease liability were reduced by $~~3.7~~ ~~million to $1.3~~ ~~million and $1.4~~ ~~million, respectively, and the $1.0~~ million security deposit associated with the lease was reclassified from long-term restricted cash to current restricted cash on the consolidated balance sheet. The Summer Street Lease will terminate on June 1, 2023.

Klybeck Lease

In March 2021, the Company entered into an operating lease agreement for office and lab space with Wincasa AG, or the landlord, that occupies approximately 21,422 square feet located at Hochbergerstrasse 60C, 4057 Basel, Basel-City, Switzerland. In April 2023, the Company and the Landlord amended the ~~lease. See Note 14~~Klybeck Lease which increased the office and lab space square footage from 21,422 square feet to 44,685 square feet and extended the term of the lease through June 30, 2027. The amendment was accounted for ~~more details.~~as a lease modification and resulted in an increases to the related ROU asset and operating lease liability of $1.8 million.

Harrison Avenue Lease

In December 2021, the Company entered into a non-cancelable lease agreement for 63,327 square feet of office and laboratory space to support its expanding operations, or the Harrison Avenue Lease. The term of the lease commenced on April 1, 2022 and the Company’s obligation to pay rent began on December 21, 2022, which resulted in noncash lease expense of $1.6 million for the six months ended June 30, 2022. The initial term of the lease is 128 months following the commencement date at which point the Company has the option to extend the lease an additional 5 years. As of the lease commencement date, the Company has determined that it is not reasonably certain to exercise the option to extend the lease and has not included the extension period in the lease term. The annual base rent under the Harrison Avenue Lease is $95.00 per square foot for the first year, which is subject to scheduled annual increases of 3%, plus certain costs, operating expenses and property management fees.

Pursuant to the terms of the Harrison Avenue Lease, the landlord will reimburse the Company for $13 million of tenant improvements. The Company will reduce the ROU asset and record an asset for construction in progress as costs are incurred and reimbursed. These costs ~~will be~~were reclassified from construction in progress to leasehold improvements upon completion of the project. As of ~~March 31,~~June 30, 2023, the Company had $~~2.0~~1.0 million receivable in reimbursable tenant improvements which is recorded as an other receivable on the condensed consolidated balance sheet.

The components of lease expense for the ~~three~~six months ended ~~March 31,~~June 30, 2023 are as follows (in thousands):


	Three months ended March 31,				Six months ended June 30,
	2023		2022		2023		2022
Operating lease expense	$	2,142	$	502	$	3,983	$	2,703
Variable lease expense		531		118		1,128		617
Total lease expense	$	2,673	$	620	$	5,111	$	3,320

The variable lease expenses generally include common area maintenance and property taxes. For ~~three~~six months ended ~~March 31,~~June 30, 2023, $~~2.2~~4.3 million lease expense was recorded within research and development and $~~0.4~~0.8 million lease expense was recorded within general and administrative in the condensed consolidated statements of operations and comprehensive loss. ~~There were~~ no ~~short-term~~Short-term lease costs infor the ~~three~~six months ended ~~March 31, 2023.~~June 30, 2023 were immaterial.

The weighted average remaining lease term and discount rate related to the Company's leases are as follows:


	March 31, 2023			December 31, 2022			June 30, 2023			December 31, 2022
Weighted average remaining lease term (years)		9.5			9.7			9.2			9.7
Weighted average discount rate		9.9	%		9.9	%		9.8	%		9.9	%

Supplemental cash flow information relating to the Company's leases for the ~~three~~six months ended ~~March 31,~~June 30, 2023 are as follows (in thousands):

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	Three months ended March 31,				Six months ended June 30,
	2023		2022		2023		2022
Right-of-use assets obtained in exchange for operating lease obligations	$	-	$	7,289	$	1,871	$	48,488
Cash paid for amounts included in the measurement of lease liabilities	$	955	$	347	$	1,790	$	712

The amortization of the ROU assets for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022 was $~~0.8~~1.5 million and $~~0.4~~1.4 million, respectively.

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Future minimum lease payments under non-cancelable leases as of ~~March 31,~~June 30, 2023 for each of the years ending December 31 are as follows (in thousands):


Undiscounted lease payments
Remaining 2023	$	5,515		$	3,432
2024		7,022			7,385
2025		7,222			7,676
2026		7,063			7,877
2027		7,151			7,621
Thereafter		38,414			38,386
Total undiscounted minimum lease payments		72,387			72,377
Less: Imputed interest		(26,222	)		(25,342	)
Total operating lease liability	$	46,165		$	47,035

8. Commitments and contingencies

License, collaboration and investment agreements

In April 2018, the Company entered into license, collaboration and investment agreements, or the License Agreement, with Cancer Research Technology Limited, or CRT, and The Institute of Cancer Research, or the ICR, for the purpose of development in the field of cereblon-mediated protein degradation, to support the Company’s early product development activities as the Company built its internal capabilities or the License and Collaboration. Pursuant to the License and Collaboration, CRT and the ICR granted the Company exclusive and non-exclusive, worldwide, and sublicensable licenses under CRT’s and the ICR’s intellection property rights in the field of cereblon mediated protein degradation to discover, research, develop, have developed, use, keep, make, have made, market, import, offer for sale, and sell products in the field of cereblon-mediated protein degradation.

In consideration for the rights granted under the License Agreement, the Company issued an aggregate of 1,132,984 common shares to CRT, the ICR and affiliated founding scientists pursuant to the Formation and Investment Agreement and paid CRT a technology access fee. The License Agreement will remain effective until terminated by written agreement between the Company, CRT and the ICR.

Upon execution of the License Agreement, the Company paid an immaterial access fee which was expensed to research and development in 2018. The research program conducted with the ICR with respect to cereblon-mediated protein degradation was completed as of December 31, 2020. However, the License and Collaboration Agreement continues until it is otherwise terminated under the terms and conditions stated within the agreement. There was no activity under this agreement for the three and six months ended ~~March 31,~~June 30, 2023.

Under the License Agreement, the Company may be obligated to make certain milestone payments for achieving specific clinical progression events for certain products, solely to the extent such products are subject to the License and Collaboration. If owed, such milestones would aggregate up to $7 million for any covered first product candidate and $3.5 million for any covered subsequent product candidate. In addition, the Company may be obligated to pay low single-digit royalties on net sales for any covered product successfully developed and commercialized in the field of cereblon-mediated protein degradation under the terms of the License and Collaboration on a country by country basis until the later of (i) the date when the manufacture, use, offer for sale, sale or importation of such product is no longer covered by a valid claim in the country of sale, use or manufacture; (ii) ten years from the first commercial sale of such product in the relevant country; and (iii) the expiry of any extended exclusivity period granted with respect to an orphan drug designation, pediatric designation or other exclusivity in the relevant country.

The License and Collaboration will remain effective until (i) the termination by either the Company or the ICR and CRT upon the bankruptcy or uncured breach of the other party, (ii) by the ICR and CRT if the Company should abandon all discovery, development and commercialization efforts for all products covered under the License and Collaboration; (iii) by the Company if it is determined the continued development of products covered under the License and Collaboration

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would be commercially unreasonable, scientifically unviable, illegal, unethical or impossible, with a 90-day notification period; or (iv) for any/no reason by written agreement of the Company and the ICR and CRT.

Indemnification

The Company, as permitted under Delaware law and in accordance with its certification of incorporation and bylaws and pursuant to indemnification agreements with certain of its officers and directors, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, which the officer or director is or was serving at the Company’s request in such capacity.

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The Company enters into certain types of contracts that contingently require the Company to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company’s bylaws, under which the Company must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers and consultants for liabilities arising out of their relationship, and (iii) procurement, service or license agreements under which the Company may be required to indemnify vendors, service providers or licensees for certain claims, including claims that may be brought against them arising from the Company’s acts or omissions with respect to the Company’s products, technology, intellectual property or services.

From time to time, the Company may receive indemnification claims under these contracts in the normal course of business. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. As of ~~March 31,~~June 30, 2023, the Company was not aware of any claims under indemnification arrangements and does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible. Therefore, no related reserves have been established.

9.9. Equity

Undesignated Preferred Stock

The Company had 10,000,000 shares authorized of undesignated preferred stock, par value of $0.0001, of which no shares were issued and outstanding as of ~~March 31,~~June 30, 2023.

Common Stock

The Company had 500,000,000 shares of common stock authorized, of which ~~49,450,063~~49,643,653 shares were issued and ~~49,360,984~~49,592,479 shares were outstanding as of ~~March 31,~~June 30, 2023.

The holders of common stock are entitled to dividends when and if declared by the board of directors, subject to the preferences applicable to any outstanding shares of preferred stock. The board of directors has not declared any dividends and the Company has not paid any dividends.

The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.

The Company has issued restricted stock to founders, employees and consultants, and expense for this restricted stock is recognized on a straight-line basis (see Note 10). The restricted stock generally vests monthly over 4 years.

As of ~~March 31,~~June 30, 2023, and December 31, 2022, the Company has reserved the following shares of common stock for the vesting of restricted stock and exercise of stock options:


	March 31, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Options to purchase common stock		10,096,033		7,436,339		9,908,375		7,436,339
Unvested restricted common stock awards		89,079		122,271		51,174		122,271
Unvested restricted common stock units		91,000		91,000		293,865		91,000
		10,276,112		7,649,610		10,253,414		7,649,610

At-the-Market Offering

In July 2022, the Company entered into a sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which the Company may offer and sell shares of its common stock having aggregate gross proceeds of up to $100 million from time to time in “at-the-market” offerings through Jefferies, as the Company’s sales agent. The Company agreed to pay Jefferies a commission of up to 3.0% of the gross proceeds of any shares sold by Jefferies under the Sales

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Agreement. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company did ~~not~~ not sell shares of its common stock under the Sales Agreement.

10. Stock-based compensation

2020 Stock incentive plan

The Company’s 2020 Stock Option and Grant Plan, or the 2020 Plan, provided for the Company to grant stock options, restricted stock and other stock awards, to employees, non-employee directors, and consultants. Upon the effectiveness of the 2021 Plan (as defined below), no further issuances were made under the 2020 Plan.

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2021 Stock incentive plan

The Company’s 2021 Stock Option and Incentive Plan, or the 2021 Plan, was approved by the Company’s board of directors on May 28, 2021 and the Company’s stockholders on June 17, 2021 and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. The 2021 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2021 Plan was 4,903,145. Under the evergreen provision of the 2021 Plan, the shares available for issuance under the 2021 Plan will be automatically increased each January 1st by 5% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31st or such lesser number of shares as may be determined by the Company’s compensation, nomination and corporate governance committee. Effective January 1, 2023 the number of shares available under the 2021 Plan automatically increased by 2,466,176 shares pursuant to the evergreen provision of the 2021 Plan. As of ~~March 31,~~June 30, 2023, ~~4,754,906~~4,598,069 shares were available for issuance under the 2021 Plan.

2021 Employee stock purchase plan

The Company’s 2021 Employee Stock Purchase Plan, or the 2021 ESPP, was approved by the Company’s board of directors on May 28, 2021 and the Company’s stockholders on June 17, 2021 and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. A total of 439,849 shares of the Company’s common stock were initially reserved for issuance under the 2021 ESPP. The shares available for issuance under the 2021 ESPP will be automatically increased on each January 1st, through January 1, 2031, by the least of (i) 439,849 shares of the Company’s common stock, (ii) 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31st or (iii) such lesser number of shares of the Company’s common stock as determined by the plan administrator of the 2021 ESPP. Effective January 1, 2023 the number of shares available under the 2021 ESPP automatically increased by 439,849 shares pursuant to the evergreen provision of the 2021 ESPP. As of ~~March 31,~~June 30, 2023, ~~1,267,600~~1,215,623 shares were available for issuance under the 2021 ESPP.

Stock option activity

The following summarizes stock option activity:


	Number of options			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value (in thousands)		Number of options			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value (in thousands)
Outstanding—December 31, 2022		7,436,339		$	9.14		8.5	$	12,440		7,436,339		$	9.14		8.5	$	12,440
Granted		2,672,350			7.66		—		—		2,942,600			7.63		—		—
Exercised		(4,261	)		4.30		—		—		(151,594	)		6.04		—		—
Forfeited		(8,395	)		12.57		—		—		(318,970	)		8.47		—		—
Outstanding—March 31, 2023		10,096,033		$	8.74		8.4	$	13,541
Vested or expected to vest—March 31, 2023		10,096,033		$	8.74		8.4	$	13,541
Exercisable—March 31, 2023		3,116,562		$	8.19		7.7	$	7,375
Outstanding—June 30, 2023											9,908,375		$	8.76		8.4	$	9,288
Vested or expected to vest—June 30, 2023											9,908,375		$	8.76		8.4	$	9,288
Exercisable—June 30, 2023											3,495,562		$	8.41		7.8	$	5,861

The aggregate intrinsic value of options granted is calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.

Restricted stock award activity

Unvested restricted stock awards were granted to employees under the 2020 Plan. Restricted stock awards generally vest over a four year period provided the individual remains in continuous service of the Company.

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The following summarizes restricted stock award activity:


	Number of shares			Weighted average grant date fair value		Number of shares			Weighted average grant date fair value
Unvested restricted stock as of December 31, 2022		122,271		$	1.04		122,271		$	1.04
Vested		(33,192	)	$	0.77		(65,377	)	$	0.76
Unvested restricted stock as of March 31, 2023		89,079		$	1.13
Forfeited							(5,720	)	$	2.00
Unvested restricted stock as of June 30, 2023							51,174		$	1.28

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The aggregate fair value of restricted stock awards that vested during the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022 was $~~0.2~~0.5 million and $~~0.5~~0.9 million, respectively. The weighted average grant date fair value of restricted stock that vested during the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022 was $~~0.77~~0.76 and $0.78, respectively.

Restricted stock unit activity

Starting in 2022, the Company granted restricted stock units, or RSUs, to employees under the 2021 Plan. Each of the RSUs represents the right to receive one share of the Company’s common stock upon vesting. The RSUs will ~~be granted~~vest over two years provided the individual remains in continuous service of the Company. Accordingly, stock-based compensation expense for each RSU is recognized on a straight-line basis over the vesting term. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant.

The following summarizes restricted stock unit activity:


	Number of shares		Weighted average grant date fair value		Number of shares			Weighted average grant date fair value
Unvested restricted stock units as of December 31, 2022		91,000	$	10.11		91,000		$	10.11
Granted		—	$	—		206,665		$	7.55
Unvested as of March 31, 2023		91,000	$	10.11
Forfeited						(3,800	)	$	10.11
Unvested as of June 30, 2023						293,865		$	8.31

No restricted stock units ~~were~~vested ~~granted~~ during the ~~three~~six months ended ~~March 31,~~June 30, 2023.

Stock-based compensation expense

Stock-based compensation expense is classified as follows (in thousands):


	Three months ended March 31,				Six months ended June 30,
	2023		2022		2023		2022
Research and development	$	2,145	$	1,157	$	4,411	$	2,593
General and administrative		1,829		1,094		3,716		2,531
Total stock-based compensation expense	$	3,974	$	2,251	$	8,127	$	5,124

As of ~~March 31,~~June 30, 2023 total unrecognized stock–based compensation cost related to unvested stock options, restricted stock awards and restricted stock units was $~~43.7~~37.9 million, $0.1 million, and $~~0.6~~1.9 million, respectively. The Company expects to recognize this remaining cost over a weighted average period of ~~2.8~~2.7 years, ~~0.8~~0.7 years, and ~~1.3~~1.7 years, respectively.

11. Income taxes

During the six months ended June 30, 2023, the Company recorded an income tax provision of $0.2 million. The income tax provision is primarily related to interest income on marketable securities in Massachusetts and the US taxable income generated from the capitalization of research and development expenses. The Company did not record a provision or benefit for income taxes during the ~~three~~six months ended ~~March 31, 2023 and~~June 30, 2022.

The Company continues to maintain a full valuation allowance against all of its deferred tax assets.

The Company has evaluated the positive and negative evidence involving its ability to realize our deferred tax assets. The Company has considered its history of cumulative net losses incurred since inception and its lack of any commercial products. The Company has concluded that it is more likely than not that it will not realize the benefits of its deferred tax assets. The Company reevaluates the positive and negative evidence at each reporting period.

12

12. Net loss per common share

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


	Three months ended March 31,						Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022			2023			2022
Net loss	$	(32,038	)	$	(23,932	)	$	(35,178	)	$	(26,469	)	$	(67,216	)	$	(50,401	)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.65	)	$	(0.51	)	$	(0.71	)	$	(0.57	)	$	(1.36	)	$	(1.08	)
Weighted-average number of common shares used in computing net loss per share—basic and diluted		49,347,473			46,595,782			49,431,922			46,668,369			49,389,931			46,632,279

The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per common share, as their effect is anti-dilutive:


	March 31,		March 31,		June 30,		June 30,
	2023		2022		2023		2022
Stock options to purchase common stock		10,096,033		7,104,931		9,908,375		7,192,968
Restricted common stock		89,079		223,824		51,174		189,316
Restricted stock units		91,000		—		293,865		—

13. Employee retirement plans

The Company, in compliance with Swiss Law, is contracted with the Swiss Life Collective BVG Foundation for the provision of pension benefits in a defined benefit plan. All benefits are reinsured in their entirety with Swiss Life Ltd within the framework of the contract. The technical administration and management of the savings account are guaranteed by Swiss Life on behalf of the collective foundation. Insurance benefits due are paid directly to the entitled persons by Swiss Life in the name of and for the account of the collective foundation. The pension plan is financed by contributions of both employees and employer. The contract between the Company and the collective foundation can be terminated by either side. In the event of a termination, the Company would have an obligation to find alternative pension arrangements for its employees. Because there is no guarantee that the employee pension arrangements would be continued under the same conditions, there is a risk, albeit remote, that a pension obligation may fall on the Company. The pension assets are pooled for all affiliated companies; the investment of assets is done by the governing bodies of the collective foundation or by mandated parties. The risks of disability, death and longevity are reinsured in their entirety with Swiss Life Ltd.

The ~~Company recorded $0.2~~ ~~million and $0.2~~ ~~million in defined benefit related~~following table summarizes pension expense ~~during the three months ended March 31, 2023 and 2022, respectively.~~incurred (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Pension expense	$	235	$	205	$	451	$	402

In February 2021, the Company adopted a defined contribution plan intended to qualify under Section 401(k) of the Internal Revenue Code covering all eligible U.S. based employees of the Company. All employees are eligible to become participants of the plan immediately upon hire. Each active employee may elect, voluntarily, to contribute a percentage of their compensation to the plan each year, subject to certain limitations. The Company reserves the right, but is not obligated, to make additional contributions to this plan. The Company makes safe-harbor match contributions of 100% of the first 4% of each participant’s eligible compensation. ~~The Company recorded $0.3~~ ~~million and $0.2~~ ~~million matching 401(k) contribution related expense during the three months ended March 31, 2023 and 2022, respectively.~~

~~14. Subsequent events~~

On April 12, 2023, the Company and Wincasa AG, or the Landlord, amended the Klybeck Lease located at Hochbergerstrasse 60C, 4057 Basel, Basel-City, Switzerland. The amendment increased the office and lab space square footage from ~~21,422~~ ~~square feet to~~ ~~44,685~~ ~~square feet and extended the term of the lease through~~ ~~June 30, 2027. The amendment is accounted for as a lease modification and resulted in an increases to the related ROU asset and operating lease liability of $1.8~~ ~~million.~~

The following table summarize 401(k) expense incurred (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
401(k) expense	$	114	$	139	$	389	$	335

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Item 2. Management’s discussion and analysis of financial condition and results of operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in “Part I, Item 1A, Risk Factors” in our 2022 Annual Report and under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special note regarding forward-looking statements.”

Overview

We are a biotechnology company developing a portfolio of novel and proprietary MGDs. MGDs are small molecule drugs that employ the body’s natural protein destruction mechanisms to selectively degrade therapeutically-relevant proteins. MGDs work by inducing the engagement of defined surfaces identified on target proteins by an E3 ligase, such as cereblon. We have developed a proprietary and industry-leading protein degradation platform, called QuEENTM to enable our unique, target-centric, MGD discovery and development and our rational design of MGD products. We believe our small molecule MGDs may give us significant advantages over existing therapeutic modalities, including other protein degradation approaches. We prioritize our product development on therapeutic targets backed by strong biological and genetic rationale with the goal of discovering and developing novel medicines.

Monte Rosa Therapeutics AG, a Swiss operating company, was incorporated under the laws of Switzerland in April 2018. Monte Rosa Therapeutics, Inc was incorporated in Delaware in November 2019. In 2020, Monte Rosa Therapeutics, Inc. and Monte Rosa Therapeutics AG, entities under common control since the incorporation of Monte Rosa Therapeutics, Inc., consummated a contribution and exchange agreement, or the Contribution and Exchange, whereby Monte Rosa Therapeutics, Inc. acquired the net assets and shareholdings of Monte Rosa Therapeutics AG via a one-for-one exchange of equity between Monte Rosa Therapeutics, Inc. and the shareholders of Monte Rosa Therapeutics AG in a common control reorganization. We are headquartered in Boston, Massachusetts with research operations in both Boston and Basel, Switzerland. To date, we have been financed primarily through the issuance of convertible promissory notes, convertible preferred stock and common ~~stock..~~stock.

Liquidity

To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes and our convertible preferred stock to outside investors in private equity financings, as well as our initial public offering and at-the-market offerings. From our inception through the date hereof, we raised an aggregate of $499.8 million of gross proceeds from such transactions. Since inception, we have had significant operating losses. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and, to a lesser extent, general and administrative expenditures. Our net loss was $108.5 million and $74.0 million for the years ended December 31, 2022 and 2021, respectively, and our net loss was ~~$32.0~~$67.2 million and ~~$23.9~~$50.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively. As of ~~March 31,~~June 30, 2023, we had an accumulated deficit of ~~$262.6~~$297.8 million and ~~$237.0~~$207.6 million in cash, cash equivalents, restricted cash and marketable securities.

~~Business effects of COVID-19~~

The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and has affected, and may continue to affect our employees, patients, communities and business operations, as well as the U.S. economy and financial markets. To date, our financial conditions and operations have not been significantly impacted by the COVID-19 pandemic; however, the full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be accurately predicted, including new information that may develop concerning COVID-19, the emergence of new variants and subvariants and the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

For additional information on the various risks posed by the COVID-19 pandemic, please read the section entitled “Risk factors” in this Quarterly Report and Part I, Item 1A; Risk Factors" included in our 2022 Annual Report.

14

Components of operating results

Research and development expenses

Our research and development expenses include:

•

expenses incurred under agreements with consultants, third-party service providers that conduct research and development activities on our behalf;

•

personnel costs, which include salaries, benefits, pension and stock-based compensation;

•

laboratory and vendor expenses related to the execution of preclinical and clinical studies;

•

laboratory supplies and materials used for internal research and development activities; and

14

•

facilities and equipment costs.

Most of our research and development expenses have been related to the development of our QuEENTM platform and advancement of our GSPT1 program, advancement of our disclosed and undisclosed programs including for CDK2, NEK7, VAV1, and multiple sickle cell disease, or SCD, targets. We have not reported program costs since our inception because we have not historically tracked or recorded our research and development expenses on a program-by-program basis. We use our personnel and infrastructure resources across the breadth of our research and development activities, which are directed toward identifying and developing product candidates.

We expense all research and development costs in the periods in which they are incurred. Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in manufacturing, as we advance our programs and conduct clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects, the costs of related clinical development costs or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

General and administrative expenses

Our general and administrative expenses consist primarily of personnel costs and other expenses for outside professional services, including legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and administrative consulting services, insurance costs and other operating costs. We expect our general and administrative expenses to increase over the next several years to support our continued research and development activities, manufacturing activities, and the potential commercialization of our product candidates and development of commercial infrastructure. We also anticipate our general and administrative costs will increase and with respect to the hiring of additional personnel, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC reporting requirements, insurance and investor relations costs.

Non-operating income and (expense)

Our non-operating income and (expense) includes (i) interest earned on our investments, including principally U.S. government-backed money-market funds and marketable securities; (ii) gains and losses on transactions of our Swiss subsidiary denominated in currencies other than the U.S. Dollar; ~~and~~ (iii) proceeds from the sale of ~~lab equipment.~~

15

fixed assets; and (iv) realized losses on the sale of marketable securities.

Results of operations for the three months ended ~~March 31,~~June 30, 2023 and 2022

The following sets forth our results of operations:


	Three months ended March 31,									Three months ended June 30,
(in thousands)	2023			2022			Dollar change			2023			2022			Dollar change
Operating expenses:
Research and development	$	26,755		$	17,915		$	8,840		$	29,076		$	20,936		$	8,140
General and administrative		7,504			6,387			1,117			8,145			6,295			1,850
Total operating expenses		34,259			24,302			9,957			37,221			27,231			9,990
Loss from operations		(34,259	)		(24,302	)		(9,957	)		(37,221	)		(27,231	)		(9,990	)
Other expense		2,221			370			1,851			2,233			762			1,471
Net loss before income taxes											(34,988	)		(26,469	)		(8,519	)
Provision for income taxes											(190	)		—			(190	)
Net loss	$	(32,038	)	$	(23,932	)	$	(8,106	)	$	(35,178	)	$	(26,469	)	$	(8,709	)

15

Research and development expenses

Research and development expenses were comprised of:


	Three months ended March 31,						Three months ended June 30,
(in thousands)	2023		2022		Dollar change		2023		2022		Dollar change
External research and development services	$	10,754	$	8,111	$	2,643	$	12,717	$	8,110	$	4,607
Personnel costs		9,511		6,088		3,423		9,407		6,408		2,999
Laboratory and related expenses		2,106		1,718		388		2,422		2,011		411
Facility costs and other expenses		4,384		1,998		2,386		4,530		4,407		123
Research and development expenses	$	26,755	$	17,915	$	8,840	$	29,076	$	20,936	$	8,140

As of ~~March 31,~~June 30, 2023, we had ~~109~~107 employees engaged in research and development activities in our facilities in the U.S. and Switzerland. As of ~~March 31,~~June 30, 2022, we had 7785 research and development employees in our facilities in the U.S. and Switzerland.

Most of our research and development expenses have been related to the development of our QuEENTM platform, advancement of our GSPT1 program including the advancement of MRT-2359 in the clinic, advancement of our VAV1 program including IND-enabling work for ~~MRT-2359,~~MRT-6160, and the advancement of our disclosed and undisclosed programs including for CDK2, NEK7, ~~VAV1,~~ multiple SCD targets, and other discovery efforts. The increase for the three months ended ~~March 31,~~June 30, 2023 as compared to 2022 was primarily due to the expansion of research and development activities in the U.S. and Switzerland including increased headcount and facilities, as well as corresponding increases in laboratory related expenses. Research and development expenses for the three months ended ~~March 31,~~June 30, 2023 and 2022 included non-cash stock-based compensation expense of ~~$2.1~~$2.3 million and ~~$1.2~~$1.4 million, respectively.

General and administrative expenses

General and administrative expenses to support our business activities were comprised of:


	Three months ended March 31,							Three months ended June 30,
(in thousands)	2023		2022		Dollar change			2023		2022		Dollar change
Personnel costs	$	4,615	$	3,520	$	1,095		$	4,715	$	3,529	$	1,186
Professional services		1,041		1,340		(299	)		1,132		1,030		102
Facility costs and other expenses		1,848		1,527		321			2,298		1,736		562
General and administrative expenses	$	7,504	$	6,387	$	1,117		$	8,145	$	6,295	$	1,850

As of ~~March 31,~~June 30, 2023 and 2022 we had 2426 and 1819 employees engaged in general and administrative activities, respectively, principally in our U.S. facility. Personnel and professional service costs increased in the three months ended ~~March 31,~~June 30, 2023 as compared to 2022 due to an increase in stock compensation driven by additional grants. The increase in other expenses in the three months ended ~~March 31,~~June 30, 2023 as compared to 2022 to support our growth and operations as a public company. General and administrative expenses for the three months ended ~~March 31,~~June 30, 2023 and 2022 included non-cash stock-based compensation expense of ~~$1.8~~$1.9 million and ~~$1.1~~$1.4 million, respectively.

Other income (expense)

Other income (expense), net was comprised of:


	Three months ended June 30,
(in thousands)	2023			2022
Interest income, net	$	2,302		$	628
Foreign currency exchange gain (loss), net		(93	)		134
Gain on disposal of fixed assets		24			—
Other income	$	2,233		$	762

The increase in interest and other income for the three months ended June 30, 2023, is principally attributable to higher interest rates on marketable securities.

16

Results of operations for the six months ended June 30, 2023 and 2022

The following sets forth our results of operations:


	Six months ended June 30,
(in thousands)	2023			2022			Dollar change
Operating expenses:
Research and development	$	55,831		$	38,851		$	16,980
General and administrative		15,649			12,682			2,967
Total operating expenses		71,480			51,533			19,947
Loss from operations		(71,480	)		(51,533	)		(19,947	)
Other expense		4,454			1,132			3,322
Net loss before income taxes	$	(67,026	)	$	(50,401	)	$	(16,625	)
Provision for income taxes		(190	)		—			(190	)
Net loss	$	(67,216	)	$	(50,401	)	$	(16,815	)

Research and development expenses

Research and development expenses were comprised of:


	Six months ended June 30,
(in thousands)	2023		2022		Dollar change
External research and development services	$	23,471	$	16,221	$	7,250
Personnel costs		18,918		12,496		6,422
Laboratory and related expenses		4,528		3,729		799
Facility costs and other expenses		8,914		6,405		2,509
Research and development expenses	$	55,831	$	38,851	$	16,980

As of June 30, 2023, we had 107 employees engaged in research and development activities in our facilities in the U.S. and Switzerland. As of June 30, 2022, we had 85 research and development employees in our facilities in the U.S. and Switzerland.

Most of our research and development expenses have been related to the development of our QuEENTM platform, advancement of our GSPT1 program including the advancement of MRT-2359 in the clinic, advancement of our VAV1 program including IND-enabling work for MRT-6160, and the advancement of our disclosed and undisclosed programs including for CDK2, NEK7, multiple SCD targets, and other discovery efforts. The increase for the six months ended June 30, 2023 as compared to 2022 was primarily due to the expansion of research and development activities in the U.S. and Switzerland including increased headcount and facilities, as well as corresponding increases in laboratory related expenses. Research and development expenses for the six months ended June 30, 2023 and 2022 included non-cash stock-based compensation expense of $4.4 million and $2.6 million, respectively.

General and administrative expenses

General and administrative expenses to support our business activities were comprised of:


	Six months ended June 30,
(in thousands)	2023		2022		Dollar change
Personnel costs	$	9,330	$	7,049	$	2,281
Professional services		2,173		2,370		(197	)
Facility costs and other expenses		4,146		3,263		883
General and administrative expenses	$	15,649	$	12,682	$	2,967

As of June 30, 2023 and 2022 we had 26 and 19 employees engaged in general and administrative activities, respectively, principally in our U.S. facility. The increase in other expenses in the six months ended June 30, 2023, compared to 2022 were primarily to support our growth and operations as a public company. General and administrative expenses for the six months ended June 30, 2023 and 2022 included non-cash stock-based compensation expense of $3.7 million and $2.5 million, respectively.

17

Other income (expense)

Other income (expense), net was comprised of:


	Three months ended March 31,					Six months ended June 30,
(in thousands)	2023			2022		2023			2022
Interest income, net	$	2,437		$	149	$	4,739		$	777
Foreign currency exchange gain (loss), net		(85	)		96		(178	)		230
Gain on disposal of fixed assets		—			125		24			125
Loss on sale of marketable securities		(131	)		—		(131	)		—
Other income	$	2,221		$	370	$	4,454		$	1,132

The increase in interest and other income for the ~~three~~six months ended ~~March 31,~~June 30, 2023 is principally attributable to higher interest rates on marketable securities.

Liquidity and capital resources

Overview

We were incorporated in November 2019 in Delaware and our operations to date have been financed primarily through the issuance of convertible promissory notes, convertible preferred stock and public offerings of our common stock. As of ~~March 31,~~June 30, 2023, we had ~~$237.0~~$207.6 million in cash, cash equivalents, restricted cash and marketable securities. We have incurred losses since our inception and, as of ~~March 31,~~June 30, 2023, we had an accumulated deficit of ~~$262.6~~$297.8 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

Cash flows

The following table summarizes our cash flows for the periods indicated:


	Three months ended March 31,						Six months ended June 30,
(in thousands)	2023			2022			2023			2022
Net cash (used in) provided by:
Operating activities	$	(23,406	)	$	(27,404	)	$	(48,730	)	$	(47,905	)
Investing activities		20,326			(180,520	)		38,876			(194,769	)
Financing activities		18			153			1,218			249
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(3,062	)	$	(207,771	)
Net decrease in cash, cash equivalents and restricted cash							$	(8,636	)	$	(242,425	)

Operating activities

Net cash used in operating activities of ~~$23.4~~$48.7 million during the ~~three~~six months ended ~~March 31,~~June 30, 2023, was attributable to our net loss of ~~$32.0~~$67.2 million off-set by an increase in our working capital of ~~$4.6~~$10.4 million and non-cash charges of ~~$4.0~~$8.1 million principally with respect to depreciation expense and stock-based compensation.

Net cash used in operating activities of ~~$27.4~~$47.9 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022, was attributable to our net loss of ~~$23.9~~$50.4 million and a net decrease in our working capital of ~~$6.7~~$5.5 million, offset by non-cash charges of ~~$3.2~~$8.0 million principally with respect to noncash lease expense, depreciation expense and stock-based compensation.

Investing activities

Cash provided by investing activities of ~~$20.3~~$38.9 million during the ~~three~~six months ended ~~March 31,~~June 30, 2023 was primarily attributable to proceeds from the maturity of marketable securities of ~~$51.7~~$76.7 million and proceeds from the sale of marketable securities of $45.6 million, offset by purchases of marketable securities of $67.8 million and purchases of property and equipment of ~~$9.2~~$15.7 million.

~~For~~Cash used in investing activities of $194.8 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~our investing activities consisted of~~was primarily attributable to purchases of marketable securities of ~~$179~~$230.7 million and purchases of property and equipment of $2$4.2 million, offset by proceeds from the maturity of marketable securities of $40 million.

Financing activities

Net cash provided by financing activities for ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~was immaterial. For~~and 2022, consisted of proceeds from the ~~three months ended March 31, 2022, our financing activities amounted to $0.2 million attributable to~~exercise of employee stock ~~option exercises.~~options.

1718

Funding requirements

Any product candidates we may develop may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development expenses, general and administrative expenses and capital expenditures will continue to increase. As a result, until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research, manufacturing and development services, costs relating to the build-out of our headquarters, laboratories and manufacturing facility, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next twelve months. We base this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

We will continue to require additional financing to advance our current product candidates through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future. We will continue to seek funds through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise capital, we will need to delay, reduce or terminate planned activities to reduce costs.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

•

the scope, progress, results and costs of researching, developing and manufacturing our current product candidates or any future product candidates, and conducting preclinical studies and clinical trials;

•

the timing of, and the costs involved in, obtaining regulatory approvals or clearances for our lead product candidates or any future product candidates;

•

the number and characteristics of any additional product candidates we develop or acquire;

•

the cost of manufacturing our lead product candidate or any future product candidates and any products we successfully commercialize, including costs associated with building-out our manufacturing capabilities;

•

our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into;

•

the expenses needed to attract and retain skilled personnel;

•

the costs associated with being a public company;

•

the timing, receipt and amount of sales of any future approved or cleared products, if any; and

•

the impact of global economic and political developments, ~~the COVID-19 pandemic~~future public health events and the corresponding responses of businesses and governments.

Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

1819

Critical accounting policies and significant judgments and estimates

Our unaudited interim condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. The preparation of our unaudited interim condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our condensed financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are 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. We evaluate our estimates and assumptions on an ongoing basis. However, even though we believe we have used reasonable estimates and assumptions in preparing our interim condensed consolidated financial statements, the future effects of global economic and political developments ~~or the COVID-19 pandemic~~and any future public health events on our results of operations, cash flows, and financial position are unclear. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes to our critical accounting policies from those described in “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2022 Annual Report.

For a complete discussion of our significant accounting policies and recent accounting pronouncements, see Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report and Note 2 to our 2022 Annual Report.

Recently issued and adopted accounting pronouncements

Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to our and consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Contractual obligations and commitments

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, there have been no material changes to our contractual obligations and commitments from those described under “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023.

Off-balance sheet arrangements

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

Emerging growth company status

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we may adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-public companies instead of the dates required for other public companies. However, we may early adopt these standards.

We will cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) the last day of our fiscal year following the fifth anniversary of the date of the closing of our initial public offering, or our IPO, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which we are deemed to be a large, accelerated filer under the rules of the SEC.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of our IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after our IPO if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual

1920

revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our annual reports on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

2021

Item 3. Quantitative and qualitative disclosures about market risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item 3.

Item 4. Controls and procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of ~~March 31,~~June 30, 2023. The term “disclosure controls and procedures,” as defined in the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~March 31,~~June 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout the company. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during ~~three~~six months ended ~~March 31,~~June 30, 2023 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

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

2122

Part II ─ Other Information

Item 1. Legal proceedings

From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of ~~March 31,~~June 30, 2023, we do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties, those risks and uncertainties discussed in “Part I, Item 1A, Risk Factors” in our 2022 Annual Report, as amended and supplemented by the information in our subsequent Quarterly Reports on Form 10-Q, together with all of the other information contained in this Quarterly Report, including our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. The risk factor disclosure in our 2022 Annual Report and subsequent Quarterly Reports on Form 10-Q is qualified by the information that is described in this Quarterly Report. If any of the risks described below or in our 2022 Annual Report actually occur, our business, prospects, operating results and financial condition could suffer materially. In such event, the trading price of our common stock could decline and you might lose all or part of your investment.

Other than as set forth below, there have been no material changes to the risk factors set forth in our 2022 Annual Report.

Risks related to our financial position and capital needs

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

Since our inception, we have focused substantially all of our efforts and financial resources on developing our proprietary QuEENTM platform, our proprietary MGD library and our initial pipeline of product candidates. To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes and our convertible preferred stock to outside investors in private equity financings, our initial public offering, and sales of our common stock. From our inception through the date hereof, we raised an aggregate of $499.8 million of gross proceeds from such transactions. As of ~~March 31,~~June 30, 2023, our cash, cash equivalents, restricted cash and marketable securities were ~~$237.0~~$207.6 million. We have incurred net losses in each year since our inception, and we had an accumulated deficit of ~~$262.6~~$297.8 million as of ~~March 31,~~June 30, 2023. For the years ended December 31, 2022 and 2021, we reported net losses of $108.5 million and $74.0 million, respectively. For the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, we reported a net loss of ~~$32.0~~$67.2 million and ~~$23.9~~$50.4 million, respectively. Substantially all of our operating losses have resulted from costs incurred in connection with our research and initial pipeline programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over the next several years and for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital. We expect our expenses to significantly increase in connection with our ongoing activities, as we:

•

conduct our clinical trial for MRT-2359;

•

continue preclinical activities for our NEK7, CDK2, VAV1 and SCD and other currently undisclosed programs;

•

prepare and submit IND applications with the FDA for other current and future product candidates;

•

complete preclinical studies for current or future product candidates;

•

progress MGD molecules from our initial programs through lead optimization to development candidates;

•

initiate and complete clinical trials for current or future product candidates;

•

expand and improve the capabilities of our QuEENTM platform;

•

continue to build our proprietary library of MGDs;

•

contract to manufacture our product candidates;

2223

•

advance research and development related activities to expand our product pipeline;

•

seek regulatory approval for our product candidates that successfully complete clinical development;

•

develop and scale up our capabilities to support our ongoing preclinical activities and future clinical trials for our product candidates and commercialization of any of our product candidates for which we may obtain marketing approval;

•

maintain, expand, and protect our intellectual property portfolio;

•

hire additional staff, including clinical, scientific and management personnel; and

•

secure facilities to support continued growth in our research, development and commercialization efforts.

In addition, if we obtain marketing approval for our current or future product candidates, we will incur significant expenses relating to our commercialization of such product candidates via our sales, marketing, product manufacturing and distribution efforts. Because of the numerous risks and uncertainties associated with developing pharmaceutical drugs, including in light of economic slowdowns, ~~or the ongoing evolution of the COVID-19 pandemic,~~ we are unable to predict the extent of any future losses or when we will become profitable, if at all.

Even if we achieve profitability, we may not be able to sustain or increase our profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, obtain product approvals, diversify our offerings or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

2324

Item 2. Unregistered sales of equity securities and use of proceeds

Recent sales of unregistered equity securities

None.

Use of proceeds from initial public offering

On June 28, 2021, we completed our IPO pursuant to which we issued and sold 11,700,000 shares of our common stock at a public offering price of $19.00 per share. On July 23, 2021, the underwriters exercised their option to purchase additional shares in full and we issued 1,755,000 shares of our common stock at the price of $19.00 per share.

The offer and sale of all of the shares of our common stock in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No. 333- 256773), which was declared effective by the SEC on June 23, 2021. J.P. Morgan Securities LLC, Cowen and Company, LLC, Piper Sandler & Co. and Guggenheim Securities, LLC acted as underwriters for the IPO.

We received aggregate gross proceeds from our IPO of $255.6 million, or aggregate net proceeds of $234.6 million after deducting underwriting discounts and commissions and other offering costs. None of the underwriting discounts and commissions or offering expenses were incurred or paid, directly or indirectly, to any of our directors or officers or their associates or to persons owning 10% or more of our common stock or to any of our affiliates.

There has been no material change in our planned use of the net proceeds from the IPO as described in our final prospectus dated June 25, 2021.

Item 3. Defaults upon senior securities

None.

Item 4. Mine safety disclosures

Not Applicable.

24Item 5. Other Information

On August 8, 2023, Ajim Tamboli, the Chief Financial Officer of the Company, resigned from the Company effective August 8, 2023 (the “Effective Date”). Mr. Tamboli’s resignation was not the result of any disagreement with the Company or its Board of Directors or any matter relating to the Company’s operations, policies, or practices.

As of the Effective Date, (i) Markus Warmuth, the Company’s Chief Executive Officer, assumed the duties of the principal financial officer of the Company and (ii) Edmund Dunn, the Company’s Vice President, Corporate Controller, assumed the duties of the principal accounting officer of the Company.

The information required by Items 401(b) and (e) of Regulation S-K with respect to Dr. Warmuth is included in the Company’s definitive proxy statement filed with the U.S. Securities and Exchange Commission on April 26, 2023, and is hereby incorporated by reference herein. There are no related party transactions between Dr. Warmuth, on the one hand, and the Company, on the other, reportable under Item 404(a) of Regulation S-K. In addition, there is no family relationship between any director or executive officer of the Company and Dr. Warmuth.

Mr. Dunn (age 57) joined the Company in 2021. Prior to joining the Company, he worked as an independent financial consultant to Ironwood Pharmaceuticals, Inc., a publicly traded pharmaceuticals company, from 2018 to 2021, where he assisted with technical and operational accounting and financial planning and analysis. Mr. Dunn started his career with Deloitte & Touche, LLP. Mr. Dunn is a Certified Public Accountant in the Commonwealth of Massachusetts. He holds a Bachelor’s Degree in Accounting from Louisiana State University and a Masters of Business Administration from University College Dublin. There are no related party transactions between Mr. Dunn, on the one hand, and the Company, on the other, reportable under Item 404(a) of Regulation S-K. In addition, there is no family relationship between any director or executive officer of the Company and Mr. Dunn.

25

In connection with his resignation, Mr. Tamboli and the Company entered into a Separation Agreement (the “Separation Agreement”) pursuant to which, Mr. Tamboli is entitled to receive severance benefits pursuant to the terms of his Employment Agreement with the Company, with an effective date of June 28, 2021, attached as Exhibit 10.8 to the Company’s Registration Statement on Form S-1 filed with the SEC on June 21, 2021.

The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the Separation Agreement, which is filed as an exhibit to this Quarterly Report on Form 10-Q.

26

Item 6. Exhibits


Exhibit Number		Description

3.1		Fourth Amended and Restated Certificate of Incorporation of Registrant, as currently in effect (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K (File No. 001-40522) filed on June 28, 2021).
3.2		Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (File No. 001-40522) filed on June 14, 2023).
3.3		Amended and Restated By-laws of the Registrant, as currently in effect (incorporated by reference to Exhibit 3.2 of the Registrant's Current Report on Form 8-K (File No. 001-40522)) filed on June 28, 2021).
10.1*#		Separation Agreement between the Registrant and Ajim Tamboli, effective as of August 8, 2023.
31.1*		Certification of Principal Executive Officer ~~Pursuant to Rules 13a-14(a)~~ and ~~15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
31.2*		~~Certification of~~ Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

# Management contract or compensatory plan, contract, or arrangement.

25

27

SIGNATURES

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


	Monte Rosa Therapeutics, Inc.

Date: ~~May 11,~~August 10, 2023	By:	/s/ Markus Warmuth
		Markus Warmuth
		Chief Executive Officer

~~Date: May 11, 2023~~	~~By:~~	~~/s/ Ajim Tamboli~~
		~~Ajim Tamboli~~
		~~Chief~~ (Principal Executive Officer and Principal Financial ~~Officer~~Officer)

2628


Delaware	84-3766197
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~645 Summer Street~~321 Harrison Avenue, Suite ~~102~~900 Boston, Massachusetts	~~02210~~02118
(Address of principal executive offices)	(Zip Code)


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


(in thousands, except share and per share amounts)	March 31,			December 31,			June 30,			December 31,
(unaudited)	2023			2022			2023			2022
Assets
Current assets:
Cash and cash equivalents	$	51,847		$	54,912		$	47,027		$	54,912
Marketable securities		179,887			207,914			156,039			207,914
Other receivables		2,170			7,656			1,154			7,656
Prepaid expenses and other current assets		5,692			4,444			3,884			4,444
Current restricted cash		960			960			—			960
Total current assets		240,556			275,886			208,104			275,886
Property and equipment, net		33,266			27,075			35,335			27,075
Operating lease right-of-use assets		30,534			34,832			30,359			34,832
Restricted cash, net of current		4,321			4,318			4,527			4,318
Other long-term assets		351			278			291			278
Total assets	$	309,028		$	342,389		$	278,616		$	342,389
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,382		$	7,862		$	5,308		$	7,862
Accrued expenses and other current liabilities		10,243			14,580			11,114			14,580
Current portion of operating lease liability		2,890			3,127			2,667			3,127
Total current liabilities		20,515			25,569			19,089			25,569
Defined benefit plan liability		1,512			1,533			1,505			1,533
Operating lease liability		43,275			43,874			44,368			43,874
Total liabilities		65,302			70,976			64,962			70,976
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding		—			—			—			—
Common stock, $0.0001 par value; 500,000,000 shares authorized, 49,450,063 shares issued and 49,360,984 shares outstanding as of March 31, 2023; and 500,000,000 shares authorized, 49,445,802 shares issued and 49,323,531 shares outstanding as of December 31, 2022		5			5
Common stock, $0.0001 par value; 500,000,000 shares authorized, 49,643,653 shares issued and 49,592,479 shares outstanding as of June 30, 2023; and 500,000,000 shares authorized, 49,445,802 shares issued and 49,323,531 shares outstanding as of December 31, 2022								5			5
Additional paid-in capital		507,688			503,696			513,041			503,696
Accumulated other comprehensive loss		(1,393	)		(1,752	)		(1,640	)		(1,752	)
Accumulated deficit		(262,574	)		(230,536	)		(297,752	)		(230,536	)
Total stockholders’ equity		243,726			271,413			213,654			271,413
Total liabilities and stockholders’ equity	$	309,028		$	342,389		$	278,616		$	342,389


(in thousands)	Three months ended March 31,						Six months ended June 30,
(unaudited)	2023			2022			2023			2022
Cash flows from operating activities:
Net loss	$	(32,038	)	$	(23,932	)	$	(67,216	)	$	(50,401	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense		3,974			2,251			8,127			5,124
Depreciation		1,151			753			2,542			1,642
Noncash lease expense		—			379			—			1,659
Net accretion of discounts/premiums on marketable securities		(1,266	)		(45	)		(2,680	)		(331	)
Loss on sale of marketable securities		131			—			131			—
Gain on disposal of property and equipment		—			(125	)		(24	)		(125	)
Changes in operating assets and liabilities
Other receivables		2,053			—			1,858			—
Prepaid expenses and other current assets		(1,320	)		(608	)		547			(688	)
Accounts payable		306			(2,184	)		(696	)		(2,547	)
Accrued expenses and other current liabilities		(3,285	)		(3,559	)		(520	)		(2,196	)
Defined benefit plan liability		(7	)		41			—			28
Right-of-use assets and operating lease liabilities		6,895			(375	)		9,201			(70	)
Net cash used in operating activities	$	(23,406	)	$	(27,404	)	$	(48,730	)	$	(47,905	)
Cash flows from investing activities:
Purchases of property and equipment		(9,181	)		(1,687	)		(15,693	)		(4,240	)
Proceeds from sale of property and equipment		—			125			62			125
Purchases of marketable securities		(67,824	)		(178,958	)		(67,824	)		(230,654	)
Proceeds from sale of marketable securities		45,631			—			45,631			—
Proceeds from maturities of marketable securities		51,700			—			76,700			40,000
Net cash provided by (used in) investing activities	$	20,326		$	(180,520	)	$	38,876		$	(194,769	)
Cash flows from financing activities:
Proceeds from exercise of employee stock options		18			153			915			249
Proceeds from employee stock purchase plan								303			—
Net cash provided by financing activities	$	18		$	153		$	1,218		$	249
Net decrease in cash, cash equivalents and restricted cash	$	(3,062	)	$	(207,771	)	$	(8,636	)	$	(242,425	)
Cash, cash equivalents and restricted cash—beginning of period		60,190			351,409			60,190			351,409
Cash, cash equivalents and restricted cash—end of period	$	57,128		$	143,638		$	51,554		$	108,984
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	51,847		$	138,305		$	47,027		$	103,664
Restricted cash		5,281			5,333			4,527			5,320
Total cash, cash equivalents and restricted cash	$	57,128		$	143,638		$	51,554		$	108,984
Supplemental disclosure of noncash items
Reduction of right-of-use assets for lease incentives receivable	$	3,433		$	—		$	4,644		$	—
Purchases of property and equipment in accounts payable and accrued expenses	$	4,402		$	794		$	1,438		$	939


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


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


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	4
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2122
Item 4.	Controls and Procedures	2122

PART II.	OTHER INFORMATION	2223
Item 1.	Legal Proceedings	2223
Item 1A.	Risk Factors	2223
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2425
Item 3.	Defaults Upon Senior Securities	2425
Item 4.	Mine Safety Disclosures	2425
Item 5.	Other Information	25
Item 6.	Exhibits	2527
Signatures		2628


	Common stock
(in thousands, except share amounts) (unaudited)	Shares		Amount		Additional paid-in capital		Accumulated other comprehensive loss			Accumulated deficit			Total Stockholders’ equity
Balance—January 1, 2022		46,535,966	$	5	$	471,566	$	(2,021	)	$	(122,035	)	$	347,515
Restricted common stock vesting		34,505		—		—		—			—			—
Exercise of common stock options		60,240		—		153		—			—			153
Provision for pension benefit obligation		—		—		—		34			—			34
Stock-based compensation expense		—		—		2,251		—			—			2,251
Unrealized loss on available-for-sale securities		—		—		—		(146	)		—			(146	)
Net Loss		—		—		—		—			(23,932	)		(23,932	)
Balance—March 31, 2022		46,630,711	$	5		473,970	$	(2,133	)	$	(145,967	)	$	325,875

Balance—January 1, 2023		49,323,531	$	5		503,696	$	(1,752	)	$	(230,536	)	$	271,413
Restricted common stock vesting		33,192		—		—		—			—			—
Exercise of common stock options		4,261		—		18		—			—			18
Provision for pension benefit obligation		—		—		—		14			—			14
Stock-based compensation expense		—		—		3,974		—			—			3,974
Unrealized gain on available-for-sale securities		—		—		—		345			—			345
Net Loss		—		—		—		—			(32,038	)		(32,038	)
Balance—March 31, 2023		49,360,984	$	5		507,688	$	(1,393	)	$	(262,574	)	$	243,726