Registrant’s telephone number, including area code: ~~(508) 473-5993~~+44-1223-497400

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

Indicate by check mark whether the ~~registrant~~Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the ~~registrant~~Registrant was required to submit ~~and post~~ such files). Yes☒ No NO ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section ~~7(a)(2)(B)~~13(a) of the ~~Securities~~Exchange Act. ☒

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

AsThe number of ~~October 31, 2017, the registrant had 12,951,033~~ shares of ~~common stock, $0.0001 par value per share, outstanding.~~Registrant’s Common Stock outstanding as of November 8, 2021 was 20,624,494.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “design,” “expect,” “seek,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.

~~These forward-looking statements include, but are not limited to, statements about:~~

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause actual results or events to differ materially from the forward-looking statements that we make include, but are not limited to, the following:

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should also read carefully the factors described in the section “Risk Factors” of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and our website. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS~~F-star Therapeutics, Inc.

~~(Unaudited)~~Condensed Consolidated Statements of Operations and Comprehensive Loss

1. ~~NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

Nature of Business and Summary of Significant Accounting Policies

~~Spring Bank Pharmaceuticals,~~Nature of Business

F-star Therapeutics, Inc. ~~(the~~(collectively with its subsidiaries, “F-star” or the “Company”) is a clinical-stage biopharmaceutical company ~~engaged~~dedicated to developing next generation immunotherapies to transform the lives of patients with cancer. F-star is pioneering the use of tetravalent (2+2) bispecific antibodies to create a paradigm shift in cancer therapy. The Company has four second-generation immuno-oncology ("IO") therapeutics in the clinic, each directed against some of the most promising IO targets in drug development, including LAG-3 and CD137. F-star’s proprietary antibody discovery platform is protected by a vast intellectual property portfolio, with 500 granted and ~~development of a novel class of therapeutics using a proprietary small molecule nucleic acid hybrid (“SMNH”) chemistry platform.~~pending patent applications relating to its platform technology and associated product pipeline. The Company has attracted multiple partnerships with biopharma targeting the significant unmet needs across several disease areas, including oncology, immunology, and CNS. F-star’s goal is to offer patients better and more durable benefits than currently available immuno-oncology treatments by developing medicines that seek to block tumor immune evasion. Through its ~~most advanced SMNH product candidate, inarigivir soproxil (“inarigivir”~~proprietary tetravalent, bispecific natural antibody (mAb²™) ~~(formerly~~format, F-star’s mission is to generate highly differentiated medicines with monoclonal antibody-like manufacturability, good safety and tolerability. With four distinct binding sites in a natural human antibody format, F-star believes its proprietary technology will overcome many of the challenges facing current immuno-oncology therapies, due to the strong pharmacology enabled by tetravalent bispecific binding.

Share Exchange Agreement

On November 20, 2020, F-star Therapeutics, Inc., formerly known as ~~SB 9200)~~Spring Bank Pharmaceuticals, Inc., completed a business combination (the “Transaction”) with F-star Therapeutics Limited (“F-star Ltd”) in accordance with the terms of the Share Exchange Agreement, dated July 29, 2020 (the “Exchange Agreement”), by and among the Company, F-star Ltd and certain holders of capital stock and convertible notes of F-star Ltd (each a “Seller”, and collectively with holders of F-star Ltd securities who subsequently became parties to the Exchange Agreement, the “Sellers”). Pursuant to the Exchange Agreement, each ordinary share of F-star Ltd outstanding immediately prior to the closing of the Transaction (the “Closing”) was exchanged by the Sellers that owned such F-star Ltd shares for a number of duly authorized, validly issued, fully paid and non-assessable shares of Company common stock pursuant to the ~~treatment~~exchange ratio formula set forth in the Exchange Agreement (the “Exchange Ratio”), rounded to the nearest whole share of ~~viral diseases. Since inception~~Company common stock (after aggregating all fractional shares of Company common stock issuable to such Seller). Also, on November 20, 2020, in ~~2002~~connection with, and prior to completion of, the Transaction, Spring Bank effected a 1-for-4 reverse stock split of its ~~initial~~common stock (the “Reverse Stock Split”) and, following the completion of the Transaction, changed its name to F-star Therapeutics, Inc. Following the completion of the Transaction, the business of the Company became the business conducted by F-star, which is a clinical-stage immuno-oncology company focused on cancer treatment through its proprietary tetravalent bispecific antibody programs. Unless otherwise noted, all references to share amounts in this report reflect the Reverse Stock Split.

Liquidity

On March 30, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Leerink LLC (“SVB Leerink”) with respect to an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, under which the Company could offer and sell, from time to time in its sole discretion, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $50.0 million through SVB Leerink as its sales agent. As of May 6, 2021, the Company had issued and sold 979,843 shares of common stock for gross proceeds of $9.5 million, resulting in net proceeds of $9.1 million after deducting sales commissions and offering expenses. On May 6, 2021, the Company terminated the Sales Agreement.

On August 13, 2021, the Company entered into a Sales Agreement (the “2021 Sales Agreement”) with SVB Leerink with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $50.0 million through

SVB Leerink as its sales agent. As of September 30, 2021 Company had 0t offered or sold any common stock under the 2021 Sales Agreement.

On May 6, 2021, the Company entered into an underwriting agreement with SVB Leerink, as representative of the underwriters, relating to an underwritten public offering ~~(“IPO”~~(the “Underwritten Public Offering”) of 10.4 million shares of the Company’s common stock, par value $0.0001 per share. The underwritten public offering resulted in ~~May 2016,~~gross proceeds of $73.1 million. The Company incurred $4.4 million in issuance costs and $0.5 million of professional fees associated with the underwritten public offering, resulting in net proceeds to the Company ~~built its technology platform and product candidate pipeline using a semi-virtual business model, supported by grants and direct funding from the United States National Institutes~~ of ~~Health (“NIH”) as well as through private financings. In September 2015,~~$68.2 million.

On April 1, 2021, the Company, ~~formed~~as borrower, entered into a ~~wholly owned subsidiary, Sperovie Biosciences, Inc.~~Venture Loan and ~~in December 2016,~~Security Agreement (the “Loan and Security Agreement”) with Horizon Technology Finance Corporation (“Horizon”), as lender and collateral agent for itself. The Loan and Security Agreement provides for 4 separate and independent $2.5 million term loans (“Loan A”, “Loan B”, “Loan C”, and “Loan D”) (with each of Loan A, Loan B, Loan C and Loan D, individually a “Term Loan” and, collectively, the “Term Loans”), whereby, upon the satisfaction of all the conditions to the funding of the Term Loans, each Term Loan will be delivered by Horizon to the Company ~~formed a wholly owned subsidiary, SBP Securities Corporation.~~in the following manner: (i) Loan A was delivered by Horizon to the Company by April 1, 2021, (ii) Loan B was delivered by Horizon to the Company by April 1, 2021, (iii) Loan C was delivered by Horizon to the Company by June 30, 2021, and (iv) Loan D was delivered by Horizon to the Company by June 30, 2021. The Company may only use the proceeds of the Term Loans for working capital or general corporate purposes as contemplated by the Loan and Security Agreement. On April 1, 2021, the Company drew down $5 million. On June 22, 2021, the Company drew down another $5 million under this facility.

The Company has incurred significant losses and has an accumulated deficit of $83.2 million as of September 30, 2021. F-star expects to incur substantial losses in the foreseeable future as it conducts and expands its research and development activities and clinical trial activities. As of September 30, 2021, the Company had cash of $71.1 million and working capital of $67.3 million. As of November 10, 2021, the date of issuance of the condensed consolidated financial statements, the Company’s cash and cash equivalents on hand will be sufficient to fund its current operating plan and planned capital expenditures for at least the next 12 months.

The Company may continue to seek additional funding through public equity, private equity, debt financing, collaboration partnerships, or other sources. There are no assurances, however, that the Company will be successful in raising additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable terms. The Company’s ~~success is dependent upon~~failure to raise future capital or enter into other such arrangements if and when needed would have a negative impact on its business, results of operations and financial condition and its ability to ~~successfully complete clinical development and obtain regulatory approval of~~develop its product candidates, successfully commercialize approved products, generate revenue, and, ultimately, attain profitable operations. The Company’s operations to date have been limited to financing and staffing the Company and the development of inarigivir, SB 11285 and the Company’s other product candidates.

Basis of Presentation ~~and Liquidity~~

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States ~~(“U.S.”)~~ generally accepted accounting principles (“U.S. GAAP”).

~~Prior to and in connection with the Company completing its IPO in May 2016, the Company effected a 1-for-4 reverse stock split of its common stock on March 8, 2016. All share and per share amounts~~ and the ~~number~~rules and regulations of ~~shares of common stock set forth in~~ the Securities Exchange Commission ("SEC") for interim financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.statements.

The accompanying interim condensed consolidated financial statements as of September 30, ~~2017~~2021, and for the three and nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, and ~~related interim~~ information contained within the notes to ~~the~~these condensed consolidated financial statements, are unaudited. ~~In management’s opinion, the~~These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and ~~include~~in management's opinion contain all ~~adjustments~~adjustrevisionments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September 30, ~~2017,~~2021, results of operations for the three and nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, statement of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. These interim condensed consolidated financial statements should be read in conjunction with the Company’s annual audited financial statements and ~~accompanying~~ notes ~~contained~~thereto included in the Company’s Annual Report filed on SEC Form 10-K for the year ended December 31, ~~2016, as filed with the Securities and Exchange Commission (“SEC”) on February 14, 2017.~~2020. The results for the three and nine months ended September 30, ~~2017~~2021, are not necessarily indicative of the results expected for the full fiscal year or any interim period.

As8

Revision of Previously Issued Financial Statements

In September ~~30, 2017,~~2021, the Company ~~had~~identified an error in its accounting treatment for research and development expenses. This error resulted in an overstatement of research and development expenses for the first six months of 2021 and accrued expenses and other current liabilities as of March 31, 2021 and June 30, 2021. The Company assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99, Materiality, and ASC 250-10, Accounting Changes and Error Corrections. The Company determined that this error was not material to the financial statements of any prior interim period. To correct the immaterial misstatement, the Company decreased accumulated deficit by $0.3 million as of ~~$77.8 million and $52.2 million~~June 30, 2021.

Principles of Consolidation

The Company’s interim condensed consolidated financial statements have been prepared in ~~cash, cash equivalents and marketable securities.~~

~~The Company expects~~conformity with U.S. GAAP. Any reference in these notes to ~~continue~~applicable guidance is meant to incur significant and increasing losses for the foreseeable future. The Company anticipates that its expenses will increase significantly as it continues to develop inarigivir, SB 11285 and its other product candidates. The Company does not have any committed external source of funds. As a result, the Company will need additional financing to support its continuing operations. Adequate additional funds may not be availablerefer to the ~~Company on acceptable terms, or at all. To~~authoritative U.S. GAAP as found in the ~~extent that~~ASC and Accounting Standards Updates (“ASU”) of the Company raises additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect common stockholder rights. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish valuable rights to its technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to the Company.

~~Principles of Consolidation~~

FASB. The accompanying condensed consolidated financial statements include the accounts of ~~the Company~~F-star Therapeutics, Inc. and its wholly owned subsidiaries, Sperovie Biosciences, Inc. and SBP Securities Corporation. Sperovie Biosciences, Inc. had operations consisting mainly of legal fees associated with intellectual property activities as of September 30, 2017. SBP Securities Corporation had assets primarily related to investments in marketable securities and operations consisting primarily of interest income as of September 30, 2017.subsidiaries. All ~~intercompany~~inter-company balances and transactions between the consolidated companies have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of ~~revenues and~~ expenses during the reporting ~~period.~~years. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the fair value of the assets and liabilities acquired in the transaction between Spring Bank and F-star Ltd fair value of the convertible loan containing embedded derivatives, the fair value of contingent value rights, the accrual for research and development expenses, revenue recognition, fair values of acquired intangible assets and impairment review of those assets, warrants, share based compensation expense, and income taxes. The Company bases its estimates ~~and assumptions~~ on historical experience, ~~when available~~known trends and ~~on various~~other market-specific or other relevant factors that it believes to be reasonable under the circumstances. ~~Significant~~Estimates are periodically reviewed in light of reasonable changes in circumstances, facts and experience. Changes in estimates ~~relied upon~~are recorded in ~~preparing~~ the accompanying financial statements related to the fair value of common stock and warrant liabilities, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, and accounting for certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actualperiod in which they become known. Actual results ~~may~~could differ from ~~these estimates.~~those estimates or assumptions.

Concentrations of credit risk and of significant suppliers

~~Cash, Cash Equivalents and Restricted Cash~~

~~Cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase.~~

~~Restricted cash consists of $250,000 and is held as collateral for the Company’s credit card program. There were no restricted cash as of December 31, 2016.~~

Included in cash and cash equivalents as of September 30, 2017 and December 31, 2016 are money market fund investments of $15,164,000 and $9,507,000, respectively, which are reported at fair value (Note 5).

~~Concentration of Credit Risk~~

Financial instruments that ~~subject~~potentially expose the Company to ~~significant~~ concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents ~~restricted cash and marketable securities. Substantially all of the Company’s cash is held at~~in financial institutions in amounts that ~~management believes to be of high-credit quality. Deposits with these financial institutions may~~could exceed ~~the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.~~

~~The Company’s one source of revenue during the three and nine months ended September 30, 2016 was grants from the NIH, representing 100% of total revenue for such periods.~~government-insured limits. The Company ~~did~~does not ~~have any sources of revenue for the three and nine months ended September 30, 2017.~~believe it is subject to additional credit risks beyond those normally associated with commercial banking relationships.

~~Investments in Marketable Securities~~

The Company ~~invests excess cash balances~~is dependent on contract research organizations to provide its clinical trials and third-party manufacturers to supply products for research and development activities in short-term and long-term marketable securities. The Company classifies investments in marketable securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time of purchase. At each balance sheet date presented, all investments in securities are classified as available-for-sale. The Company reports available-for-sale investments at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in the value of the investment,its programs. In particular, the Company ~~considers all available evidence~~relies and expects to ~~evaluate~~continue to rely on a small number of manufacturers to supply its requirements for

supplies and raw materials related to these programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the ~~extent to which the decline is “other than temporary,” including the intention to sell~~availability of raw materials.

Property, plant and ~~if so, marks the investment to market through a charge to the Company’s consolidated statements of operations and comprehensive loss.~~equipment

Property, ~~and Equipment, Net~~

~~Property~~plant and equipment are ~~recorded~~stated at ~~cost. Costs associated with maintenance and repairs are expensed as incurred.~~ cost, less accumulated depreciation. Depreciation ~~and amortization are provided~~expense is recognized using the straight-line method over the estimated useful ~~lives:~~lives of the respective assets as follows:


~~Asset Category~~		Estimated Useful Economic Life
~~Equipment~~Leasehold property improvements, right of use assets		~~5-7 years~~Lesser of lease term or useful life
~~Furniture and fixtures~~Laboratory equipment		5 years
~~Leasehold improvements~~Furniture and office equipment		~~Lesser of 10~~3 years ~~or the remaining~~ ~~term of the respective lease~~

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, and lease obligations in the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at 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, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term to each lease. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. ~~Through~~As of September 30, ~~2017, no~~2021, 0 such impairment has ~~occurred.~~been recorded.

License and collaboration arrangements and revenue recognition

~~Deferred Rent~~

The Company’s ~~operating leases~~revenues are generated primarily through license and collaboration agreements with pharmaceutical and biotechnology companies. The terms of these arrangements may include ~~rent escalation payment terms and other incentives received from landlords. Deferred rent represents~~(i) the ~~difference between actual operating lease payments due and straight-line rent expense over~~grant of intellectual property rights (IP licenses) to therapeutic drug candidates against specified targets, developed using the ~~term of the lease, which is recorded in accrued expenses and other current liabilities. The Company had deferred aggregate rent for its~~Company’s proprietary mAb2 bispecific antibody platform, (ii) performing research and development ~~facility in Milford, Massachusetts~~services to optimize drug candidates, and ~~its headquarters in Hopkinton, Massachusetts~~(iii) the grant of ~~$35,000~~options to obtain additional research and ~~$35,000 as~~development services or licenses for additional targets, or to optimize product candidates, upon the payment of ~~September 30, 2017~~option fees.

The terms of these arrangements typically include payment to the Company of one or more of the following:

non-refundable, upfront license fees; payments for research and ~~December 31, 2016, respectively.~~development services; fees upon the exercise of options to obtain additional services or licenses; payments based upon the achievement of defined collaboration objectives; future regulatory and sales-based milestone payments; and royalties on net sales of future products.

~~Revenue Recognition~~

The Company ~~recognizes revenue when~~has adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. To date, the ~~following criteria are met: there is persuasive evidence~~Company has entered into License and Collaboration Agreements with Denali Therapeutics, Inc. (“Denali”), Ares Trading S.A. (“Ares,”)

an affiliate of ~~an arrangement,~~Merck KGaA, Darmstadt, Germany) and in July 2021 with AstraZeneca AB ("AstraZeneca"), which were determined to be within the ~~fee is fixed or determinable, delivery has occurred or services have been rendered and collection~~scope of the related receivable is reasonably assured. Generally, these criteria were met and revenue from grants from the NIH, which subsidized certain of the Company’s research projects, as efforts were expended and as eligible project costs were incurred.ASC 606.

Research and ~~Development Costs~~development costs

Research and development costs are expensed as incurred. Research and development expenses ~~consist primarily~~are comprised of costs incurred ~~for the Company’s~~in performing research and development activities, including ~~discovery efforts,~~compensation expense, share-based compensation and ~~the~~benefits, facilities costs and laboratory supplies, depreciation, amortization and impairment expense, manufacturing expenses and external costs of outside vendors engaged to conduct preclinical development ~~of product candidates, which include:~~

~~expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical~~ activities and clinical trials ~~on the Company’s behalf~~ as well as ~~contract manufacturing organizations,~~the cost of licensing technology. Typically, upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred, except for payments relating to intellectual property rights with future alternative use which will be expensed when the intellectual property is in use. Nonrefundable advance payments for goods or ~~CMOs, that manufacture drug products~~services to be received in the future for use in ~~the Company’s preclinical and clinical trials;~~

~~salaries, benefits and other related costs, including stock-based compensation expense, for personnel in the Company’s~~ research and development ~~functions;~~activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

~~costs of outside consultants, including their fees, stock-based compensation and related travel expenses;~~Warrants

~~the cost of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;~~

~~costs related to compliance with regulatory requirements; and~~

~~facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.~~

The Company ~~expenses research and development costs~~accounts for warrants within stockholders equity or as incurred. The Company recognizes external development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors and its clinical investigative sites. Payments for these activities areliabilities based on the ~~terms~~characteristics and provisions of each instrument. The Company evaluates outstanding warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. If none of the ~~individual agreements, which may differ from the pattern of costs incurred, and are reflected~~criteria in the ~~Company’s consolidated financial statements as prepaid or accrued research and development expenses.~~

~~Warrants~~

~~The Company reviews~~evaluation in these standards are met, the ~~terms of all~~ warrants ~~issued and classifies the warrants~~are classified as a component of ~~permanent~~stockholders’ equity ~~if they are freestanding financial instruments that are legally detachable~~ and separately exercisable, contingently exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the warrants must require physical settlement and may not provide any guarantee of value or return. Warrants that meet these criteria are initially recorded at their grant date fair value ~~and are not subsequently remeasured.~~without subsequent remeasurement. Warrants that ~~do not~~ meet ~~this~~the criteria are classified as liabilities and remeasured to their fair value at the end of each reporting period.

Stock-Based Compensation

The Company accounts for ~~all stock-based payment awards granted~~share-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”(“ASC 718”). ASC 718 requires companies to employees and nonemployees using a fair value method. The Company’s stock-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is generally the vesting period, on a straight-line basis. The measurement date for nonemployee awards is the date the services are completed, resulting in periodic adjustments to stock-based compensation during the vesting period for changes inestimate the fair value of equity-based payment awards on the ~~awards. Stock-based compensation costs for nonemployees are~~date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the ~~vesting~~requisite service period ~~on a straight-line basis. Stock-based compensation expense is classified~~ in the ~~accompanying~~Company’s consolidated statements of operations and comprehensive ~~loss based on the department to which the related services are provided.~~loss.

Fair value measurements of financial instruments

~~Financial Instruments~~

The Company’s financial instruments consist of cash, ~~equivalents, marketable securities,~~ accounts payable, CVRs and liability classified warrants. The carrying amounts of cash ~~and cash equivalents~~ and accounts payable approximate their fair value due to the short-term nature of those financial instruments. The fair value of CVRs and the ~~marketable securities and~~ liability classified warrants are remeasured to fair value each reporting ~~period as described in Note 5.~~period.

Net loss per share

~~Fair Value Measurements~~

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) 820, ~~Fair Value Measurements and Disclosures~~ (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

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

~~Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.~~

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

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include cash equivalents, marketable securities and warrant liabilities.

~~Net Loss Per Share~~

~~Basic~~computes net loss per share ~~is computed by dividing~~in accordance with ASC Topic 260, Earnings Per Share (“ASC 260”) and related guidance, which requires two calculations of net (loss) income attributable to the Company’s shareholders per share to be disclosed: basic and diluted. Convertible preferred shares are considered participating securities and are included in the calculation of basic and diluted net ~~loss by~~(loss) income per share using the ~~weighted-average number of~~two-class method. In periods where the Company reports net losses, such losses are not allocated to the convertible preferred shares ~~of common stock outstanding~~ for the ~~period.~~ computation of basic or diluted net (loss) income.

Diluted net ~~loss~~(loss) income per share is ~~computed by dividing~~ the same as basic net (loss) income per share for the periods in which the Company had a net loss bybecause the ~~weighted-average number~~inclusion of ~~shares of common stock and dilutive~~outstanding common stock equivalents ~~outstanding~~would be anti-dilutive.

Income taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the ~~period, determined using~~expected future tax consequences of events that have been recognized in the ~~treasury-stock method and~~

consolidated financial statements or in the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. As of September 30, 2017 and December 31, 2016, both methods are equivalent. Common stock, preferred stock and warrant issuances are described further in Note 7.

~~Income Taxes~~

Company’s tax returns. Deferred tax assets and liabilities are determined ~~based upon~~on the basis of the differences between the consolidated financial ~~statement carrying amounts~~statements and ~~the~~ tax basis of ~~existing~~ assets and liabilities ~~and for loss and credit carryforwards~~ using enacted tax rates ~~expected to be~~ in effect infor the ~~years~~year in which the differences are expected to reverse. ~~Deferred~~Changes in deferred tax assets and liabilities are ~~reduced by a valuation allowance if~~recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that ~~some~~all or a portion ~~or all~~ of the deferred tax ~~asset~~assets will not be ~~realized.~~

~~The Company assesses its~~realized, a valuation allowance is established through a charge to income tax ~~positions~~expense. The potential recovery of deferred tax assets is evaluated by estimating the potential for future taxable profits, if any.

Research and ~~records~~development tax ~~benefits based upon management’s evaluation~~credit

As the entities located in the United Kingdom carry out extensive research and development activities, they seek to benefit from the UK research and development tax credit cash rebate regime known as the Small and Medium-sized Enterprises R&D Tax Credit Program (the “SME Program”). Qualifying expenditures largely comprise employment costs for research staff, consumables expenses incurred under agreements with third parties that conduct research and development, preclinical activities, clinical activities and manufacturing on the Company’s behalf and certain internal overhead costs incurred as part of research projects. The tax credit received in the United Kingdom pursuant to the SME Program permits companies to deduct an extra 130% of their qualifying costs from their yearly profit or loss, as well as the normal 100% deduction, to make a total 230% deduction. If the company is incurring losses, it is entitled to claim a tax credit worth up to 14.5% of the ~~facts, circumstances~~surrenderable loss. To qualify for relief under the SME Program, companies are required to employ fewer than 500 staff and ~~information available at~~have a turnover of under €100.0 million or a balance sheet total of less than €86.0 million.

Research and development tax credits received in the ~~reporting date. For those~~United Kingdom are recorded as a reduction in research and development expenses. The UK research and development tax ~~positions where it~~credit is ~~more likely than~~payable to companies after surrendering tax losses and is not ~~that~~dependent on current or future taxable income. As a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions whereresult, it is not ~~more likely than not that a~~reflected as part of the income tax ~~benefit will be sustained, no tax benefit is recognized in~~provision.

During the ~~consolidated financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of interest expense. As of~~nine months ended September 30, ~~2017 and December 31, 2016,~~2021 the Company ~~has not identified any material uncertain tax positions.~~

~~Guarantees and Indemnifications~~

~~As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request~~ received $3.4 millionin ~~such capacity.~~

~~The Company leases office space in Hopkinton, Massachusetts and~~ research and development ~~space in Milford, Massachusetts,~~tax credits related to the year ended December 31, 2020.

Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential loss range is probable and reasonably estimable under ~~non-cancelable operating leases.~~the provisions of the authoritative guidelines that address accounting for contingencies. The Company ~~has standard indemnification arrangements under these leases that require it~~expenses costs as incurred in relation to ~~indemnify~~such legal proceedings as general and administrative expense within the landlords against liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under the Company’s lease.

Through September 30, 2017, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair valueconsolidated statements of ~~these obligations is negligible, and no related reserves were established.~~

~~Segment Information~~

Operating segments are identified as components of an enterprise about which separate and discrete financial information is available for evaluation by the chief operating decision maker, the Company’s chief executive officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and ~~manages its business in one operating segment and does not track expenses on a program-by-program basis.~~comprehensive loss.

Recently Issued Accounting Pronouncements

In ~~November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~, which includes provisions intended to clarify how entities present restricted cash and restricted cash equivalents in the statement of cash flows. Companies must show the change in total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard is applied retrospectively and is effective for our annual periods beginning after December 15, 2017, and for interim periods within those annual periods, with early adoption permitted. The Company elected early adoption of this standard as of September 30, 2017, the first period in which the Company had restricted cash. The adoption of this standard has resulted in the presentation of the change in cash, cash equivalents and restricted cash on the statement of cash flows in the periods presented.

~~In March~~June 2016, the FASB issued ASU ~~2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU ~~2016-09”~~2016-13”) to require changes to several areas of employee stock-based compensation payment accounting in an effort to simplify stock-based compensation reporting. The update revises requirements in the following areas: minimum statutory withholding, accounting. ASU 2016-13 will change how companies account for ~~income taxes, forfeitures,~~credit losses for most financial assets and intrinsic value accounting for private entities. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods within each annual reporting period. The Company adopted this standard on January 1, 2017. The update revises requirements in the following areas: minimum statutory withholding, accounting for income taxes,certain other instruments. For trade receivables, loans and forfeitures. Prior to adoption, the Company applied a 0% forfeiture rate to stock-based compensation, resulting in no cumulative effect adjustment to the opening period. Upon adoption of this standard, the Company’s accounting policy isheld-to-maturity debt securities, companies will be required to recognize ~~forfeitures as they occur.~~

~~The update requires~~an allowance for credit losses rather than reducing the ~~Company to recognize~~carrying value of the income tax effect of awards in the income statement when the awards vest or are settled. It also allows the Company to repurchase more of an employee’s shares than it could prior to the update for tax withholding purposes without triggering a liability. The income tax related items had no effect on the current period presentation and the Company maintains a full valuation allowance against its deferred tax assets.

asset. In ~~May 2014,~~November 2019, the FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2019-10, Financial Instruments — Credit Losses (Topic ~~606) (“ASC 606”)~~326), ~~which amends~~Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates to amend the ~~guidance~~effective date of ASU 2016-13, for revenue recognition to replace numerous industry-specific requirements. ASC 606 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. ASC 606 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include ensuring the time value of money is considered in the transaction price, and allowing estimates of variable considerationentities eligible to be ~~recognized before contingencies are resolved in certain circumstances. The amendments in ASC 606 are~~“smaller reporting companies,” as defined by the SEC, to be effective for ~~reporting periods~~fiscal years beginning after December 15, ~~2016, and early~~2022, including interim periods within those fiscal years. Early adoption is permitted. The Company has not ~~permitted. In July 2015, the FASB approved the deferral of adoption by one year. Entities can transition~~elected to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Until the Company expects material revenue to be recognized, the adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

~~In January 2016, the FASB issued~~early adopt ASU ~~2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities, which amends ASC Subtopic 825-10,~~ ~~Financial Instruments - Overall~~, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for the Company for the annual period beginning after December 15, 2017, with early adoption permitted.No. 2016-13. The Company is currently evaluating the potential impact that the adoption of ~~this standard may~~ASU 2016-13 will have on ~~its consolidated~~the Company’s financial ~~statements.~~position and results of operations.

During the three months ended September 30, 2021, $4.5 million of ~~diluted weighted-average shares outstanding, because such securities~~in-process R&D assets were reclassified to intangible assets as management determined that these assets had ~~an antidilutive impact due to the losses reported:~~

~~Cash in excess~~been brought into use and were no longer in-process. The appropriate useful life of the ~~Company’s immediate requirements is invested~~intangible assets was determined in accordance with ASC 350, Goodwill and Other. Accordingly, the ~~Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital.~~

~~The following table summarizes~~useful lives are based on the ~~Company’s investments, by category, as~~period during which 95% of the undiscounted cash flows of the assets will be realized. As a result $0.1 million of amortization was recorded for the three months ended September 30, ~~2017~~2021.

~~6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES~~7. Accrued Expenses and other Current Liabilities

~~Effective February~~On April 1, ~~2016,~~2021, the Company, ~~amended~~as borrower, entered into the Loan and ~~restated its license agreement~~Security Agreement with ~~BioHEP Technologies Ltd. (“BioHEP”). In connection with~~Horizon, as lender and collateral agent for itself. The Loan and Security Agreement provides for 4 separate and independent $2.5 million term loans (Loan A, Loan B, Loan C, and Loan D), whereby, upon the ~~amendment and restatement,~~satisfaction of all the conditions to the funding of the Term Loans, each Term Loan will be delivered by Horizon to the Company in the following manner: (i) Loan A was delivered by Horizon to the Company by April 1, 2021, (ii) Loan B was delivered by Horizon to the Company by April 1, 2021, (iii) Loan C was delivered by Horizon to the Company by June 30, 2021, and (iv) Loan D was delivered by Horizon to the Company by June 30, 2021. The Company may only use the proceeds of the Term Loans for working capital or general corporate purposes as contemplated by the Loan and Security Agreement. On April 1, 2021, the Company drew down $5 million. On June 22, 2021, the Company drew down another $5 million under this facility. The Company incurred $0.3 million of debt issuance costs and issued ~~125,000~~$0.3 million of warrants.

The term note matures on the 48-month anniversary following the funding date, therefore $5 million plus an additional fee of $0.2 million becomes due on April 1, 2025, and $5 million plus an additional fee of $0.2 million will become due on June 22, 2025. The principal balance the Term Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “prime rate” then in effect, plus (b) 6.25%; provided that, in the event such rate of interest is less than 3.25%, such rate shall be deemed to be 3.25% for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Term Loan principal amount outstanding the preceding month and at September 30, 2021 the rate applied was 9.5%.

The Company may, at its option upon at least five business days’ written notice to Horizon, prepay all or any portion of the outstanding Term Loan by simultaneously paying to Horizon an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Term Loan so prepaid; plus (ii) an amount equal to (A) if such Term Loan is prepaid on or before the Loan Amortization Date (as defined in the Loan and Security Agreement) applicable to such Term Loan, three percent of the then outstanding principal balance of such Term Loan, (B) if such Term Loan is prepaid after the Loan Amortization Date applicable to such Term Loan, but on or before the date

10. Stock Option Plans

Incentive Plans

The Company maintains two equity incentive plans (the "Plans") that provide for the ~~2014 Plan~~granting of stock options, share appreciation rights, restricted shares, restricted share units, performance share units and certain other share based awards as provided in the ~~2015 Plan (collectively~~Plans to certain employees, members of the ~~“Plans”):~~

Options

Weighted-Average
Exercise Price
Per Share

Aggregate
Intrinsic
Value

Options outstanding at December 31, 2015

610,481

$
11.99

$
—

     Granted

128,334

10.41

—

     Exercised

(10,247
)

9.28

29,550

     Cancelled

(24,253
)

9.89

—

Outstanding at December 31, 2016

704,315

$
11.82

—

     Granted

286,500

8.20

—

     Exercised

(10,000
)

9.28

11,228

     Cancelled

(3,250
)

12.44

—

Options outstanding at September 30, 2017

977,565

$
10.78

$
5,923,320

Options exercisable at September 30, 2017

390,417

$
11.67

$
2,019,924

board of directors, consultants or other service providers of the Company, with a prescribed contractual term not to exceed ten years. As of September 30, ~~2017, all options~~2021, there were 196,910 shares of common stock available for grant under the Plans. Awards granted ~~are expected to~~under the Plans generally vest over a four-year period with 25% or 28% of the award vesting on the first anniversary of the commencement date and the ~~weighted-average~~balance vesting monthly over the remaining three years. Grants are generally awarded with a contractual ~~life~~terms of ~~all options is 8.4 years.~~10 years from the date of the grant. For certain senior members of management and directors, the board of directors approved an alternative vesting schedule. The ~~weighted-average~~share reserve under one of the Plans automatically increases on January 1st each year, in an amount equal to 4% of the total number of shares outstanding as of December 31 of the preceding year.

Stock option valuation

The fair value of ~~all~~ stock option grants is estimated using the Black-Scholes option-pricing model with the following assumptions:


	Black-Scholes Option- Pricing
	September 30, 2021			December 31, 2020
Risk-free interest rate	0.76%-0.86%			0.17% – 0.42%
Expected volatility		92.9	%	82.8%-98.3%
Expected dividend yield		0	%		0	%
Expected life (in years)		5.1			5.1

The table below summarizes stock option activity under the Company’s stock option plans:


Stock Option Activity
	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2020		533,559		$	3.33		9.30	$	8,494
Granted		624,986			7.76		8.99		(1,008	)
Exercised		(19,805	)		0.12		8.15		500
Forfeited and expired		(55,550	)		5.98		9.38		157
Outstanding as of September 30, 2021		1,083,190			5.80		8.98		6,011
Options exercisable at September, 2021		232,626			5.86		8.26		2,801

The weighted average grant date fair value of options granted during the nine months ended September 30, 2021 and 2020 was $6.15 and $1.65 per share, respectively. The total fair value of options vested during the nine months ended September 30, 2021 and 2020 was $4.2 million and $4.4 million, respectively.

Restricted Stock Units

Time-Based Restricted Stock Units (RSU)

In February 2021, the Company issued 310,385 time-based RSUs to employees and directors under the Amended and Restated 2015 Plan. The weighted average grant date fair value of the time-based RSUs was $8.57 for the nine months ended September 30, ~~2017 was $5.67. Intrinsic value at~~2021. The vesting for the time-based RSUs occurs either immediately, after one year or after four years. For the three and nine months ended September 30, ~~2017 is based on~~2021, the ~~closing price of the Company’s common stock of $16.84 per share.~~

~~Prior~~Company recognized approximately $0.4 million and $1.8 million in expenses related to the ~~Company’s IPO on May 11, 2016,~~time-based RSUs.

The table below is a rollforward of all RSU activity under the ~~Board determined~~Stock Incentive Plans The table below summarizes activity relating to RSUs for the estimated fair value of the Company’s common stock on the date of grant based on a number of objective and subjective factors, including third party valuations. Since the IPO, the fair value of the Company’s common stock on the date of the grant is based on the closing price per share of the common stock on the NASDAQ Capital Market on the date of grant. nine months ended September 30, 2021:


RSU Activity
	Restricted Stock Units			Weighted- Average Grant Date Fair Value
Total nonvested units at December 31, 2020		69,749		$	11.73
Granted		310,385			8.57
Vested		(83,889	)		9.34
Total nonvested units at September 30, 2021		296,245		$	9.10

Share-based Compensation

The ~~computation of expected volatility is based on the historical volatilities of peer companies. The peer companies include organizations that are~~Company recorded share-based compensation expense in the same industry, with similar size and stage of growth. The Company estimates that the expected life of the options granted using the simplified method allowable under the SEC’s Staff Accounting Bulletin No. 107, ~~Share Based Payments~~. The interest rate is based on the U.S. Treasury bill rates for U.S. treasury bills with terms commensurate with the expected term of the option grants on the grant date of the option. The Company accounts for stock option forfeitures when they occur.

There were no stock options granted prior to 2015. The assumptions the Company used to determine the fair value of stock options granted to employees and directors in 2017 and 2016 are as follows, presented on a weighted-average basis.

Nine Months Ended September 30,

2017

2016

Risk-free interest rate

2.0
%

1.4
%
Expected term (in years)

6.0

6.1

Expected volatility

79.8
%

77.6
%
Expected dividend yield

0
%

0
%

~~The~~ following ~~table summarizes the stock-based compensation~~ expense categories for the three and nine months ended September 30, ~~2017~~2021 and ~~2016, under the Plans~~2020 of its consolidated statements of operations and comprehensive loss (in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Stock-based compensation:

Research and development

$
121

$
104

$
402

$
286

General and administrative

389

274

1,081

729

Total Stock-based compensation

$
510

$
378

$
1,483

$
1,015


Share-Based Compensation
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development expenses	$	1,115	$	1,135	$	4,197	$	1,682
General and administrative expenses		400		59		1,357		517
	$	1,515	$	1,194	$	5,554	$	2,199

~~The fair value of stock options vested during the nine months ended September 30, 2017 was $1,275,000.~~ At September 30, ~~2017,~~2021, there was ~~$3,875,000~~$4.4 million of unrecognized stock-based compensation expense relating to stock options granted pursuant to the Stock Incentive Plans, which will be recognized over the weighted-average remaining vesting period of ~~2.3~~2.7 years.

~~Reserved Shares~~

~~As of~~At September 30, ~~2017~~2021, there was $1.5 million of unrecognized stock-based compensation expense relating to the time-based RSUs granted pursuant to the Stock Incentive Plans, which will be recognized over the weighted-average remaining vesting period of 3.0 years.

11. Significant Agreements

License and ~~2016,~~Collaboration agreements

For the nine months ended September 30, 2021 and 2020, the Company ~~has reserved~~had License and Collaboration agreements (“LCAs”) with Denali, Ares and AstraZeneca. The following table summarizes the ~~following shares~~revenue recognized in the Company’s consolidated statements of ~~common stock for potential conversion of the exercise of warrants~~operations and ~~outstanding options~~comprehensive loss from these arrangements (in thousands):


Revenue by Collaboration Partner
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Ares	$	0		8,691		2,800		9,945
Denali		0		504		117		1,148
AstraZeneca		500	$	0		500	$	0
Other		251	$	0		251	$	0
Total	$	751	$	9,195	$	3,668	$	11,093

2019 License and ~~issuance of shares available for grant under the 2015 Plan:~~collaboration agreement with Ares Trading S.A.

September 30,

2017

2016

2016 BioHEP warrants

125,000

125,000

2016 IPO warrants

28,347

28,347

November Private Placement warrants

1,644,737

—

2014 and 2015 Stock incentive plans

1,449,652

1,475,000

Total

3,247,736

1,628,347

Summary

~~8. COMMITMENTS AND CONTINGENCIES~~

~~Leases~~

In April 2015, the Company entered into an amendment to the lease for its research and development facility in Milford, Massachusetts to extend the term of the lease through March 31, 2018 and expand the leased laboratory space.

~~In March 2016,~~On May 13, 2019, the Company entered into a ~~new operating lease~~licensing and collaboration agreement ("2019 LCA") with Ares, pursuant to which the Company granted the option to enter into a worldwide, exclusive license to certain patents and know-how to develop, manufacture and commercialize two separate mAb2 antibody products that each contain a specific Fcab and a Fab target pair (each a licensed product).

For the exclusive rights granted in relation to the first molecule, an option fee of $11.1 million was paid by Ares to the Company. Following receipt of the option fee, Ares became responsible for the development of the molecule and development, regulatory and sales-based royalties become payable to Company upon achievement of specified events.

On July 15, 2020, a deed of amendment (the “2020 Amendment”) was entered into in respect of the 2019 LCA. The 2020 Amendment had two main purposes (i) to grant additional options to acquire intellectual property rights for a third and fourth molecule; and (ii) to allow Ares to exercise its ~~headquarters~~option early to acquire intellectual property rights to the second molecule included in ~~Hopkinton, Massachusetts with~~the 2019 LCA as well as to terminate the R&D services. An option fee of $8.5 million was paid by Ares to the Company on exercise of the option to acquire rights to the second molecule.

During March 2021 Ares paid an option fee of $2.7 million to acquire the rights to the third molecule.

As a ~~lease term through May 31, 2021.~~ result of the 2020 Amendment, the maximum amount payable by Ares on the achievement of certain development and regulatory milestones in the aggregate was increased to $473.9 million, and the maximum amount payable on the achievement of certain commercial milestones was increased to $292.3 million. In addition, to the extent that any product candidates covered by the exclusive licenses granted to Ares are commercialized, the Company will be entitled to receive a single digit royalty based on a percentage of net sales on a country-by-country basis.

Revenue recognition

Management has considered the performance obligations identified in the Ares LCA and concluded that the option for the grant of intellectual property rights is not distinct from the provision of R&D services, as the R&D services would significantly modify the early-stage intellectual property. As a result, the option for the grant of intellectual property rights and the provision of R&D services has been combined into a single performance obligation for each individual molecule included in the 2019 LCA. The Company recognized revenue using the cost-to-cost method, which it believes best depicted the transfer of control of the services to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation.

The total ~~payments due during~~transaction price for the ~~term~~2019 LCA, was initially determined to be $15.4 million, consisting of the ~~lease~~upfront payment for the first molecule and research and development funding for the research term for the second molecule. Variable consideration to be paid to the company upon reaching certain milestones had been excluded from the calculation, as at the inception of the contract, it was not probable that a significant reversal of revenue recognized would not occur in a subsequent reporting period.

There were two components identified in the 2020 Amendment, each of which was accounted for as a separate performance obligation. The first component, the grant of the additional options to acquire intellectual property rights for the third and fourth molecule, was deemed to be distinct, as the customer can benefit from it on its own, and it is independent of the delivery of other performance obligations in the 2019 LCA. Additionally, as the amount of consideration reflects a standalone selling price, the Company determined that the second component is accounted for as a separate contract.

The second component, which allowed the customer to exercise its option to acquire intellectual property rights to the second molecule early, is considered to be a modification of the 2019 LCA. This is because the option is not independent of the R&D services provided under the 2019 LCA, and therefore the goods and services are ~~approximately $771,000.~~not distinct. The Company updated the transaction price and measure of progress for the performance obligation relating to this molecule.

~~Rent paid for~~For the three and nine months ended September 30, ~~2017~~2020, $0.2 million and $1.5 million was ~~$59,000~~recognized in relation to the first antibody included in the 2020 Amendment.

During the nine months ended September 30, 2021, Ares provided notice of its intention to exercise its option granted under the 2020 Amendment to acquire the intellectual property rights for an additional molecule and ~~$174,000, respectively. Rent~~$2.7 million was recognized at a point in time in respect of the option exercise.

License and collaboration agreement with Denali Therapeutics, Inc.

Summary

In August 2016 the Company entered into an exclusive license and collaboration agreement (the “Denali LCA”) with Denali. Under the terms of the Denali LCA, Denali was granted the right to nominate up to three Fcab targets for approval (“Accepted Fcab Targets”), within the first three years of the date of the agreement. Upon entering into the Denali LCA, Denali had selected Transferrin receptor as the first Accepted Fcab Target and paid an upfront fee of $5.5 million to the Company. In May 2018, Denali exercised its right to nominate two additional Fcab targets and identified a second Accepted Fcab Target. Denali made a one-time payment to the F-star group for the two additional Accepted Fcab Targets of $6.0 million and extended the time period for its selection of the third Accepted Fcab Target until August 2020.

Under the terms of the agreement the Company is entitled to receive contingent payments that relate to certain defined preclinical, clinical, regulatory, and commercial milestones with a maximum value of $49.5 million.

Revenue recognition

The Company has considered the performance obligations identified in the contracts and concluded that the grant of intellectual property rights is not distinct from the provision of R&D services, as the R&D services are expected to significantly modify the early-stage intellectual property. As a result, the grant of intellectual property rights and the provision of R&D services has been combined into a single performance obligation for this contract.

The initial transaction price for first Accepted Fcab Target was deemed to be $7.1 million consisting of $5.0 million for the grant of intellectual property rights and $2.1 million for R&D services. The initial transaction price for the second Accepted Fcab target was $5.1 million, consisting of $3.0 million for the grant of intellectual property rights and $2.1 million for R&D services. During the year ended December 31, 2019, the transaction price for the first Accepted Fcab was increased to $6.6 million due to achievement of a $1.5 million milestone that on initial recognition of the Denali LCA was not included in the transaction price, as it was not deemed probable that a reversal would not occur in a future reporting period.

All performance obligations were deemed to have been fully satisfied during the year ended December 31, 2019 in respect of the first Accepted Fcab Target, and during the three months ended March 30, 2021 in respect of the second Accepted Fcab Target. As a result, 0 revenue was recognized in respect of these targets for the three months ended September 30, 2021. In respect of the second Accepted Fcab Target, for the nine months ended September 30, 2021 and 2020, the Company recognized $0.1 million and $1.1 million, respectively, and for the three months ended September 30, 2020, the Company recognized $0.5 million.

2021 Agreement with AstraZeneca

Summary

On July 7, 2021 the Company entered into a License Agreement with AstraZeneca AB. Under the terms of the agreement the Company has granted an exclusive license to certain patents and know-how to develop, manufacture and commercialize STING inhibitor compounds. AstraZeneca will be responsible for all future research, development and commercialization activities.

For the exclusive rights granted, an initial upfront fee of $0.5 million was paid by AstraZeneca to the Company during the three months ended September 2021. The Company is entitled to receive additional contingent near-term preclinical milestones of $11.5 million, plus maximum contingent payments that relate to certain defined development and regulatory milestones of $96.5 million and commercial milestones of $221.3 million, as well as royalty payments based upon a single digit percentage on net sales of products developed. Pursuant to the STING Antagonist CVR Agreement, 80% of net proceeds received the Company under the License Agreement with AstraZeneca will be payable, pursuant to the Exchange Agreement, to common stockholders of Spring Bank as of November 19, 2020, immediately prior to the Closing of the transaction.

Revenue recognition

Management has identified a single performance obligation in the contract, which is the grant of intellectual property rights.

The total transaction price was initially determined to be $0.5 million, consisting only of the upfront payment. Variable consideration to be paid to the company upon reaching certain milestones has been excluded from the calculation, as at the inception of the contract, it is not probable that a significant reversal of revenue recognized would not occur in a subsequent reporting period. The transaction price was allocated to the single performance obligation, which was deemed to be fully satisfied on the grant of intellectual property rights, and therefore the initial upfront fee was recognized at a point in time.

In the three and nine months ended September 30, ~~2016 was $56,000~~2021, the Company recorded revenue of $0.5 million in respect of this contract.

Summary of Contract Assets and ~~$110,000, respectively.~~Liabilities

~~Future minimum commitments~~Up-front payments and fees are recorded as deferred revenue upon receipt or when due until such time as the Company satisfies its performance obligations under ~~all leases at September 30, 2017 are as follows (in thousands):~~

Year

2017

$
59

2018

174

2019

157

2020

164

Thereafter

70

Total minimum lease payments

$
624

~~See subsequent events (Note 10) regarding~~these arrangements. A contract asset is a ~~new lease commitment~~conditional right to consideration in exchange for goods or services that the Company ~~entered into after September 30, 2017.~~ has transferred to a customer. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

The ~~commitments under the new lease agreement are not included~~following table presents changes in the ~~table above.~~

~~BioHEP Technologies Ltd. License Agreement~~

~~In January 2016, the Company entered into an amended and restated license agreement with BioHEP, which became effective on February 1, 2016.~~

Under the amended and restated license agreement, the Company agreed to pay BioHEP up to $3.5 million in development and regulatory milestone payments for disease(s) caused by each distinct virus for which the Company develops licensed product(s). BioHEP is also eligible to receive tiered royalties in the low-to-mid single-digits on net product salesbalances of licensed products by the Company and its affiliates and sub licensees, and a specified share of non-royalty sublicensing revenues the Company and its affiliates receive from sub licensees, which share of sublicensing revenues is capped at a maximum aggregate of $2.0 million under all such sublicenses.

~~Contingencies~~

The Company accrues for contingent liabilities to the extent that the liability is probable and estimable. There are no accruals for contingent liabilities in these consolidated financial statements.

~~During May 2015, the Company entered into a transition agreement with~~ the Company’s former President and Chief Executive Officer. Under the transition agreement, he continued to serve as the Company’s president and chief executive officer for a transition period that ended on August 17, 2015. Following the transition period, the Company made 18 monthly payments totaling $464,000 and also provided benefits consistent with the coverage that was provided prior to the execution of the transition agreement. There was no remaining unpaid balance relating to this obligation at September 30, 2017.contract liabilities (in thousands):


	Deferred revenue balance at January 1, 2021		Additions		Revenue recognized			Impact of exchange rates			Deferred revenue balance at September 30, 2021
Deferred revenue
Ares collaboration	$	37	$	0	$	(37	)	$	0		$	0
Denali collaboration		263		0		(117	)		(146	)		0
Total deferred revenue	$	300	$	0	$	(154	)	$	(146	)	$	0

~~9. RELATED PARTY TRANSACTIONS~~

During the nine months ended September 30, ~~2016,~~2021, all revenue recognized by the Company ~~reimbursed BioHEP,~~as a ~~greater than five percent stockholder as~~result of ~~September 30, 2016, $14,000~~changes in the contract liability balances in the respective periods was based on proportional performance.

12. Commitments and Contingencies

Lease Obligations

On January 27, 2021, the Company signed an operating lease for ~~legal expenses that BioHEP incurred~~three years for its corporate headquarters in ~~connection with entering into the amended and restated license agreement.~~Cambridge, United Kingdom, which has approximately 2.3 years remaining. The Company ~~incurred no such payments during~~also has leases for the former Spring Bank headquarters and laboratory space in Hopkinton, Massachusetts, which are being subleased. The Company’s leases have remaining lease terms of approximately 7.1 years for its former principal office and laboratory space, which includes an option to extend the lease for up to five years. The Company’s former locations are being subleased through the remainder of the lease term.

Operating lease costs under the leases for the nine months ended September 30, ~~2017.~~2021, were approximately $0.8 million.

The following table summarizes the Company’s maturities of operating lease liabilities as of September 30, 2021 (in thousands):


Maturities of Operating Lease Liabilities
Periods
For the period October 1, 2021 to December 31, 2021	$	242
2022		978
2023		990
2024		474
2025		486
Thereafter		1,444
Total lease payments	$	4,614

Sublease

~~10. SUBSEQUENT EVENTS~~

The Company subleases the former Spring Bank offices in Hopkinton, Massachusetts. Operating sublease income under operating lease agreements for the nine months ended September 30, 2021, was $0.4 million. This sublease

has ~~evaluated subsequent events through~~a remaining lease terms of 7.1 years. Future expected cash receipts from our sublease as of September 30, 2021, are as follows (in thousands):


Future Expected Cash Receipts From Sublease
Period
For the period October 1, 2021 to December 31, 2021	$	56
2022		462
2023		474
2024		486
2025		498
Thereafter		1,481
Total sublease receipts	$	3,457

Service Agreements

As of September 30, 2021, the Company had contractual commitments of $2.6 million with a contract manufacturing organization (“CMO”) for activities that are ongoing or are scheduled to start between three and nine months of the date of the statement of financial position. Under the terms of the agreement with the CMO, the Company is committed to pay for some activities if those activities are cancelled up to three, six or nine months prior to the commencement date.

Contingent value rights

The acquisition-date fair value of the Contingent Value Rights ("CVR") liability represents the future payments that are contingent upon the achievement of sale or licensing for the STING product candidates. The fair value of the contingent value rights is based on ~~which~~the Company’s probability-weighted discounted cash flow assessment that considers probability and timing of future payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving a sale or licensing agreement, anticipated timelines, and discount rate. The current liability of the CVR was $0.6 million and $2.1 million at September 30, 2021 and December 31, 2020, respectively. The long term liability of the CVR was $2.9 million and $0.4 million at September 30, 2021 and December 31, 2020, respectively. Changes in the fair value of the liability will be recognized in the consolidated statement of operations and comprehensive loss until settlement.

13. Subsequent Events

On October 19, 2021, the Company entered into a License and Collaboration Agreement with Janssen Biotech, Inc., one of the Janssen Pharmaceutical Companies of Johnson & Johnson. The agreement was facilitated by Johnson & Johnson Innovation. Under the terms of the agreement, F-star has granted Janssen a worldwide, exclusive royalty-bearing license to research, develop, and commercialize up to five novel bispecific antibodies directed to Janssen therapeutic targets using F-star’s proprietary Fcab™ and mAb2™ platforms. Janssen will be responsible for all research, development and commercialization activities under the agreement. Under the terms of the agreement F-star is entitled to receive upfront fees of $17.5 million with total potential income of up to $1.35 billion. F-star is also eligible to receive potential tiered mid-single digit royalties on annual net sales.

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

The following information should be read in conjunction with the unaudited financial ~~statements were issued, to ensure that~~information and the notes thereto included in this ~~submission includes appropriate disclosure of events both recognized in~~Quarterly Report on Form 10-Q and the consolidated financial statements and ~~events which occurred subsequently but were not recognized in the consolidated financial statements.~~

On October 4, 2017, the Company entered into a lease agreement (the “New Lease”) in Hopkinton, Massachusetts. The premises covered by the New Lease will serve as the Company’s new principal office and laboratory space. The initial term of the New Lease is 125 months beginning on the date on which the landlord substantially completes certain renovations to the premises covered by the New Lease. The Company has the option to extend the New Lease one time for an additional 5-year period. Following an eleven-month rent abatement period, the Company will be obligated to make monthly rent payments in the amount of $34,533, which is subject to increase by approximately 3% annuallynotes thereto for the ~~first five years~~year ended December 31, 2020, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K filed with the ~~New Lease~~SEC on March 30, 2021.

Our actual results and ~~by approximately 2.5% annually thereafter. The total lease payments~~the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements due ~~during the term of the lease are approximately $4.4 million. In addition, the Company is responsible~~to various important factors, risks and uncertainties, including, but not limited to, those set forth under ~~the New Lease for specified costs and charges, including certain operating expenses, utilities, taxes and insurance.~~

~~Item 2.~~

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

~~You should read the following discussion and analysis of financial condition and results of operations together with Part I, Item 1“Financial~~“Forward-Looking Statements” ~~and related notes~~ included elsewhere in this Quarterly Report on Form 10-Q or under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 30, 2021, as may be updated by Part II, Item 1A, Risk Factors of our subsequently filed Quarterly Reports on Form 10-Q. We caution our readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.

~~Overview~~We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms including, but not limited to, “may,” “likely,” “will,” “should,” “would,” “design,” “expect,” “seek,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.

These forward-looking statements include, but are not limited to, statements about:



our ongoing and planned preclinical studies and clinical trials;



preclinical study data and clinical trial data and the timing of results of our ongoing clinical studies and/or trials;



our plans to seek and enter into clinical trial collaborations and other broader collaborations;



the direct and indirect impact of the COVID-19 pandemic on our business operations and financial condition, including manufacturing, research and development costs, clinical trials, regulatory processes and employee expenses; and



our estimates regarding prospects, strategies, expenses, operating capital requirements, results of operations and needs for additional financing.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause actual results or events to differ materially from the forward-looking statements that we make include, but are not limited to, the following:



We are very early in our development efforts and our product candidates may not be successful in later stage clinical trials. Results obtained in our preclinical studies and clinical trials to date are not necessarily indicative of results to be obtained in future clinical trials. As a result, our product candidates may never be approved as marketable therapeutics.



We will need additional funding to complete the development of our product candidates and before we can expect to become profitable from the sales of our products, if approved. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.



We rely, and expect to continue to rely, on third parties to conduct our clinical trials and to manufacture our product candidates for preclinical and clinical testing. These third parties may not perform satisfactorily, which could delay our product development activities.



If we are unable to adequately protect our proprietary technology or obtain and maintain issued patents which are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects.



We may not be able to retain key executives or to attract, retain and motivate key personnel. If we are unable to retain such key personnel, it could have a material adverse impact on our business and prospects.



Business interruptions resulting from COVID-19 outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

materially different from what we expect. You should also read carefully the factors described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2021, to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and our website. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

Overview

F-star Therapeutics, Inc. (collectively with its subsidiaries, “F-star” or the “Company”) is a clinical-stage biopharmaceutical company ~~engaged~~dedicated to developing next generation immunotherapies to transform the lives of patients with cancer. F-star is pioneering the use of tetravalent (2+2) bispecific antibodies to create a paradigm shift in cancer therapy. The Company has four second generation immuno-oncology ("IO") therapeutics in the clinic, each directed against some of the most promising IO targets in drug development, including LAG-3 and CD137. F-star’s proprietary antibody discovery platform is protected by an extensive IP estate. F-star has over 500 granted patents and ~~development of a novel class of therapeutics using~~pending patent applications relating to its platform technology and associated product pipeline. The Company has attracted multiple partnerships with biopharma targeting the significant unmet needs across several disease areas, including oncology, immunology, and CNS. F-star’s goal is to offer patients better and more durable benefits than currently available immuno-oncology treatments by developing medicines that seek to block tumor immune evasion. Through our proprietary ~~small molecule nucleic acid hybrid,~~tetravalent, bispecific natural antibody (mAb²™) format, our mission is to generate highly differentiated medicines with monoclonal antibody-like manufacturability, good safety and tolerability. With four distinct binding sites in a natural human antibody format, we believe that our proprietary technology will overcome many of the challenges facing current immuno-oncology therapies, due to the strong pharmacology enabled by tetravalent bispecific binding.

Our Programs

F-star’s most advanced product candidate, FS118, is currently being evaluated in a proof-of-concept Phase 2 trial in PD-1/PD-L1 acquired resistance head and neck cancer patients. FS118 is a tetravalent mAb2 bispecific antibody targeting two receptors, PD-L1 and LAG-3, both of which are validated targets in immuno-oncology. Phase 1 data from 43 heavily pre-treated patients with advanced cancer, who have failed PD-1/PD-L1 therapy, showed that administration of FS118 was well-tolerated with no dose limiting toxicities up to 20 mg/kg. In addition, a disease control rate (“DCR”), defined as either a complete response, partial response or ~~SMNH, chemistry platform. Our SMNH compounds are small segments~~stable disease, of ~~nucleic acids~~49% was observed in 39 evaluable patients receiving dose levels of FS118 of 1mg/kg or greater. In acquired resistance patients, DCR was 59% (16 out of 27 patients) and long-term (greater than six months) disease control was observed in six of these patients. We expect to provide an update from the proof-of-concept Phase 2 trial in PD-1/PD-L1 acquired resistance head and neck cancer patients in mid-2022. Recent data from an external randomized phase 3 trial in patients with previously untreated, locally advanced or metastatic melanoma provides clinical validation for the combination of LAG-3 and PD-1 inhibition. This clinical benefit in targeting PD-1 and LAG-3 gives us reason to believe that ~~we design~~FS118 has potential to ~~selectively target and modulate the activity of specific proteins implicated~~benefit patients not only with acquired resistance, but also in ~~various disease states.~~preventing resistance in patients receiving PD-1 monotherapy. We are ~~developing our most advanced SMNH~~initiating a clinical trial in checkpoint inhibitor (CPI) naïve patients in biomarker enriched non-small cell lung cancer (“NSCLC”) and diffuse large B cell lymphoma (“DLBCL”) populations in second half of 2021.

F-star’s second product candidate, ~~inarigivir soproxil (formerly known as SB 9200), which we refer~~FS120, aims to ~~as inarigivir,~~improve checkpoint inhibitor and chemotherapy outcomes and is a mAb2 bispecific antibody that is designed to bind to and stimulate OX40 and CD137, two proteins found on the surface of T cells that both function to enhance T cell activity. F-star is developing FS120 alone and in combination with PD-1/PD-L1 therapy for the treatment of ~~certain viral diseases. We~~tumors where PD-1/PD-L1 products are approved, and which have ~~designed inarigivir to selectively activate within infected cells~~co-expression of OX40 and CD137 in the ~~cellular proteins, retinoic acid-inducible gene~~tumor microenvironment. F-star initiated a Phase 1 (RIG-I) and nucleotide-binding oligomerization domain-containing protein 2 (NOD2), to inhibit viral replication and to cause the induction of intracellular interferon signaling pathways for antiviral defense. We believe that inarigivir may play an important role in antiviral therapy by modulating the body’s immune response through its mechanisms of action to fight viral infections. We are also developing other SMNH product candidates, including SB 11285, an immunotherapeutic agent for the treatment of selected cancers through the activation of the STimulator of INterferon Genes, or STING, pathway.

~~RIG-I Product Candidates~~

~~We are currently developing inarigivir for the treatment of chronic hepatitis B virus, or HBV. We are conducting Part A of our Phase 2 ACHIEVE multi-center~~ clinical trial ~~of inarigivir~~ in ~~Canada, Hong Kong, Korea and Taiwan. Part A of the Phase 2 ACHIEVE trial is a randomized, placebo-controlled, multiple ascending dose trial in up to 80 non-cirrhotic~~ patients ~~infected~~ with chronic HBV using doses of 25 mg, 50 mg, 100 mg and 200 mg of inarigivir as a monotherapy administered daily for 12 weeks. Following this treatment, all patients will receive treatment with the oral antiviral agent tenofovir disoproxil fumarate (marketed by Gilead Sciences, Inc., or Gilead, as Viread®), which we refer to as Viread, as a monotherapy for 12 weeks. Patients will be sequentially enrolled into one of the four dose cohorts and randomized between the inarigivir dose group or placebo on a 4:1 basis. Patients are stratified based on HBeAg positive (+) or negative (–) status. HBeAg is a non-structural protein which is secreted by the virus and whose presence in blood, or HBeAg–positive, is indicative of wild type or non-mutated virus with high levels of viral replication. The loss of HBeAg occurs secondary to mutations in the virus and results in a patient becoming HBeAg negative with a resulting lower level of actively replicating virus. The primary endpoints of Part A of the Phase 2 ACHIEVE clinical trial are safety and antiviral activity, as measured by the change in HBV DNA at week 12 from baseline. Multiple exploratory secondary endpoints include reduction or loss of hepatitis B surface antigen, or HBsAg, and HBeAg, quantitative HBV RNA as a marker for control of virus production and studies of immune activity.

In May 2017, we reported top-line results from the first inarigivir monotherapy dosing cohort of Part A of the Phase 2 ACHIEVE clinical trial indicating that a low dose (25mg) of inarigivir alone showed a favorable safety profile and antiviral activity against HBV DNA and HBsAg. The first inarigivir monotherapy dosing cohort consisted of 11 HBeAg-positive and 9 HBeAg–negative patients, of which 80% were genotype B/C, the most common Asian genotypes. Administration of inarigivir resulted in a statistically ~~significant reduction in HBV DNA at week 12 (unpaired t-test 2.85, p=0.01) compared to placebo, with a mean reduction of 0.6 log~~₁₀ ~~(range 0 to 1.87 log~~₁₀~~) in the inarigivir treatment group. For the secondary endpoint of reduction or loss of HBsAg, 5 of 16 patients (31%) in the inarigivir treatment group had a greater than 0.5 log~~₁₀ ~~reduction at any time point (range 0.52 to 1.01 log~~₁₀~~), compared to none in the placebo group. The 7 HBeAg–negative patients in the inarigivir treatment group had the greatest mean reduction in HBV DNA at 0.9 log~~₁₀~~, and 3 of these 7 patients also had a greater than 0.5 log~~₁₀ reduction in HBsAg. The overall safety profile of inarigivir was favorable with no serious adverse events observed during the 12 week study. Treatment-emergent adverse events ranged from mild to moderate in severity with no interferon-like side effects and were comparable to patients on placebo.

In October 2017, we reported additional results from the first cohort of Part A of the Phase 2 ACHIEVE clinical trial consisting of patient data from 12 weeks of Viread monotherapy treatment that followed 12 weeks of inarigivir (25mg) monotherapy treatment. Treatment with Viread monotherapy during weeks 12-24 of the first cohort induced potent suppression of HBV DNA in all patients including placebo, and 6 of 16 patients (38%) in the inarigivir treatment group had a greater than 0.5 log₁₀ ~~reduction in HBsAg at week 24, which included 3 HBeAg-positive patients. An associated greater than 0.75 log~~₁₀ reduction in HBeAg was seen in 4 of 9 (44%) HBeAg-positive patients in the inarigivir treatment group, compared to zero of four (0%) in the placebo group. We believe this data suggests an enhanced effect of Viread in the inarigivir treated patients and is supportive of the proposed combination strategy that will be evaluated in Part B of the Phase 2 ACHIEVE trial, as discussed below.

~~We expect to report top-line results from the second inarigivir monotherapy dosing cohort (50mg) of Part A of the Phase 2 ACHIEVE clinical trial~~advanced cancers in the fourth quarter of ~~2017,~~2020 and has completed the accelerated dose titration phase during the fourth quarter of 2021. We are continuing further dose escalation to ~~report top-line monotherapy results~~determine an optimal dosing regimen to initiate a combination of FS120 and the PD-1 inhibitor, pembrolizumab, in 2022. Pembrolizumab will be supplied under clinical trial collaboration and supply agreement with Merck & Co..

F-star’s third product candidate, FS222, aims to improve outcomes particularly in low PD-L1 expressing tumors and is a mAb2 bispecific antibody that is designed to target both the costimulatory CD137 and the inhibitory PD-L1 receptors, which are co-expressed in a number of tumor types. F-star initiated a Phase 1 clinical trial in patients with advanced cancers for ~~all patients treated~~FS222 in late 2020. We believe there is a strong rationale to combine FS222 with ~~inarigivir alone in the second half of 2018.~~

~~Part B of~~other anti-cancer agents, including targeted therapy and chemotherapy, and this can be done within the Phase ~~2 ACHIEVE clinical trial, which we expect to initiate in the second half of 2018, will consist of 12 weeks of combination treatment with inarigivir (100mg) and Viread. Following this treatment, all patients will receive treatment with Viread as a monotherapy for 12 weeks.~~ 1 study. We expect to ~~initiate Part B of this clinical trial~~report an update on the current single agent dose escalation study in the ~~second half~~fourth quarter of ~~2018. Both Parts A and B of the Phase 2 ACHIEVE clinical trial are being conducted under our clinical trial supply and collaboration agreement with Gilead.~~2021.

We have entered into multiple collaborations and seek to enter into additional collaborations with third parties that are investigating and/or developing compounds for the treatment of chronic HBV with different pharmacological mechanisms of action than inarigivir. Pursuant to this strategy, in 2016, we entered into an agreement with Arrowhead Pharmaceuticals, Inc., or Arrowhead, to collaborate on the study of the combined use of inarigivir and Arrowhead’s small interfering ribonucleic acid, or siRNA, product pipeline for the treatment of chronic HBV. Under this collaboration with Arrowhead, we agreed first to study the co-administration of both agents in preclinical models, with the potential to be addedSB 11285, which F-star acquired pursuant to a ~~clinical study. We have also entered into~~business combination with Spring Bank Pharmaceuticals, Inc. (“Spring Bank”), is a ~~material transfer agreement with a third party~~next generation cyclic dinucleotide STimulator of INterferon Gene (“STING”) agonist designed to conduct preclinical experiments examining the co-administration of inarigivir with a capsid inhibitor for the potential treatment of patients infected with chronic HBV. Additionally, in July 2017, we entered into a clinical trial collaboration with Gilead under which Gilead will fund and conduct a Phase 2 trial examining the co-administration of inarigivir and tenofovir alafenamide (marketed by Gileadimprove checkpoint inhibition outcomes as ~~Vemlidy®) in patients infected with chronic HBV.~~ ~~The protocol for this Phase 2~~ ~~clinical~~ ~~trial provides that treatment will consist of 12 weeks of combination therapy with inarigivir (50mg) and Vemlidy. Following this treatment, all patients will receive treatment with Vemlidy as a monotherapy for 12 weeks. We anticipate that Gilead will initiate this clinical trial in the first quarter of 2018.~~

~~We are also pursuing the development of the co-formulation of inarigivir with Viread and with entecavir (marketed as Baraclude®), which we refer to~~ as Baraclude, as potential fixed-dose combination products for the treatment of patients with chronic HBV who may benefit from the combined use of inarigivir as a potential immunomodulatory agent, and Baraclude or Viread, as the antiviral agent. We anticipate that the fixed-dose combination product(s) could result in enhanced patient compliance and potentially allow for a more favorable safety profile. We have conducted early development work on a co-formulation of inarigivir with Viread and believe that inarigivir with Viread is compatible in the same formulation. We believe that the immunomodulatory activity provided by inarigivir could become a key component of a future combinatorial treatment of patients infected with chronic HBV, which could increase the percentage of chronic HBV patients who achieve a functional cure.

~~STING Agonist Product Candidates~~

~~We are developing~~ SB ~~11285, a novel proprietary STING agonist, as a potential~~an immunotherapeutic ~~agent~~compound for the treatment of selected cancers. Recent published scientific literature indicates that the activation of the STING pathway can result in the induction of cellular interferons and cytokines and promote an aggressive and strong anti-tumor response through the induction of innate and adaptive immune response. In our preclinical studies performed in ~~in vitro~~ ~~systems,~~ SB 11285 ~~has been observed~~appeared to ~~cause the induction of interferon~~be well tolerated both alone and ~~other cytokines, as well as cell death, or apoptosis, of multiple tumor-derived cell lines.~~

~~We continue to conduct preclinical studies of SB 11285 in multiple~~ ~~in vivo~~ ~~cancer models. In 2017, we have presented data from~~ ~~in vivo~~ studies in the A20 lymphoma, CT26 colon carcinoma, B16 melanoma and orthotopic4T1 breast cancer syngeneic mouse models at various industry conferences, including the March 2017 Cancer Immunology and Immunotherapy Keystone Symposia, the June 2017 American Society of Clinical Oncology (ASCO) Annual Meeting and the October 2017 American Association for Cancer Research (AACR) Conference on Tumor Immunology and Immunotherapy.~~SB 11285 was evaluated~~ ~~for~~ tumor growth inhibition and tumor growth delay and has shown that it is highly potent and has a durable anti-tumor response when administered intravenously, intratumorally and intraperitoneally across different tumor models. The induction of immune-memory, tumor growth inhibition and abscopal anti-tumor activity upon intra-tumoral administration of SB 11285 has been observed in the A20 lymphoma model. In addition, in the CT26 colon cancer syngeneic mouse model, SB 11285 has exhibited dose-dependent, potent tumor growth inhibition and durable anti-tumor response upon intra-tumoral, intraperitoneal and intravenous routes of administration. In the B16 melanoma model, intravenous and intraperitoneal administration of SB 11285 showed significant inhibition of tumor growth. In the orthotopic 4T1 breast cancer model, intraperitoneal administration of SB 11285 resulted in significant inhibition of primary tumor growth, as well as inhibition of tumor metastasis. In the rat orthotopic bladder cancer model, intravenous administration of SB 11285 resulted in potent, dose-dependent inhibition of tumor growth in bladder. As part of the mechanism of action, immuno-histochemistry combined with flow cytometric analysis of tissues and blood from SB 11285-treated groups were conducted which revealed the presence of activated immune cells, including CD8+ T cells, natural killer (NK) cells and macrophages critical for anti-tumor activity. ~~We believe these preclinical studies demonstrate the potential for both intra-tumoral and systemic administration of SB 11285 to target a variety of tumors, which could potentially be used~~ in combination with ~~other therapeutic modalities.~~

~~We intend to continue the development of SB 11285~~atezolizumab across all dose levels tested to-date, including five dose levels as monotherapy and three dose levels as a ~~potentially important addition to~~combination. Initial analysis showed that pharmacokinetics (PK) were in-line with the ~~current standard~~predicted profile for rapid cellular uptake, a characteristic of ~~care~~second generation STING agonists. F-star is continuing with further dose-escalation and in ~~the treatment of~~ ~~various~~ ~~cancers that we believe could increase the treatment responses in patients. We intend to continue to advance the SB 11285 program with preclinical, toxicology, and process~~parallel pursuing strategic business development ~~efforts. Subject to the results of these preclinical studies, we hope to submit an investigational new drug application, or IND, and/or a clinical trial application, or CTA,~~opportunities for SB ~~11285 in mid-2018, and,~~ ~~if cleared, commence Phase Ib/II clinical trials in liver cancer~~11285. We expect to report an update on this study in the second half of ~~2018.~~2022.

Share Exchange Agreement

On November 20, 2020, the Company, formerly known as Spring Bank, completed a business combination (the “Transaction”) with F-star Therapeutics Limited (“F-star Ltd”) in accordance with the terms of the Share Exchange Agreement, dated July 29, 2020 (the “Exchange Agreement”), by and among the Company, F-star Ltd and certain holders of the capital stock and convertible notes of F-star Ltd (each a “Seller”, and collectively with holders of F-star Ltd securities who subsequently became parties to the Exchange Agreement, the “Sellers”). Pursuant to the Exchange Agreement, each ordinary share of F-star Ltd outstanding immediately prior to the closing of the Transaction (the “Closing”) was exchanged by the Sellers that owned such F-star Ltd shares for a number of duly authorized, validly issued, fully paid and non-assessable shares of Company common stock pursuant to an exchange ratio formula as set forth in the Exchange Agreement (the “Exchange Ratio”), rounded to the nearest whole share of Company common stock (after aggregating all fractional shares of Company common stock issuable to such Seller). Also, on November 20, 2020, in connection with, and prior to completion of, the Transaction, Spring Bank effected a 1-for-4 reverse stock split of its common stock (the “Reverse Stock Split”) and, following the completion of the Transaction, changed its name to F-star Therapeutics, Inc. Following the completion of the Transaction, the business of the Company became the business conducted by F-star, which is a clinical-stage immuno-oncology company focused on cancer treatment through its proprietary tetravalent bispecific antibody programs. Unless otherwise noted, all references to share amounts in this report reflect the Reverse Stock Split.

Under the terms of the Exchange Agreement, at the Closing, Spring Bank issued an aggregate of 4,620,618 shares of its common stock to F-star Ltd stockholders, based on an Exchange Ratio of 0.1125 shares of Spring Bank common stock for each F-star Ltd ordinary share, stock option and restricted stock unit (“RSU”) outstanding immediately prior to the Closing. The Exchange Ratio was determined through arms-length negotiations between Spring Bank and F-star Ltd pursuant to a formula set forth in the Exchange Agreement.

Pursuant to the Exchange Agreement, immediately prior to the Closing, certain investors in F-star Ltd purchased $15.0 million of F-star Ltd ordinary shares (the “Pre-Closing Financing”). These ordinary shares of F-star Ltd were then exchanged at the Closing for shares of the Company’s common stock in the Transaction at the Exchange Ratio.

Pursuant to the Exchange Agreement, all outstanding options to purchase Spring Bank common stock were accelerated immediately prior to the Closing and each outstanding option with an exercise price greater than the closing price of the stock on the Closing Date was exercised in full and all other outstanding options to purchase Company common stock were cancelled effective as of the Closing Date.

Immediately following the Reverse Stock Split and the Closing, there were approximately 4,449,559 shares of Spring Bank common stock outstanding. Following the Closing, the F-star Ltd stockholders beneficially owned approximately 53.7% of the combined company’s common stock, and the existing stockholders of Spring Bank beneficially owned approximately 46.3% of the combined company’s common stock. Concurrently with the execution of the Exchange Agreement, certain officers and directors of Spring Bank and F-star Ltd and certain

stockholders of F-star Ltd entered into lock-up agreements, pursuant to which they agreed to certain restrictions on transfers of any shares of the Company’s common stock for the 180-day period following the Closing, other than the shares of the Company’s common stock received in exchange for ordinary shares of F-star Ltd subscribed for in the Pre-Closing Financing and pursuant to certain other limited exceptions.

In ~~August 2017, we~~addition, at the Closing, Spring Bank, F-star Ltd, a representative of Spring Bank stockholders prior to the Closing, and Computershare Trust Company N.A., as the Rights Agent, entered into a ~~preclinical research collaboration~~STING Agonist Contingent Value Rights Agreement (the “STING Agonist CVR Agreement”). Pursuant to the Exchange Agreement and the STING Agonist CVR Agreement, each pre-Reverse Stock Split share of Spring Bank common stock held by stockholders as of the record date on November 19, 2020, immediately prior to the Closing, received a dividend of one contingent value right (“CVR”) (“STING Agonist CVR”), payable on a pre-Reverse Stock Split basis, entitling such holders to receive, in connection with ~~a third party to examine the potential for the conjugation of selected compounds from our~~certain transactions involving proprietary STING agonist ~~platform~~compound designated as SB 11285 occurring on or prior to the STING Agonist CVR Expiration Date (as defined below) that resulted in aggregate Net Proceeds (as defined in the STING Agonist CVR Agreement) at least equal to the Target Payment Amount (as defined below), an aggregate amount equal to the greater of (i) 25% of the Net Proceeds received from all CVR Transactions (as defined in the STING Agonist CVR Agreement) and (ii) an aggregate amount equal to the product of $1.00 and the total number of shares of Company common stock outstanding as of such record date (not to exceed an aggregate amount of $18.0 million) (the “Target Payment Amount”).

The CVR payment obligation expires on the later of 18 months following the Closing or the one-year anniversary of the date of the final database lock of the STING clinical trial (as defined in the STING Agonist CVR Agreement) (the “STING Agonist CVR Expiration Date”). The STING Agonist CVRs are not transferable, except in certain limited circumstances, are not certificated or evidenced by any instrument, do not accrue interest and are not registered with ~~selected proprietary antibodies from~~ the ~~third-party’s immune-oncology portfolio.~~SEC or listed for trading on any exchange. Until the STING Agonist CVR Expiration Date, subject to certain exceptions, the Company is required to use commercially reasonable efforts to (a) complete the STING Trial and (b) pursue a CVR Transaction. The STING Agonist CVR Agreement became effective upon the Closing and, unless terminated earlier in accordance with its terms, will continue in effect until the STING Agonist CVR Expiration Date the payment or all CVR payment amounts are paid pursuant to their terms.

~~Recent Developments~~

~~On October 4, 2017, we~~At the Closing, Spring Bank, F-star Ltd, a representative of Spring Bank stockholders prior to the Closing, and Computershare Trust Company N.A., as the Rights Agent, also entered into a ~~lease~~STING Antagonist Contingent Value Rights Agreement (the “STING Antagonist CVR Agreement”). Pursuant to the Exchange Agreement and the STING Antagonist CVR Agreement, each share of common stock held by Spring Bank stockholders as of November 19, 2020, immediately prior to the Closing, received a dividend of one CVR (“STING Antagonist CVR”) entitling such holders to receive, in connection with the execution of a potential development agreement (the “Approved Development Agreement”) and certain other transactions involving proprietary STING antagonist compound occurring on or prior to the ~~New Lease,~~STING Antagonist CVR Expiration Date (as defined below) equal to: 80% of all net proceeds (as defined in ~~Hopkinton, Massachusetts. The premises covered~~the STING Antagonist CVR Agreement) received by the ~~New Lease will serve as our new principal office~~Company after the Closing pursuant to (i) the Approved Development Agreement, if any, and ~~laboratory space.~~ (ii) all CVR Transactions (as defined in the STING Antagonist CVR Agreement) entered into prior to the STING Antagonist CVR Expiration Date.

The ~~initial term~~STING Antagonist CVRs are not transferable, except in certain limited circumstances, are not certificated or evidenced by any instrument, do not accrue interest, and are not registered with the SEC or listed for trading on any exchange. Until the STING Antagonist CVR Expiration Date, subject to certain exceptions, the Company is required to use commercially reasonable efforts to (a) consummate the Approved Development Agreement, (b) to perform the terms of the ~~New Lease~~Approved Development Agreement and (c) pursue CVR Transactions. The STING Antagonist CVR Agreement became effective upon the Closing and, unless terminated earlier in accordance with its terms, will continue in effect until the STING Antagonist CVR Expiration Date or all CVR payment amounts are paid pursuant to their terms. On July 8, 2021, the Company entered into a License Agreement with AstraZeneca AB (“AstraZeneca”) under which AstraZeneca will receive global rights to research, develop and commercialize next generation STING inhibitor compounds. Under the terms of the agreement, AstraZeneca is ~~125~~granted exclusive access to and will be responsible for all future research, development and commercialization of the STING inhibitor compounds. F-star is eligible to receive upfront and near-term payments of up to $12 million upon meeting certain milestones. In addition, F-star will be eligible for development and sales milestone payments of over $300 million, as well as single digit percentage royalty payments. Payments received by F-star are subject to a contingent value

rights agreement (CVR 2), under which 80% will be payable to stockholders of F-star that were previously stockholders of Spring Bank prior to the business combination between F-star and Spring Bank.

The acquisition-date fair value of the CVR liability represents the future payments that are contingent upon the achievement of sale or licensing for the product candidates. The fair value of the contingent consideration acquired of $2.5 million as of December 31, 2020, and $3.5 million as of September 30, 2021, is based on the Company’s probability-weighted discounted cash flow assessment that considers probability and timing of future payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving a sale or licensing agreement, anticipated timelines, and discount rate. Changes in the fair value of the liability will be recognized in the consolidated statement of operations and comprehensive loss until settlement. For the three months ended September 30, 2021, the estimated fair value increased to $3.5 million which resulted in a $0.4 million charge on the Consolidated Statements of Operations and Comprehensive Loss.

All issued and outstanding F-star Ltd share options granted under F-star’s three legacy equity incentive plans became exercisable in full immediately prior to the Closing. At the Closing, all issued share options and restricted stock units granted by F-star Ltd under the F-star Therapeutics Limited 2019 Equity Incentive Plan were replaced by options and awards on the same terms (including vesting), of the combined company’s common stock, based on the Exchange Ratio.

The Company’s common stock, which is listed on the Nasdaq Capital Market, traded through the close of business on Friday, November 20, 2020, under the ticker symbol “SBPH” and continued trading on the Nasdaq Capital Market, on a post-Reverse Stock Split adjusted basis, under the ticker symbol “FSTX” beginning on Monday, November 23, 2020. Commencing on November 23, 2020, the ~~date~~Company’s common stock was represented by a new CUSIP number, 30315R 107.

The Transaction was accounted for as a business combination using the acquisition method of accounting under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). The Transaction was accounted for as a reverse acquisition with F-star Ltd being deemed the acquiring company for accounting purposes. Under ASC 805, F-star Ltd as the accounting acquirer, recorded the assets acquired and liabilities assumed of Spring Bank in the Transaction at their fair values as of the acquisition date.

F-star Ltd was determined to be the accounting acquirer based on ~~which~~an analysis of the ~~landlord substantially completes certain renovations~~criteria outlined in ASC 805 and the facts and circumstances specific to the ~~premises covered by~~Transaction, including the ~~New Lease. We have~~fact that immediately following the ~~option to extend~~Transaction: (1) F-star Ltd shareholders owned the ~~New Lease one time for an additional 5-year period. The total lease payments due during the term~~majority of the ~~lease are approximately $4.4 million.~~voting rights of the combined company; (2) F-star Ltd designated a majority (five of eight) of the initial members of the board of directors of the combined company; and (3) F-star Ltd senior management held the key positions in senior management of the combined company. As a result, upon consummation of the Transaction, the historical financial statements of F-star Ltd became the historical financial statements of the combined organization.

~~Financial Operations Overview~~Impact of COVID-19 on our Business

~~To date, we have devoted substantially~~We continue to closely monitor the impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19, on all aspects on our business, including how the pandemic continues to impact our employees, clinical trials, development programs, manufacturing supply, and other aspects of our ~~resources~~operations. Overall, the global pandemic and consequent restrictions have resulted in a three to six-month delay in the operationalization of some aspects of our research and development ~~efforts,~~operations. Specifically, by the way of example, patient enrollment in our FS118 Phase 2 trial has been somewhat slower than anticipated as a result of limited clinical trial staffing at certain study sites combined with some investigative sites inability to support remote site monitoring. While the COVID-19 pandemic did not have a material adverse effect on our reported results for the nine months ended September 30, 2021, we are unable to predict the ultimate impact that the pandemic may have on our business, future results of operations, financial position, or cash flows. The extent to which our operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including ~~conducting clinical trials~~new information which may emerge concerning the severity of the outbreak, including the emergence and spread of variants of COVID-19, such as the delta variant, and actions by government authorities to contain the outbreak.

Recent Developments

Subsequent Events

On October 19, 2021, the Company entered into a License and Collaboration Agreement with Janssen Biotech, Inc., one of the Janssen Pharmaceutical Companies of Johnson & Johnson (“Janssen”). The agreement was facilitated by Johnson & Johnson Innovation. Under the terms of the agreement, F-star has granted Janssen a worldwide, exclusive royalty-bearing license to research, develop, and commercialize up to five novel bispecific antibodies directed to Janssen therapeutic targets using F-star’s proprietary Fcab™ and mAb2™ platforms. Janssen will be responsible for ~~our product candidates, protecting our intellectual property~~all research, development and ~~providing general and administrative support for these operations. We~~commercialization activities under the agreement. Under the terms of the agreement, F-star is entitled to receive upfront fees of $17.5 million with total potential income of up to $1.35 billion. F-star is also eligible to receive potential tiered mid-single digit royalties on annual net sales.

Components of Operating Results

License revenue

To date, we have not generated any revenue ~~to date other than~~ from ~~grants from the National Institutes of Health, or NIH. We have incurred significant annual net operating losses in every year since our inception~~product sales, and we do not expect to ~~continue to incur significant expenses and net operating losses~~generate any revenue from product sales for the foreseeable future. Our ~~net losses were $10.8 million~~revenue consists of collaboration revenue under our license and ~~$26.2 million~~collaboration agreements with Ares Trading S.A. (“Ares”), Denali Therapeutics, Inc. (“Denali”) and AstraZeneca, including amounts that are recognized related to upfront payments, milestone payments, option exercise payments, and amounts due to us for research and development services. In the ~~three~~future, revenue may include new collaboration agreements, additional milestone payments, option exercise payments, and ~~nine months ended September 30, 2017, respectively, and $17.4 million for the year ended December 31, 2016. As of September 30, 2017, we had an accumulated deficit of $77.8 million. Our~~royalties on any net losses may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur significant expenses and increasing operating losses for the next several years. We anticipate that our expenses will increase significantly as we continue to develop inarigivir, SB 11285 and our other product candidates. See “—Liquidity and Capital Resources—Funding Requirements.” As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales ~~if ever, we expect to finance~~under our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies or product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve and sustain profitability, and we may never be able to do so.

~~As of September 30, 2017, we had $52.2 million in cash, cash equivalents and marketable securities.~~collaborations. We expect that ~~our cash, cash equivalents~~any revenue we generate will fluctuate from period to period as a result of the timing and ~~marketable securities as~~amount of September 30, 2017 will enable us to fund our operating expenses and capital expenditure requirements through the end of 2019. However, we anticipate that our existing cash, cash equivalents, restricted cash and marketable securities will not be sufficient to fund additional development of inarigivir beyond our Phase 2 ACHIEVE clinical trial. See “—Liquidity and Capital Resources.”

~~Grant revenue~~

Historically, we have generated revenue from grants from the NIH for the development of inarigivir. The NIH grants provided funding of $6.8 million between October 2003 and April 2016. As of September 30, 2017, no additional funding remains available to us under any grant for the development of any of our product candidates.

~~Operating expenses~~

~~Our operating expenses since inception have consisted primarily of~~license, research and development ~~expense~~services, and ~~general~~milestone and ~~administrative costs.~~other payments.

Operating Expenses

Research and development costs

Research and development costs are expensed as incurred. Research and development expenses ~~consist primarily~~are comprised of costs incurred ~~for our~~in performing research and development activities, including ~~our discovery efforts,~~salaries, share-based compensation and benefits, facilities costs and laboratory supplies, depreciation, amortization and impairment expense, manufacturing expenses and external costs of outside vendors engaged to conduct preclinical development activities and clinical trials as well as the cost of licensing technology. Typically, upfront payments and milestone payments made for the licensing of technology are expensed as research and development ~~of our product candidates,~~in the period in which they are incurred, except for payments relating for intellectual property rights with future alternative use which will be expensed when the intellectual property is in use. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Those expenses associated with R&D and clinical costs primarily include:



expenses incurred under agreements with ~~third parties, including~~ contract research organizations ~~or CROs, that conduct research, preclinical activities and clinical trials on our behalf~~(“CROs”) as well as ~~contract manufacturing organizations, or CMOs,~~investigative sites and consultants that ~~manufacture drug products for use in~~conduct our clinical trials, preclinical ~~and clinical trials;~~

~~salaries, benefits~~studies and other ~~related costs, including stock-based compensation expense, for personnel in our research~~scientific development services;



manufacturing scale-up expenses and ~~development functions;~~

~~costs of outside consultants, including their fees, stock-based compensation and related travel expenses;~~

the cost of ~~laboratory supplies and~~ acquiring ~~developing~~ and manufacturing preclinical ~~study~~ and clinical trial materials;



~~costs related to compliance with regulatory requirements; and~~

expenses incurred for outsourced professional scientific development services;



~~facility-related~~costs for laboratory materials and supplies used to support our research activities;



allocated facilities costs, depreciation, and other expenses, which include ~~direct depreciation costs and allocated expenses for~~ rent and ~~maintenance of facilities~~utilities;



up-front, milestone and ~~other operating costs.~~

management fees for maintaining licenses under our third-party licensing agreements; and



compensation expense.

~~We expense research and development costs as incurred. We recognize~~30

The Company recognizes external ~~development~~R&D costs based on an evaluation of the progress to completion of specific tasks using information provided to usit by ~~our vendors~~its internal program managers and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses.service providers.

Our primary focus of research and development since inception has been on the development of inarigivir. Our direct research and development expenses consist primarily of external costs, such as fees paid to investigators, consultants and CROs in connection with our preclinical studies and clinical trial and regulatory fees. We do not allocate employee-related costs and other indirect costs to specific research and development programs because our primary focus has been on the discovery and development of inarigivir. Our direct research and development expenses are not currently tracked on a program-by-program basis.

The successful development of our product candidates is highly uncertain. Accordingly, at this time, we cannot reasonably estimate the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of these product candidates. We are also unable to predict when, if ever, we will generate revenues from inarigivir or any of our other current or potential product candidates. This is due to the numerous risks and uncertainties associated with developing medicines, including the uncertainties of:

~~establishing an appropriate safety profile with IND-enabling toxicology studies;~~

~~successful enrollment in and completion of clinical trials;~~

~~receipt of marketing approvals from applicable regulatory authorities;~~

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

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

~~launching commercial sales of the products, if and when approved, whether alone or in collaboration with others; and~~

~~a continued acceptable safety profile of the products following approval.~~

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

Research and development activities are central to ~~our~~the Company’s business ~~model.~~models. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of ~~later-stage~~later stage clinical trials. ~~We expect~~As a result, the Company expects that ~~our~~ research and development expenses will ~~continue~~increase over the next several years as the Company increases personnel costs, initiate and conduct additional clinical trials and prepare regulatory filings related to ~~increase in~~ the ~~foreseeable future as we continue~~various product candidates.

The successful development of our product ~~candidates. However, we do not believe that it~~candidates is ~~possible~~highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to ~~accurately project total program-specific expenses through commercialization. There~~complete the remainder of the development of these product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from our product candidates. This is due to the numerous ~~factors~~risks and uncertainties associated with developing products, including the ~~successful commercialization of any~~uncertainty of:



research and development support of our product candidates, including conducting future ~~trial design~~clinical trials of FS118, FS120, FS222 and ~~various~~SB 11285;



progressing the clinical development of FS118, FS120, FS222 and SB11285;



establishing an appropriate safety profile with investigational new drug-enabling studies to advance our programs into clinical development;



identifying new product candidates to add to our development pipeline;



successful enrollment in, and the initiation and completion of clinical trials;



the timing, receipt and terms of any marketing approvals from applicable regulatory ~~requirements, many~~authorities;



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



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



the development and timely delivery of ~~which cannot~~commercial-grade drug formulations that can be ~~determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact~~used in our clinical trials;



addressing any competing technological and market developments, as well as any changes in governmental regulations;



negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations under such arrangements;



maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how, as well as obtaining and maintaining regulatory exclusivity for our product candidates;



continued acceptable safety profile of the drugs following approval; and



attracting, hiring, and retaining appropriately qualified personnel.

A change in the outcome of any of these variables with respect to the development ~~programs~~of a product candidate could mean a significant change in the costs and ~~plans.~~timing associated with the development of that product candidate. For example, the U.S. Food and Drug Administration, European Medicines Agency or another regulatory authority may require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or we may experience significant trial delays due to patient enrolment or other reasons, in which case we would be required to expend significant additional financial resources and time on the completion of clinical development. In addition, we may obtain unexpected results from our clinical trials, and we may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and

uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.

In September 2021, the Company identified an error in its accounting treatment for research and development expenses. This error resulted in an overstatement of research and development expenses for the first six months of 2021 and accrued expenses and other current liabilities as of March 31, 2021 and June 30, 2021. The Company assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99, Materiality, and ASC 250-10, Accounting Changes and Error Corrections. The Company determined that this error was not material to the financial statements of any prior interim period. To correct the immaterial misstatement, the Company decreased accumulated deficit by $0.3 million as of June 30, 2021.

General and administrative expenses

General and administrative expenses consist primarily of salaries, related benefits, travel, and ~~other related costs, including stock-based~~share-based compensation expense for personnel in ~~our~~ executive, finance, ~~corporate and business development~~legal and administrative functions. General and administrative expenses also include ~~legal fees relating to~~facility-related costs, patent filing and ~~corporate matters;~~prosecution costs, insurance and marketing costs and professional fees for legal, consulting, accounting, ~~auditing,~~audit, tax services and ~~consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation~~ costs ~~and allocated expenses for rent and maintenance of facilities and other operating costs.~~

~~We anticipate~~associated with being a public company. Other expense also includes foreign currency transaction losses. The Company expects that ~~our~~ general and administrative expenses will increase in the future as ~~we increase our headcount to support~~ the ~~expected growth in our research and development~~Company expands its operating activities and ~~the potential commercialization~~incurs costs of ~~our product candidates. We also expect to continue to incur significant expenses associated with~~ being a US public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, and investor and public relations costs.company.

Other income ~~(expense)~~and expenses, net

Other income ~~(expense) consists of~~and expenses, net, is primarily rent received from subletting an office in the United States and interest ~~income earned~~received on ~~our cash, cash equivalents, restricted cash~~overdue trade receivable balances, bank interest received, and ~~marketable securities~~interest expense, which is primarily bank interest payable and similar charges, the ~~gain/loss~~interest liability on ~~the change~~leased assets and convertible debt notes, changes in the fair value of CVR and foreign exchange losses incurred. Foreign exchange gain (loss) is foreign exchange gains or losses due to the ~~warrant liabilities.~~fluctuation of the GBP, U.S. dollar and/or the Euro. Change in the fair value of convertible debt is the fair value adjustment of the convertible notes as measured using level 3 inputs which was converted on November 20, 2020, with the transaction with Spring Bank.

~~Critical Accounting Policies and Significant Judgments and Estimates~~Income tax

~~Our consolidated financial statements are prepared in accordance with generally accepted accounting principles~~The Company is subject to corporate taxation in the United States, United Kingdom and Austria.

Our UK established entities have generated losses and some profits in the United Kingdom since inception and have therefore not paid significant UK corporation tax. Our Austrian subsidiary has historical losses in Austria with more recent profits, which has resulted in payment of ~~America.~~Austrian corporation tax in the years ended December 31, 2020, and 2019. The ~~preparation~~corporation tax benefit (tax) presented in the Company’s statements of ~~our consolidated financial statements~~comprehensive income (loss) represents the tax impact from its operating activities in the United States, United Kingdom and ~~related disclosures requires us~~Austria, which have generated taxable income in certain periods. As the entities located in the United Kingdom carry out extensive research and development activities, they seek to benefit from the UK research and development tax credit cash rebate regime known as the Small and Medium-sized Enterprises R&D Tax Credit Program (the “SME Program”). Qualifying expenditures largely comprise employment costs for research staff, consumables expenses incurred under agreements with third parties that conduct research and development, preclinical activities, clinical activities and manufacturing on the Company’s behalf and certain internal overhead costs incurred as part of research projects.

The tax credit received in the United Kingdom pursuant to the SME Program permits companies to deduct an extra 130% of their qualifying costs from their yearly profit or loss, as well as the normal 100% deduction, to make ~~estimates~~a total 230% deduction. If the company is incurring losses, it is entitled to claim a tax credit worth up to 14.5% of the surrenderable loss. To qualify for relief under the SME Program, companies are required to employ fewer than 500 staff and ~~assumptions that affect the reported amount~~have a turnover of ~~assets, liabilities, revenue, costs~~under €100.0 million or a balance sheet total of less than €86.0 million.

Research and ~~expenses and related disclosures. We believe that the estimates and assumptions involved~~development tax credits received in the ~~accounting policies described therein may have~~United Kingdom are recorded as a reduction in research and development expenses. The UK research and development tax credit is payable to companies after surrendering tax losses and is not dependent on current or future taxable income. As a result, it is not reflected as part of the ~~greatest potential impact on our consolidated financial statements~~income tax provision.

During the nine months ended September 30, 2021 the Company received $3.4 million in research and ~~therefore, consider these~~development tax credits related to ~~be our critical accounting policies. We evaluate our estimates~~the year ended December 31, 2020.

Income tax expense was not material for the three and ~~assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.~~nine months ended September 30, 2021.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a predetermined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:



CROs in connection with performing research services on our behalf and clinical trials;



investigative sites or other providers in connection with clinical trials;



vendors in connection with preclinical and clinical development activities; and



vendors related to product manufacturing, development and distribution of preclinical and clinical ~~supplies.~~

supplies and material.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

~~Equity-Classified Warrants~~Contingent value rights

In connection with entering into the amended and restated license agreement with BioHEP effective February 1, 2016, we issued to BioHEP a warrant to purchase 125,000 shares of our common stock at a purchase price of $16.00 per share. We evaluated the termsThe acquisition-date fair value of the ~~warrant and concluded~~CVR liability represents the future payments that ~~it should be equity-classified.~~are contingent upon the achievement of sale or licensing for the STING product candidates. The fair value of the ~~warrant, $0.8 million~~contingent value rights is based on the Company’s probability-weighted discounted cash flow assessment that considers probability and ~~was expensed as research and development costs.~~

~~In connection with our initial public offering, or IPO, we issued the sole book-running manager for the IPO warrants to purchase 28,347 shares~~timing of ~~common stock at an exercise price of $15.00 per share, which we refer to collectively~~future payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the ~~IPO warrants. We evaluated the terms~~probability of ~~the IPO warrants~~achieving a sale or licensing agreement, anticipated timelines, and ~~concluded that they should be equity-classified. The aggregate fair value of the IPO warrants was $0.2 million. See Note 7 of the notes to the unaudited financial statements included elsewhere~~discount rate. Changes in ~~this Quarterly Report on Form 10-Q.~~

~~Liability-Classified Warrants~~

In connection with our private placement offering in November 2016, or the November private placement, we issued warrants to purchase 1,644,737 shares of common stock to a group of accredited investors. The warrants will be exercisable beginning May 24, 2017 at an exercise price of $10.79 per share. We evaluated the terms of the warrants and concluded that they should be liability-classified. We recognize any change in the value of the warrant liability each reporting period in the statement of operations. As of September 30, 2017, the fair value of the ~~warrants was approximately $17.8 million, which is an increase~~liability will be recognized in the consolidated statement of ~~$11.5 million from~~operations and comprehensive loss until settlement.

Share-based compensation

The Company accounts for share-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 requires companies to estimate the fair value of ~~approximately $6.3 million as of December 31, 2016. See Note 7 of the notes to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.~~

~~Stock-Based Compensation~~

~~We measure stock options and other stock-based~~equity-based payment awards ~~granted to employees and directors based on the fair value~~ on the date of ~~grant~~grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated statements of operations and ~~recognize~~comprehensive loss.

The Company records the ~~corresponding~~expense for option awards using a graded vesting method. The Company accounts for forfeitures as they occur. For share-based awards granted to non-employee consultants, the measurement date is the date of grant. The compensation expense ~~of those awards, net of estimated forfeitures,~~is then recognized over the requisite service period, which is ~~generally~~ the vesting period of the respective award. ~~Generally, we issue~~

The fair value of stock options ~~and restricted stock awards with only service-based vesting conditions and record~~(“options”) on the ~~expense for these awards~~grant date is determined utilizing the Black-Scholes option-pricing model using the ~~straight-line method.~~

~~We measure~~single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including an option’s expected term and the price volatility of the underlying stock, ~~options and other stock-based awards granted~~ to ~~consultants and nonemployees based on~~determine the fair value of the ~~award on the date at which the related service is complete. We recognize this~~award.

The Company classifies share-based compensation expense over the period during which services are rendered by such consultants and nonemployees until completed. At the end of each financial reporting period prior to completion of the service, we remeasure the fair value of these awards using the then-current fair value of our common stock and updated assumption inputs in ~~the Black-Scholes option-pricing model.~~

We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model. Use of this model requires that we make assumptions as to the fair value of our common stock, the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. Because we lack company-specific historical and implied volatility information due in part to the limited time in which we have operated as a publicly traded company, we estimate our expected volatility based on the historical volatility of a group of publicly traded peer companies. We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our traded stock price. We use the simplified method prescribed by the SEC’s Staff Accounting Bulletin No. 107, ~~Share-Based Payment~~, to calculate the expected term of options granted to employees and directors. We base the expected term of options granted to consultants and nonemployees on the contractual term of the options. We determine the risk-free interest rate by reference

to the United States Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

~~There were no stock options granted prior to 2015. We recognize forfeitures as they occur and the compensation expense is reversed in the period that the forfeiture occurs.~~

In 2015, we began issuing stock options to employees, directors and consultants. During the periods ended September 30, 2017 and 2016, we issued common stock to consultants and advisors as compensation for services and recognized expense equal to the fair value of the shares issued. The following table summarizes the classification of our stock-based compensation expenses recognized in ourits consolidated statements of operations and comprehensive loss ~~(in thousands):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Research and development

$
121

$
104

$
402

$
286

General and administrative

389

274

1,081

729

$
510

$
378

$
1,483

$
1,015

~~JOBS Act~~

~~In April 2012,~~Income in 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,” or EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Subject to certain conditions, as an EGC, we intend to rely on certain exemptions afforded by the JOBS Act, including the exemption from: certain requirements related to the disclosure of executive compensation in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive compensation and any golden parachute payments; the requirement that the auditors provide an attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an EGC until the earliest of the last day of the fiscal yearsame manner in which ~~we have total annual gross revenues of approximately $1.07 billion~~the award recipient’s payroll costs are classified or ~~more;~~in which the last day of the fiscal year following the fifth anniversary of the date of the completion of the closing of an IPO; the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or the date on which weaward recipient’s service payments are ~~deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or the SEC.~~classified.

Results of Operations

Comparison of the ~~Three and Nine Months Ended~~three months ended September 30, ~~2017~~2021 and ~~2016~~2020

The ~~following~~ table below summarizes our results of operations for the three ~~and nine~~ months ended September 30, ~~2017~~2021 and ~~2016 (in thousands)~~2020 :

	For the Three Months Ended September 30,						Increase			For the Nine Months Ended September 30,						Increase
	2017			2016			(Decrease)			2017			2016			(Decrease)			Three Months Ended September 30,
Grant revenue	$	—		$	—		$	—		$	—		$	352		$	(352	)
																			2021			2020			Change
																			(in thousands)
Statements of Comprehensive Income
License revenue																			$	751		$	9,195		$	(8,444	)
Operating expenses:
Research and development		3,221			2,723			498			9,152			11,247			(2,095	)		5,113			5,321			(208	)
General and administrative		1,968			1,452			516			5,811			4,136			1,675			5,239			7,261			(2,022	)
Total operating expenses		5,189			4,175			1,014			14,963			15,383			(420	)	$	10,352		$	12,582		$	(2,230	)
Loss from operations		(5,189	)		(4,175	)		(1,014	)		(14,963	)		(15,031	)		68			(9,601	)		(3,387	)		(6,214	)
Other income		141			27			114			220			65			155
Change in fair value of warrant liabilities		(5,780	)		—			(5,780	)		(11,474	)		—			(11,474	)
Other non-operating income (expense):
Other income (expense)																				(746	)		506			(1,252	)
Change in fair value of convertible notes																				—			(446	)		446
Change in fair value of liability																				(444	)		—			(444	)
Loss before income taxes																				(10,791	)		(3,327	)		(7,464	)
(Loss) benefit for income taxes																				—			(124	)		124
Net loss	$	(10,828	)	$	(4,148	)	$	(6,680	)	$	(26,217	)	$	(14,966	)	$	(11,251	)	$	(10,791	)	$	(3,451	)	$	(7,340	)

~~Grant revenue. There was no grant revenue~~Licensing and Research & Development Services Revenue

Revenue for the three months ended September ~~2017~~30, 2021 was $0.8 million compared to $9.2 million for the three months ended September 30, 2020, a decrease of approximately $8.4 million. This $8.4 million decrease is due primarily to a reduction of $7.7 million of licensing revenue and ~~2016. There~~a $0.7 million reduction in R&D services revenue.

Research and development costs

Total Research and development expenses were $5.1 million for the three months ended September 30, 2021, as compared to $5.3 million for the prior year's third quarter. This $0.2 million decrease for the three months ended September 30, 2021, was ~~no grant revenue~~due to an increase in clinical CRO costs of $1.6 million, due to a full quarter of Phase 1

clinical trial costs for FS120 and FS222 and SB11285 in 2021, a $0.9 million increase in R&D staff related costs, and $0.3 million in lab consumables, all offset by a $2.3 million reduction in the UK R&D tax credit, and decreases in manufacturing costs of $0.4 million and other allocated costs of $0.3 million.

General and administrative expense

General and administrative expense for the three months ended September 30, 2021, decreased by approximately $2.0 million over the prior comparable quarter, primarily due to a decrease in legal and professional costs of $2.6 million, due to costs incurred in the comparative period in preparation for the share exchange transaction with Spring Bank, and a decrease in staff costs of $0.6 million, offset by increases in insurance costs of $0.5 million, rent and repairs of $0.5 million, primarily due to the leased buildings acquired in the Spring Bank transaction, and other administrative costs of $0.2 million.

Other income (expenses)

Other income (expense) for the three months ended September 30, 2021, consisted primarily of rental income of $0.2 million offset by foreign exchange losses of $0.6 million and interest expense on the term debt of $0.3 million. In addition, there was a loss of $0.4 million for the change in fair value of the CVR liability.

For the three months ended September 30, 2020, the total expense of $0.5 million consisted of other income of $0.8 million of foreign currency gains offset by $0.3 million of interest related to the convertible notes.

A gain of $0.4 million was recorded in relation to a fair value adjustment for the convertible notes.

Comparison of the nine months ended September 30, 2021 and 2020

The table below summarizes our results of operations for the nine months ended September 30, ~~2017~~2021 and 2020 :


	Nine Months Ended September 30,
	2021			2020			Change
	(in thousands)
Statements of Comprehensive Income
License revenue	$	3,668		$	11,093		$	(7,425	)
Operating expenses:
Research and development		20,536			10,695			9,841
General and administrative		18,169			13,805			4,364
Total operating expenses	$	38,705		$	24,500		$	14,205
Loss from operations		(35,037	)		(13,407	)		(21,630	)
Other non-operating income (expense):
Other income (expense)		230			(1,164	)		1,394
Change in fair value of convertible notes		—			(2,330	)		2,330
Change in fair value of liability		(1,027	)		—			(1,027	)
Loss before income taxes		(35,834	)		(16,901	)		(18,933	)
(Loss) benefit for income taxes		(190	)		(171	)		(19	)
Net loss	$	(36,024	)	$	(17,072	)	$	(18,952	)

Licensing and Research & Development Services Revenue

Revenue for the nine months ended September 30, 2021, was $3.7 million compared with $11.1 million for the nine months ended September 30, 2020, a decrease of $7.4 million.

Revenue from contracts with Ares decreased by $7.1 million due to a reduction in licensing revenue and R&D services revenue.

In addition, there was a $1.0 million decrease relating to licensing and R&D services revenue with Denali. All performance obligations relating to this Denali contract were satisfied in February 2021.

These were offset by $0.5 million in revenue related to the license agreement with AstraZeneca executed in July 2021 and $0.2 million in other revenue.

Research and development costs

Costs related to research and development for the nine months ended September 30, 2021 was $20.5 million, an increase of approximately $9.8 million, compared to ~~$0.4~~$10.7 million for the nine months ended September 30, ~~2016. The decrease~~2020.

This $9.8 million increase for the nine months ended September 30, 2021, was primarily due to increases in clinical CRO and clinical assay costs of $4.7 million, due to a full nine months of Phase 1 clinical trial costs for FS120 and FS222 and SB11285, a $3.0 million increase in manufacturing costs, $0.9 million in R&D staff costs, $0.8 million in share-based compensation expense, $0.5 million in laboratory consumables, and a $0.4 million decrease in the ~~completion~~UK R&D tax incentive credit (which is recorded as a credit against R&D expenditure), offset by a decrease of ~~our last NIH grant as~~$0.3 million in allocated costs and a decrease in other R&D costs of ~~April 30, 2016. As~~$0.2 million, due to the timing of ~~September 30, 2017, no additional funding remained available to us under any grant~~other project-related activities.

General and administrative expense

General and administrative expense for the ~~development of any of our product candidates.~~

~~Research and development expenses~~.

~~Research and development expenses were $3.2 million for the three~~nine months ended September 30, ~~2017,~~2021 was $18.2 million, an increase of approximately $4.4 million, compared to $2.7 million for the three months ended September 30, 2016. The increase of $0.5 million was due primarily to an increase in spending on preclinical studies and clinical trial related activities for inarigivir and preclinical studies for ~~SB 11285~~ ~~in the three months ended September 30, 2017.~~

~~Research and development expenses were $9.1~~$13.8 million for the nine months ended September 30, 2017, compared to $11.2 million for the nine months ended September 30, 2016. The decrease of $2.1 million was due primarily to $2.7 million in non-cash charges primarily in connection with our amended and restated license agreement with BioHEP; offset by an2020.This increase of $0.4 million in spending on preclinical studies and clinical trial related activities for inarigivir and SB 11285 in the nine months ended September 30, 2017 and an increase in additional salaries and benefits of $0.2 million associated with higher headcount in the nine months ended September 30, 2017.

~~General and administrative expenses~~.

General and administrative expenses were $2.0 million for the three months ended September 30, 2017, compared to $1.5 million for the three months ended September 30, 2016. This increase of $0.5 million was primarily due to ~~an increase~~$2.5 million in ~~non-cash charges for stock based~~share-based compensation expense, $1.5 million in insurance and other costs of ~~$0.1~~being a public company, $0.4 million ~~additional salaries~~in legal and ~~benefits of $0.1~~professional fees, $0.3 million ~~associated with higher headcount of non-research~~in IT costs and ~~development employees~~$0.6 million in rent and repairs, primarily related to the leased buildings acquired in the three months ended September 30, 2017, an increase of $0.1 million for public company related expenses in the three months ended September 30, 2017, an increase of $0.1 million for consulting related costs during the three months ended September 30, 2017 and an increase of $0.1 million for other general and administrative costs in the three months ended September 30, 2017.

~~General and administrative expenses~~Spring Bank transaction. These increases were $5.8 million for the nine months ended September 30, 2017, compared to $4.1 million for the nine months ended September 30, 2016. This increase of $1.7 million was primarily due to an increase in non-cash charges for stock based compensation of $0.4 million, additional salaries and benefits of $0.7 million associated with higher headcount of non-research and development employees in the nine months ended September 30, 2017, $0.6 million for public company related expenses incurred during the nine months ended September 30, 2017 and $0.1 million for additional rent expense for the nine months ended September 30, 2017; offset by a decrease in staff costs of ~~$0.1 million for legal and consulting related costs during the nine months ended September 30, 2017.~~$0.9 million.

~~Other income~~. Other income for the three and nine months ended September 30, 2017 and 2016 is solely comprised of interest income. Interest income for the three and nine months ended September 30, 2017 was $141,000 and $220,000, respectively, and was primarily related to the interest earned on marketable securities. Interest(expenses)

Other income for the nine months ended September 30, ~~2016~~2021 of $0.2 million consisted of $0.5 million of other income relating to sub-lease rental income, a foreign exchange gain of $0.2 million, offset by interest payable on the term debt facility of $0.5 million.

In addition, there was ~~$27,000 and $65,000, respectively, and was primarily related to~~an expense of $1.0 million for the ~~interest earned on marketable securities.~~

~~Change~~change in fair value of ~~warrant liabilities. Change in fair value of warrant liabilities for~~ the ~~three and~~CVR.

For the nine months ended September 30, ~~2017 was $5.8~~2020, other expense of $1.2 million ~~and $11.5~~consisted of foreign currency losses of $0.9 million, ~~respectively, and was solely related~~interest expense of $0.8 million in relation to ~~an increase~~the convertible debt, offset by other income of $0.5 million from the UK government Coronavirus Job Retention Scheme, for staff that were furloughed in the first half of 2020.

In addition, a fair value adjustment in respect of the warrants from the November private placement, primarily due to the increase in the Company’s stock price. There were no warrant liabilities during the three and nine months ended September 30, 2016.convertible debt of $2.3 million was recorded.

Liquidity and Capital Resources

Sources of ~~Liquidity~~liquidity

From our inception through September 30, ~~2017,~~2021, we have not generated any revenue from product sales, and we have incurred significant operating losses and negative cash flows from our operations. We do not expect to generate significant revenue from sales of any products for several years, if at all.

As of September 30, 2021, the Company had an accumulated deficit of $83.2 million, cash of $71.1 million and working capital of $67.3 million. The future success of the Company is dependent on its ability to successfully obtain additional working capital, obtain regulatory approval for and successfully launch and commercialize its product candidates and to ultimately attain profitable operations. As of November 10, 2021 the Company’s cash and

cash equivalents on hand will be sufficient to fund its current operating plan and planned capital expenditures for at least the next 12 months.

Historically, we have financed our operations ~~through~~with proceeds from the sale and issuance of equity securities, proceeds from the issuance of notes payable and proceeds received ~~from private placements~~in connection with our collaboration arrangements and for providing research and development services. We expect this historical financing trend to continue if and until we are able obtain regulatory approval for and successfully commercialize one or more of ~~convertible notes, common stock and/~~our drug candidates, although there can be no assurance that we will obtain regulatory approval or ~~warrants;~~successfully commercialize any of our current or planned future product candidates.

On March 30, 2021, the exercise of options and warrants; NIH grant funding; and public offerings of securities. As of September 30, 2017, we had cash, cash equivalents and marketable securities totaling $52.2 million and an accumulated deficit of $77.8 million.

~~In August 2017, we~~Company entered into a ~~Controlled Equity Offering Sales Agreement, or~~ Sales Agreement with ~~Cantor Fitzgerald & Co., or Cantor, pursuant~~SVB Leerink LLC ("SVB Leerink") with respect to an at-the-market offering program under which wethe Company could offer and sell, from time to time in its sole discretion, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $50.0 million through SVB Leerink as its sales agent. As of May 6, 2021, the Company had issued and sold 979,843 shares, for gross proceeds of $9.5 million, resulting in net proceeds of $9.2 million after deducting sales commissions. On May 6, 2021, the Company terminated the Sales Agreement.

On August 13, 2021, the Company entered into a new Sales Agreement (the “2021 Sales Agreement”) with SVB Leerink with respect to an at-the-market offering program under which the Company may offer and sell, from time to time ~~through Cantor,~~at its sole discretion, shares of ~~our~~its common stock having an aggregate offering price of up to $50.0 ~~million. We will pay Cantor a commission rate equal to 3.0%~~million through SVB Leerink as its sales agent. As of September 30, 2021 Company had not offered or sold any common stock under the 2021 Sales Agreement.

On May 6, 2021, the Company entered into an underwriting agreement with SVB Leerink, as representative of the ~~aggregate gross proceeds from each sale. Shares sold under the Sales Agreement will be offered and sold pursuant~~underwriters, relating to our Registration Statement on Form S-3 (Registration No. 333-218399) that was declared effective by the SEC on June 12, 2017, or the Registration Statement, and a prospectus supplement and accompanying base prospectus that we filed with the SEC on August 18, 2017.

~~In June 2017, we issued and sold in~~ an underwritten public offering ~~an aggregate~~ of ~~3,269,219~~10.4 million shares of ~~our~~the Company’s common stock, ~~at $13.00~~par value $0.0001 per ~~share, which included 384,604 shares pursuant to the exercise of an option to purchase additional shares granted to the underwriters in connection with the offering.~~share. The ~~shares issued in this offering were registered under the Securities Act pursuant to the Registration Statement. The~~underwritten public offering resulted in ~~$39.6~~gross proceeds of $73.1 million. The Company incurred $4.4 million in issuance costs and $0.5 million of professional fees associated with the underwritten public offering, resulting in net proceeds ~~after deducting underwriting discounts and commissions and other offering expenses payable by us.~~to the Company of $68.2 million.

~~In November 2016, we~~On April 1, 2021, the Company, as borrower, entered into ~~a definitive agreement~~the Loan and Security Agreement with ~~a group~~Horizon, as lender and collateral agent for itself. The Loan and Security Agreement provides for four (4) separate and independent $2.5 million term loans (Loan A, Loan B, Loan C, and Loan D), whereby, upon the satisfaction of ~~accredited investors resulting in a private placement~~all the conditions to the funding of ~~1,644,737 shares of our common stock and warrants to purchase 1,644,737 shares of common stock, which we refer to as~~ the ~~November private placement. These investors paid $9.12 for~~Term Loans, each ~~share of common stock and warrant to purchase one share of common stock. The warrants~~Term Loan will be exercisable beginning May 24, 2017 with a term of five years at an exercise price of $10.79. We completed the November private placement on November 23, 2016, resulting in approximately $15.0 million in gross proceeds. Net proceeds from this issuance after deducting placement agent fees and other offering-related expenses were $13.7 million.

~~In May 2016, we completed our IPO and sold an aggregate of 944,900 shares of common stock at a price~~delivered by Horizon to the ~~public of $12.00 per share, which included 24,900 shares pursuant~~Company in the following manner: (i) Loan A was delivered by Horizon to the ~~exercise of an option to purchase additional shares granted~~Company by April 1, 2021, (ii) Loan B was delivered by Horizon to the ~~underwriters in connection with~~Company by April 1, 2021, (iii) Loan C was delivered by Horizon to the ~~IPO.~~Company by June 30, 2021, and (iv) Loan D was delivered by Horizon to the Company by June 30, 2021. The ~~offering resulted in $8.2 million of net~~Company may only use the proceeds ~~after deducting underwriting discounts and commissions and other offering expenses payable by us. In connection with the closing~~ of the ~~IPO, we received approximately $5.3~~Term Loans for working capital or general corporate purposes as contemplated by the Loan and Security Agreement. On April 1, 2021, the Company drew down $5 million. On June 22, 2021, the Company drew down another $5 million ~~in proceeds upon the exercise of previously issued warrants to purchase 641,743 shares of common stock.~~under this facility.

Cash Flows

The following table summarizes ~~sources and uses of~~our cash flows for each of the periods ~~presented (in thousands):~~presented:


Summarized cash flow information							Summarized cash flow information
								Nine Months Ended September 30,
	For the Nine Months Ended September 30,							2021			2020			Change
	2017			2016				(in thousands)
Net cash used in operating activities	$	(12,640	)	$	(11,708	)		$	(34,048	)		(118	)	$	(33,930	)
Net cash used in investing activities		(19,919	)		(1,955	)			(643	)		(50	)		(593	)
Net cash provided by financing activities		39,664			14,648				87,048			850			86,198
Net increase in cash, cash equivalents and restricted cash	$	7,105		$	985
Effect of exchange rate changes on cash									167			(56	)		223
Net increase in cash								$	52,524		$	626		$	51,898

Operating activities

Net cash used ~~in operating activities. The use~~ of ~~cash in both periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital. Net cash used in operating activities was $12.6~~$34.0 million ~~and $11.7 million during the nine months ended September 30, 2017 and 2016, respectively. The increase in cash used~~ in operating activities for the nine months ended September 30, ~~2017 compared to September 30, 2016 was primarily due to an increase in~~2021, consisted of the net loss of ~~$11.3~~$36.0 million ~~which were~~adjusted for changes in operating assets and liabilities of $5.1 million and offset by ~~a decrease in prepaid expenses, accounts payable and accrued expenses~~non-cash charges of ~~$1.2 million. In addition, there was an increase in the non-cash change in the~~$7.1 million, primarily for share-based compensation expense of $5.6 million, fair value adjustment of the ~~warrant~~CVR liability of ~~$11.5~~$1.0 million, depreciation and ~~an increase in non-cash stock based compensation~~amortization of $0.5 million, ~~which was~~non-cash interest expense of $0.1 million, offset by ~~a decrease~~foreign exchange gains of $0.1 million.

Net cash used of $0.1 million in ~~non-cash common stock and warrant valuation expense related to the BioHEP license agreement of $2.8 million~~operating activities for the nine months ended September 30, ~~2017.~~2020, was primarily due to a net loss of $17.1 million offset by changes in operating assets and liabilities of $9.8 million and non-cash charges of $7.2 million. The non-cash charges included share-based compensation of $2.2 million, foreign exchange losses of $1.0 million, depreciation of $0.9 million, non-cash interest expense of $0.8 million relating to the convertible notes and changes in fair value of convertible notes of $2.3 million.

~~Net cash used in investing~~Investing activities~~. Net~~

For the nine months ended September 30, 2021 and 2020, net cash used in investing activities was ~~$19.9~~$0.6 million ~~for~~and $0.1 million, respectively. In both periods this related to the purchase of capital equipment.

Financing activities

For the nine months ended September 30, ~~2017 compared to $2.0~~2021, net cash provided by financing activities was $87.0 million ~~for~~. This included $77.3 million raised on the issue of common stock, with $9.1 million of the total generated from the “at the market” offering and $68.2 million generated from the underwritten public offering, offset by $0.5 million legal fees in connection with the offering. In addition, we received net proceeds of $9.8 million from the Loan and Security Agreement with Horizon and third-party debt issuance costs of $0.1 million were paid.

For the nine months ended September 30, 2016. The cash used in investing activities of $19.9 million in the nine months ended September 30, 2017 was primarily the result of $14.6 million in proceeds from the sale of marketable securities, offset by $34.4 million for the purchase of marketable securities and $0.1 million for the purchase of property and equipment. The cash used in investing activities of $2.0 million for the nine months ended September 30, 2016 was mainly due to proceeds of $4.9 million from the sale of marketable securities, offset by $6.7 million for the purchase of marketable securities and $0.2 million for the purchase of property and equipment for the nine months ended September 30, 2016.

~~Net cash provided by financing activities. Net~~2020, net cash provided by financing activities was ~~$39.7~~$0.9 million, which was generated from the issuance of convertible notes.

Future Funding Requirements

The Company has incurred significant losses and ~~$14.6~~has an accumulated deficit of $83.2 million ~~during the nine months ended~~as of September 30, ~~2017 and 2016, respectively. The cash provided by financing activities~~2021. F-star expects to incur substantial losses in the ~~nine months ended September 30, 2017 was primarily~~foreseeable future as it conducts and expands its clinical trial and research and development activities. As of November 10, 2021 the ~~result~~Company’s cash and cash equivalents on hand will be sufficient to fund its current operating plan and planned capital expenditures for at least the next 12 months.

The Company may continue to seek additional working capital through the sale and issuance of ~~$42.5 million~~equity securities, debt financing, collaboration arrangements or other sources. There are no assurances, however, that the Company will be successful in raising additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise additional capital or enter into other financing arrangements if and when needed would have an adverse impact on its business, results of ~~gross proceeds from~~operations and financial condition and its ability to develop its product candidates.

Our future capital requirements will depend on many factors, including:



our ability to raise capital in light of the ~~common stock offering~~impacts of the ongoing global COVID-19 pandemic on the global financial markets;



the scope, progress, results, and ~~$0.1 million~~costs of ~~proceeds from the exercise of stock options, offset by $2.9 million of offering expenses. The cash provided by~~

~~financing activities in the nine months ended September 30, 2016 was primarily the result of $11.3 million of gross proceeds received from our IPO, cash of $5.3 million~~drug discovery, preclinical development, laboratory testing, drug manufacturing and clinical trials for the ~~exercise~~product candidates we have developed or may develop;



our ability to enroll clinical trials in a timely manner and to quickly resolve any delays or clinical holds that may be imposed on our development programs, particularly in light of ~~warrants in connection~~the global COVID-19 pandemic;



the costs associated with our manufacturing process development and evaluation of third-party manufacturers and suppliers;



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



the costs of preparing and ~~$0.1 million for the exercise of stock options, offset by $2.1 million in underwriting discounts and offering expenses related to our IPO.~~

~~Funding Requirements~~

We expect to continue to incur significant and increasing losses for the foreseeable future. We anticipate these losses to increase as our expenses increase, and we expect that our expenses will increase if and as we:

~~continue to develop and conduct clinical trials of inarigivir, including the ongoing Part A of our Phase 2 ACHIEVE trial of inarigivir for chronic HBV;~~

~~continue preclinical development of SB 11285 and our other product candidates and initiate clinical trials of SB 11285 and our other product candidates, if supported by the preclinical data;~~

~~initiate and continue research and preclinical and clinical development efforts for our other product candidates;~~

~~seek to identify and develop additional product candidates;~~

~~seek regulatory and~~submitting marketing approvals for any of our product candidates that successfully complete clinical trials, ~~if any;~~

~~establish sales,~~and the costs of maintaining marketing ~~distribution~~authorization and ~~other commercial infrastructure in the future to commercialize various~~related regulatory compliance for any products for which we ~~may~~ obtain marketing ~~approval, if any;~~

approval;



~~require~~ the ~~manufacture~~costs of ~~larger quantities of product candidates for clinical development~~preparing, filing, and ~~potentially commercialization;~~

~~maintain, expand~~prosecuting patent applications, maintaining and ~~protect~~enforcing our intellectual property ~~portfolio;~~

and proprietary rights, and defending intellectual property-related claims;



~~hire and retain additional personnel, including clinical, quality control and scientific personnel;~~

add operational, financial and management information systems and personnel, including personnel to support our product development and help us continue to comply with our obligations as a public company; and

~~add equipment and physical infrastructure to support our research and development programs.~~

We expect that our existing cash, cash equivalents and marketable securities as of September 30, 2017 will enable us to fund our operating expenses and capital expenditure requirements through the end of 2019. However, we anticipate that our existing cash, cash equivalents and marketable securities will not be sufficient to fund additional development of inarigivir beyond our Phase 2 ACHIEVE clinical trial in patients with chronic HBV. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of inarigivir and SB 11285, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements both near and long-term, will depend on many factors, including, but not limited to:

~~initiation, progress, timing, costs and results of preclinical studies and clinical trials of inarigivir, including Part A of our Phase 2 ACHIEVE clinical trial in patients with chronic HBV;~~

~~initiation, progress, timing, costs and results of preclinical studies of SB 11285;~~

~~initiation, progress, timing, costs and results of preclinical studies and clinical trials of our other product candidates;~~

~~our obligation to make royalty and non-royalty sublicense payments to third-party licensors, if any, under our licensing agreements;~~

~~the timing, receipt, and amount of milestone payments or royalties, if any, from inarigivir, SB 11285, or any of our other product candidates;~~

•

~~the number and characteristics of product candidates that we discover or in-license and develop;~~

the outcome, timing and cost of seeking regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect;

the costs of ~~filing, prosecuting, defending~~future activities, including product sales, medical affairs, marketing, manufacturing, and ~~enforcing any patent claims and maintaining and enforcing other intellectual property rights;~~

~~subject to receipt of marketing approval, revenue, if any, received from commercial sales of inarigivir and any other products;~~

~~the costs and timing of the implementation of commercial-scale manufacturing activities;~~

~~the costs and timing of establishing sales, marketing and~~ distribution, ~~capabilities~~ for any product candidates for which we ~~may~~ receive ~~regulatory~~marketing approval; ~~and~~



the terms of our current and any future license agreements and collaborations; and the extent to which we acquire or in-license other product candidates, technologies and intellectual property;



the success of our collaborations with Janssen, AZ, Ares and Denali and other partners;



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



the costs of operating as a public company.

~~Identifying~~Critical Accounting Policies and Significant Judgments and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial statements. The preparation of our condensed consolidated financial statements and related disclosures requires our management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We believe that the estimates and assumptions underlying the accounting policies described therein may have the greatest potential ~~product candidates~~impact on our consolidated financial statements and, conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expecttherefore, consider these to be ~~commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve~~ our ~~business objectives.~~

~~Adequate additional funds~~critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may ~~not be available to us~~differ from these current estimates based on ~~acceptable terms, or at all. We do not currently~~different assumptions and under different conditions. There have ~~any committed external source of funds.~~ ~~We have an effective shelf registration statement on Form S-3 (File No. 333-218399~~), which we refer to as the Registration Statement. In August 2017, we entered into the Sales Agreement with Cantor pursuant to which we may offer and sell, from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $50.0 million. Shares sold under the Sales Agreement will be offered and sold pursuantbeen no material changes to the ~~Registration Statement~~Company’s critical accounting policies and ~~a prospectus supplement and accompanying base prospectus that we~~estimates as disclosed in the Company’s Annual Report filed on SEC Form 10-K for the year ended December 31, 2020, filed with the SEC on ~~August 18, 2017. As of September~~March 30, 2017, we had up to $107.5 million in securities available for future issuance under the Registration Statement, which includes $50.0 million in shares issuable pursuant to the Sales Agreement with Cantor. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Additional debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute the ownership interests of our stockholders.2021.

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

Contractual Obligations and Commitments

~~The following table summarizes our contractual obligations at September 30, 2017, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):~~

Payments Due by Period

Total

Less Than
1 Year

1 – 3
Years

3 – 5
Years

More than
5 Years

Operating lease commitments

$
624

$
194

$
430

$
0

$
—

Total

$
624

$
194

$
430

$
0

$
—

In addition to the amounts shown in the above table, we have contractual obligations pursuant to our amended and restated license agreement with BioHEP. Under this agreement, we have agreed to pay up to $3.5 million in development and regulatory milestone payments to BioHEP for each distinct viral indication for which we develop licensed product(s). BioHEP is also eligible to

receive tiered royalties in the low-to-mid single-digits on net product sales of licensed products by us and our affiliates and sub licensees, and a specified share of non-royalty sublicensing revenues we and our affiliates receive from sub licensees, which share of sublicensing revenues is capped at a maximum aggregate of $2.0 million under all such sublicenses. Milestone and royalty payments associated with our amended and restated license agreement with BioHEP have not been included in the above table of contractual obligations as we cannot reasonably estimate if or when they will occur.

On October 4, 2017, we entered into a New Lease. The premises covered by the New Lease will serve as our new principal office and laboratory space. The initial term of the New Lease is 125 months beginning on the date on which the landlord substantially completes certain renovations to the premises covered by the New Lease, which we expect to occur in approximately April 2018. Following an eleven-month rent abatement period, we will be obligated to make monthly rent payments in the amount of $34,533, which is subject to increase by approximately 3% annually for the first five years of the New Lease and by approximately 2.5% annually thereafter. The total lease payments due during the term of the lease are approximately $4.4 million. In addition, we are responsible under the New Lease for specified costs and charges, including certain operating expenses, utilities, taxes and insurance.

We enter into contracts in the normal course of business with ~~third party~~third-party service providers for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. We have not included our payment obligations under these contracts ~~in the table~~ as these contracts generally provide for termination upon notice, and therefore, we believe that our non-cancelable obligations under these agreements are not ~~material.~~material, and we cannot reasonably estimate the timing of if and when they will occur. We could also enter into additional research, manufacturing, supplier and other agreements in the future, which may require up-front payments and even long-term commitments of cash.

Off-Balance Sheet Arrangements

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

~~Recently Issued Accounting Pronouncements~~Emerging Growth Company and Smaller Reporting Company Status

~~In November 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash, which includes provisions intended to clarify how entities present restricted cash and restricted cash equivalents~~We are an emerging growth company, (“EGC”) as defined in the ~~statement~~Jumpstart Our Business Startups Act of ~~cash flows. Companies must show~~2012 (the “JOBS Act”). We will remain an EGC until the ~~change in total cash, cash equivalents, restricted cash and restricted cash equivalents in~~earlier of (1) the ~~statement~~last day of ~~cash flows. The new standard is applied retrospectively and is effective for~~the fiscal year following the fifth anniversary of the completion of our ~~annual periods beginning after December 15, 2017, and for interim periods within those annual periods, with early adoption permitted. We elected early adoption~~initial public offering (December 31, 2021), (2) the last day of ~~this standard as of September 30, 2017,~~ the ~~first period~~fiscal year in which we ~~had restricted cash. The adoption~~have total annual gross revenue of ~~this standard has resulted in~~at least $1.07 billion, (3) the ~~presentation~~last day of the ~~change~~fiscal year in ~~cash, cash equivalents and restricted cash on the statement of cash flows in the periods presented.~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”) to require changes to several areas of employee stock-based compensation payment accounting in an effort to simplify stock-based compensation reporting. The update revises requirements in the following areas: minimum statutory withholding, accounting for income taxes, forfeitures, and intrinsic value accounting for private entities. ASU 2016-09 is effective for our annual reporting periods beginning after December 15, 2016, including interim reporting periods within each annual reporting period. We adopted this standard on January 1, 2017. The update revises our requirements in the following areas: minimum statutory withholding, accounting for income taxes, and forfeitures. Prior to adoption,which we applied a 0% forfeiture rate to stock-based compensation, resulting in no cumulative effect adjustment to the opening period. Upon adoption of this standard, our accounting policy is to recognize forfeitures as they occur.

~~The update requires us to recognize the income tax effect of awards in the income statement when the awards vest or~~ are settled. It also allows us to repurchase more of an employee’s shares than we could prior to the update for tax withholding purposes without triggering a liability. The income tax related items had no effect on the current period presentation and we maintain a full valuation allowance against our deferred tax assets.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (Topic 606), or ASC 606, which amends the guidance for revenue recognition to replace numerous industry-specific requirements. ASC 606 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. ASC 606 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include ensuring the time value of money is considered in the transaction price, and allowing estimates of variable considerationdeemed to be ~~recognized before contingencies are resolved~~a “large accelerated filer” as defined in ~~certain circumstances. The amendments in ASC 606 are effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, FASB approved~~Rule 12b-2 under the ~~deferral~~Securities Exchange Act of ~~adoption by one year. Entities can transition to the standard either retrospectively or~~1934, as a cumulative-effect adjustment as of the date of adoption. Until we expect material revenue to be recognized, the adoption of this standard is not expected to have an impact on our consolidated financial statements.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~amended (the “Exchange Act”), which ~~amends Accounting Standards Codification, or ASC, Subtopic 825-10,~~ ~~Financial Instruments - Overall~~, and includes updates on certain aspects of recognition, measurement, presentation and disclosure of financial instruments and applies to all entities that hold financial assets or owe financial liabilities. The new standard is effective for our annual period beginning after December 15, 2017, with early adoption permitted. We are currently evaluatingwould occur if the ~~impact that the adoption of this standard may have on our consolidated financial statements.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~, which supersedes the current leasing guidance and upon adoption, will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for our annual period beginning after December 15, 2018, and can be early adopted by applying a modified retrospective approach for leases existing at, and entered into after, the beginning of the earliest comparable period presented in the financial statements. We are currently evaluating the impact that the adoption of this standard may have on our consolidated financial statements.

~~In September 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments, which amends ASC Topic 230,~~ ~~Statement of Cash Flows~~, and includes provisions intended to reduce diversity in practice and provides guidance on eight specific statements of cash flows classification issues. The new standard is effective for our annual period ending after December 15, 2017, and for annual and interim periods thereafter, with early adoption permitted. We are currently evaluating the impact that the adoption of this standard may have on our consolidated financial statements.

~~In July 2017, the FASB issued ASU 2017-11,~~ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II simply replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. This ASU is effective for public companies for the annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact that the adoption of this standard may have on our consolidated financial statements

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

We are exposed to market risk related to changes in interest rates. Our cash, cash equivalents and marketable securities of $52.2 million as of September 30, 2017, consisted of cash, money market accounts and short-term marketable debt securities. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, an immediate 10% change in market interest rates would not be expected to have a material impact on the fair market value of our ~~investment portfolio~~ordinary shares held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year or (4) the date on

which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. The JOBS Act permits an EGC to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, we are entitled to rely on certain exemptions as an EGC we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial ~~condition~~reporting pursuant to Section 404(b), (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that has or ~~results~~may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of ~~operations.~~the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of Spring Bank’s initial public offering (December 31, 2021) or until we no longer meet the requirements of being an EGC, whichever is earlier.

We are also a smaller reporting company as defined under the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act for this reporting period and are not required to provide the information required under this item.

~~Item 4.~~

~~Controls and Procedures.~~

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

~~Our~~As of September 30, 2021, our management, ~~with~~under the ~~participation~~supervision of our ~~principal executive officer~~Chief Executive Officer and ~~our principal financial officer, evaluated, as~~Chief Financial Officer, performed an evaluation of ~~the end of the period covered by this Quarterly Report on Form 10-Q,~~ the effectiveness of our disclosure controls and ~~procedures. Based on that evaluation of our disclosure controls and~~ procedures as of September 30, 2017, 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. The term “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, means controls and other procedures of a company that are designed~~ to ensure that information required to be disclosed by ~~a company~~the Company in the reports that it files or submits under the Exchange Act ~~are~~is recorded, processed, summarized and reported within the time periods specified inby the ~~SEC’s~~SEC rules and ~~forms. Disclosure controls~~forms, and ~~procedures include, without limitation, controls and procedures designed to ensure~~ that such information ~~required to be disclosed by us in the reports we file or submit under the Exchange Act~~ is accumulated and communicated to our management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. ~~Management recognizes that any~~Based on this evaluation, our Chief Executive Officer and Chief Financial Officer determined the material weaknesses in our internal controls as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, as described below, our disclosure controls and procedures ~~no matter how well designed and operated, can provide only reasonable assurance~~were not effective as of ~~achieving their objectives and~~September 30, 2021.

Management’s Annual Report on Internal Control over Financial Reporting

We have performed an evaluation of the effectiveness of our internal control over financial reporting, based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control-Integrated Framework. Based on that evaluation, our management, ~~necessarily applies its judgment~~including our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of September 30, 2021, due to material weaknesses in ~~evaluating~~internal control over financial reporting, associated with (i) the ~~cost-benefit relationship~~lack of ~~possible~~formal policies and procedures and sufficient complement of personnel to implement effective segregation of duties and (ii) the lack of sufficient formality and evidence of controls over key reports, contracts and ~~procedures.~~spreadsheets.

~~Inherent Limitations~~40

A material weakness is a deficiency, or a combination of ~~Internal Controls~~deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future ~~periods~~years are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As an EGC under the JOBS Act, we are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

Remediation Plans

As discussed above, the material weaknesses over effective controls on the financial statement close and reporting process as well as lack of an effective control environment with formal processes and procedures and not having sufficient formality and evidence of controls as of December 31, 2020, were not fully remediated as of September 30, 2021. We have commenced measures to remediate these material weaknesses and have hired additional finance and accounting personnel with appropriate expertise to perform specific functions which we believe will allow for proper segregation of duties, design key controls and implement improved processes and internal controls. We will continue to assess our finance and accounting staffing needs to ensure remediation of these material weaknesses. The material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

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 the ~~quarter~~three months ended September 30, ~~2017,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any material litigation.

~~Item 1A.~~

~~Risk Factors.~~

~~There~~Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on March 30, 2021, which could materially affect our business, financial condition, or results of operations. Except as disclosed below, there have been no material changes ~~in or additions~~ to the risk factors ~~included~~described in our Annual Report on Form 10-K ~~for~~filed with the ~~year ended~~ ~~December~~ ~~31, 2016 and~~SEC on March 30, 2021, as updated by “Part II, Item 1A, Risk Factors” of our Quarterly ~~Report~~Reports on Form 10-Q for the ~~quarter~~quarters ended March 31, 2021 and June 30, ~~2017.~~2021, filed with the SEC on May 17, 2021 and August 13, 2021, respectively.

Intellectual property rights of third parties could adversely affect our ability to commercialize our product candidates, such that we could be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation is costly and any required licenses may not be available on commercially reasonable terms.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts. Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. However, our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, derivation proceedings, oppositions and inter partes reexamination proceedings before the USPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates.

In particular, we are aware of a “method of use” patent issued in 2021 in the United States to E.R. Squibb & Sons, L.L.C. that expires in 2029, subject to the timely payment of maintenance fees and absent any patent term extension, and which includes claims directed to a method for treating cancer in a subject comprising administering to the subject an anti-LAG-3 antibody and an anti-PD-L1 antibody, which antibodies are specified in a subclaim as being in a bispecific molecule. We believe, based on our review of this U.S. patent, that the patent claims are impermissibly broad and that there would be strong arguments available to us should we decide to challenge its validity in court or USPTO post-grant proceedings, based on prior art and lack of written description and enablement for the entire scope of the claims. If we succeed in developing and obtaining regulatory approval to market our product candidate FS118 in the future, this patent, prior to its expiration, could impact our commercial plans for FS118 in the United States. We do not expect the patent to have any impact on commercialization of FS118 outside of the United States, and we do not expect the patent to impact our pre-commercial development of FS118 inside or outside of the United States. We are also aware of a “second medical use” patent issued in 2021 in Europe to Bristol-Myers Squibb Company, which includes claims protecting until 2036 (subject to the timely payment of annual renewal fees and absent any supplementary protection certificates based on the patent) an anti-PD-1 or anti-PD-L1 antibody that inhibits PD-1 activity for use in a method for treating a subject identified as HPV positive and afflicted with a tumor derived from a HPV positive squamous cell carcinoma head and neck cancer, the method comprising administering to the subject a therapeutically effective amount of the antibody. Multiple parties, including Regeneron Pharmaceuticals, Inc. and Merck Sharp and Dohme Corp, have filed oppositions at the European Patent Office challenging the validity of this European patent. We believe, based on our review of this European patent and the oppositions that have been filed, that there are strong grounds to argue that the patent is invalid due to lack of novelty and inventive step based on prior art as well as impermissible added matter and lack of sufficiency. If not revoked or amended to a form that poses no or a sufficiently reduced risk to our business, this patent, prior to its expiration, could impact our commercial plans for FS118 and FS222 in Europe, but we do not

expect the patent to impact our pre-commercial development efforts. Patent litigation is costly and time-consuming and there is no assurance that we would prevail, should we initiate or defend such litigation. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that we may be subject to claims of infringement of the patent rights of third parties.

Our competitive position may suffer if patents issued to third parties or other third-party intellectual property rights cover our products or product candidates or elements thereof, our manufacture or uses relevant to our development plans, the targets of our mAb2 product candidates, or other attributes of our mAb2 product candidates or our mAb2 technology. In such cases, we may not be in a position to develop or commercialize products or product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms or at all.

It is also possible that we fail to identify relevant patents or patent applications. For example, certain U.S. applications filed after November 29, 2000 that will not be filed outside the United States may remain confidential until issuance of a patent. In general, patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications relating to our products or platform technology could have been filed by others without our knowledge. Furthermore, we operate in a highly competitive field, and given our limited resources, it is unreasonable to monitor all patent applications purporting to gain broad coverage in the areas in which we are active. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our products or the use of our products.

Parties making claims of infringement against us or defending against our invalidity actions may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. If we fail in any such dispute, in addition to being forced to pay damages, we or our licensees may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. We may be required to seek a license to any such technology that we are found to infringe, which license may not be available on commercially reasonable terms, or at all. Even if we or our collaboration partners obtain a license, it may be non-exclusive; thereby giving our competitors access to the same technologies licensed to us or our licensors or collaboration partners. Moreover, such a license may require us to pay royalties to the licensor; thus, reducing our expected revenues. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent in the United States. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, they could have a substantial adverse effect on our share price. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

In addition, if the breadth or strength of protection provided by our or our collaboration partners’ patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

~~Item 5.~~

~~Other Information.~~

On October 26, 2017, our Board of Directors, or Board, elected Christiana Bardon, M.D., to the Board as a class II director with a term expiring at the 2020 annual meeting of stockholders. The Board also appointed Dr. Bardon to the Compensation Committee of the Board.Item 5. Other Information.

In accordance with our current non-employee director compensation policy, Dr. Bardon will receive a $35,000 annual cash retainer for service on the Board and a $5,000 annual cash retainer for service on the Compensation Committee. These cash retainers are payable quarterly in arrears. The non-employee director compensation policy includes a stock-for-fees policy, under which Dr. Bardon has elected to receive shares of our common stock in lieu of cash fees.None.

In addition, in accordance with the non-employee director compensation policy, Dr. Bardon received an option to purchase 11,000 shares of common stock upon her election to the Board, at an exercise price of $15.17, the closing share price of the common stock on the NASDAQ Capital Market on October 26, 2017. This option becomes exercisable on a monthly basis over the course of three years, subject to Dr. Bardon’s continued service as a director and, in the event of a change in control of the company, the vesting schedule of the option will accelerate in full. Dr. Bardon is also entitled to receive an option to purchase 5,500 shares of common stock on the date of each annual meeting of stockholders with an exercise price equal to the closing share price of the common stock on the NASDAQ Stock Market on the date of grant. Such option shall vest in 12 equal monthly installments while Dr. Bardon is serving as a director and, in the event of a change in control of the company, the vesting schedule of the option will accelerate in full.

Also, in connection with her election to the Board, we and Dr. Bardon entered into an indemnification agreement. The indemnification agreement is substantially the same as the form of indemnification agreement that we have entered into with our other directors, a copy of which was filed as Exhibit 10.1 to our Registration Statement on Form S-1 (File No. 333-208875) filed with the SEC on January 5, 2016 and is hereby incorporated by reference. The indemnification agreement provides that we will indemnify Dr. Bardon for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by her in any action or proceeding arising out of her service as a director.

In November 2016, we entered into a definitive agreement with respect to the private placement of 1,644,737 shares of common stock and warrants to purchase 1,644,737 shares of our common stock to a group of accredited investors. All investors paid $9.12 for each share of common stock and warrant to purchase one share of common stock. The warrants are currently exercisable at an exercise price of $10.79 per share. Burrage Capital Healthcare Fund I, L.P. (“Burrage Capital”), of which Dr. Bardon serves as the Portfolio Manager, purchased 54,824 shares of common stock and warrants to purchase 54,824 shares of common stock in the private placement. UBS Oncology Impact Fund L.P. (“Oncology Impact Fund”) purchased 603,070 shares of common stock and warrants to purchase 603,070 shares of common stock in the private placement. Dr. Bardon’s spouse, Ansbert Gadicke, M.D., serves as the Managing Member of MPM Oncology Impact Management GP LLC, an indirect General Partner of Oncology Impact Fund. Additionally, in June 2017, we completed a public offering of 3,269,219 shares of our common stock at $13.00 per share. Oncology Impact Fund purchased 230,769 shares of common stock at the public offering price in this public offering. Dr. Bardon may be deemed to have a beneficial ownership interest in the shares purchased by the entities identified above.

~~There are no arrangements or understandings between Dr. Bardon and any other person pursuant to which Dr. Bardon was elected as a director.~~

~~Item 6.~~

~~Exhibits.~~

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index set forth immediately ~~below.~~prior to the signature page.

~~EXHIBIT~~44

EXHIBIT INDEX


Exhibit Number	Description
~~Exhibit~~ ~~Number~~		~~Description~~
10.1		~~Controlled Equity Offering~~^SMSales Agreement, dated ~~as of~~ August ~~18, 2017,~~13, 2021, by and between ~~Spring Bank Pharmaceuticals,~~F-star Therapeutics, Inc. and ~~Cantor Fitzgerald & Co.~~SVB Leerink LLC (incorporated by reference to Exhibit ~~10.1~~1.2 to ~~Spring Bank Pharmaceuticals, Inc.’s Current Report~~the Registration Statement on Form ~~8-K~~S-3 filed by the Registrant on August ~~18, 2017)~~13, 2021, Reg. No. 333-258783).

~~31.1~~	10.2*±	License Agreement between F-star Therapeutics, Inc. and Astrazeneca AB, dated as of July7, 2021.

10.3*±	License and Collaboration Agreement between F-Star Therapeutics, Inc. and Janssen Biotech, Inc., dated as of October 19, 2021.

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.
		99
~~31.2~~	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.
		;lk;
~~32.1~~	32.1*	Certification of Principal Executive Officer ~~and~~Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

101.INS		Inline XBRL Instance Document

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	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, has been formatted in Inline XBRL.


*	Filed herewith.
±	Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

~~SIGNATURES~~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.


	~~Spring Bank Pharmaceuticals,~~	F-star Therapeutics, Inc.

Date: ~~October 31, 2017~~November 10 2021	~~By:~~	By:	/s/ ~~Jonathan Freve~~Eliot R. Forster
		~~Jonathan Freve~~	Eliot R. Forster, Ph.D.
			President and Chief ~~Financial~~Executive Officer ~~and Treasurer~~ ~~(Principal Financial and Accounting Officer)~~


Delaware	52-2386345
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~86 South Street~~Eddeva B920 Babraham Research Campus ~~Hopkinton, MA~~Cambridge, United Kingdom	~~01748~~CB22 3AT
(Address of principal executive offices)	(Zip Code)


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company	☒

		Emerging growth company	☒

	September 30,			December 31,
	2017			2016
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	17,539		$	10,684
Marketable securities		34,640			14,046
Prepaid expenses and other current assets		850			840
Total current assets		53,029			25,570
Marketable securities, long-term		—			752
Property and equipment, net		534			522
Restricted cash		250			—
Other assets		35			35
Total	$	53,848		$	26,879
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,773		$	1,519
Accrued expenses and other current liabilities		2,312			1,982
Total current liabilities		4,085			3,501
Warrant liabilities		17,807			6,333
Other long-term liabilities		32			27
Total liabilities		21,924			9,861
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 10,000,000 shares at September 30, 2017 and December 31, 2016; no shares issued or outstanding at September 30, 2017 and December 31, 2016		—			—
Common stock, $0.0001 par value—authorized, 200,000,000 shares at September 30, 2017 and December 31, 2016; 12,697,038 and 9,416,238 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		1			1
Additional paid-in capital		109,682			68,559
Accumulated deficit		(77,752	)		(51,535	)
Other comprehensive loss		(7	)		(7	)
Total stockholders’ equity		31,924			17,018
Total	$	53,848		$	26,879


	September 30,			December 31,
	2021			2020
	Unaudited
Assets
Current Assets:
Cash and cash equivalents	$	71,050		$	18,526
Other receivables		436			0
Prepaid expenses and other current assets		3,173			3,976
Tax incentive receivable		1,502			3,563
Total current assets		76,161			26,065
Property and equipment, net		1,011			789
Right of use asset		3,501			2,782
Goodwill		14,885			14,926
In-process research and development and intangible assets, net		18,790			18,986
Other long-term assets		450			61
Total assets	$	114,798		$	63,609
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	1,569		$	4,597
Accrued expenses and other current liabilities		5,642			9,461
Contingent value rights		648			2,080
Lease obligations, current		976			539
Deferred revenue		0			300
Total current liabilities		8,835			16,977
Long term Liabilities:
Term debt		9,535			0
Lease obligations		2,875			2,622
Contingent value rights		2,899			440
Deferred tax liability		576			576
Total liabilities		24,720			20,615
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized, 10,000,000 shares at September 30, 2021 and December 31, 2020; 0 shares issued or outstanding at September 30, 2021 and December 31, 2020		0			0
Common Stock, $0.0001 par value; authorized 200,000,000 shares at September 30, 2021 and December 31, 2020; 20,623,041 and 9,100,117 shares issued and outstanding at September 30, 2021 and December 31, 2020		2			1
Additional paid-in capital		174,410			91,238
Accumulated other comprehensive loss		(1,142	)		(1,077	)
Accumulated deficit		(83,192	)		(47,168	)
Total stockholders’ equity		90,078			42,994
Total liabilities and stockholders’ equity	$	114,798		$	63,609

	For the Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(26,217	)	$	(14,966	)
Adjustments for:
Depreciation and amortization		115			87
Change in fair value of warrant liabilities		11,474			—
Non-cash investment income (losses)		(50	)		28
Non-cash stock-based compensation		1,483			1,015
Non-cash issuance of common stock and warrants connected to license agreement		—			2,780
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(10	)		(746	)
Other assets		—			(35	)
Accounts payable		254			148
Accrued expenses and other liabilities		311			(19	)
Net cash used in operating activities		(12,640	)		(11,708	)
Cash flows from investing activities:
Purchases of marketable securities		(34,397	)		(6,693	)
Proceeds from sale of marketable securities		14,605			4,894
Purchases of property and equipment		(127	)		(156	)
Net cash used in investing activities		(19,919	)		(1,955	)
Cash flows from financing activities:
Proceeds from issuance of common stock		42,500			11,339
Payment of finance costs related to issuance of common stock		(2,928	)		(2,128	)
Proceeds from exercise of warrants		—			5,342
Proceeds from exercise of stock options		92			95
Cash provided by financing activities		39,664			14,648
Net increase in cash, cash equivalents and restricted cash		7,105			985
Cash and cash equivalents, beginning of period		10,684			4,347
Cash, cash equivalents and restricted cash, end of period	$	17,789		$	5,332
Supplemental disclosures of cash flow information:
Cash paid for taxes	$	1		$	1
Cash paid for interest	$	—		$	—
Supplemental disclosures of noncash financing activities:
Issuance of common stock warrants in connection with initial public offering	$	—		$	218


☒	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~~
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020	32
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	43
	Condensed Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021, and 2020	56
	Notes to Unaudited Condensed Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2024
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3340
Item 4.	Controls and Procedures	3340

	PART II. OTHER INFORMATION
~~Item 1.~~	~~Legal Proceedings~~	34
Item ~~1A.~~1.	~~Risk Factors~~Legal Proceedings	3442
Item 5.1A.	~~Other Information~~Risk Factors	3442
Item 6.2	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	3443
Item 3	Defaults Upon Senior Securities	44
Item 4	Mine Safety Disclosures	44
Item 5	Other Information	44
Item 6.	Exhibits	44
Exhibit Index		3545
Signatures		3646


	Stockholders’ Equity
	Common Shares
For the Three Months Ended September 30, 2021	Number of Shares		Value		Capital in Excess of par Value		Accumulated Other Comprehensive Loss			Accumulated deficit			Total Stockholders’ Equity
Balance at June 30, 2021 as originally stated		20,586,562	$	2	$	172,895	$	(1,218	)	$	(72,686	)	$	98,993
Adjustment (see note 1)		—		—		—	$	(41	)	$	285		$	244
Revised balance at June 30, 2021		20,586,562	$	2	$	172,895	$	(1,259	)	$	(72,401	)	$	99,237
Equity adjustment from foreign currency translation		—		—		—		117			—			117
RSU vesting and stock option exercises		36,479		—		—		—			—			—
Share-based compensation		—		—		1,515		—			—			1,515
Net loss		—		—		—		—			(10,791	)		(10,791	)
Balance at September 30, 2021		20,623,041	$	2	$	174,410	$	(1,142	)	$	(83,192	)	$	90,078


	Stockholders’ Equity
	Seed preferred		Series A preferred		Common Shares
For the Three Months Ended September 30, 2020	Number of shares		Number of shares		Number of shares		Value		Capital in Excess of par Value		Accumulated Other Comprehensive Loss			Accumulated deficit			Total Stockholders’ Equity
Balance at July 1, 2020		103,611		1,441,418		4,312,137	$	1	$	32,723	$	(1,224	)	$	(35,170	)	$	(3,670	)
Equity adjustment from foreign currency translation		—		—		—		—		—		14			—			14
Share-based compensation		—		—		—		—		1,194		—			—			1,194
Net loss		—		—		—		—		—		—			(3,451	)		(3,451	)
Balance at September 30, 2020		103,611		1,441,418		4,312,137	$	1	$	33,917	$	(1,210	)	$	(38,621	)	$	(5,913	)


Purchase Price Allocation
Number of full common shares		4,449,559
Multiplied by fair value per share of common stock	$	4.84
Purchase price	$	21,536
Cash and cash equivalents	$	9,779
Marketable securities		5,000
Prepaid expenses and other assets		935
Operating lease right of use asset		2,784
Intangible assets		4,720
Goodwill		10,451
Accounts payable, accrued expenses and other liabilities		(5,453	)
Contingent value rights		(2,520	)
Liability and equity based warrants		(422	)
Deferred tax liability		(576	)
Operating lease liability		(3,162	)
Fair value of net assets acquired	$	21,536


Potential Dilutive Shares
	For the Three and Nine Months Ended September 30,
	2021		2020
Convertible debt shares		0		185,732
Common stock warrants		124,729		481,781
Stock options and RSUs		528,871		1,660,906


	September 30, 2021						December 31, 2020
	In-process R&D		Intangible assets		Total		In-process R&D		Intangible assets		Total
Cost	$	18,912	$	4,469	$	23,381	$	23,554	$	—	$	23,554
Less: accumulated amortization		0		65		65		0		0		0
Less: impairments		4,526		0		4,526		4,568		—		4,568
	$	14,386	$	4,404	$	18,790	$	18,986	$	—	$	18,986

	For the Three and Nine Months Ended September 30,
	2017		2016
Common stock warrants		1,798,084		153,347
Stock options		977,565		718,065

	September 30,			December 31,
Investments - Current:	2017			2016
Debt securities - available for sale	$	34,640		$	14,046
Total	$	34,640		$	14,046
			��
Investments - Noncurrent:
Debt securities - available for sale	$	—		$	752
Total	$	—		$	752

	At September 30, 2017
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Commercial paper	$	14,345	$	—	$	—		$	14,345
Corporate bonds		18,309		—		(7	)		18,302
United States treasury securities		1,993		—		—			1,993
Total	$	34,647	$	—	$	(7	)	$	34,640

	At December 31, 2016
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Investments - Current:
Agency bonds	$	452	$	—	$	—		$	452
Commercial paper		2,947		—		—			2,947
Corporate bonds		8,499		—		(7	)		8,492
United States treasury securities		2,155		—		—			2,155
Total	$	14,053	$	—	$	(7	)	$	14,046

Investments - Noncurrent:
Corporate bonds		752		—		—			752
Total	$	752	$	—	$	—		$	752


Property, Plant and Equipment, net
	September 30,		December 31,
	2021		2020
Leasehold improvements	$	203	$	15
Laboratory equipment		2,211		1,788
Furniture and office equipment		161		169
		2,575		1,972
Less: Accumulated depreciation		1,564		1,183
	$	1,011	$	789

	Amortized Cost		Fair Value
Due in one year or less	$	34,647	$	34,640
Due after one year through two years		—		—
Total	$	34,647	$	34,640


	Fair Value Measurements as of September 30, 2021 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent value rights	$	—	$	—	$	3,547	$	3,547
Warrants		—		—		11		11
	$	—	$	—	$	3,558	$	3,558


	Fair Value Measurements as of December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent value rights	$	—	$	—	$	2,520	$	2,520
Warrants		—		—		37		37
	$	—	$	—	$	2,557	$	2,557

			Fair Value Measurement at September 30, 2017
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds ⁽¹⁾	$	15,164	$	15,164	$	—	$	—
Fixed income securities		34,640		—		34,640		—
Total	$	49,804	$	15,164	$	34,640	$	—

Liabilities:
Warrant liabilities	$	17,807	$	—	$	—	$	17,807
Total	$	17,807	$	—	$	—	$	17,807

			Fair Value Measurement at December 31, 2016
Assets:	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds ⁽¹⁾	$	9,507	$	9,507	$	—	$	—
Fixed income securities		14,798		—		14,798		—
Total	$	24,305	$	9,507	$	14,798	$	—

Liabilities:
Warrant liabilities	$	6,333	$	—	$	—	$	6,333
Total	$	6,333	$	—	$	—	$	6,333

	November Private Placement Warrants
Balance at December 31, 2015	$	—
Issuance of warrants		8,275
Change in fair value		(1,942	)
Balance at December 31, 2016		6,333
Change in fair value		11,474
Balance at September 30, 2017	$	17,807


Change in Level 3 Liabilities
	November 2016 Private Placement Warrants			Contingent Value Rights
Balance at December 31, 2020	$	37		$	2,520
Warrants exercised		(26	)		0
Change in fair value of CVR		0			1,027
Balance at September 30, 2021	$	11		$	3,547

	September 30, 2017			December 31, 2016
Risk-free interest rate		1.8	%		1.9	%
Expected term (in years)		4.1			4.9
Expected volatility		70.0	%		65.5	%
Expected dividend yield		0	%		0	%

	~~Warrants~~
~~Outstanding at December 31, 2015~~		~~1,181,776~~
~~Grants~~		~~1,798,084~~
~~Exercises~~		~~(641,743~~	)
~~Expirations/cancellations~~		~~(540,033~~	)
~~Outstanding at December 31, 2016~~		~~1,798,084~~
~~Grants~~		—
~~Exercises~~		—
~~Expirations/cancellations~~		—
~~Outstanding at September 30, 2017~~		~~1,798,084~~


	Warrants Outstanding
Outstanding at December 31, 2020		144,384
Exercises		(51,054	)
Issued		42,236
Expired		(10,837	)
Outstanding at September 30, 2021		124,729

	Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Options outstanding at December 31, 2015		610,481		$	11.99	$	—
Granted		128,334			10.41		—
Exercised		(10,247	)		9.28		29,550
Cancelled		(24,253	)		9.89		—
Outstanding at December 31, 2016		704,315		$	11.82		—
Granted		286,500			8.20		—
Exercised		(10,000	)		9.28		11,228
Cancelled		(3,250	)		12.44		—
Options outstanding at September 30, 2017		977,565		$	10.78	$	5,923,320
Options exercisable at September 30, 2017		390,417		$	11.67	$	2,019,924

Year
2017	$	59
2018		174
2019		157
2020		164
Thereafter		70
Total minimum lease payments	$	624

	Payments Due by Period
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
Operating lease commitments	$	624	$	194	$	430	$	0	$	—
Total	$	624	$	194	$	430	$	0	$	—