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

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

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

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of ~~November 10, 2020,~~August 9, 2021, the registrant had ~~43,703,381~~47,093,531 shares of voting and non-voting common stock, $0.0001 par value per share, outstanding.

(in thousands, except share data)	September 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	234,792		$	18,879		$	343,119		$	218,309
Prepaid expenses and other current assets		3,269			1,345			1,456			2,500
Total current assets		238,061			20,224			344,575			220,809
Property and equipment, net		1,620			1,647			3,109			2,480
Right-of-use asset								1,897			—
Deferred offering costs								—			301
Total assets	$	239,681		$	21,871		$	349,581		$	223,590
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Liabilities and stockholders’ equity
Current liabilities:
Capital lease obligation	$	—		$	258
Accounts payable		5,074			1,974		$	6,844		$	3,920
Accrued expenses and other current liabilities		6,285			2,603			6,430			7,455
Operating lease liability								1,403			—
Total current liabilities		11,359			4,835			14,677			11,375
Other liabilities		15			5			—			32
Operating lease liability								543			—
Total liabilities		11,374			4,840			15,220			11,407
Convertible preferred stock, $0.0001 par value:
Series A convertible preferred stock: No shares and 13,574,008 shares authorized at September 30, 2020 and December 31, 2019, respectively; no shares and 11,736,119 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		—			36,595
Series B convertible preferred stock: No shares and 18,500,000 shares authorized at September 30, 2020 and December 31, 2019; No shares and 7,628,846 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		—			29,848
Series C convertible preferred stock: no shares authorized, issued or outstanding at September 30, 2020 and December 31, 2019		—			—
Total convertible preferred stock		—			66,443
Commitments
Stockholders’ equity (deficit):
Voting common stock, $0.0001 par value: 487,149,741 and 42,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 32,593,010 and 3,161,653 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		3			—
Non-voting common stock, $0.0001 par value; 12,850,259 and no shares authorized at September 30, 2020 and December 31, 2019, respectively; 11,110,371 and no shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		1			—
Commitments (Note 7)
Stockholders’ equity:
Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 35,636,695 and 32,595,301 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								4			3
Non-voting common stock, $0.0001 par value; 12,850,259 shares authorized; 11,402,037 and 11,110,371 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								1			1
Additional paid-in capital		316,479			1,085			489,947			319,605
Accumulated deficit		(88,176	)		(50,497	)		(155,591	)		(107,426	)
Total stockholders’ equity (deficit)		228,307			(49,412	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	239,681		$	21,871
Total stockholders’ equity								334,361			212,183
Total liabilities and stockholders’ equity							$	349,581		$	223,590

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except share and per share data)	2020			2019			2020			2019			2021			2020			2021			2020
Operating expenses:
Research and development	$	15,293		$	5,490		$	33,605		$	15,430		$	22,409		$	9,776		$	38,879		$	18,312
General and administrative		2,851			1,394			5,712			2,584			5,513			1,660			11,010			2,861
Total operating expenses		18,144			6,884			39,317			18,014			27,922			11,436			49,889			21,173
Loss from operations		(18,144	)		(6,884	)		(39,317	)		(18,014	)		(27,922	)		(11,436	)		(49,889	)		(21,173	)
Other income, net		1,384			150			1,638			483			1,057			28			1,724			254
Net loss	$	(16,760	)	$	(6,734	)	$	(37,679	)	$	(17,531	)	$	(26,865	)	$	(11,408	)	$	(48,165	)	$	(20,919	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(5.25	)	$	(3.93	)	$	(15.83	)	$	(10.80	)	$	(0.58	)	$	(5.50	)	$	(1.06	)	$	(10.65	)
Weighted average common shares outstanding, basic and diluted		3,194,471			1,713,371			2,380,100			1,622,546			46,057,112			2,074,108			45,592,117			1,964,403

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Convertible preferred stock

Stockholders’ equity (deficit)

Series A

Series B

Series C

Voting common stock

Non-voting common
stock

Additional
paid-in

Accumulated

(in thousands, except shares)

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

capital

deficit

Total

Balance at January 1,
   2020

11,736,119

$
36,595

7,628,846

$
29,848

—

$
—

3,161,653

$
—

—

$
—

$
1,085

$
(50,497
)

$
(49,412
)
Sale of Series B convertible
   preferred stock, net of
   issuance costs of $58

—

—

7,628,846

29,942

—

—

—

—

—

—

—

—

—

Stock-based compensation
   expense, including
   issuance of restricted stock
   awards

—

—

—

—

—

—

432,301

—

—

—

362

—

362

Net loss

—

—

—

—

—

—

—

—

—

—

—

(9,511
)

(9,511
)
Balance at March 31,
   2020

11,736,119

36,595

15,257,692

59,790

—

—

3,593,954

—

—

—

1,447

(60,008
)

(58,561
)
Exercise of stock options

—

—

—

—

—

—

36,745

—

—

—

31

—

31

Stock-based compensation
   expense

—

—

—

—

—

—

—

—

—

—

627

—

627

Net loss

—

—

—

—

—

—

—

—

—

—

—

(11,408
)

(11,408
)
Balance at June 30, 2020

11,736,119

36,595

15,257,692

59,790

—

—

3,630,699

—

—

—

2,105

(71,416
)

(69,311
)
Exercise of stock options

—

—

—

—

—

—

61,509

—

—

—

65

—

65

Sale of Series C convertible
   preferred stock, net of
   issuance costs of $174

—

—

—

—

3,443,612

49,826

—

—

—

—

—

—

—

Conversion of convertible
   preferred stock into
   voting and non-voting
   common stock upon initial
   public offering

(11,736,119
)

(36,595
)

(15,257,692
)

(59,790
)

(3,443,612
)

(49,826
)

19,327,052

2

11,110,371

1

146,208

—

146,211

Sale of common stock in
   initial public offering,
   net of offering costs of
   $2,538

—

—

—

—

—

—

9,573,750

1

—

—

166,629

—

166,630

Stock-based compensation
   expense

—

—

—

—

—

—

—

—

—

—

1,472

—

1,472

Net loss

—

—

—

—

—

—

—

—

—

—

—

(16,760
)

(16,760
)
Balance at September 30, 2020

—

$
—

—

$
—

—

$
—

32,593,010

$
3

11,110,371

$
1

$
316,479

$
(88,176
)

$
228,307

	Stockholders’ equity
	Voting common stock				Non-voting common stock				Additional paid-in		Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at January 1, 2021		32,595,301	$	3		11,110,371	$	1	$	319,605	$	(107,426	)	$	212,183
Exercise of stock options		210,274		—		—		—		386		—			386
Sale of common stock, net of offering costs of $739		2,583,334		1		291,666		—		161,411		—			161,412
Stock-based compensation expense		—		—		—		—		3,886		—			3,886
Net loss		—		—		—		—		—		(21,300	)		(21,300	)
Balance at March 31, 2021		35,388,909	$	4		11,402,037	$	1	$	485,288	$	(128,726	)	$	356,567
Exercise of stock options		247,786		—		—		—		422		—			422
Stock-based compensation expense		—		—		—		—		4,237		—			4,237
Net loss		—		—		—		—		—		(26,865	)		(26,865	)
Balance at June 30, 2021		35,636,695	$	4		11,402,037	$	1	$	489,947	$	(155,591	)	$	334,361

Convertible preferred stock

Stockholders’ deficit

Series A

Series B

Common stock

Additional
paid-in

Accumulated

(in thousands, except shares)

Shares

Amount

Shares

Amount

Shares

Amount

capital

deficit

Total

Balance at January 1, 2019

11,736,119

$
36,595

—

$
—

2,380,270

$
—

$
234

$
(22,927
)

$
(22,693
)
Stock-based compensation
   expense

—

—

—

—

—

—

82

—

82

Net loss

—

—

—

—

—

—

—

(5,241
)

(5,241
)
Balance at March 31, 2019

11,736,119

36,595

—

—

2,380,270

—

316

(28,168
)

(27,852
)
Exercise of stock options

—

—

—

—

3,242

—

5

—

5

Sale of Series B convertible
   preferred stock, net of
   issuance costs of $152

—

—

7,628,846

29,848

—

—

—

—

—

Stock-based compensation
   expense, including issuance
   of restricted stock awards

—

—

—

—

345,840

—

141

—

141

Net loss

—

—

—

—

—

—

—

(5,556
)

(5,556
)
Balance at June 30, 2019

11,736,119

36,595

7,628,846

29,848

2,729,352

—

462

(33,724
)

(33,262
)
Stock-based compensation
   expense, including issuance
   of restricted stock awards

—

—

—

—

432,301

—

297

—

297

Net loss

—

—

—

—

—

—

—

(6,734
)

(6,734
)
Balance at September 30, 2019

11,736,119

$
36,595

7,628,846

$
29,848

3,161,653

$
—

$
759

$
(40,458
)

$
(39,699
)

	Convertible preferred stock								Stockholders’ deficit
	Series A				Series B				Common stock					Additional paid-in		Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		Shares			Amount		capital		deficit			Total
Balance at January 1, 2020		11,736,119	$	36,595		7,628,846	$	29,848		3,161,653		$	—	$	1,085	$	(50,497	)	$	(49,412	)
Sale of Series B convertible preferred stock, net of offering costs of $152		—		—		7,628,846		29,942		—			—		—		—			—
Stock-based compensation expense, including issuance of RSAs		—		—		—		—		432,301	��		—		362		—			362
Net loss		—		—		—		—		—			—		—		(9,511	)		(9,511	)
Balance at March 31, 2020		11,736,119	$	36,595		15,257,692	$	59,790		3,593,954		$	—	$	1,447	$	(60,008	)	$	(58,561	)
Exercise of stock options		—		—		—		—		36,745			—		31		—			31
Stock-based compensation expense		—		—		—		—		—			—		627		—			627
Net loss		—		—		—		—		—			—		—		(11,408	)		(11,408	)
Balance at June 30, 2020		11,736,119	$	36,595		15,257,692	$	59,790		3,630,699		$	—	$	2,105	$	(71,416	)	$	(69,311	)

	Nine months ended September 30,						Six months ended June 30,
(in thousands)	2020			2019			2021			2020
Cash flows used in operating activities:
Net loss	$	(37,679	)	$	(17,531	)	$	(48,165	)	$	(20,919	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		409			254			359			267
Noncash lease expense								572			—
Stock-based compensation		2,461			520			8,123			989
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,924	)		(344	)		1,044			364
Accounts payable		1,931			(76	)		3,327			1,134
Accrued expenses and other liabilities		3,472			(19	)		(856	)		(658	)
Operating lease liabilities								(459	)		—
Net cash used in operating activities		(31,330	)		(17,196	)		(36,055	)		(18,823	)
Cash flows used in investing activities:
Purchases of property and equipment		(292	)		(581	)		(1,367	)		(122	)
Net cash used in investing activities		(292	)		(581	)		(1,367	)		(122	)
Cash flows provided by financing activities:
Proceeds from the issuance of common stock upon initial public offering, net of offering costs		167,929			—
Proceeds from the sale of Series C convertible preferred stock, net of offering costs		49,826			—
Proceeds from the sale of common stock, net of offering costs								161,424			—
Proceeds from the sale of Series B convertible preferred stock, net of offering costs		29,942			29,848			—			29,942
Payment of capital lease obligation		(258	)		(31	)		—			(191	)
Proceeds from the exercise of stock options		96			5			808			31
Net cash provided by financing activities		247,535			29,822			162,232			29,782
Net increase in cash and cash equivalents		215,913			12,045			124,810			10,837
Cash and cash equivalents at beginning of period		18,879			15,595			218,309			18,879
Cash and cash equivalents at end of period	$	234,792		$	27,640		$	343,119		$	29,716
Supplemental disclosures:
Property and equipment in accounts payable	$	90		$	108		$	386		$	73
Offering costs in accounts payable							$	—		$	290
Offering costs in accrued expenses and other current liabilities	$	220		$	—		$	—		$	185
Offering costs in accounts payable	$	1,079		$	—

Prelude Therapeutics Incorporated (the “Company”) was incorporated in Delaware on February 5, 2016 and is a clinical-stage precision oncology company focused on discovering and developing small molecule therapies optimized to target the key driver mechanisms in cancers with high unmet need. Since beginning operations, the Company has devoted substantially all its efforts to research and development, conducting preclinical and clinical studies, recruiting management and technical staff, administration, and raising capital.

In September 2020, the Company closed its initial public offering (“IPO”) in which the Company issued and sold 9,573,750 shares of its common stock at a public offering price of $19.00 per share for net proceeds of $166.6 million after deducting underwriting discounts, commissions and other offering expenses paid or to be paid. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. In connection with the closing of the IPO, the Company amended and restated its Fifth Amended and Restated Certificate of Incorporation to change the authorized capital stock to 500,000,000 shares designated as common stock (of which 12,850,259 shares are non-voting common stock) and 10,000,000 shares designated as preferred stock, all with a par value of $0.0001 per share.

The Company is subject to a number of risks common to early-stage companies in the biotechnology industry. Principal among these risks are the uncertainties in the development process, development of the same or similar technological innovations by competitors, protection of proprietary technology, dependence on key personnel, compliance with government regulations and approval requirements, and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval, or that any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and contractors.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of ~~$88.2~~$155.6 million at ~~September~~June 30, ~~2020.~~2021. The Company has no revenue to date and devotes its efforts to research and development. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

The Company believes that its cash and cash equivalents as of ~~September~~June 30, ~~2020, which includes the net proceeds of approximately $166.6 million from the IPO of the Company’s common stock completed in September 2020,~~2021 will be sufficient to fund its operating expenses and capital expenditure requirements into ~~the second half of 2022.~~mid-2023.

To fund its operating expenses and capital expenditure requirements after that date, the Company plans to seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic. There is significant uncertainty as to the likely effects of this disease which may, among other things, materially impact the Company’s planned clinical trials. This pandemic or outbreak could result in difficulty securing clinical trial site locations, CROs, and/or trial monitors and other critical vendors and consultants supporting the trial. In addition, outbreaks or the perception of an outbreak near a clinical trial site location could impact the Company’s ability to enroll patients. These situations, or others associated with COVID-19, could cause delays in the Company’s clinical trial plans and could increase expected costs, all of which could have a material adverse effect on the Company’s business and its financial condition. At the current time, the Company is unable to quantify the potential effects of this pandemic on its future financial statements.

The summary of significant accounting policies included in the Company’s financial statements for the year ended December 31, ~~2019~~2020 can be found in “Note 3. Summary of significant accounting policies” of the Company’s ~~prospectus~~Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on ~~September 25, 2020 (the “Prospectus”).~~March 16, 2021. Those policies have not materially changed, except as set forth below.

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ~~ended~~ending December 31, ~~2020.~~2021. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, ~~2019~~2020 found in the ~~Prospectus~~Form 10-K filed with the SEC on ~~September 25, 2020.~~March 16, 2021. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

On September 18, 2020, the Company’s board of directors and stockholders approved a 1.1566-to-one reverse stock split of the Company’s issued and outstanding shares of common stock and convertible preferred stock. All share and per share amounts in the unaudited interim financial statements and notes hereto have been retrospectively adjusted for all periods presented to give effect to the reverse stock split.

~~The completion of the IPO, as described above, impacts the comparability of certain amounts to the corresponding prior year period, including earnings per share.~~

The preparation of the unaudited interim financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the unaudited interim financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying unaudited interim financial statements in the period they are determined to be necessary. Prior to the IPO, significant areas that required management’s estimates included the fair value of the Company’s common stock, stock-based compensation assumptions and accrued clinical trial expenses. Subsequent to the IPO, theThe most significant estimate relates to accrued clinical trial expenses.

Based upon the historical and anticipated future losses, management has determined that the deferred tax assets generated by net operating losses and research and development credits do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted stock awards as these instruments are considered contingently issuable shares until they vest. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and convertible preferred stock, and the effect from unvested restricted stock ~~options,~~awards which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is ~~anti-~~

~~dilutive.~~anti-dilutive. The Company’s convertible preferred stock and unvested restricted stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock and unvested restricted stock have no obligation to fund losses.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited interim financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

InOn January 1, 2021, the Company adopted ASC 842 issued by the FASB in February 2016, ~~the FASB issued ASU No. 2016-02,~~ ~~Leases~~, which was subsequently supplemented by clarifying guidance to improve financial reporting of leasing transactions. The new lease accounting guidance requires ~~a lessee~~lessees to ~~record a~~recognize lease liabilities and right-of-use ~~asset and a corresponding lease liability~~assets on the balance sheet for all leases with initial terms longer than 12 ~~months. A~~months and provides enhanced disclosures on key information of leasing arrangements.

The Company adopted the new standard using the modified retrospective transition ~~approach is required~~method utilizing the optional transition method and elected the package of practical expedients. Accordingly, prior periods were not restated to reflect the adopted standard. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). The Company has elected the practical expedient to account for ~~lessees for capital~~the lease and non-lease components of each of its operating leases ~~existing at,~~as a single lease component and allocate all of the contract consideration to the lease component only. Upon adoption, the Company recorded a right of use asset of $2.5 million and corresponding operating lease liabilities of $2.5 million, with an offset to accrued expenses and other current liabilities of approximately $64,000 to eliminate deferred rent on the balance sheets.

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise. The Company calculates the present value of lease payments using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. At the lease commencement date, the Company records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date. The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”). For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the balance sheet. The Company entered into ~~after,~~a short-term lease in June 2021 and elected the ~~beginning~~short-term lease exemption that allows the Company to record the rent expense on a straight-line basis and does not require the recognition of a right-of-use asset or corresponding operating lease liability. Refer to Note 7 for the Company’s lease disclosures.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the ~~earliest comparative period presented in~~remaining lease payments using the ~~financial statements, with certain practical expedients available. The standard is effective~~discount rate determined at lease commencement and (ii) the right-of-use lease asset based on the re-measured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the ~~Company beginning January 1, 2022, with early adoption permitted. The Company is currently evaluating~~cumulative difference between rent expense and amounts paid under the lease agreement. Any lease incentives received, and any initial direct costs incurred are amortized on a straight-line basis over the expected ~~impact that~~lease term. Rent expense is recorded on a straight-line basis over the ~~standard will have on its financial statements and related disclosures.~~expected lease term.

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements,~~ ~~which changes the fair value measurement disclosure requirements of ASC Topic 820,~~ ~~Fair Value Measurement~~ (“ASC 820”). The goal of the ASU is to improve the effectiveness of ASC 820’s disclosure requirements. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods therein. The adoption of ~~this~~the new lease accounting standard ~~on January 1, 2020~~ did not have a material impact on the Company’s ~~unaudited interim financial statements.~~results of operations or cash flows for the six months ended June 30, 2021.

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The Company follows the provisions of ASC 820, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:

In August 2020, the Company’s existing Convertible Preferred Stock investors as well as a new investor purchased 3,443,612 shares of Series C at a price of $14.5197 per share for net proceeds of approximately $49.8 million.

~~In March 2020, the Company’s Series B investors exercised their Future Tranche Right and purchased 7,628,846 shares of Series B for net proceeds of approximately $29.9 million.~~

In ~~September 2020, the Company completed its IPO in which~~January 2021, the Company sold ~~9,573,750~~2,875,000 shares of its common stock at a public offering price of ~~$19.00~~$60.00 per share. The Company received net proceeds of ~~$166.6~~$161.4 million after deducting underwriting discounts, commissions, and other offering expenses paid by the Company. In addition, immediately prior to the closing of the IPO on September 29, 2020, (i) all of the Company’s outstanding shares of convertible preferred stock converted into an aggregate of 30,437,423 shares of common stock (of which, 11,110,371 shares are non-voting common stock) and (ii) the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of authorized shares of common stock to 500,000,000.

The Company has two classes of common stock; “voting common stock” and “non-voting common stock.” The holders of the voting common stock are entitled to one vote for each share of voting common stock held at all meetings of stockholders. Except as otherwise required by law, the holders of non-voting common stock shall not be entitled to vote at any meetings of stockholders (or written actions in lieu of meetings) and the shares of non-voting common stock shall not be included in determining the number of shares voting or entitled to vote on any matter. Unless required by law, there shall be no cumulative voting. Any holder of non-voting common stock may elect to convert each share of non-voting common stock into one fully paid and non-assessable share of voting common stock at any time by providing written notice to the Company; provided that as a result of such conversion, such holder, together with its affiliates and any members of a Schedule 13(d) group with such holder, would not beneficially own in excess of 9.99% of the Company’s common stock immediately prior to and following such conversion, unless otherwise as expressly provided for in the Company’s restated certificate of incorporation. However, this ownership limitation may be increased (not to exceed 19.99%) or decreased to any other percentage designated by such holder of non-voting common stock upon 61 days’ notice to the Company.

The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease, which expires in December 2022. The Company has an option to renew the leases for an additional 1-year period. Thisoptiontoextendwasnotrecognizedas partof theCompany’s measurementof theright-of-useassetand operatingleaseliabilityas of June 30, 2021. ThediscountrateusedtoaccountfortheCompany’s operatingleaseunderASC 842istheCompany’sestimatedincrementalborrowingrateof10.0%. In June 2021, the Company signed a 12-month noncancelable lease, which commenced on July 1, 2021 and will expire on June 30, 2022 and has remaining lease payments of approximately $0.2 million in both 2021 and 2022.

Rentexpenseforthethree monthsendedJune 30,2021and2020was$0.3millionand $0.2 million, respectively.Rentexpenseforthesix monthsendedJune 30,2021and2020was$0.7millionand $0.5 million, respectively.

Futureminimumannualleasepaymentsunder the Company’s noncancelableleaseatJune 30,2021isasfollows:

The Company entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment agreements

The Company sponsors a 401(k) defined‑contribution plan covering all employees. Participants are permitted to contribute up to 100% of their eligible annual pretax compensation up to an established federal limit on aggregate participant contributions. The Company provides a safe harbor match with a maximum amount of 3% of the participant’s compensation. During the three and six months ended June 30, 2021, the Company made matching contributions of $0.1 million and $0.3 million, respectively.

The Company enters into agreements with contract research organizations (“CROs”) to assist in the performance of research and development activities. Expenditures to CROs will represent a significant cost in clinical development for the Company.

The Company has ~~two~~2 equity incentive plans: the 2016 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan. New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”)~~. The total number~~ and as of ~~shares initially authorized under the Plan was 4,680,000. Of this amount, 4,677,407~~June 30, 2021, 6,282,783 shares were available for future ~~grants as of September 30, 2020.~~grants. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021, and continuing for ten years, in an amount equal to ~~five~~5 percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year. The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods with 25% of options vesting after 1 year and then monthly thereafter, and have a term of ten years. In September 2020, the Company ~~also~~ adopted the 2020 Employee Stock Purchase Plan (the “ESPP”), which, ~~includes 520,000~~as of June 30, 2021, had 957,056 shares of common stock reserved for future issuance. NoNaN shares have been issued from the ESPP as of ~~September~~June 30, ~~2020.~~2021.

The Company measures stock-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company recorded stock-based compensation expense in the following expense categories in its accompanying statements of operations:

At ~~September~~June 30, ~~2020,~~2021, the aggregate intrinsic value of outstanding options and exercisable options was ~~$153.7~~$131.1 million and ~~$22.3~~$33.2 million, respectively.

The following table summarizes information about stock options outstanding at ~~September~~June 30, ~~2020~~2021 under the Plan:

The weighted-average grant date fair value of options granted was ~~$8.44~~$38.31 and ~~$1.40~~$2.88 per share for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The aggregate intrinsic value of options exercised was ~~$2.9~~$18.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The Company recorded stock-based compensation expense of ~~$1.2~~$4.2 million and ~~$0.2~~$0.6 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to stock options. The Company recorded stock-based compensation expense of ~~$1.9~~$7.7 million and ~~$0.3~~$0.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to stock options. As of ~~September~~June 30, ~~2020,~~2021, the total unrecognized compensation expense related to unvested stock option awards was ~~$39.1~~$55.6 million, which the Company expects to recognize over a weighted-average period of ~~3.74~~3.05 years.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

The Company issues restricted stock awards (“RSA”) to employees that generally vest over a four-year period with 25% of awards vesting after one year and then monthly thereafter. Any unvested shares will be forfeited upon termination of services. The fair value of an RSA is equal to the fair market value price of the Company’s common stock on the date of grant. RSA expense is ~~amortized~~recorded on a straight-line basis over the vesting period.

The following table summarizes activity related to RSA stock-based payment awards:

The Company recorded stock-based compensation expense of ~~$0.3~~$0.2 million and ~~$0.1~~$0.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to RSAs. The Company recorded stock-based compensation expense of ~~$0.6~~$0.4 million and $0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to RSAs. As of ~~September~~June 30, ~~2020,~~2021, the total unrecognized expense related to all RSAs was ~~$2.4~~$1.8 million, which the Company expects to recognize over a weighted-average period of ~~2.94~~2.26 years.

~~On November 1, 2020,~~During the six months ended June 30, 2021, the Company ~~entered into a Second Amended and Restated Entrepreneur Client License Agreement (the “Amendment”) with Delaware Innovation Space, Inc.~~ granted 25,000 restricted stock units (“~~DISI”~~RSU”) to ~~amend~~an employee that vest over a four-year period with 25% of awards vesting after one year and then quarterly thereafter. Any unvested units will be forfeited upon termination of services. At June 30, 2021 the ~~Amended and Restated Entrepreneur Client License Agreement dated June 1, 2020 (the “Original Agreement”) relating~~total unrecognized expense related to the Company’s office and laboratory space in Wilmington, Delaware. The Amendment provides for the expansion of the premises by approximately 8,800 rentable square feet (the “Expansion Space”). Upon inclusion of the Expansion Space,RSUs was $0.8 million, which the Company ~~will license approximately 19,800 rentable square feet of office space (the “Premises”) from DISI (the “License”). Pursuant~~expects to ~~the Amendment, the initial term of the License is twenty-six months commencing on November 1, 2020 and terminating on December 31, 2022 (the “Initial Term”).~~

The total base license fee for the Premises through the Initial Term is expected to be $3.0 million (the “License Fee”). The Company has an option to renew the License for twelve months commencing on January 1, 2023 at a monthly renewal license fee increased by 5.0% for a total of $1.4 million payable during the renewal term.

Pursuant to the Amendment, the Company was granted a right of first offer (the “ROFO”) in connection with certain licensable additional space on the Premises that becomes vacant prior to October 31, 2021 (��Available ROFO Space”). If the Company exercises its ROFO, the Company will pay to DISI an increased monthly license fee not to exceed $0.2 million per month at any time during the Initial Term. As consideration for the ROFO, the Company paid DISI a one-time payment of $0.2 million.recognize over 3.95 years.

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

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

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

We are a clinical-stage precision oncology company focused on discovering and developing small molecule therapies optimized to target the key driver mechanisms in cancers with high unmet need. By leveraging our core competencies in cancer biology and medicinal chemistry, combined with our target class- and technology platform-agnostic approach, we have built an efficient, fully-integrated drug discovery engine to identify compelling biological targets and create new chemical entities, or NCEs, that we rapidly advance into clinical development. We believe our approach could result in better targeted cancer therapies. Our discovery excellence has been validated by our rapid progress in creating a wholly-owned, internally developed pipeline. Since our inception in 2016, we have received clearance from the U.S. Food and Drug Administration, or the FDA, for ~~three~~four investigational new drug applications, or INDs, and successfully advanced these ~~three~~ programs into clinical development. In addition, we have three unique programs in various stages of preclinical development that we plan to advance into clinical development beginning in 2021.

By focusing on developing agents using broad mechanisms that have multiple links to oncogenic driver pathways in select patients, we have developed a diverse pipeline consisting of six distinct programs spanning methyltransferases, kinases, protein-protein interactions and targeted protein degraders. Our pipeline is geared towards serving patients with high unmet medical need where there are limited or no treatment options. We are exploring therapies in both solid tumors and hematological malignancies such as adenoid cystic carcinoma, or ACC, homologous recombination deficient positive, or HRD+, cancers, myelofibrosis, or MF, and glioblastoma multiforme, or GBM, amongst others. We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms.

Our lead product candidates are designed to be oral, potent and selective inhibitors of protein arginine methyltransferase 5, or PRMT5. The potency and selectivity of our product candidates is supported by preclinical data demonstrating nanomolar inhibition of PRMT5 and no inhibition of related enzymes at 1,000 times higher concentration of our product candidates. We are currently advancing our first clinical candidate, PRT543, in a Phase 1 clinical trial in select solid tumors and myeloid malignancies in patients who are refractory to or intolerant of established therapies. Interim Phase 1 results indicate dose-dependent increases in exposure and target engagement, and we have observed early signs of clinical activity, including aan ongoing confirmed complete response, or CR, in a patient with HRD+ high grade serous ovarian ~~cancer.~~cancer through nine months of therapy. A complete response is defined as the disappearance of all target lesions. ~~While we~~We will need to enroll and demonstrate objective responses in additional patients to support further development and potential approval by the FDA or other regulatory authorities, and while such approval is not guaranteed, we are encouraged by the clinical activity ~~to date.~~as of the date of this Quarterly Report on Form 10-Q. Patient enrollment is continuing in multiple biomarker-selected solid tumor and hematologic malignancy expansion cohorts. We ~~expect to begin~~anticipate presenting data from the dose escalation portion of the Phase 1 trial in unselected patient ~~enrollment into~~populations, including safety, PK and PD data and markers of target engagement, at the ~~select solid tumor~~AACR-NCI-EORTC Annual Meeting in October 2021 and data from the expansion cohorts of ~~our ongoing Phase 1~~the trial during the fourth quarter of 2020 and into the select myeloid malignancies cohorts early in 2021. We anticipate obtaining initial clinical data from these expansion cohorts in the first half of 2021 and presenting these data at medical meetings ~~in 2021.~~throughout 2022.

We are also advancing PRT811, a second PRMT5 inhibitor that we have optimized for high brain exposure, in a Phase 1 clinical trial in solid tumors, including GBM. ToAs of the date of this Quarterly Report on Form 10-Q, the trial has demonstrated early signs of clinical activity and tolerability. The previously disclosed refractory GBM patient whose tumor had demonstrated a 66% reduction on monotherapy PRT811 ~~has~~ subsequently ~~undergone~~underwent a follow-up MRI at week 1618 and the regression improved to 77% from baseline, confirming a partial response, ~~(PR)~~or PR, per RANO (response assessment in neuro-oncology) criteria. We ~~expect to begin enrolling patients~~will present data from the dose escalation portion of the Phase 1 trial in unselected patient populations, including safety, PK and PD data and markers of target engagement, at the AACR-NCI-EORTC Annual Meeting in October 2021. We anticipate beginning the dose expansion portion of the Phase 1 ~~clinical~~ trial in the ~~first half~~third quarter of 2021 in selected patients with central nervous system cancers, including high grade gliomas and ~~anticipate initial clinical~~CNS metastatic cancers. We expect to present data from these expansion cohorts ~~by the end of 2021. We have also received FDA clearance of~~at medical meetings throughout 2022.

PRT1419, our ~~IND for PRT1419, which~~third clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1. The potency andselectivity of PRT1419 is supported by preclinical data demonstrating nanomolar inhibition of MCL1 and no inhibition of related enzymes at 200 times higher concentration of our product candidate. We ~~recently initiated a Phase 1 clinical trial in relapsed/refractory~~have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloidleukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or ~~MM.~~MM, into the dose escalation portion of a Phase 1 open-label, multicenter clinical trial for the oral formulation of PRT1419. We expect to add dose expansion and combination cohorts to the Phase 1 clinical trial in the second half of 2021. Additionally, in March 2021, the FDA cleared our IND for an intravenous (IV) formulation of PRT1419. The Phase 1 trial of the IV formulation of PRT1419, which leverages the optimized physicochemical properties of PRT1419, is now underway in patients with solid tumors.

We were incorporated in February 2016 under the laws of the State of Delaware. Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations. We have funded our operations primarily through the sale of convertible preferred stock and common ~~stock through our IPO.~~stock. Our net loss was ~~$14.7 million and $27.6~~$48.2 million for the ~~years~~six months ended ~~December 31, 2018 and 2019, respectively, and $16.8 and $37.7~~June 30, 2021 as compared to $20.9 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2020. As~~2020, and as of ~~September~~June 30, ~~2020,~~2021, we had an accumulated deficit of ~~$88.2~~$155.6 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of ~~September~~June 30, ~~2020,~~2021, we had ~~$234.8~~$343.1 million in cash and cash equivalents. We expect our existing cash and cash equivalents towill enable us to fund our operating expenses and capital ~~expenditure requirements~~expenditures into ~~the second half of 2022.~~

We are continuing to proactively monitor and assess the current coronavirus disease 2019, or COVID-19, global pandemic. Since early March 2020, we have been monitoring the potential impact on our business that may result from this rapidly evolving crisis and to avoid any unnecessary potential delays to our programs. At this time, our lead programs and research activities remain on track. The safety and well-being of employees, patients and partners is our highest priority.

To date, we have not recognized any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred, including:

We track outsourced development costs and other external research and development costs to specific product candidates on a program-by-program basis, fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including stock-based compensation, conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. General and administrative expense also includes corporate facility costs not otherwise included in research and development expense, including rent, utilities, depreciation and maintenance, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, legal support and accountants, among other expenses. Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the Securities and Exchange Commission, or SEC,insurance and investor relations costs. If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.

Other income, net consists primarily of interest earned on our cash equivalents and grant income received from the State of Delaware. We anticipate re-applying for the grant from the State of Delaware from time to time as long as we maintain qualifying headcount levels in the State of Delaware. We expect our interest income, net to increase due to our investment of cash received ~~from the IPO.~~our stock offerings.

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

Comparison of the Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

The following table sets forth our results of operations for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

Research and development expenses increased by ~~$9.8~~$12.6 million to ~~$15.3~~$22.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$5.5~~$9.8 million for the three months ended ~~September~~June 30, ~~2019.~~2020. The increase was mainly due to increased clinical research costs for the PRT543, PRT811 and ~~PRT811 clinical trials~~PRT1419 (Oral and ~~increased costs associated with the initiation of the clinical trial for PRT1419, which began in the third quarter of 2020. We also incurred an increase in~~IV). Our chemistry, manufacturing and other costs for those ~~trials.~~trials also increased. We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

General and administrative expenses increased by ~~$1.5~~$3.9 million to ~~$2.9~~$5.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 from ~~$1.4~~$1.6 million for the three months ended ~~September~~June 30, ~~2019.~~2020. The increase was primarily due to an increase in personnel related expense due to ~~increases~~an increase in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development efforts and incurred additional costs to operate as a public company.

Other income, net increased by ~~$1.2~~$1.0 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the ~~third~~second quarter of ~~2020.~~2021.

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

The following table sets forth our results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

Research and development expenses increased by ~~$18.2~~$20.6 million to ~~$33.6~~$38.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$15.4~~$18.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The increase was mainly due to increased ~~patient enrollment and monitoring~~clinical research costs for the PRT543 and ~~PRT811 clinical trials and increased costs associated with the initiation of the clinical trial for PRT1419, which began in the third quarter of 2020. We also incurred an increase in~~PRT811. Our chemistry, manufacturing and other costs for those ~~trials.~~trials also increased. We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

General and administrative expenses increased by ~~$3.1~~$8.1 million to ~~$5.7~~$11.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 from ~~$2.6~~$2.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The increase was primarily due to an increase in personnel related expense due to increases in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development ~~efforts. We also~~efforts and incurred additional ~~expenses as we began~~costs to operate as a public company.

Other income, net increased by ~~$1.2~~$1.5 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the ~~third~~first and second quarter of ~~2020.~~2021.

Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. Since our inception, ~~through August 2020,~~ we have funded our operations through the sale of convertible preferred stock ~~receiving aggregate net proceeds of $144.4 million.~~ ~~Upon the completion of our IPO in September 2020, we received net proceeds of $166.6 million.~~ and common stock. As of ~~September~~June 30, ~~2020,~~2021, we had ~~$234.8~~$343.1 million in cash and cash equivalents and had an accumulated deficit of ~~$88.2~~$155.6 million. We expect our existing cash and cash equivalents to enable us to fund our operating expenses and capital expenditure requirements into ~~the second half of 2022.~~mid-2023. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.

Our primary use of cash is to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

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

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

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

The following table shows a summary of our cash flows for the periods indicated:

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we used ~~$31.3~~$36.1 million of cash in operating activities. Cash used in operating activities reflected our net loss of ~~$37.7~~$48.2 million, offset by a ~~$3.5~~$3.1 million net decrease in our operating assets and liabilities and noncash charges of ~~$2.9~~$9.1 million, which consisted of $0.4 million in depreciation, $0.6 million noncash lease expense and ~~$2.5~~$8.1 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we used ~~$17.2~~$18.8 million of cash in operating activities. Cash used in operating activities reflected our net loss of ~~$17.5~~$20.9 million, ~~and~~offset by a $0.8 million net ~~increase of $0.4 million~~decrease in our operating assets and liabilities ~~offset by $0.8 million of~~and noncash charges of $1.3 million, which consisted of $0.3 million in depreciation and ~~amortization and $0.5~~$1.0 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we used ~~$0.3~~$1.4 million and ~~$0.6~~$0.1 million of cash, respectively, for the purchase of property and equipment.

During the ~~nine~~six months ended ~~September~~June 30, 2021, financing activities provided $162.2 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $0.8 million from the exercise of stock options. During the six months ended June 30, 2020, financing activities provided ~~$247.5 million. During~~$29.8 million of cash. Net cash provided by financing activities for the ~~nine~~six months ended ~~September~~June 30, 2020 ~~we completed our IPO and received net cash~~consisted of ~~$167.9 million. We also received $49.8 million from the sale of our Series C convertible preferred stock,~~ $29.9 million from the sale of our Series B convertible preferred stock and $96,000 from the exercise of stock options. During the nine months ended September 30, 2020, we made $0.3 million in payments for our capital lease obligation. During the nine months ended September 30, 2019 net cash provided by financing activities consisted of $29.8 million from the sale of our Series B convertible preferred stock and $5,000$31,000 of proceeds received from the exercise of stock options, offset by payments of ~~$31,000~~$0.2 million for our capital lease obligation.

During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

During the ~~nine~~three months ended ~~September~~June 30, ~~2020,~~2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” inon our Annual Report on Form 10-K filed with the ~~Prospectus.~~Securities and Exchange Commission on March 16, 2021.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest of (1) the last day of our first fiscal year (a) in which we have total annual gross revenues of at least $1.07 billion, or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30^th, (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period and (3) December 31, 2025.

See Note 3 to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from complying with new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act, including without limitation, exemption to the requirements for providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our IPO, (ii) in which we have total annual gross revenues of at least $1.07 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Q~~ualitati~~veQualitative Disclosures About Market Risk.

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

As of ~~September~~June 30, ~~2020,~~2021, management, with the participation of our Principal Executive Officer and Principal Financial and Accounting Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that, as of ~~September~~June 30, ~~2020,~~2021, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Management determined that, as of ~~September~~June 30, ~~2020,~~2021, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. . In addition, we may receive letters alleging infringement of patents or other intellectual property rights. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business, operating results, cash flows or financial conditions should such litigation be resolved unfavorably. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.

Investing in our common stock involves a high degree of risk. Before making your decision to invest in shares of our common stock, you should carefully consider the risks and uncertainties described below, together with the other information contained in this Quarterly ~~Report~~Report on Form 10-Q, including our financial statements and the related notes ~~appearing at~~and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The risks and uncertainties described below are not the ~~end~~only ones we face. Additional risks and uncertainties that we are unaware of, ~~this Quarterly Report on Form 10-Q.~~or that we currently believe are not material, may also become important factors that affect us. We cannot assure you that any of the events discussed below will not occur. These events could have a material and adverse impact on our business, financial condition, results of operations and prospects. If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.

~~The below summary risks provide an overview of many of the risks we are exposed~~

Our business is subject to ~~in the normal course of our business activities. As~~ a ~~result, the below summary risks do not contain all of the information that may be important to you, and you should read the summary risks together with the more detailed discussion~~number of risks ~~set forth~~and uncertainties, including those immediately following this ~~section under the heading "Risk Factors," as well as elsewhere in this Quarterly Report on Form 10-Q under the heading “Management’s Discussion and Analysis~~summary. Some of ~~Financial Condition and Results of Operations.” Additional~~these risks beyond those summarized below or discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may apply to our activities or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate. Consistent with the foregoing, we are exposed to a variety of risks, including risks associated with:

We have a limitedoperatinghistory,which maymakeitdifficultto evaluatethe successof our businessto dateand to assessour futureviability.We have incurredsignificantoperatinglossessinceour inception and have not generatedany revenue.We expectto incur continuedlossesforthe foreseeablefutureand mayneverachieveor maintainprofitability.

Investmentindrugdevelopmentisahighlyspeculativeundertakingandinvolvesasubstantialdegreeof risk.Wecommencedoperationsin2016and area clinical-stagebiopharmaceuticalcompanywith a limited operatinghistory.Wehave not yetcommercializedany productand we do not expectto generaterevenuefrom salesofany productsforseveralyears,ifatall.Consequently,therehave been limitedoperationsupon which we oryoucanevaluateourbusiness,andpredictionsaboutour futuresuccessor viabilitymaynot be as accurateas theycouldbeifwehada longeroperatinghistoryor a historyof successfullydevelopingand commercializing cancertherapies.Forthe ~~three~~six monthsJune 30, 2021 and ~~nine months ended September 30,~~ 2020,wereportedanetlossof ~~$16.8~~ $48.2million and ~~$37.7~~$20.9 million, respectively.Asof ~~September~~June 30, ~~2020,~~ 2021,wehadanaccumulateddeficitof ~~$88.2~~ $155.6million.Weexpecttocontinue to incursignificantresearchand developmentand otherexpensesrelatedto our ongoing operations.

Sinceourinception,wehavefocusedsubstantiallyallofoureffortsandfinancialresourceson theresearch, preclinicalandclinicaldevelopmentofour productcandidates,PRT543,PRT811and PRT1419,and our research effortsonotherpotentialproductcandidatestargetingProteinArginineMethyltransferase5,orPRMT5, Myeloid CellLeukemiaSequence1,orMCL1,Cyclin-dependentkinase9,orCDK9, andBrahmahomologue,or BRM, otherwiseknownasSMARCA2. To date, we have funded our operations with proceeds from sales of shares of our convertible preferred stock and common stock upon our IPO. From inception through September 30, 2020, we received an aggregate of $311.0 million in net proceeds from such sales. As of ~~September~~June 30, ~~2020,~~2021, our cashand cashequivalentswere ~~$234.8~~$343.1 million.

Weexpecttoincurincreasinglevelsofoperatinglossesfortheforeseeablefuture,particularlyaswe advance PRT543, PRT811 and PRT1419 through clinical development. Our prior losses, combined with expectedfuturelosses,havehad,andwillcontinueto have, an adverseeffecton our stockholders’equityand workingcapital.Weexpectourresearchanddevelopmentexpensestosignificantlyincreasein connectionwith our additionalplannedclinicaltrialsforour leadproductcandidates,includingtheongoing Phase 1 clinicaltrials andtheplannedexpansioncohortsofPRT543 andPRT811, the ~~current~~ ongoingPhase1clinicaltrialfor oral PRT1419 and developmentandsubsequentINDsofotherfutureproductcandidateswemaychooseto pursue,including IV PRT1419, PRT2527,ourCDK9inhibitor,aSMARCA2 proteindegraderandakinaseinhibitor.Inaddition,ifweobtain marketingapprovalforPRT543,PRT811, PRT1419 oranotherproductcandidate,wewillincursignificantsales, marketing and outsourced manufacturing expenses in connection with the commercialization of PRT543, PRT811, PRT1419 orsuchotherproductcandidate,respectively.Wewillalsocontinuetoincuradditionalcosts associatedwith operatingas a publiccompany.As a result,we expectto continueto incursignificantand increasingoperatinglossesfortheforeseeablefuture.Becauseofthenumerousrisksand uncertaintiesassociated withdevelopingpharmaceuticalproducts,weareunabletopredicttheextentofanyfuturelossesorwhenwe willbecomeprofitable,ifatall.Evenifwedobecomeprofitable,wemaynotbeabletosustainorincreaseour profitabilityon a quarterlyor annualbasis.We expectour financialconditionand operatingresultsto fluctuate significantlyfromquarter-to-quarterand year-to-yeardue to a varietyof factors,manyof which arebeyond our control.Accordingly,youshouldnotrelyupon theresultsof any quarterlyor annualperiodsas indicationsof futureoperatingperformance.

Ourabilitytobecomeprofitabledependsupon our abilityto generaterevenue.To date,we have not generatedanyrevenueand we do not know when, or if,we willgenerateany revenue.We do not expectto generatesignificantrevenueunlessand untilwe obtainmarketingapprovalfor,and beginto sell,PRT543, PRT811, PRT1419 oranotherproductcandidate.Ourabilitytogeneraterevenuedependson a numberof factors, including,but not limitedto, our abilityto:

~~complete a successful Phase 1 clinical trial of PRT1419 as a treatment for patients with certain hematological malignancies;~~

~~submit INDs for PRT2527 and the SMARCA2 protein degrader that are made effective by the U.S.~~ Food and Drug Administration,or theFDA;

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obtain,maintain,protectand defendour intellectualpropertyportfolio;and

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achievemarketacceptanceofPRT543,PRT811,PRT1419andourothersuccessfulproductcandidates with themedicalcommunityand with third-partypayors.

~~obtain, maintain, protect and defend our intellectual property portfolio; and~~

~~achieve market acceptance of PRT543, PRT811, PRT1419 and our other successful product candidates with the medical community and with third-party payors.~~

To become and remain profitable, we must succeed in designing, developing and eventually commercializingproductsthatgeneratesignificantrevenue.Thiswillrequireustobesuccessfulinarangeof challengingactivities,includingcompletingpreclinicaltestingandclinicaltrialsforour productcandidates, designingadditionalproductcandidates,establishingarrangementswith third partiesfor the manufactureof clinicalsuppliesofourproductcandidates,obtainingmarketingapprovalforour productcandidates ~~obtaining marketing approval for our product candidates~~ and manufacturing,marketingandsellingany productsforwhich we mayobtainmarketingapproval.We areonly in thepreliminarystagesofmostof theseactivities.We mayneversucceedin theseactivitiesand, even ifwe do, maynevergeneraterevenuesthataresignificantenough to achieveprofitability.

Incaseswherewearesuccessfulinobtainingregulatoryapprovaltomarketoneormoreofourproduct candidates,ourrevenuewillbedependent,inpart,uponthesizeofthemarketsintheterritoriesforwhichwe gainregulatoryapproval,theacceptedpricefortheproduct,theabilitytoobtaincoverageandreimbursement, andwhetherweownthecommercialrightsforthatterritory.Ifthenumberofouraddressablepatientsisnot as significantasweestimate,theindicationapprovedbyregulatoryauthoritiesisnarrowerthanweexpect,or the treatmentpopulationisnarrowedbycompetition,physicianchoiceor treatmentguidelines,we maynot generate significantrevenuefromsalesof such products,even ifapproved.

Becauseofthenumerousrisksanduncertaintiesassociatedwithpharmaceuticalproductdevelopment,we areunabletoaccuratelypredictthetimingoramountof increasedexpenseswe willincuror when, or if,we will beabletoachieveprofitability.IfwedecidetoorarerequiredbytheFDA orregulatoryauthoritiesinother jurisdictionstoperformstudiesor clinicaltrialsin additionto thosecurrentlyexpected,or ifthereareany delays inestablishingappropriatemanufacturingarrangementsfor,ininitiatingor completingour currentand planned clinicaltrialsfor,or in thedevelopmentof, any of our productcandidates,our expensescouldincreasematerially and profitabilitycouldbe furtherdelayed.

Evenifwedoachieveprofitability,wemaynotbeabletosustainorincreaseprofitabilityon a quarterlyor annualbasis.Ourfailuretobecomeand remainprofitablewould depressthevalueof our companyand could impairourabilitytoraisecapital,expand our business,maintainour researchand developmentefforts,diversify ourproductofferingsorevencontinueouroperations.Adeclineinthevalueofourcompanycouldalsocause you to loseallor partof your investment.

We willrequiresubstantialadditionalfunding to pursue our business objectives.Ifwe are unable to raisecapitalwhenneeded or on termsacceptableto us, we could be forced to delay,reduceor eliminateour researchor drug developmentprograms,any futurecommercialization effortsor otheroperations.

Weexpectourexpensestoincreasesubstantiallyinconnectionwithourongoingactivities,particularlyas weadvanceourproductcandidates,PRT543,PRT811andPRT1419, andotherpipelineproductcandidates throughclinicaldevelopment,and seekto designadditionalproductcandidatesfromour discoveryprograms.We expectincreasedexpensesaswecontinueour ~~expenses to increase substantially in connection with our ongoing activities, particularly as we advance our product candidates, PRT543, PRT811~~ researchand ~~PRT1419, and other pipeline product candidates through~~ development,initiateadditionalclinical ~~development,~~ trials,and seek ~~to design additional~~ marketingapprovalforourleadprogramsandourotherproduct candidates from our discovery programs. We expect increased expenses as we continue our research and development, initiate additional clinical trials, and seek marketing approval for our lead programs and our other product candidates.In addition,ifwe obtain marketingapprovalforany of our productcandidates,we expectto incursignificantcommercializationexpenses relatedtoproductmanufacturing,marketing,salesanddistribution.Furthermore,we expectto continueto incur additionalcostsassociatedwithoperatingas a publiccompany.Accordingly,we willneed to obtainsubstantial additionalfundinginconnectionwithourcontinuingoperations.Adequateadditionalfinancingmaynot be availabletous on favorableterms,or atall.In addition,we mayseekadditionalcapitaldue to favorablemarket conditionsorstrategicconsiderationsevenifwebelievewehavesufficientfundsforourcurrentor future operatingplans.Ifweareunabletoraisecapitalwhenneededoronfavorableterms,we couldbe forcedto delay, reduceor eliminateour researchand developmentprograms,our commercializationplansor otheroperations.

Webelievethatourexistingcashandcashequivalents willenableustofundouroperatingexpenses,andcapitalexpenditurerequirementsinto ~~the second half of 2022.~~mid-2023. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Changes beyond our control may occur that would cause us to use our availablecapital before that time, including changes in and progress of our drug development activities and changes in regulation. Our futurecapitalrequirementswilldepend on manyfactors,including:

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theprogress,timingandresultsofpreclinicalstudiesandclinicaltrialsforourcurrentoranyfuture productcandidates;

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theextentto which we develop,in-licenseor acquireotherpipelineproductcandidatesor technologies;

~~the progress, timing and results of preclinical studies and clinical trials for our current or any future product candidates;~~

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thenumberanddevelopmentrequirementsofotherproductcandidatesthatwemaypursue,andother indicationsforour currentproductcandidatesthatwe maypursue;

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thecosts,timingandoutcomeofobtainingregulatoryapprovalsofourcurrentorfutureproduct candidatesand any companiondiagnosticswe maypursue;

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the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturingcapabilities,forbothclinicalandcommercialsuppliesof our currentor futureproduct candidates;

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the costs involved in growing our organization to the size needed to allow for the research, developmentand potentialcommercializationof our currentor futureproductcandidates;

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thecostassociatedwithcommercializing anyapprovedproductcandidates,includingestablishing sales,marketingand distributioncapabilities;

~~the extent to which we develop, in-license or acquire other pipeline product candidates or technologies;~~

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thecostassociatedwithcompletinganypost-marketingstudiesortrialsrequiredbytheFDAorother regulatoryauthorities;

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therevenue,ifany,receivedfromcommercialsalesofPRT543, PRT811, PRT1419, orPRT2527ifany areapproved,or our otherpipelineproductcandidatesthatreceivemarketingapproval;

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the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectualpropertyrightsand defendingintellectualproperty-relatedclaimsthatwe maybecome subjectto, includingany litigationcostsand theoutcomeof such litigation;

~~the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidates that we may pursue;~~

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the costs associated with potential product liability claims, including the costs associated with obtaininginsuranceagainstsuch claimsand with defendingagainstsuch claims;and

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totheextentwepursuestrategiccollaborations,includingcollaborationstocommercializePRT543, PRT811, PRT1419, PRT2527 orany of our otherpipelineproductcandidates,our abilityto establish andmaintaincollaborationsonfavorableterms,ifatall,aswellasthetimingandamountof any milestoneorroyaltypaymentswe arerequiredto makeor areeligibleto receiveundersuch collaborations,ifany.

~~the costs, timing and outcome of obtaining regulatory approvals of our current or future product candidates and any companion diagnostics we may pursue;~~

the scope and costs of making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our current or future product candidates;

~~the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or future product candidates;~~

~~the cost associated with commercializing any approved product candidates, including establishing sales, marketing and distribution capabilities;~~

~~the cost associated with completing any post-marketing studies or trials required by the FDA or other regulatory authorities;~~

~~the revenue, if any, received from commercial sales of PRT543, PRT811, or PRT1419, if any are approved, or our other pipeline product candidates that receive marketing approval;~~

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims that we may become subject to, including any litigation costs and the outcome of such litigation;

~~the costs associated with potential product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims; and~~

to the extent we pursue strategic collaborations, including collaborations to commercialize PRT543, PRT811, PRT1419 or any of our other pipeline product candidates, our ability to establish and maintain collaborations on favorable terms, if at all, as well as the timing and amount of any milestone or royalty payments we are required to make or are eligible to receive under such collaborations, if any.

We willrequireadditionalcapitalto completeour planned clinical developmentprogramsforourcurrentproductcandidatesto obtainregulatoryapproval.Our abilityto raise additionalfundswilldepend on financial,economicand marketconditionsand otherfactors,overwhich we may havenoorlimitedcontrol.Ifadequatefundsarenotavailableoncommerciallyacceptabletermswhenneeded, wemaybeforcedtodelay,reduceorterminatethedevelopmentorcommercializationofallorpartofour researchprogramsorproductcandidatesor we maybe unableto takeadvantageof futurebusinessopportunities. Furthermore,any additionalcapital-raisingeffortsmaydivertour managementfrom their day-to-dayactivities, whichmayadverselyaffectourabilitytodevelopandcommercializeourcurrentandfutureproductcandidates, ifapproved.

Raising additionalcapitalmaycause dilutionto our stockholdersrestrictour operationsor requireus to relinquishrightsto our technologiesor product candidates.

Untilsuchtime,ifever,aswe can generatesubstantialproductrevenue,we expectto financeour cashneeds throughacombinationofequityofferings,debtfinancings,collaborations,strategicalliancesand marketing, distributionorlicensingarrangements.Inaddition,wemayseekadditionalcapitaldue to favorablemarket conditionsorstrategicconsiderations,evenifwebelievewehavesufficientfundsforour currentor future operatingplans.Totheextentthatweraiseadditionalcapitalthroughthesaleof equityor convertibledebt securities,yourownershipinterestwillbe diluted,and thetermsof thesesecuritiesmayincludeliquidationor otherpreferencesthatadverselyaffectyourrightsasacommonstockholder.Debt financingand preferredequity financing,ifavailable,mayinvolveagreementsthatincludecovenantslimitingor restrictingour abilityto take specificactions,suchasincurringadditionaldebt,makingacquisitionsor capitalexpendituresor declaring dividends.

Ifwe raiseadditionalfundsthroughcollaborations,strategicalliancesor marketing,distributionor licensing arrangementswiththirdparties,wemayhavetorelinquishvaluablerightstoourtechnologies,futurerevenue streams,researchprogramsorproductcandidatesorgrantlicensesontermsthatmaynotbefavorabletous.If weareunabletoraiseadditionalfundsthroughequityordebtfinancingsor otherarrangementswhen needed,we may be required to delay, limit, reduce or terminate our research, product development or future commercializationeffortsorgrantrightstothirdpartiestodevelopandmarketproductcandidatesthatwewould otherwisepreferto developand market ~~product candidates that we would otherwise prefer to develop and market~~ ourselves.

Risks Related to Design and Development of our Product Candidates

We are highlydependenton the successof our productcandidates,PRT543,PRT811and PRT1419, which are in earlyclinicaldevelopment,and PRT2527,which isin preclinicaldevelopment.We have not completedsuccessfullate-stagepivotalclinicaltrialsor obtainedregulatoryapprovalforany product candidate.We mayneverobtainapprovalforany of our productcandidatesor achieveor sustain profitability.

Our futuresuccessishighlydependenton our abilityto obtainregulatoryapprovalfor,and thensuccessfully commercialize,ourproductcandidates,PRT543,PRT811andPRT1419. Weareearlyinourdevelopmentefforts andourleadproductcandidates,PRT543,PRT811andPRT1419,areeachcurrentlyinaPhase1clinicaltrial. Ourotherproductcandidates,includingPRT2527, areinearlierstagesofdevelopment.Wecurrentlyhaveno productsthatareapprovedforsaleinanyjurisdiction.TherecanbenoassurancethatPRT543, PRT811, PRT1419, PRT2527 or our otherproductcandidatesin developmentwillachievesuccessin theirclinicaltrialsor obtainregulatoryapproval.

Ourabilitytogenerateproductrevenues,which we do not expectwilloccurformanyyears,ifever,will dependheavilyonthesuccessfuldevelopmentandeventualcommercializationofPRT543, PRT811, PRT1419, PRT2527 orotherproductcandidatesindevelopment.The successof our productcandidates,includingPRT543, PRT811,PRT1419and ~~PRT1419,~~ PRT2527,willdepend on severalfactors,includingthefollowing:

•

successfulcompletionof preclinicalstudiesand clinicaltrials;

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acceptanceofINDsbytheFDAorothersimilarclinicaltrialapplicationsfromforeignregulatory authoritiesforour futureclinicaltrialsforour pipelineproductcandidates;

~~successful completion of preclinical studies and clinical trials;~~

•

timelyand successfulenrollmentof patientsin, and completionof, clinicaltrialswith favorableresults;

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demonstrationofsafety,efficacyandacceptablerisk-benefitprofilesofourproductcandidatestothe satisfactionof theFDAand foreignregulatoryagencies;

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ourability,orthatofourcollaborators,todevelopandobtainclearanceorapprovalofcompanion diagnostics,on a timelybasis,or atall;

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receiptandrelatedtermsofmarketingapprovalsfromapplicableregulatoryauthorities,includingthe completionof any requiredpost-marketingstudiesor trials;

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raisingadditionalfundsnecessarytocompleteclinicaldevelopmentofandcommercializeourproduct candidates;

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obtainingandmaintainingpatent,tradesecretandotherintellectualpropertyprotectionandregulatory exclusivityforour productcandidates;

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makingarrangementswiththird-partymanufacturers,orestablishingmanufacturingcapabilities,for both clinicaland commercialsuppliesof our productcandidates;

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developingand implementingmarketingand reimbursementstrategies;

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establishing sales, marketing and distribution capabilities and launching commercial sales of our products,ifand when approved,whetheraloneor in collaborationwith others;

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acceptanceofourproducts,ifandwhenapproved,bypatients,themedicalcommunityandthird-party payors;

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effectivelycompetingwith othertherapies;

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obtainingand maintainingthird-partypayorcoverageand adequatereimbursement;

~~acceptance of INDs by the FDA or other similar clinical trial applications from foreign regulatory authorities for our future clinical trials for our pipeline product candidates;~~

~~timely and successful enrollment of patients in, and completion of, clinical trials with favorable results;~~

~~demonstration of safety, efficacy and acceptable risk-benefit profiles of our product candidates to the satisfaction of the FDA and foreign regulatory agencies;~~

~~our ability, or that of our collaborators, to develop and obtain clearance or approval of companion diagnostics, on a timely basis, or at all;~~

~~receipt and related terms of marketing approvals from applicable regulatory authorities, including the completion of any required post-marketing studies or trials;~~

~~raising additional funds necessary to complete clinical development of and commercialize our product candidates;~~

~~obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates;~~

~~making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our product candidates;~~

~~developing and implementing marketing and reimbursement strategies;~~

~~establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;~~

~~acceptance of our products, if and when approved, by patients, the medical community and third-party payors;~~

~~effectively competing with other therapies;~~

~~obtaining and maintaining third-party payor coverage and adequate reimbursement;~~

~~protecting and enforcing our rights in our intellectual property portfolio; and~~

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

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protectingand enforcingour rightsin our intellectualpropertyportfolio;and

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maintaininga continuedacceptablesafetyprofileof theproductsfollowingapproval.

Manyofthesefactorsarebeyondourcontrol,anditispossiblethatnone of our productcandidateswillever obtainregulatoryapprovalevenifweexpendsubstantialtimeandresourcesseekingsuchapproval.Ifwedo not achieveoneormoreofthesefactorsinatimelymanneroratall,we couldexperiencesignificantdelaysor an inabilityto successfullycommercializeour productcandidates,which would materiallyharmour business. For example,ourbusinesscouldbeharmedifresultsofourongoingclinicaltrialsofPRT543, PRT811 orPRT1419, varyadverselyfromour expectations.

Drug developmentinvolvesa lengthyand expensiveprocess,and clinicaltestingisuncertainas to the outcome.

We currentlyhave ~~two~~ threeproductcandidatesin Phase 1 clinicaldevelopment ~~one product candidate preparing to enter into Phase 1 clinical development~~ and additionalproduct candidatesinpreclinicaldevelopment,andtheriskof failureforeachishigh. We areunableto predictwhen or if ourproductcandidateswillproveeffectiveorsafeinhumansor willobtainmarketingapproval.Beforeobtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinicaldevelopmentand thenconductextensiveclinicaltrialsto demonstratethesafetyand efficacyof our productcandidatesinhumans.Clinicaltestingisexpensive,difficulttodesignandimplement,cantakemany yearsto completeand isuncertainas to theoutcome.

Afailureofoneormoreclinicaltrialscanoccuratanystageof testing.The outcomeof preclinicaltesting andearlyclinicaltrialsmaynotbepredictiveofthesuccessof laterclinicaltrialsor of clinicaltrialsof thesame productcandidatesinotherindications,andinterimorpreliminaryresultsofaclinicaltrialdonotnecessarily predictfinalresults.Later-stageclinicaltrialscoulddifferin significantways fromearly-stageclinicaltrials, includingchangestoinclusionandexclusioncriteria,efficacyendpoints,dosingregimenandstatisticaldesign. Inparticular,thesmallnumberofpatientsinourcurrentPhase1clinicaltrialsmaymaketheresultsofthese trialslesspredictiveoftheoutcomeoflaterclinicaltrials.In addition,althoughwe have observed

encouraging clinicalactivityinthedoseescalationportionofthePhase1portionofourongoingPRT543 andPRT811 clinical trials,theprimaryobjectivesweretodeterminethesafety,tolerabilityand maximumtolerateddose of PRT543 andPRT811,respectively,andtodeterminearecommendedPhase2dosefortheexpansionportionofour Phase1clinicaltrials,andnottodemonstrateefficacy.Theassessmentsofclinicalactivityfromthisportionof theclinicaltrials,someofwhichwerenotpre-specified,maynotbepredictiveoftheresultsin dose expansion cohorts,specifictumortypesorfurtherclinicaltrialsofPRT543 andPRT811. Inaddition,whilewemaybelieve certainresultsin patients,such as stabledisease,suggestencouragingclinicalactivity,stabledisease is not consideredaresponseforregulatorypurposes.Stabledisease,orSD,isdefinedasfailuretomeetthedefinition ofobjectiveclinicalresponseor progressivedisease.Furthermore,safetyeventsmaybe observedin latertrials thataltertheanticipatedrisk-benefitprofilesof PRT543and PRT811.

We mayincur additionalcostsor experiencedelaysin completing,or ultimatelybe unable to completethe developmentand/or commercializationof PRT543,PRT811,PRT1419,PRT2527or our otherproduct candidates.

Beforewecaninitiateclinicaltrialsofaproductcandidateinanyindication,we mustsubmittheresultsof preclinicalstudiestotheFDA ortocomparableforeignauthorities,respectively,alongwithotherinformation, includinginformationabouttheproductcandidate’schemistry,manufacturingand controlsand our proposed clinicaltrialprotocol,as partof an IND or comparableforeignregulatoryfilings.

TheFDA mayrequireustoconductadditionalpreclinicalstudiesforany productcandidatebeforeitallows ustoinitiatesubsequentclinicaltrialsunderanyIND,whichmayleadto additionaldelaysand increasethecosts of our preclinicaldevelopmentprograms.

Anydelaysinthecommencementorcompletionof our ongoing, plannedor futureclinicaltrialscould significantlyaffectour productdevelopmentcosts.We mayexperiencenumerousunforeseeneventsduring,or as aresultof,clinicaltrialsthatcoulddelayorpreventourabilitytoobtainmarketingapprovalorcommercialize our productcandidates,including:

regulators, institutional review boards, or IRBs, or ethics committees, or ECs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

~~the FDA may disagree as to the design or implementation of our clinical trials or with our recommended Phase 2 doses for any of our pipeline programs;~~

we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective clinical research organizations, or CROs, and prospective trial sites;

clinical trials for our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay or halt clinical trials or abandon product development programs;

~~lack of adequate funding to continue the clinical trial;~~

•

regulators,institutionalreviewboards,orIRBs,orethicscommittees,orECs,maynotauthorizeusor our investigatorsto commencea clinicaltrialor conducta clinicaltrialata prospectivetrialsite;

•

the ~~number~~FDA may disagree as to the design or implementation of ~~patients required for~~our clinical trials ~~for~~or with our recommendedPhase 2 dosesforany of our pipelineprograms;

•

wemayexperiencedelaysinreaching,orfailtoreach,agreementonacceptableclinicaltrialcontracts orclinicaltrialprotocolswithprospectiveclinicalresearchorganizations,orCROs,andprospective trialsites;

•

clinicaltrialsforourproductcandidatesmayproducenegativeorinconclusiveresults,andwemay decide,orregulatorsmayrequireus,toconductadditionalclinicaltrials,delayor haltclinicaltrialsor abandon productdevelopmentprograms;

•

lackof adequatefundingto continuetheclinicaltrial;

•

thenumberofpatientsrequiredforclinicaltrialsforourproductcandidatesmaybelargerthanwe anticipate,enrollmentin theseclinicaltrialsmaybe slowerthanwe anticipateor maybe lower than we anticipatedue to challengesin recruitingand enrollingsuitablepatientsthatmeetthestudy criteria, participantsmaydropoutof theseclinicaltrialsata higherratethanwe anticipateor thedurationof theseclinicaltrialsmaybe longerthanwe anticipate;

•

competitionforclinicaltrialparticipantsfrominvestigationalandapprovedtherapiesmaymakeit moredifficultto enrollpatientsin our clinicaltrials;

•

we may experience difficulties in maintaining contact with patients after treatment, resulting in incompletedata;

~~competition for clinical trial participants from investigational~~

•

weorthird-partycollaboratorsmayfailtoobtainregulatoryapprovalofcompaniondiagnostictests,if required,on a timelybasis,or atall;

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ourthird-partycontractorsmayfailtomeettheircontractualobligationstousinatimelymanner,orat all,or mayfailto complywith regulatoryrequirements;

•

wemayhavetosuspendorterminateclinicaltrialsforourproductcandidatesforvariousreasons, includinga findingby us or by a Data MonitoringCommitteefora trialthattheparticipantsare being exposedto unacceptablehealthrisks;

•

our product candidates may have undesirable or unexpected side effects or other unexpected characteristics,causingusorourinvestigators,regulatorsorIRBs/ECstosuspendorterminatethe trials;

•

thecostof clinicaltrialsforour productcandidatesmaybe greaterthanwe anticipate;

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changesto clinicaltrialprotocol;

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thesupplyorqualityofourproductcandidatesorothermaterialsnecessarytoconductclinicaltrialsfor ourproductcandidatesmaybeinsufficientorinadequateandresultindelaysorsuspensionof our clinicaltrials;and

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theimpactoftheongoingCOVID-19pandemic,whichmayslowpotentialenrollment,reducethe numberof eligiblepatientsforclinicaltrials,or reducethenumberof patientsthatremainin our trials.

Delays,includingdelayscausedbytheabove factors,can be costlyand ~~approved therapies may make it more difficult~~ couldnegativelyaffectour abilityto ~~enroll patients in~~ completeaclinicaltrialorobtaintimelymarketingapprovals.Wedonotknowwhetheranyofourplanned preclinicalstudiesorclinical ~~trials;~~

Delays, including delays caused by the above factors, can be costly and could negatively affect our ability to complete a clinical trial or obtain timely marketing approvals. We do not know whether any of our planned preclinical studies or clinical trials will ~~begin on a timely basis or at all, will~~ need to be restructuredor willbe completedonschedule,oratall.Forexample,theFDA mayplaceapartialorfullclinicalholdonanyofour clinical trials for a variety of reasons, including safety concerns and noncompliance with regulatory requirements.Ifwearenotabletocompletesuccessfulclinicaltrials,wewillnotbeableto ~~complete successful clinical trials, we~~obtainregulatory approvaland willnot be able ~~to obtain regulatory approval and will not be able~~ to commercializeour productcandidates.

Significantpreclinicalorclinicaltrialdelaysalsocouldshortenany periodsduringwhich we mayhave the exclusiverighttocommercializeourproductcandidatesorallowourcompetitorstobringproductstomarket beforewedoandimpairourabilitytosuccessfullycommercializeourproductcandidatesand mayharmour businessand resultsof operations.

Ifwe experiencedelaysor difficultiesin enrollingpatientsin our ongoing or planned clinicaltrials,our receiptof necessaryregulatoryapprovalcould be delayedor prevented.

Wemaynotbeabletoinitiateorcontinueourongoingorplannedclinicaltrialsforourproductcandidates ifweareunabletoidentifyandenrollasufficientnumberofeligiblepatientsto participatein thesetrialsas requiredbytheFDA orcomparableforeignregulatoryauthorities.In addition,someof our competitorscurrently haveongoingclinicaltrialsforproductcandidatesthatwouldtreatthesamepatientsas our clinicalproduct candidates,andpatientswhowouldotherwisebe eligibleforour clinicaltrialsmayinsteadenrollin clinicaltrials ofourcompetitors’productcandidates.ThisisacutelyrelevantforourdevelopmentofPRT543 forthetreatment ofpatientswithmyeloidmalignanciesandothersolidtumors,includingadenoidcysticcarcinoma,or ACC, indicationsforwhichinvestigationaldrugsbyourcompetitorsarecompetingforclinicaltrialparticipants. Patientenrollmentisalsoaffectedby otherfactors,including:

Our inability to enroll and maintain a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials, including due to the COVID-19 pandemic, may result in increased development costs, which would cause the value of our company to decline and limit our ability to obtain additional financing.

~~The COVID-19 pandemic could adversely impact our business, including our clinical trials and clinical trial operations.~~

The COVID-19 pandemic in the United States and in other countries in which we have planned or have active clinical trial sites and where our third-party manufacturers operate, could cause significant disruptions that could severely impact our business and clinical trials, including:

Ourinabilitytoenrolland maintaina sufficientnumberof patientsforour clinicaltrialswould resultin significantdelaysormayrequireustoabandononeormoreclinicaltrialsaltogether.Enrollmentdelaysin our clinicaltrials,includingduetotheCOVID-19pandemic,mayresultinincreaseddevelopmentcosts,which would causethevalueof our companyto declineand limitour abilityto obtainadditionalfinancing.

The COVID-19pandemiccould ~~have an adverse effect on~~ adverselyimpactour business,includingour clinicaltrialsand ~~financial condition, including impairing~~clinical trialoperations.

TheCOVID-19 pandemicintheUnitedStatesand in othercountriesin which we have plannedor have activeclinicaltrialsitesand where our ~~ability to raise capital when needed.~~third-partymanufacturersoperate, could cause significantdisruptionsthat couldseverelyimpactour businessand clinicaltrials,including:

Suchdisruptionscouldimpede,delay,limitorpreventcompletionofour ongoing clinicaltrialsand preclinicalstudiesor commencementof new clinicaltrialsand ultimatelyleadto thedelayor denialof regulatory approvalofourproductcandidates,whichwouldseriouslyharmour operationsand financialconditionand increaseourcostsandexpenses.WeareinclosecontactwithourCROs, CMOsandclinicalsitesasweseekto mitigatetheimpactofCOVID-19 onourstudiesand currenttimelines.Measureswe have takenin responseto COVID-19 include,where feasible,conductingremoteclinicaltrialsiteactivationsand datamonitoring,and limitingon-sitepatientvisitsby adjustingpatientassessmentsand protocol.However, despitetheseefforts,we haveexperiencedlimiteddelaysin trialsiteinitiations,patientparticipationand patientenrollmentin someof our clinicaltrialsandwemaycontinueto experiencesomedelaysin our clinicaltrialsand preclinicalstudiesand delaysin datacollectionand analysis.These delaysso farhave

had a limitedimpact,but thismaychangeas the COVID-19 pandemicandtheresponsetosuchCOVID-19 pandemiccontinuestoevolve,and couldhave an adverseimpactonourtimelinesandourbusiness.TheCOVID-19 pandemiccouldalsoaffectthebusinessofthe FDA, EMAorotherhealthauthorities,whichcouldresultin delaysin meetingsrelatedto plannedor completed clinical trials and ultimately of reviews and approvals of our product candidates. The global COVID-19 pandemiccontinuestorapidlyevolve.TheextenttowhichtheCOVID-19pandemicmayimpactourbusiness andclinicaltrialswilldependonfuturedevelopments,which arehighlyuncertainand cannotbe predictedwith confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptionsandtheeffectivenessofactionstakenintheUnitedStatesand othercountriesto containand treatthe disease.

Adversesideeffectsor othersafetyrisksassociatedwith PRT543,PRT811,PRT1419or our otherproduct candidatescould delayor precludeapproval,cause us to suspend or discontinueclinicaltrialsor abandon furtherdevelopment,limitthe commercialprofileof an approvedproduct,or resultin significantnegativeconsequencesfollowingmarketingapproval,ifany.

Asisthecasewithpharmaceuticalsgenerally,we have observedsideeffectsand adverseeventsassociated withourclinicalproductcandidate,PRT543.Thesesideeffectsincludeddiarrhea,nauseaandfatigue,butnone ofthesesideeffectswereconsideredrelatedtoPRT543. At thehighestdose levelof our clinicalproduct candidate,PRT543,therewereoccurrencesofgrade4thrombocytopeniathatweredeemedrelatedtoPRT543, butthetoxicitywasreversibleaftera one to two week drug holidayand theaffectedpatientsremainedon the studyandwererestartedatalowerdose.We have alsoobservedsideeffectsand adverseeffectsassociatedwith PRT811.Thesesideeffectsincludednausea,constipation,vomitingandhyponatremia,butnoneoftheseside effects ~~and adverse effects associated with PRT811. These side effects included nausea, constipation, vomiting and hyponatremia, but none of these side effects~~ were consideredrelatedto PRT811.

Resultsof our ongoing and plannedclinicaltrialscouldreveala high and unacceptableseverityand prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our product candidatescouldresultinthedelay,suspensionorterminationofclinicaltrialsbyusorregulatoryauthoritiesfor a number of reasons. Furthermore, clinical trials by their nature utilize a sample of the potential patient population.Withalimitednumberofsubjectsandlimiteddurationofexposure,rareandseveresideeffectsof ourproductcandidatesor thoseof our competitorsmayonly be uncoveredwith a significantlylargernumberof patientsexposedto thedrug.

Additionally,duetothehighmortalityratesofthecancersforwhich we areinitiallypursuingdevelopment andthepretreatednatureofmanypatientsinourongoingclinicaltrialsofPRT543,PRT811andPRT1419,a materialpercentageof ~~many~~ patientsin ~~our ongoing and planned~~ theseclinicaltrialsmaydieduringa trial,which couldimpactdevelopmentof PRT543, PRT811 and ~~PRT1419, a material percentage of patients in these clinical trials may die during a trial, which could impact development of PRT543, PRT811 and~~ PRT1419, respectively.Ifweelectorarerequiredto delay,suspendor terminateany clinicaltrial,thecommercialprospectsofourproductcandidateswillbeharmedand our abilityto generate productrevenuesfromthisproductcandidatewillbedelayedoreliminated.Seriousadverseevents,orSAEs, observedinclinicaltrialscouldhinderor preventmarketacceptanceof our product candidates will be harmed and our ability to generate product revenues from this product candidate will be delayed or eliminated. Serious adverse events, or SAEs, observed in clinical trials could hinder or prevent market acceptance of our product candidates.Any of these occurrencesmayharmour business,prospects,financialconditionand resultsof operationssignificantly.

Moreover,ifourproductcandidatesareassociatedwith undesirablesideeffectsin clinicaltrialsor have characteristicsthatareunexpected,wemayelectto abandon or limittheirdevelopmentto morenarrowusesor subpopulationsinwhichtheundesirablesideeffectsorothercharacteristicsarelessprevalent,lesssevereor moreacceptablefromarisk-benefitperspective,whichmaylimitthecommercialexpectationsforour product candidates,ifapproved.Wemayalsoberequiredtomodifyourstudyplansbasedonfindingsinourclinical trials.Suchsideeffectscouldalsoaffectpatientrecruitmentortheabilityofenrolledpatientstocompletethe trial.Manydrugsthatinitiallyshowedpromiseinearlystagetestinghave laterbeen found to causesideeffects thatpreventedfurtherdevelopment.Inaddition,regulatoryauthoritiesmaydrawdifferentconclusions,require additionaltestingtoconfirmthesedeterminations,requiremorerestrictivelabeling,ordenyregulatoryapproval of theproductcandidate.

Itispossiblethat,as we testour productcandidatesin larger,longerand moreextensiveclinicaltrials, includingwithdifferentdosingregimens,or as theuse of our productcandidatesbecomesmorewidespread followinganyregulatoryapproval,illnesses,injuries,discomfortsandotheradverseeventsthatwere observedin earliertrials,as wellas conditionsthatdid not occuror went undetectedin previoustrials,willbe reportedby patients.Ifsuchsideeffectsbecomeknownlaterindevelopmentoruponapproval,ifany,suchfindingsmay harmour business,financialcondition,resultsof operationsand prospectssignificantly.

Inaddition,ifanyofourproductcandidatesreceivemarketingapproval,and we or otherslateridentify undesirablesideeffectscausedby treatmentwith such drug, a numberof potentiallysignificantnegative consequencescouldresult,including:

Anyoftheseeventscouldpreventusfromachievingormaintainingmarketacceptanceof our product candidates,ifapproved,andcouldsignificantlyharmourbusiness,financialcondition,resultsof operationsand prospects.

Preliminary,interimand toplinedata fromour clinicaltrialsthatwe announce or publishfromtimeto timemaychange as morepatientdata becomeavailableand are subjectto auditand verification proceduresthatcould resultin materialchanges in the finaldata.

Fromtimetotime,wemaypubliclydisclosepreliminary,interimortoplinedatafromourclinicaltrials, suchasthepreliminarydataanalysisforthePhase1doseexpansionportionsofourPRT543 andPRT811 trials. Theseupdatesarebasedonapreliminaryanalysisofthen-availabledata,andtheresultsand relatedfindingsand conclusionsaresubjectto changefollowinga morecomprehensivereviewof thedatarelatedto theparticular studyortrial.Additionally,interimdatafromclinicaltrialsthatwemaycompletearesubjecttotheriskthatone ormoreoftheclinicaloutcomesmaymateriallychangeas patientenrollmentcontinuesand morepatientdata becomeavailable.Therefore,positiveinterimresultsinanyongoingclinicaltrialmaynot be predictiveof such resultsinthecompletedstudyortrial.Wealsomakeassumptions,estimations,calculationsand conclusionsas partofouranalysesof data,and we maynot have receivedor had theopportunityto fullyand carefullyevaluate alldata.Asaresult,thetoplineresultsthatwe reportmaydifferfromfutureresultsof thesamestudies,or differentconclusionsorconsiderationsmayqualifysuchresults,onceadditionaldatahavebeenreceivedand fullyevaluated.Toplinedataalsoremainsubjecttoauditandverificationproceduresthatmayresultinthefinal databeingmateriallydifferentfromthepreliminarydatawepreviouslypublished.Asaresult,toplinedata shouldbeviewedwithcautionuntilthefinaldataareavailable.Inaddition,we mayreportinterimanalysesof onlycertainendpointsratherthanallendpoints.Adversechangesbetweenpreliminaryorinterimdataand final datacouldsignificantlyharmourbusinessandprospects.Further,additionaldisclosureofinterimdatabyusor byourcompetitorsinthefuturecouldresultinvolatilityinthepriceof our commonstock.See thedescriptionofrisksundertheheading ~~“Risks~~ “RisksRelatedtoourCommonStock”formore disclosurerelatedto theriskof volatilityin our stockprice.

Further,others,includingregulatoryagencies,maynot acceptor agreewith our assumptions,estimates, calculations,conclusionsoranalysesor mayinterpretor weigh theimportanceof datadifferently,which could impactthevalueof theparticularprogram,theapprovabilityor commercializationof theparticularproduct candidateorproductandourcompanyingeneral.Inaddition,theinformationwechoosetopubliclydisclose regardingaparticularstudyorclinicaltrialistypicallyselectedfromamoreextensiveamountof available information.Youorothersmaynot agreewith what we determineisthematerialor otherwiseappropriate informationtoincludeinourdisclosure,andanyinformationwedeterminenottodisclosemayultimatelybe deemedsignificantwithrespecttofuturedecisions,conclusions,views, activitiesor otherwiseregardinga particularproduct,productcandidateorourbusiness.Ifthepreliminaryor toplinedatathatwe reportdifferfrom late,finaloractualresults,orifothers,includingregulatoryauthorities,disagreewiththeconclusionsreached, ourabilitytoobtainapprovalfor,andcommercialize,PRT543, PRT811 orPRT1419, orany otherproduct candidatesmaybeharmed,whichcouldharmourbusiness,financialcondition,resultsof operationsand prospects.

We mayexpend our limitedresourcesto pursue a particularproductcandidateor indicationand failto capitalizeon productcandidatesor indicationsthatmaybe moreprofitableor forwhich thereisa greater likelihoodof success.

Becausewehavelimitedfinancialandmanagerialresources,wefocusonresearchprogramsand product candidatesthatwe identifyforspecificindications.As a result,we mayforegoor delaypursuitof opportunities withotherproductcandidatesorforotherindicationsthatlaterproveto have greatercommercialpotential.Our resourceallocationdecisionsmaycauseustofailtocapitalizeonviablecommercialproductsorprofitable marketopportunities.Our spendingon currentand futureresearchand developmentprogramsand product candidatesforspecificindicationsmaynot yieldany commerciallyviableproducts.Ifwe do not accurately evaluatethecommercialpotentialor targetmarketfora particularproductcandidate,we mayrelinquishvaluable rightstothatproductcandidatethroughcollaboration,licensingor otherroyaltyarrangementsin casesin which it wouldhavebeen moreadvantageousforus to retainsoledevelopmentand commercializationrightsto such productcandidate.

We maynot be successfulin our effortsto designadditionalpotentialproductcandidates.

Akeyelementofourstrategyistoidentifymoleculartargetsand interventionpointsleadingto treatment failure,andthenapplyourexpertiseofcancerbiologyand medicinalchemistry,as wellas our in-depth understandingofthecurrentlandscapeofoncologytreatments,todesignsolutionsthatcanbepreciselytailored inatargetclassagnosticfashion.The therapeuticdesignand developmentactivitiesthatwe areconductingmay notbesuccessfulindevelopingproductcandidatesthataresafeand effectivein treatingcanceror otherdiseases. Ourresearchprogramsmayinitiallyshowpromiseinidentifyingpotentialproductcandidates,yetfailto yield productcandidatesforclinicaldevelopmentfora numberof reasons,including:

Researchprogramstoidentifyanddesignnew productcandidatesrequiresubstantialtechnical,financialand humanresources.We maychooseto focusour effortsand resourceson a potentialproductcandidatethat ultimatelyprovestobe unsuccessful.Ifwe areunableto identifyand designsuitableproductcandidatesfor preclinicalandclinicaldevelopment,wewillnot be ableto obtainrevenuesfromthesaleof productsin future periods,whichlikelywouldresultin significantharmto our financialpositionand adverselyimpactour stock price.

The developmentand commercializationof pharmaceuticalproductsare subjectto extensiveregulation, and we maynot obtainregulatoryapprovalsforPRT543,PRT811,PRT1419,PRT2527or any other productcandidates,on a timelybasisor at all.

The clinicaldevelopment,manufacturing,labeling,packaging, storage, recordkeeping,advertising, promotion,export,import,marketing,distribution,adverseeventreporting,includingthesubmissionofsafety andotherpost-marketinginformationandreports,andotherpossibleactivitiesrelatingtoPRT543,PRT811 and PRT1419, currentlyour only productcandidatesin plannedor ongoing clinicaltrials,as wellas any otherproduct candidatethatwemaydevelopinthefuture,aresubjecttoextensiveregulation.Marketingapprovalof drugsin the ~~future, are subject to extensive regulation. Marketing approval~~ UnitedStatesrequiresthesubmissionof ~~drugs in the United States requires the submission of~~ anNDA totheFDA, andwearenot permittedto marketany product candidateintheUnitedStatesuntilweobtainapprovalfromtheFDAoftheNDAforthatproduct.AnNDA mustbesupportedbyextensiveclinicaland preclinicaldata,as wellas extensiveinformationregarding pharmacology,chemistry,manufacturingandcontrols.Our productcandidatesmustbe approvedby comparable regulatoryauthoritiesin otherjurisdictionspriorto commercialization.

FDAapprovalofanNDA isnotguaranteed,andthereviewandapprovalprocessisanexpensiveand uncertainprocessthatmaytakeseveralyears.Ofthelargenumberofdrugsindevelopmentin theUnitedStates, onlyasmallpercentagewillsuccessfullycompletetheFDA regulatoryapprovalprocessandwillbe commercialized. Accordingly, there can be no assurance that any of our product candidates will receive regulatoryapprovalin theUnitedStates,or otherjurisdictions.

TheFDA alsohassubstantialdiscretionintheapprovalprocess.Thenumberand typesof preclinicalstudies andclinicaltrialsthatwillberequiredforNDAapprovalvariesdependingontheproductcandidate,thedisease ortheconditionthattheproductcandidateisdesignedtotreatandtheregulationsapplicableto any particular productcandidate.Forexample,ifsuccessful,we believethattheexpansionportionsof thePhase 1 clinicaltrials ofPRT543 orPRT811 maybesufficienttosupportFDA approvalofanNDA forPRT543 orPRT811, respectively,buttheFDA maydisagreewiththesufficiencyofour dataand requireadditionalclinicaltrials.

Additionally,dependingupontheresultsoftheexpansionportionsofthePhase1clinicaltrialsofPRT543 or PRT811,wemay ~~be sufficient~~ chooseto ~~support FDA~~ seekSubpartHacceleratedapproval ~~of an NDA~~ forPRT543orPRT811,respectively, but the FDA may disagree with the sufficiency of our data and require additional clinical trials. Additionally, depending upon the results of the expansion portions of the Phase 1 clinical trials of PRT543 or PRT811, we may choose to seek Subpart H accelerated approval for PRT543 or PRT811, respectively, which would requirecompletionof a confirmatorytrialto validatetheclinicalbenefitof thedrug. Despitethetime and expenseassociatedwithpreclinicalstudiesandclinicaltrials,failurecan occuratany stage.The resultsof preclinicalandearlyclinicaltrialsofPRT543, PRT811, PRT1419, PRT2527 oranyotherproductcandidatemay not be predictiveof theresultsof our later-stageclinicaltrials.

Clinicaltrialfailuremayresultfromamultitudeof factorsincludingflawsin trialdesign,dose selection, placeboeffect,patientenrollmentcriteriaandfailuretodemonstratefavorablesafetyorefficacytraits,and failure ~~to demonstrate favorable safety or efficacy traits, and failure~~ inclinicaltrialscan occuratany stage.Companiesin thepharmaceuticalindustryfrequentlysuffer setbacksintheadvancementofclinicaltrialsduetolackofefficacyor adversesafetyprofiles,notwithstanding promisingresultsinearliertrials.Baseduponnegativeorinconclusiveresults,we maydecide,or regulatorsmay requireus,toconductadditionalclinicaltrialsor preclinicalstudies.In addition,dataobtainedfromclinicaltrials aresusceptibletovaryinginterpretations,andregulatorsmaynot interpretour dataas favorablyas we do, which mayfurtherdelay,limitor preventmarketingapproval.

TheFDAcoulddelay,limitordenyapprovalofaproductcandidateformanyreasons,includingbecause theFDA:

~~We have not obtained FDA approval for any product. This lack of experience may impede our ability to obtain FDA approval in a timely manner, if at all, for our clinical product candidates.~~

If we experience delays in obtaining approval or if we fail to obtain approval of PRT543, PRT811 or PRT1419, our commercial prospects will be harmed and our ability to generate revenues will be materially impaired which would adversely affect our business, prospects, financial condition and results of operations.

The accelerated approval pathway for our product candidates may not lead to a faster development or regulatory review or approval process and does not increase the likelihood that our product candidates will receive marketing approval.

Under the FDA’s accelerated approval program, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. We may seek accelerated approval for one or more of our product candidates on the basis of ORR with an acceptable duration of response, a surrogate endpoint that we believe is reasonably likely to predict clinical benefit.

For drugs granted accelerated approval, post-marketing confirmatory trials are required to describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. These confirmatory trials must be completed with due diligence and, in some cases, the FDA may require that the trial be designated, initiated, and/or fully enrolled prior to approval. If any of our competitors were to receive full approval on the basis of a confirmatory trial for an indication for which we are seeking accelerated approval before we receive accelerated approval, the indication we are seeking may no longer qualify as a condition for which there is an unmet medical end and accelerated approval of our product candidate would be more difficult or may not occur. Moreover, the FDA may withdraw approval of our product candidate approved under the accelerated approval pathway if, for example:

WehavenotobtainedFDAapprovalforanyproduct.Thislackofexperiencemayimpedeourabilityto obtainFDAapprovalin a timelymanner,ifatall,forour clinicalproductcandidates.

IfweexperiencedelaysinobtainingapprovalorifwefailtoobtainapprovalofPRT543, PRT811 or PRT1419, ourcommercialprospectswillbeharmedandourabilityto generaterevenueswillbe materially impairedwhich would adverselyaffectour business,prospects,financialconditionand resultsof operations.

The acceleratedapprovalpathway forour productcandidatesmaynot leadto a fasterdevelopmentor regulatoryreviewor approvalprocessand does not increasethe likelihoodthatour productcandidates willreceivemarketingapproval.

UndertheFDA’sacceleratedapprovalprogram,theFDA mayapproveadrugforaseriousorlife- threateningillnessthatprovidesmeaningfultherapeuticbenefitto patientsoverexistingtreatmentsbasedupon a surrogateendpointthatisreasonablylikelytopredictclinicalbenefit,or on a clinicalendpointthatcan be measuredearlierthanirreversiblemorbidityor mortality,thatisreasonablylikelyto predictan effecton irreversiblemorbidityormortalityorotherclinicalbenefit,takingintoaccounttheseverity,rarity,or prevalence oftheconditionandtheavailabilityorlackofalternativetreatments.Wemayseekacceleratedapprovalforone ormoreofourproductcandidatesonthebasisofORR withanacceptabledurationofresponse,asurrogate endpointthatwe ~~fail~~ believeisreasonablylikelyto ~~conduct~~ predictclinicalbenefit.

competitorswere to receivefullapprovalon thebasisof a confirmatorytrialforanindicationforwhichweareseekingacceleratedapprovalbeforewe ~~disseminate false~~ receiveaccelerated approval,theindicationweareseekingmayno longerqualifyas a conditionforwhich thereisan unmetmedical needandacceleratedapprovalofour productcandidatewould be moredifficultor ~~misleading promotional materials relating to~~ maynot occur.Moreover,the ~~relevant~~ FDA maywithdrawapprovalofourproduct ~~candidate.~~candidateapprovedundertheacceleratedapprovalpathway if,for example:

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thetrialortrialsrequiredtoverifythepredictedclinicalbenefitofourproductcandidatefailtoverify suchbenefitordonotdemonstratesufficientclinicalbenefittojustifytherisksassociatedwiththe drug;

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otherevidencedemonstratesthatourproductcandidateisnotshowntobesafeoreffectiveunderthe conditionsof use;

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we failto conductany requiredpost-approvaltrialof our productcandidatewith due diligence;or

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we disseminatefalseor misleadingpromotionalmaterialsrelatingto therelevantproductcandidate.

Our failureto obtainmarketingapprovalin foreignjurisdictionswould preventour productcandidates frombeing marketed ~~abroad,~~ in thosejurisdictions,and any approvalwe are grantedforour productcandidates in the United Stateswould not assureapprovalof productcandidatesin foreignjurisdictions.

InordertomarketandsellourproductsinanyjurisdictionoutsidetheUnitedStates,wemustobtain separatemarketingapprovalsandcomplywith numerousand varyingregulatoryrequirements.The approval procedurevariesamongcountriesandcaninvolveadditionaltesting.The timerequiredto obtainapprovalmay differsubstantiallyfromthatrequiredtoobtainFDAapproval.Theregulatoryapprovalprocessoutsidethe UnitedStatesgenerallyincludesalloftherisksassociatedwithobtainingFDA approval. ~~The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval.~~ Inaddition,inmany countriesoutsidetheUnitedStates,itisrequiredthattheproductbe approvedforreimbursementbeforethe productcanbeapprovedfor ~~reimbursement before~~ saleinthatcountry.Wemaynotobtainapprovalsfromregulatoryauthorities outsidethe ~~product can be approved for sale in that country. We may~~ UnitedStatesonatimelybasis,ifatall.ApprovalbytheFDA doesnot ~~obtain approvals from~~ ensureapprovalbyregulatory authorities ~~outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities~~ in othercountriesor jurisdictions,and approvalby one regulatoryauthorityoutsidetheUnitedStates doesnotensureapprovalbyregulatoryauthoritiesinothercountriesorjurisdictionsorbytheFDA. Wemaynot beabletosubmitformarketingapprovalsandmaynotreceivenecessaryapprovalstocommercializeour productsin any market.

We maynot be ableto obtainor maintainorphan drug designationor exclusivityforour product candidates.

Regulatoryauthoritiesin somejurisdictions,includingthe United States, may designatedrugs for relatively smallpatientpopulationsas ~~“orphan~~ “orphandrugs.”UndertheOrphanDrugAct,theFDA maydesignateadrugasan orphandrugifitisintendedto treata rarediseaseor condition,which isgenerallydefinedas a patientpopulation offewerthan200,000individualsin theUnitedStates,or ifthediseaseor conditionaffectsmorethan200,000 individualsintheUnitedStatesandthereisnoreasonableexpectationthatthecostof developingthedrug forthe typeof diseaseor conditionwillbe recoveredfromsalesof theproductin theUnited States, or if the disease or condition affects more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing the drug for the type of disease or condition will be recovered from sales of the product in the United States.

Orphandrugdesignationentitlesa partyto financialincentives,such as opportunitiesforgrantfunding towardsclinicaltrialcosts,taxadvantagesand user-feewaivers.Additionally,ifa productthathas orphan designationsubsequentlyreceivesthefirstFDA approvalforthediseaseorconditionforwhich ithas such designation,theproductisentitledtoorphandrugexclusivity,whichmeansthattheFDA maynotapproveany otherapplicationsto marketthesamedrug forthesameindicationforsevenyears,exceptin certain circumstances,suchasashowingofclinicalsuperiority ~~(i.e.~~(i.e.,anotherproductissafer,moreeffectiveor makesa majorcontributiontopatientcare)overtheproductwithorphanexclusivityorwherethemanufacturerisunable toassuresufficientproductquantity.Competitors,however, mayreceiveapprovalof differentproductsforthe sameindicationforwhichtheorphanproducthas exclusivity,or obtainapprovalforthesameproductbut fora differentindicationthanthatforwhich theorphanproduct ~~has exclusivity, or obtain approval for the same product but for a different indication than that for which the orphan product~~ has exclusivity.

Wemayapplyforanorphandrug designationin theUnitedStatesor othergeographiesforour product candidatesin thefuture.However, obtainingan orphandrug designationcan be difficult,and we maynot be successfulindoing so. Even ifwe obtainorphandrug designationforour productcandidatesin specific indications,wemaynot be thefirstto obtainregulatoryapprovalof theseproductcandidatesforthe ~~orphan-designated~~ orphan- designatedindication,duetotheuncertaintiesassociatedwith developingpharmaceuticalproducts.In addition, exclusivemarketingrightsin theUnitedStatesmaybe limitedifwe seekapprovalforan indicationbroader than the orphan-designated indication or may be lost if the FDA later determines that the request for orphan designationwasmateriallydefectiveorifthemanufacturerisunabletoassuresufficientquantitiesof theproduct to meettheneedsof patientswith therarediseaseor condition.Orphan drug designationdoes not ensurethatwe willreceivemarketingexclusivityinaparticularmarket,andwecannotassureyouthatany futureapplicationfor orphandrugdesignationin any othergeographyor with respectto any otherproductcandidatewillbe granted. Orphan drug designationneithershortensthedevelopmenttimeor regulatoryreviewtimeof a drug, nor gives the drug any advantagein theregulatoryreviewor approvalprocess.

A Breakthrough Therapy Designationby the FDAforany of our currentor futureproductcandidates maynot leadto a fasterdevelopmentor regulatoryreviewor approvalprocess,and itwould not increase the likelihoodthatthe productcandidatewillreceivemarketingapproval.

Wemayseeka BreakthroughTherapyDesignationforone or moreof our currentor futureproduct candidates.Abreakthroughtherapyisdefinedasadrugthatisintended,aloneorincombinationwithoneor moreotherdrugs,totreataseriousor life-threateningdiseaseor condition,and preliminaryclinicalevidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinicallysignificantendpoints,such as substantialtreatmenteffectsobservedearlyin clinicaldevelopment.For drugsthathavebeendesignatedasbreakthroughtherapies,interactionandcommunicationbetweentheFDA and thesponsorof thetrialcan helpto identifythemostefficientpathforclinicaldevelopmentwhileminimizingthe numberofpatientsplacedinineffectivecontrolregimens.Drugsdesignatedasbreakthroughtherapiesbythe FDAarealsoeligibleforpriorityreviewifsupportedby clinicaldataatthetimeof thesubmissionof theNDA.

DesignationasabreakthroughtherapyisatthediscretionoftheFDA. Accordingly,evenifwebelievethat oneofourproductcandidatesmeetsthecriteriafordesignationasabreakthroughtherapy,theFDA maydisagree and insteaddeterminenot to makesuch designation.In any event,thereceiptof a Breakthrough Therapy Designationforadrugmaynotresultinafasterdevelopmentprocess,review,or approvalcomparedto drugs consideredforapprovalunderconventionalFDAproceduresanditwouldnotassureultimateapprovalbythe FDA.Inaddition,evenifoneormoreofourproductcandidatesqualifyasbreakthroughtherapies,theFDA may laterdecidethattheproductcandidateno longermeetstheconditionsforqualificationor thatthetimeperiodfor FDAreviewor approvalwillnot be shortened.

Ifwe are unable to successfullydevelop,validate,obtainregulatoryapprovalof and commercialize companiondiagnostictestsforany productcandidatesthatrequiresuch tests,or experiencesignificant delaysin doing so, we maynot realizethe fullcommercialpotentialof theseproductcandidates.

Acompaniondiagnosticisamedicaldevice,oftenaninvitrodevice,whichprovidesinformationthatis essentialforthesafeand effectiveuse of a correspondingtherapeuticdrug product.A companiondiagnosticcan beusedtoidentifypatientswhoaremostlikelytobenefitfromthetherapeuticproduct.In thefuture,we may evaluateopportunitiesto develop,eitherby ourselvesor with collaborators,companion diagnostictests for our productcandidatesforcertainindications.

Acompaniondiagnosticisgenerallydevelopedin conjunctionwith theclinicalprogramforan associated therapeuticproduct.Todate,theFDA has requiredpremarketapprovalof ~~all~~ the vast majority ofcompaniondiagnosticsforcancer therapies.Generally,whenacompaniondiagnosticisessentialtothesafeandeffectiveuseofa drug product,the FDA requiresthatthecompaniondiagnosticbeapprovedbeforeorconcurrentwith approvalof thetherapeutic productandbeforeaproductcanbecommercialized.Theapprovalofacompaniondiagnosticaspartofthe therapeuticproduct’slabelinglimitstheuseofthetherapeuticproducttoonlythosepatientswhoexpressthe specificgeneticalterationthatthecompaniondiagnosticwas developedto detect.

Developmentofacompaniondiagnosticcouldincludeadditionalmeetingswith regulatoryauthorities,such asapre-submissionmeetingandtherequirementtosubmitaninvestigationaldevice ~~exemption.~~ exemptionapplication.In thecaseofacompaniondiagnosticthatisdesignatedas “significantriskdevice,”approvalof an investigational deviceexemptionbytheFDA andIRBisrequiredbeforesuchdiagnosticisused in conjunctionwith theclinical trialsfora correspondingproductcandidate.

To be successfulin developing,validating,obtainingapprovalof and commercializinga companion diagnostic,weorourcollaboratorswillneedtoaddressa numberof scientific,technical,regulatoryand logistical challenges.Wehavenopriorexperiencewithmedicaldeviceordiagnostictestdevelopment.Ifwechooseto developandseekFDA approvalforcompaniondiagnostictestsonourown,wewillrequireadditionalpersonnel. Wemayrelyonthirdpartiesforthedesign,development,testing,validationandmanufactureof companion diagnostictestsforourtherapeuticproductcandidatesthatrequiresuchtests,theapplicationforandreceiptof anyrequiredregulatoryapprovals,andthecommercialsupplyofthesecompaniondiagnostics.Iftheseparties areunabletosuccessfullydevelopcompaniondiagnosticsforthesetherapeuticproductcandidates,or experience delaysin doing so, we maybe unableto enrollenough patientsforour currentand plannedclinicaltrials,the developmentof thesetherapeuticproductcandidatesmaybe adverselyaffected,these therapeuticproduct candidatesmay ~~be adversely affected, these therapeutic product candidates~~ notobtainmarketingapproval,andwemaynot ~~obtain marketing approval, and we may not~~ realizethefullcommercialpotentialof any of thesetherapeuticsthatobtainmarketingapproval.For any productcandidateforwhich a companiondiagnosticis necessarytoselectpatientswhomaybenefitfromuseoftheproductcandidate,anyfailuretosuccessfully developacompaniondiagnosticmaycauseor contributeto delayedenrollmentof our clinicaltrials,and may preventusfrominitiatingapivotaltrial.Inaddition,thecommercialsuccessofanyofourproductcandidates thatrequireacompaniondiagnosticwillbetiedtoanddependentuponthereceiptofrequiredregulatory approvals and the continued ability of such third parties to make the companion diagnostic commercially availabletous on reasonabletermsin therelevantgeographies.Any failureto do so couldmateriallyharmour business,resultsof operationsand financialcondition.

Ifwe decideto pursue a Fast Track Designationby the FDA,itmaynot leadto a fasterdevelopmentor regulatoryreviewor approvalprocess.

WemayseekFastTrackDesignationforoneormoreofourproductcandidates.Ifa drug isintendedforthe treatmentofaseriousorlife-threateningconditionandthedrugdemonstratesthepotentialto addressunmet medicalneedsforthiscondition,theproductsponsormayapplyforFDAFastTrackDesignation.TheFDA has broaddiscretionwhether ~~or not~~ to grantthisdesignation,so even ifwe believea particularproduct candidateis eligible forthisdesignation,wecannotassureyouthattheFDAwoulddecidetograntit.EvenifwedoreceiveFast TrackDesignation,wemaynotexperienceafasterdevelopmentprocess,reviewor approvalcomparedto conventionalFDA procedures.TheFDA maywithdrawFastTrackDesignationifitbelievesthatthedesignation isno longersupportedby datafromour clinicaldevelopmentprogram.

Even ifwe obtainmarketingapprovalforour productcandidates,the termsof approvals,ongoing regulationof our productsor otherpost-approvalrestrictionsmaylimithowwe manufactureand market our productsand compliancewith such requirementsmayinvolvesubstantialresources,which could materiallyimpairour abilityto generaterevenue.

AnyproductcandidatesforwhichwereceiveacceleratedapprovalfromtheFDAarerequiredtoundergo one or moreconfirmatoryclinicaltrials.Ifsuch a productcandidatefailsto meetitssafetyand efficacyendpoints in such confirmatoryclinicaltrials,theregulatoryauthoritymaywithdraw its conditionalapproval. There is no assurancethatanysuchproductwillsuccessfullyadvancethroughitsconfirmatoryclinicaltrial(s).Therefore, evenifaproductcandidatereceivesacceleratedapprovalfromtheFDA, suchapprovalmaybewithdrawnata laterdate.

Evenifmarketingapprovalof a productcandidateisgranted,an approvedproductand itsmanufacturerand marketer are subject to ongoing review and extensive regulation, which may include the requirement to implementaREMS ortoconductcostlypost-marketingstudiesor clinicaltrialsand surveillanceto monitorthe safetyor efficacyof theproduct.

Wemustalsocomplywithrequirementsconcerningadvertisingand promotionforany of our product candidatesforwhichweobtainmarketingapproval.Promotionalcommunicationswithrespecttoprescription drugsaresubjecttoavarietyoflegalandregulatoryrestrictionsandmustbeconsistentwiththeinformationin theproduct’sapprovedlabeling.Thus, we willnot be ableto promoteany productswe developfor indicationsor usesforwhich theyarenot approved.

Inaddition,manufacturersof approvedproductsand thosemanufacturers’facilitiesarerequiredto ensure thatqualitycontrolandmanufacturingproceduresconformtocurrentgoodmanufacturing ~~practice,~~ practices,or cGMPs, whichincluderequirementsrelatingtoqualitycontroland qualityassuranceas wellas thecorresponding maintenanceofrecordsanddocumentationandreportingrequirements.We and our contractmanufacturing organizations,orCMOs,couldbesubjecttoperiodicunannouncedinspectionsby theFDAto monitorand ensure compliancewith cGMPs.

Accordingly,assumingweobtainmarketingapprovalforoneormoreofourproductcandidates,weand our CMOswillcontinuetoexpendtime,moneyandeffortin allareasof regulatorycompliance,including manufacturing,production,productsurveillanceandqualitycontrol.Ifwe arenot ableto complywith ~~post-approval~~ post- approvalregulatoryrequirements,wecouldhavethemarketingapprovalsforour productswithdrawnby regulatoryauthoritiesandourabilitytomarketanyfutureproductscouldbelimited,whichcouldadversely affectourabilityto achieveor sustainprofitability.As a result,thecostof compliancewith post-approval regulationsmayhave a negativeeffecton our operatingresultsand financialcondition.

Any productcandidateforwhich we obtainmarketingapprovalwillbe subjectto ongoing enforcementof post-marketingrequirementsby regulatoryagencies,and we could be subjectto substantialpenalties, includingwithdrawal of our productfromthe market,ifwe failto complywith allregulatory requirementsor ifwe experienceunanticipatedproblemswith our products,whenand ifany of themare approved.

Anyproductcandidateforwhichweobtainmarketingapproval,alongwiththemanufacturingprocesses, post-approvalclinicaldata,labeling,advertisingandpromotionalactivitiesforsuch product,willbe subjectto continualrequirementsofandreviewbytheFDA andotherregulatoryauthorities.Theserequirementsinclude, butarenotlimitedto,restrictionsgoverningpromotionofanapprovedproduct,submissionsofsafetyand other post-marketinginformationand reports,registrationand listingrequirements,cGMP requirementsrelatingto manufacturing,qualitycontrol,qualityassuranceand correspondingmaintenanceof recordsand ~~review by~~documents,and requirementsregardingdrug distributionand thedistributionof samplesto physiciansand recordkeeping.

TheFDA and other regulatory authorities. These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding drug distribution and the distribution of samples to physicians and recordkeeping.

~~The FDA and other~~ federaland stateagencies,includingtheDepartmentof Justice,closelyregulate compliancewith allrequirementsgoverningprescriptiondrug products, including requirementspertainingto marketingandpromotionofdrugsinaccordancewith theprovisionsof theapprovedlabelingand manufacturing ofproductsinaccordancewithcGMPrequirements.Forexample,theFDAandotheragenciesactivelyenforce thelawsandregulationsprohibitingthepromotionofoff-labeluses,and a companythatisfound to have improperlypromotedoff-labelusesmaybe subjectto significantliability.Violationsof such requirementsmay leadtoinvestigationsallegingviolationsoftheFederalFood,Drug,andCosmeticAct,orFDCA, andother statutes,includingtheFalseClaimsActandotherfederalandstatehealthcarefraudandabuselawsaswellas stateconsumerprotectionlaws.Ourfailuretocomplywithallregulatoryrequirements,andlaterdiscoveryof previouslyunknownadverseeventsorotherproblemswithourproducts,manufacturersor manufacturing processes,mayyieldvariousresults,including:

•litigationinvolvingpatientstakingour products;

•restrictionson such products,manufacturersor manufacturingprocesses;

•restrictionson thelabelingor marketingof a product;

•restrictionson productdistributionor use;

•requirementsto ~~investigations alleging violations~~ conductpost-marketingstudiesor clinicaltrials;

•warningor untitledletters;

•withdrawalof the ~~Federal Food, Drug,~~ productsfromthemarket;

•refusalto approvependingapplicationsor supplementsto approvedapplicationsthatwe submit;

•recallof products;

•fines,restitutionor disgorgementof profitsor revenues;

•suspensionor withdrawalof marketingapprovals;

•damageto relationshipswith any potentialcollaborators;

•unfavorablepresscoverageand ~~Cosmetic Act,~~ damageto our reputation;

•refusalto permittheimportor ~~FDCA,~~ exportof our products;

•productseizure;or

•injunctionsor theimpositionof civilor criminalpenalties.

Non-compliancebyusor any futurecollaboratorwith regulatoryrequirements,includingsafetymonitoring or pharmacovigilance,and ~~other statutes, including~~with requirementsrelatedto the ~~False Claims Act~~ developmentof productsfor the pediatricpopulation can alsoresultin significantfinancialpenalties.

Our currentand ~~other federal~~ futurerelationshipswith customersand ~~state healthcare~~ third-partypayorsmaybe subjectto applicable anti-kickback,fraud and abuse, transparency,healthprivacy,and otherhealthcarelaws ~~as well as state consumer protection laws.~~ and regulations, which could exposeus to significantpenalties,includingcriminal,civil,and administrativepenalties, contractualdamages,reputationalharm and diminishedprofitsand futureearnings.

Healthcareproviders,includingphysicians,andthird-partypayorswillplaya primaryrolein the recommendationandprescriptionofanyproductcandidatesforwhichweobtainmarketingapproval.Our ~~failure~~current andfuturearrangementswithhealthcareproviders,third-partypayorsand customersmayexposeus to ~~comply with all regulatory requirements,~~ broadly applicablefraudand ~~later discovery of previously unknown adverse events~~ abuseand otherhealthcarelaws and regulationsthatmayconstrainthebusinessor ~~other problems with~~financial arrangementsandrelationshipsthroughwhichweresearch,aswellas,market,sellanddistributeanyproducts forwhichweobtainmarketingapproval.Restrictionsunderapplicablefederaland statehealthcarelaws and regulationsthatmaybe applicableto our ~~products, manufacturers or manufacturing processes, may yield various results, including:~~businessincludethefollowing:

~~litigation involving patients taking our products;~~

~~restrictions on such products, manufacturers or manufacturing processes;~~

~~restrictions on the labeling or marketing of a product;~~

~~restrictions on product distribution or use;~~

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~~requirements~~ thefederalAnti-KickbackStatuteprohibits,amongotherthings,personsfromknowinglyandwillfully soliciting,offering,receivingorprovidingremuneration,directlyorindirectly,incashorinkind,to ~~conduct post-marketing studies~~ induceorreward,orinreturnfor,eitherthereferralofanindividualfor,or ~~clinical trials;~~thepurchase,orderor recommendationof, any good or service,forwhich paymentmaybe madeundera federalhealthcare programsuch as Medicareand Medicaid;

~~warning or untitled letters;~~

~~withdrawal of the products from the market;~~

~~refusal to approve pending applications or supplements to approved applications that we submit;~~

~~recall of products;~~

~~fines, restitution or disgorgement of profits or revenues;~~

~~suspension or withdrawal of marketing approvals;~~

~~damage to relationships with any potential collaborators;~~

~~unfavorable press coverage and damage to our reputation;~~

~~refusal to permit the import or export of our products;~~

~~product seizure; or~~

~~injunctions or the imposition of civil or criminal penalties.~~

Non-compliance by us or any future collaborator with regulatory requirements, including safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population can also result in significant financial penalties.

Our current and future relationships with customers and third-party payors may be subject to applicable anti-kickback, fraud and abuse, transparency, health privacy, and other healthcare laws and regulations, which could expose us to significant penalties, including criminal, civil, and administrative penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, including physicians, and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare providers, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, as well as, market, sell and distribute any products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations that may be applicable to our business include the following:

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

the federal civil, including the False Claims Act, which can be enforced by civil whistleblower or qui tam actions on behalf of the government, and criminal false claims laws and the civil monetary penalties law, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal government program, or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government;

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of the payor (e.g. public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security, and transmission of such individually identifiable health information;

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thefederalcivil and criminal false claims laws,includingtheFalseClaimsAct,whichcanbeenforcedbycivilwhistleblowerorqui tamactionsonbehalfofthegovernment,andcriminalfalseclaimslawsandthecivilmonetary penaltieslaw,prohibitindividualsorentitiesfrom,amongotherthings,knowingly presenting,or causingto be presentedfalseor fraudulentclaimsforpaymentby a federalgovernmentprogram, or makingafalsestatementorrecordmaterialtopaymentofafalseclaimor avoiding,decreasingor concealingan obligationto pay moneyto thefederalgovernment;

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thefederalHealthInsurancePortabilityandAccountabilityActof1996,orHIPAA,prohibits,among otherthings,knowinglyandwillfullyexecuting,orattemptingtoexecute,aschemetodefraudany healthcarebenefitprogram,regardlessofthepayor(e.g.publicor private),and knowingly and willfully falsifying,concealingorcoveringupbyanytrickordeviceamaterialfactor makingany materially false,fictitiousorfraudulentstatementsinconnectionwiththedeliveryof, or paymentfor,healthcare benefits,itemsor servicesrelatingto healthcarematters;

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HIPAA,asamendedbytheHealthInformationTechnologyforEconomicandClinicalHealthAct,or HITECH, andtheirimplementingregulations,imposerequirementson certaincoveredhealthcare providers,healthplans,andhealthcareclearinghousesaswellastheirrespectivebusinessassociates andtheirsubcontractorsthatperformservicesforthemthatinvolvetheuse, or disclosureof, individuallyidentifiablehealthinformation,relatingtotheprivacy,security,and transmissionof such individuallyidentifiablehealthinformation;

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the federal transparency requirements under the Patient Protection and Affordable Care Act, as amendedbytheHealthCareandEducationReconciliationActof2010, collectivelyreferredto as the ACA,requirescertainmanufacturersofdrugs,devices,biologicsandmedicalsuppliestoannually reporttotheCentersforMedicare&MedicaidServices,orCMS, informationrelatedto paymentsand ~~medical supplies~~ othertransfersofvalueprovidedto,andownershipandinvestmentinterestsheldby,physicians, definedtoincludedoctors,dentists,optometrists,podiatristsandchiropractors,andtheirimmediate familymembers.Beginningin 2022, applicablemanufacturersalsowillbe requiredto report ~~to the Centers for Medicare & Medicaid Services, or CMS,~~such information ~~related to~~ regardingpaymentsand ~~other~~ transfersofvalueprovided, ~~to, and~~as wellas ownershipand investment interestsheld, ~~by, physicians, as defined by such law,~~ duringthepreviousyearto physicianassistants,nurse practitioners,clinicalnurse specialists,anesthesiologistassistants,certifiednurseanesthetistsand ~~their immediate family members;~~ certifiednurse-midwives;and

analogous state laws and regulations such as state anti-kickback and false claims laws and analogous non-U.S. fraud and abuse laws and regulations, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance regulations promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing, including price increases. State and local laws require the registration of pharmaceutical sales representatives. State and non-U.S. laws that also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

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analogousstatelawsandregulationssuchasstateanti-kickbackandfalseclaimslawsandanalogous non-U.S. fraudand abuselaws and regulations,mayapplyto salesor marketingarrangementsand claimsinvolvinghealthcareitemsor servicesreimbursedby non-governmentalthird-partypayors, includingprivateinsurers.Somestatelawsrequirepharmaceuticalcompaniesto complywith the pharmaceuticalindustry’svoluntarycomplianceguidelinesand therelevantcomplianceregulations promulgatedbythefederalgovernmentandmayrequiredrug manufacturersto reportinformation relatedtopaymentsandothertransfersofvaluetophysiciansand otherhealthcareproviders,marketing expenditures,or drug pricing,includingpriceincreases.Stateand locallaws requirethe registrationof pharmaceuticalsalesrepresentatives.Stateandnon-U.S.lawsthatalsogoverntheprivacyand security ofhealthinformationinsomecircumstances,manyofwhichdifferfromeachotherin significantways and oftenarenot preemptedby HIPAA,thuscomplicatingcomplianceefforts.

Effortstoensurethatour businessarrangementswith thirdpartieswillcomplywith applicablehealthcare laws and regulationswillinvolvesubstantialcosts.Itispossiblethatgovernmentalauthoritieswill conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicablefraudandabuseorotherhealthcarelawsandregulations.Ifouroperationsarefound to be in violation ofanyoftheselaws or any othergovernmentalregulationsthatmayapplyto us, we maybe subjectto significant civil,criminaland administrativepenalties,damages,fines,disgorgement,imprisonment,exclusionfrom governmentfundedhealthcareprograms,suchasMedicareandMedicaidand otherfederalhealthcareprograms, contractualdamages,reputationalharm,diminishedprofitsand futureearnings,additionalintegrityreportingand oversightobligations,andthecurtailmentor restructuringof our operations,any of which couldadverselyaffect ourabilitytooperateourbusinessandourresultsofoperations.Ifany of thephysiciansor otherhealthcare providersorentitieswithwhomweexpectto do businessisfound to be not in compliancewith applicablelaws, theymaybesubjectto significantcriminal,civiland administrativesanctions,includingexclusionsfrom governmentfundedhealthcareprograms,which couldhave a materialadverseeffecton our business,resultsof operations,financialconditionand prospects.

Recentlyenactedand futurelegislationmayincreasethe difficultyand costforus to obtainmarketing approvalof and commercializeour productcandidatesand decreasethe priceswe mayobtain.

IntheUnitedStatesandsomeforeignjurisdictions,therehavebeenanumberof legislativeand regulatory changesandproposedchangesregardingthehealthcaresystemthatcouldpreventor delaymarketingapprovalof ourproductcandidates,restrictorregulatepost-approvalactivitiesandaffectourabilitytoprofitablysellany productcandidatesforwhich we obtainmarketingapproval.

Forexample, ~~in March 2010, the former U.S. President signed into law the~~ heACA was enacted,asweepinglawintended tobroadenaccesstohealthinsurance,reduceor constrainthegrowth of healthcarespending,enhanceremedies againstfraudandabuse,addnewtransparencyrequirementsforthehealthcareand healthinsuranceindustries, imposenew taxesand feeson thehealthindustryand imposeadditionalhealthpolicyreforms.

Among theprovisionsof theACAof importanceto our potentialproductcandidatesarethefollowing:

~~annual fees and taxes on manufacturers of certain branded prescription drugs;~~

~~an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic products;~~

a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

~~a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;~~

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations;

~~expansion of healthcare fraud and abuse laws, including the False Claims Act and the federal Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;~~

~~extension of manufacturers’ Medicaid rebate liability;~~

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~~expansion~~ annualfeesand taxeson manufacturersof ~~eligibility criteria for Medicaid programs;~~certainbrandedprescriptiondrugs;

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anannual,nondeductiblefeeonanyentitythatmanufacturesorimportsspecifiedbrandedprescription drugsand biologicproducts;

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anewMedicarePartDcoveragegapdiscountprogram,inwhichmanufacturersmustnowagreeto offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiariesduringtheircoveragegapperiod,asa conditionforthemanufacturer’soutpatientdrugsto be coveredunderMedicarePartD;

~~expansion~~

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a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Programarecalculatedfordrugsthatareinhaled,infused,instilled,implantedor injected;

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anincreaseinthestatutoryminimumrebatesamanufacturermustpayundertheMedicaidDrug Rebate Programandextendedtherebateprogramto individualsenrolledin Medicaidmanagedcare organizations;

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expansionofhealthcarefraudandabuselaws,includingtheFalseClaimsActandthefederalAnti- KickbackStatute,new governmentinvestigativepowers, and enhancedpenaltiesfornoncompliance;

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extensionof manufacturers’Medicaidrebateliability;

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expansionof eligibilitycriteriaforMedicaidprograms;

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expansionoftheentitieseligiblefordiscountsunderthePublicHealthServicepharmaceuticalpricing program;

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requirementstoreportfinancialarrangementswithphysicians,asdefinedbysuchlaw,andteaching hospitals;

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a requirement to annually report drug samples that manufacturers and distributors provide to physicians;and

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a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparativeclinicaleffectivenessresearch,alongwith fundingforsuch research.

There have been legislative and judicial effortstorepealorreplacecertainaspectsoftheACA, including measures taken during the ~~entities eligible for discounts under the Public Health Service pharmaceutical pricing program;~~

There remain judicial and Congressional challenges as well as efforts by the current U.S. President’s administration to repeal or replace certain aspects of the ACA. Since January 2017, the current U.S. President has signed Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Trump administration. WhileCongress ~~has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress~~ has not passedcomprehensiverepeallegislation,ithas enactedlaws thatmodify certain provisionsoftheACAsuchasremovingpenalties, startingJanuary1,2019,fornotcomplyingwiththeACA’s individualmandatetocarryhealthinsurance,eliminatingtheimplementationof certainACA-mandatedfees,and increasingthepoint-of-salediscountthatisowedbypharmaceuticalmanufacturerswho participatein Medicare PartD. ~~On December 14, 2018, a U.S. District~~In November 2020, the United States Supreme Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019,held oral arguments on the U.S. Court of Appeals for the ~~5th Circuit upheld the District Court ruling~~Fifth Circuit’s decision that held that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case, and has allotted one hour for oral arguments, which are expected to occur in the fall of 2020. It is unconstitutional.Itisunclear how such litigationand othereffortsto repealand replacetheACAwillimpacttheACAand our business.

Inaddition,otherlegislativechangeshavebeenproposedandadoptedsincetheACA wasenacted.On August2,2011,theBudgetControlActof2011wassignedintolaw,which,amongotherthings,createdthe JointSelectCommitteeonDeficitReductionto recommendto Congressproposalsforspendingreductions.The Joint Select Committee did not achieve a targeted deficit reduction, triggering the legislation’s automatic reductiontoseveralgovernmentprograms.Thesechangesincludeaggregatereductionsto Medicarepaymentsto providersofupto2%perfiscalyear,which began in 2013, and due to subsequentlegislativeamendmentsto the statute,willremainineffectthrough2030unlessadditionalCongressionalactionistaken.The CoronavirusAid, Relief,andEconomicSecurityAct,ortheCARESAct,whichwassignedintolawinMarch2020andis designedto providefinancialsupportand resourcesto individualsand businessesaffectedby the COVID-19 pandemic,suspendedthe2%MedicaresequesterfromMay1,2020throughDecember31,2020,andextended thesequesterbyoneyear,through2030.The Consolidated Appropriations Act, 2021 extended the suspension of the 2% Medicare sequester ~~from May 1, 2020~~ through ~~December~~March 31, ~~2020, and extended the sequester by one year, through 2030.~~2021. In January2013, theAmericanTaxpayerReliefAct of 2012 was signed intolaw,which,amongotherthings,reducedMedicarepaymentstoseveralproviders,andincreasedthestatute oflimitationsperiodforthegovernmenttorecoveroverpaymentstoprovidersfromthreetofiveyears.These laws mayresultin additionalreductionsin Medicareand otherhealthcarefunding.

Further,therehas been heightenedgovernmentalscrutinyrecentlyoverthemannerin which drug manufacturerssetpricesfortheirmarketedproducts,which has resultedin severalCongressionalinquiriesand proposedand enactedfederaland statelegislationdesignedto, amongotherthings,bringmoretransparencyto productpricing,reviewtherelationshipbetweenpricingand manufacturerpatientprograms,and reform governmentprogramreimbursementmethodologiesfordrugproducts.At thefederallevel,the ~~current U.S. President’s~~ Trumpadministrationissuedbudgetproposalsforfiscalyear2021 includesa $135 billionallowanceto supportlegislativeproposalsseekingtoreducedrugprices,increasecompetition,lowerout-of-pocketdrug costs forpatients,andincreasepatientaccesstolower-costgenericandbiosimilardrugs.

In particular, onJuly24,2020andSeptember13,2020,theTrump administrationannouncedseveralexecutiveorders relatedto prescriptiondrug pricingthatseekto implementseveralof theadministration’sproposals.As a result, theFDA alsoreleasedafinalruleonSeptember24,2020providingguidanceforstatesto buildand ~~increase patient access~~submit importationplansfordrugsfromCanada. The Trump and Biden administrations both issued executive orders intended to ~~lower-cost generic and biosimilar drugs. On March 10, 2020,~~favor government procurement from domestic manufacturers. In addition, the Trump administration ~~sent “principles” for drug pricing~~issued an executive order specifically aimed at the procurement of pharmaceutical products, which instructed the federal government to ~~Congress, calling for legislation~~develop a list of “essential” medicines and then buy those and other medical supplies that ~~would, among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide~~are manufactured, including the manufacture of the API, in the United States. On July 9, 2021, President Biden issued an ~~option to cap Medicare Part D beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases. In addition,~~executive order supporting the ~~current U.S. President’s administration previously released a “Blueprint” to lower drug prices and reduce out of pocket costs~~importation of drugs from Canada as an effort to reduce prescription drug costs, requesting that ~~contained proposals to increase manufacturer competition, increase~~ the ~~negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The~~ Department of Health and Human Services ~~has solicited feedback on some~~develop a plan to address drug pricing by the end of ~~these measures~~the summer of 2021 and ~~has~~encouraging the Federal Trade Commission to use its rulemaking authority to combat unfair anticompetitive conduct related to the introduction of generic drugs and biosimilars to the market. It is unclear whether this executive order or something similar will be implemented ~~others~~ by the Biden Administration.

Further,onNovember20,2020,HHS finalizedaregulationremoving safeharborprotectionforpricereductionsfrompharmaceuticalmanufacturersto plansponsorsunder ~~its existing authority. Although some~~PartD, eitherdirectlyorthroughpharmacybenefitmanagers,unlessthepricereductionisrequiredby law. The rulealso createsanewsafeharborforpricereductionsreflectedatthepoint-of-sale,as wellas a safeharborforcertain fixedfeearrangementsbetweenpharmacybenefitmanagersandmanufacturers.The Centers for Medicare and Medicaid Services, or CMSalsopublishedaninterimfinalrulethatestablishesaMostFavoredNation,or MFN, Model for Medicare Part B drug payment. This regulation would substantially change the drug reimbursement landscape asit basesMedicare PartBpaymentfor50selected drugsonpricesinforeign countriesinsteadofaveragesalesprice,orASP,andestablishesafixedadd-onpaymentinplaceofthecurrent 6percent(4.3percentaftersequestration)ofASP. TheMFN drug paymentamountisexpectedto be lowerthan thecurrentASP-basedpaymentlimitbecauseU.S.drugpricesaregenerallythehighestintheworld.On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of ~~these measures may require additional authorization to become effective, Congress~~the interim final rule, and itfacesuncertainprospectsfor implementation.

Atthe ~~current U.S. President’s administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. In addition, at the~~ statelevel,individualstateshave increasinglypassedlegislationand implementedregulations designedtocontrolpharmaceuticalandbiologicalproductpricing,includingpriceor patientreimbursement constraints,discounts,restrictionson certainproductaccessand marketingcostdisclosureand transparency measures,and, in somecases,designedto encourageimportationfromothercountriesand bulk purchasing.

WeexpectthattheACA,as wellas otherhealthcarereformmeasuresthatmaybe adoptedin thefuture,may resultinmorerigorouscoveragecriteriaand in additionaldownward pressureon thepricethatwe receiveforany approvedproduct.The implementationof costcontainmentmeasuresor other healthcarereformsmay prevent us frombeingableto generaterevenue,attainprofitability,or commercializeour products.

Legislativeandregulatoryproposalshavebeenmadetoexpandpost-approvalrequirementsandrestrict salesandpromotionalactivitiesforpharmaceuticalproducts.Wecannotbesurewhetheradditionallegislative changeswillbeenacted,orwhethertheFDAregulations,guidanceorinterpretationswillbechanged,orwhat theimpactofsuchchangesonthemarketingapprovalsof our productcandidates,ifany, maybe. In addition, increasedscrutinybytheU.S. CongressoftheFDA’sapprovalprocessmaysignificantlydelayor prevent marketingapproval,as wellas subjectus to morestringentproductlabelingand post-marketingtestingand other requirements.Itisalsopossiblethatadditionalgovernmentalactionistakento addresstheCOVID-19pandemic.

Governmentsoutsideof the United Statestend to imposestrictpricecontrols,which mayadverselyaffect our revenues,ifany.

Insomecountries,particularlythecountriesoftheEuropeanUnion,ortheEU, thepricingofprescription pharmaceuticalsissubjecttogovernmentalcontrol.Inthesecountries,pricingnegotiationswithgovernmental authoritiescantakeconsiderabletimeafterthereceiptof marketingapprovalfora product.To obtain reimbursement or pricing approval insome countries, wemay berequired toconduct aclinical trial that comparesthecost-effectivenessof our productcandidatesto otheravailabletherapies.Ifreimbursementof our productsisunavailableorlimitedinscopeoramount,orifpricingissetatunsatisfactorylevels,our business couldbe harmed.Political,economicand regulatorydevelopmentsmayfurthercomplicatepricing negotiations, andpricingnegotiationsmaycontinueafterreimbursementhasbeenobtained.Referencepricingusedby various EU memberstates,and paralleltrade,such as arbitragebetweenlow-pricedand high-pricedmemberstates,can furtherreduceprices.Therecan be no assurancethatany countrythathas pricecontrolsor reimbursement limitationsforpharmaceuticalproductswillallowfavorablereimbursementand pricingarrangementsfor any products,ifapprovedinthosecountries.Inaddition,therecentwithdrawaloftheUnitedKingdomfromits membershipintheEU, oftenreferredtoas“Brexit”,couldleadtolegalandregulatoryuncertaintyintheUnited Kingdom ~~from its membership in~~ andmayleadtothe ~~EU, often referred to as “Brexit”, could lead to legal~~ UnitedKingdomand ~~regulatory uncertainty in the United Kingdom and may lead to the United Kingdom and~~ EU adoptingdivergentlawsandregulations,includingthose relatedtothepricingofprescriptionpharmaceuticals,astheUnitedKingdomdetermineswhichEU lawsto replicateor replace.IftheUnitedKingdom were to significantlyalterits regulationsaffectingthe pricing of prescriptionpharmaceuticals, ~~as the United Kingdom determines which EU laws to replicate or replace. If the United Kingdom were to significantly alter its regulations affecting the pricing of prescription pharmaceuticals,~~ wecouldfacesignificantnewcosts.Asa result,Brexitcouldimpairour abilityto transactbusinessin theEUand theUnitedKingdom.

Laws and regulationsgoverningany internationaloperationswe mayhave in the futuremayprecludeus fromdeveloping,manufacturingand sellingcertainproductcandidatesand productsoutsideof the United Statesand requireus to developand implementcostlycomplianceprograms.

IfweexpandouroperationsoutsideoftheUnitedStates,we mustdedicateadditionalresourcesto comply withnumerouslawsandregulationsineachjurisdictionin which we planto operate.The ForeignCorrupt PracticesAct,orFCPA,prohibitsanyU.S. individualorbusinessfrompaying,offering,authorizingpaymentor offeringanythingofvalue,directlyorindirectly,toanyforeignofficial,politicalpartyorcandidateforthe purposeofinfluencinganyactordecisionofsuchthirdpartyin orderto assisttheindividualor business from paying, offering, authorizing payment or offering anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of such third party in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the UnitedStatestocomplywithcertainaccountingprovisionsrequiringthecompanytomaintainbooksand records thataccuratelyandfairlyreflectalltransactionsofthecompany,includinginternationalsubsidiaries,andto deviseand maintainan adequatesystemof internalaccountingcontrolsforinternationaloperations.

CompliancewiththeFCPA isexpensiveanddifficult,particularlyincountriesinwhich corruptionisa recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because,inmanycountries,hospitalsareoperatedbythegovernment,and doctorsand otherhospitalemployees areconsideredforeignofficials.Certainpaymentstohospitalsin connectionwith clinicaltrialsand otherwork have been deemedto be improperpaymentsto governmentofficialsand have ledto FCPAenforcementactions.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the UnitedStates,or thesharingwith certainnon-U.S. nationals,of informationclassifiedfornationalsecurity purposes,aswellascertainproductsandtechnicaldatarelatingtothoseproducts.Ifweexpandourpresence outsideoftheUnitedStates,itwillrequireustodedicateadditionalresourcestocomplywiththeselaws,and theselawsmayprecludeusfromdeveloping,manufacturingor sellingcertainproductcandidatesand products outsideof theUnitedStates,which couldlimitour growth potentialand increaseour developmentcosts.

Thefailuretocomplywithlawsgoverninginternationalbusinesspracticesmayresultinsubstantialcivil andcriminalpenaltiesandsuspensionordebarmentfromgovernmentcontracting.The Securitiesand Exchange Commission, or the SEC, also may suspend or bar issuers from trading securities on U.S.exchanges for violationsof theFCPA’saccountingprovisions.

Ifwe failto complywith environmental,healthand safetylaws and regulations,we could becomesubject to finesor penaltiesor incur coststhatcould harm our business.

Weandourthird-partycontractorsaresubjectto numerousforeign,federal,stateand localenvironmental, healthandsafetylaws and regulations,includingthosegoverninglaboratoryproceduresand thehandling,use, storage,treatmentand disposalof hazardousmaterialsand wastes.Our operationsinvolvetheuse of hazardous and flammablematerials,includingchemicalsand biologicalmaterials.Our operationsalso produce hazardous wasteproducts.Wegenerallycontractwiththirdpartiesforthedisposalofthesematerialsandwastes.We cannoteliminatetheriskof contaminationor injuryfromthesematerials.In theeventof contaminationor injury resultingfromouruseofhazardousmaterials,wecouldbeheldliableforanyresultingdamages,andany liabilitycouldexceedour resources,includingany availableinsurance.

Inaddition,ourleasingand operationof realpropertymaysubjectus to liabilitypursuantto certainof these lawsorregulations.UnderexistingU.S.environmentallawsandregulations,currentorpreviousownersor operatorsofrealpropertyandentitiesthatdisposedorarrangedforthedisposalof hazardoussubstancesmaybe heldstrictly,jointlyandseverallyliableforthecostof investigatingor remediatingcontaminationcausedby hazardoussubstancereleases,even iftheydid not know of and were not responsibleforthereleases.

Wecouldincursignificantcostsandliabilitieswhichmayadverselyaffectour financialconditionand operatingresultsforfailuretocomplywithsuchlawsandregulations,including,amongotherthings,civilor criminalfinesandpenalties,propertydamageandpersonalinjuryclaims,costsassociatedwithupgradesto our facilitiesor changesto our operatingprocedures,or injunctionslimitingor alteringour operations.

Althoughwemaintainliabilityinsurancetocoverusforcostsand expenseswe mayincurdue to injuriesto our employees, this insurance may not provide adequate coverage against potential liabilities. We do not maintaininsuranceforenvironmentalliabilityortoxictortclaimsthatmaybe assertedagainstus in connection with our storageor disposalof biological,hazardousor radioactivematerials.

Inaddition,we mayincursubstantialcostsin orderto complywith currentor futureenvironmental,health andsafetylaws and regulations.These currentor futurelaws and regulations,which arebecomingincreasingly morestringent,mayimpairourresearch,developmentorproductionefforts.Ourfailuretocomplywiththese laws and regulationsalsomayresultin substantialfines,penaltiesor othersanctions.

We are subjectto certainU.S.and certainforeignanti-corruption,anti-moneylaundering,export

control,sanctionsand othertradelaws and regulations.We can faceseriousconsequencesforviolations.

U.S. andforeignanti-corruption,anti-moneylaundering,exportcontrol,sanctionsandothertradelaws and regulationsprohibit,amongotherthings,companiesandtheiremployees,agents,CROs, CMOs,legalcounsel, accountants,consultants,contractorsand otherpartnersfromauthorizing,promising,offering,providing, soliciting,orreceivingdirectlyorindirectly,corruptorimproperpaymentsoranythingelseofvalueto or from recipientsinthepublicorprivatesector.Violationsof theselaws can resultin substantialcriminalfinesand civil penalties,imprisonment,thelossoftradeprivileges,debarment,taxreassessments,breachofcontractand fraud litigation,reputationalharmandotherconsequences.Wehavedirectorindirectinteractionswith officialsand employeesof governmentagenciesor government-affiliatedhospitals,universitiesand other ~~consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other~~ organizations.We alsoexpectournon-U.S.activities toincreaseovertime.Weexpecttorelyonthirdpartiesforresearch, preclinicalstudiesand clinicaltrialsand/orto obtainnecessarypermits,licenses,patentregistrationsand other marketingapprovals.Wecanbeheldliableforthecorruptor otherillegalactivitiesof our personnel,agents,or partners,even ifwe do not explicitlyauthorizeor have priorknowledge of such activities.

Anyviolationsofthelawsandregulationsdescribedabove mayresultin substantialciviland criminalfines andpenalties,imprisonment,thelossof exportor importprivileges,debarment,taxreassessments,breachof contractand fraudlitigation,reputationalharmand otherconsequences.

We rely,and intendto continueto rely,on thirdpartiesto conduct our clinicaltrialsand performsomeof our researchand preclinicalstudies.Ifthesethirdpartiesdo not satisfactorilycarryout theircontractual duties,failto complywith applicableregulatoryrequirementsor do not meetexpecteddeadlines,our developmentprogramsmaybe delayedor subjectto increasedcostsor we maybe unable to obtain regulatoryapproval,each of which mayhave an adverseeffecton our business,financialcondition, resultsof operationsand prospects.

Wedonothavetheabilitytoindependentlyconductallaspectsofourpreclinicaltestingor clinicaltrials ourselves.As a result,we aredependenton thirdpartiesto conductour ongoing and plannedclinicaltrialsof PRT543,PRT811andPRT1419, andanypreclinicalstudiesandclinicaltrialsofanyotherproductcandidates. Thetimingoftheinitiationandcompletionofthesetrialswillthereforebepartiallycontrolledbysuchthird parties and may result in delays to our development programs. Specifically, we expect CROs, clinical investigatorsandconsultantstoplayasignificantrolein theconductof thesetrialsand thesubsequentcollection andanalysisofdata.However,theseCROs andotherthirdpartiesarenot our employees,and we willnot be able to controlallaspectsof theiractivities.Nevertheless,we areresponsibleforensuringthateachclinicaltrialis conductedinaccordancewith theapplicableprotocoland legal,regulatoryand scientificstandards,and our relianceontheCROs andotherthirdpartiesdoesnot relieveus of our regulatoryresponsibilities.We and our CROsarerequiredtocomplywithgoodclinicalpractices,orGCP, requirements,whichareregulationsand guidelinesenforcedbytheFDA forproductcandidatesin clinicaldevelopment.Regulatoryauthoritiesenforce theseGCP requirementsthroughperiodicinspectionsof trialsponsors,clinicaltrialinvestigatorsand clinicaltrial sites.IfweoranyofourCROs orclinicaltrialsitesfailtocomplywithapplicableGCP requirements,thedata generatedinourclinicaltrialsmaybedeemedunreliable,andtheFDA mayrequireus to performadditional clinicaltrialsbeforeapprovingourmarketingapplications.Wecannotassureyouthat,upon inspection,theFDA willdeterminethatourclinicaltrialscomplywithGCPs. In addition,our clinicaltrialsmustbe conductedwith productproducedundercGMP regulations.Our failureor thefailureof thirdpartieson whom we relyto comply withtheseregulationsmayrequireustostopand/orrepeatclinicaltrials,which would delaythemarketing approvalprocess.

ThereisnoguaranteethatanysuchCROs, clinicaltrialinvestigatorsorotherthirdpartiesonwhichwerely willdevoteadequatetimeandresourcestoourdevelopmentactivitiesor performas contractuallyrequired.Ifany ofthesethirdpartiesfailto meetexpecteddeadlines,adhereto our clinicalprotocolsor meetregulatory requirements,otherwiseperformin a substandardmanner,or terminatetheirengagementswith us, thetimelines forourdevelopmentprogramsmaybeextendedordelayedorourdevelopmentactivitiesmaybe suspendedor terminated. If our clinical trial site terminates for any reason, we may experience the loss of follow-up informationonsubjectsenrolledinsuchclinicaltrialunlessweareabletotransferthosesubjectsto another qualifiedclinicaltrialsite,which maybe difficultor impossible.

Furthermore,thesethirdpartiesmayalsohave relationshipswith otherentities,someof which maybe our competitorsforwhomtheymayalsobeconductingclinicaltrialsor otherpharmaceuticalproductdevelopment activitiesthatcouldharmour competitiveposition.Ifthesethirdpartiesdo not successfullycarryout their contractualduties,meetexpecteddeadlinesorconductourclinicaltrialsin accordancewith regulatory requirementsorour statedprotocols,we willnot be ableto obtain,or maybe delayedin obtaining,marketing approvalsforPRT543, PRT811, PRT1419 oranyotherproductcandidatesandwillnotbeableto,ormaybe delayedin our effortsto, successfullycommercializeour products.

Manufacturingpharmaceuticalproductsiscomplexand subjectto productlossfora varietyof reasons. We relyon third-partysuppliers,includingsinglesourcesuppliers,to manufacturepreclinicaland clinicalsuppliesof our productcandidatesand we intendto relyon thirdpartiesto produce commercial suppliesof any approvedproductcandidate.This relianceon thirdpartiesincreasesthe riskthatwe will not have sufficientquantitiesof our productcandidatesor productsor such quantitiesat an acceptable costor quality,which could delay,preventor impairour developmentor commercializationefforts.

Wedonothaveanymanufacturingfacilities.Werely,andexpectto continueto rely,on thirdpartiesforthe manufactureof our productcandidatesforpreclinicaland clinicaltesting,product developmentpurposes, to supportregulatoryapplicationsubmissions,aswellasforcommercialmanufactureifanyof our product candidatesobtainmarketingapproval.Inaddition,weexpectto contractwith analyticallaboratoriesforrelease andstabilitytestingofourproductcandidates.Thisrelianceonthirdpartiesincreasestheriskthatwe willnot havesufficientquantitiesofourproductcandidatesorproductsorsuchquantitiesatanacceptablecostor quality, whichcoulddelay,preventorimpairourdevelopmentor commercializationefforts.

We do not have any manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, product development purposes, to support regulatory application submissions, as well as for commercial manufacture if any of our product candidates obtain marketing approval. In addition, ~~we expect to contract with analytical laboratories for release and stability testing of our product candidates. This reliance on third parties increases~~ the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. In addition, the ongoing COVID-19 pandemicmayresultin disruptionsto theoperationsor an extendedshutdown of certainbusinesses, which couldincludecertainof our contractmanufacturers.

Wemaybeunabletoestablishanyagreementswiththird-partymanufacturersor do so on favorableterms. Evenifweareabletoestablishagreementswiththird-partymanufacturers,relianceon third-partymanufacturers entailsadditionalrisks,including:

Wehaveonlylimitedsupplyarrangementsinplacewithrespectto our productcandidates,and these arrangementsdonotextendtocommercialsupply.Weacquiremanykeymaterialsonapurchaseorderbasis.As aresult,we do not have long-termcommittedarrangementswith respectto our productcandidatesand other materials.Wewillneedtoestablishone or moreagreementswith thirdpartiesto developand scaleup thedrug manufacturingprocess,conductdrugtesting,andgeneratedatato supporta regulatorysubmission.Ifwe obtain marketingapprovalforanyofourproductcandidates,wewillneedtoestablishanagreementforcommercial manufacturewith a thirdparty.

Inaddition,wearedependentonasolesupplierforcertaincomponentsofourmanufacturingprocess.Even ifweareabletoreplaceanyrawmaterialsorothermaterialswithanalternative,suchalternativesmaycost more,resultinloweryieldsornotbeassuitableforourpurposes.Inaddition,someofthematerialsthatweuse tomanufactureourproductcandidatesarecomplexmaterials,which maybe moredifficultto substitute. Therefore,anydisruptionsarisingfromour solesupplierscouldresultin delaysand additionalregulatory submissions.

Third-partymanufacturersmaynotbeabletocomplywith cGMP regulationsor similarregulatory requirementsoutsideoftheUnitedStates.IftheFDA determinesthatourCMOsarenot in compliancewith FDA lawsandregulations,includingthosegoverningcGMPs,theFDA maydenyanewdrugapplication,orNDA, approval until the deficiencies are corrected or we replace the manufacturer in our application with a manufacturerthatisin compliance.Moreover,our failure,or thefailureof our third-partymanufacturersand suppliers,to complywith applicableregulationscouldresultin sanctionsbeingimposedon us, includingclinical holds, fines, injunctions, civil penalties, seizures or recalls of product candidates or products, operating restrictionsandcriminalprosecutions,anyof which couldsignificantlyand adverselyaffectsuppliesof our products.Inaddition,approvedproductsandthefacilities atwhichtheyaremanufacturedarerequiredto maintainongoingcompliancewithextensiveFDA requirementsandtherequirementsofothersimilaragencies, includingensuringthatqualitycontrolandmanufacturingproceduresconformtocGMPrequirements.As such, ourCMOsaresubjecttocontinualreviewandperiodicinspectionstoassesscompliancewith cGMPs. Furthermore,althoughwedonothaveday-to-daycontrolovertheoperationsofourCMOs,weareresponsible forensuringcompliancewith applicablelaws and regulations,includingcGMPs.

Inaddition,ourthird-partymanufacturersandsuppliersaresubjectto numerousenvironmental,healthand safetylawsandregulations,includingthosegoverningthehandling,use, storage,treatmentand disposalof waste products,andfailuretocomplywithsuchlawsandregulationscouldresultin significantcostsassociatedwith civilor criminalfinesand penaltiesforsuch thirdparties.Based on theseverityof regulatoryactionsthatmaybe broughtagainstthesethirdpartiesinthefuture,ourclinicalorcommercialsupplyofdrugandpackagingand otherservicescouldbe interruptedor limited,which couldharmour business.

Ourproductcandidatesandanyproductsthatwe maydevelopmaycompetewith otherproductcandidates and ~~any~~ products ~~that we may develop may compete with other product candidates and products~~ foraccessto manufacturingfacilities.As a result,we maynot obtainaccessto thesefacilitieson a prioritybasisoratall.Therearealimitednumberof manufacturersthatoperateundercGMP regulationsand that mightbe capableof manufacturingforus.

Asweprepareforlater-stageclinicaltrialsandpotentialcommercialization,we willneed to takestepsto increasethescaleof productionof our productcandidates.We have not yetscaledup the manufacturingprocess forany of our productcandidates.Thirdpartymanufacturersmaybe unableto successfullyincreasethe manufacturingcapacityforanyofourproductcandidatesin a timelyor cost-effectivemanner,or atall.In addition,qualityissuesmayariseduringscale-uporcommercialactivities.Forexample,ifmicrobial,viralor othercontaminationsarediscoveredinourproductcandidatesor in themanufacturingfacilitiesin which our productcandidatesaremade,suchmanufacturingfacilitiesmayneed to be closedforan extendedperiodof time to investigateand remedythecontamination.

Any performance failure on the part of our existing or future manufacturers could delay clinical developmentormarketingapproval.Wedonotcurrentlyhavearrangementsin placeforredundantsupplyor a secondsourceforbulkdrugsubstance.IfourcurrentCMOs forpreclinicaland clinicaltestingcannotperformas agreed, we may be required to replace such CMOs. Although we believe that there are several potential alternativemanufacturerswhocouldmanufactureourproductcandidates,wemayincuraddedcostsanddelays inidentifyingandqualifyinganysuchreplacementmanufactureror be ableto reachagreementwith any alternativemanufacturer.Further,our third-partymanufacturersmayexperiencemanufacturingor shipping difficultiesduetoresourceconstraintsorasaresultof naturaldisasters,labordisputes,unstablepolitical environments,orpublichealthepidemicssuchasthe ~~recent~~ COVID-19 pandemic.Ifourcurrentthird-party manufacturerscannotperformasagreed,wemayberequiredtoreplacesuchmanufacturersandwemaybe ~~required~~ unableto replace ~~such manufacturers and we may be unable to replace~~ themon a timelybasisor atall.

Ourcurrentandanticipatedfuturedependenceuponothersforthemanufactureof our productcandidatesor productsmayadverselyaffectour futureprofitmarginsand ~~anticipated future dependence upon others~~ our abilityto commercializeany productsthatobtain marketingapprovalon a timelyand competitivebasis.

We mayenterintocollaborationswith thirdpartiesforthe ~~manufacture~~ developmentand commercializationof our productcandidates.Ifthosecollaborationsare not successful,we maynot be ableto capitalizeon the marketpotentialof theseproductcandidates.

Wemayseekthird-partycollaboratorsforthedevelopmentand commercializationof someof our product candidates ~~or products may adversely affect our future profit margins and our ability to commercialize any products that obtain marketing approval~~ ona ~~timely and competitive~~ selectbasis.

We may enter into collaborations with third parties for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

~~We may seek third-party collaborators for the development and commercialization of some of our product candidates on a select basis. We~~ have not enteredintoany collaborationsto date.Our likelycollaboratorsforany futurecollaborationarrangementsincludelargeandmid-sizepharmaceuticalcompanies,regionalandnational pharmaceuticalcompaniesandbiotechnologycompanies.We facesignificantcompetitionin seekingappropriate collaborators.Ourabilitytoreacha definitiveagreementfora futurecollaborationwilldepend, amongother things,uponourassessmentofthefuturecollaborator’sresourcesandexpertise,thetermsand conditionsof the proposedcollaborationand theproposedcollaborator’sevaluationof a numberof factors.

Ifwedoenterintoanysucharrangementswith any thirdparties,we willlikelyhave limitedcontroloverthe amountandtimingofresourcesthatourfuturecollaboratorsdedicateto thedevelopmentor commercializationof ourproductcandidates.Ourabilitytogeneraterevenuesfromthesearrangementswilldependonourfuture collaborators’abilitiesand effortsto successfullyperformthefunctionsassignedto themin these arrangements. Collaborationswith futurecollaboratorsinvolvingour productcandidateswould pose numerousrisksto us, includingthefollowing:

Ifweestablishoneormorecollaborations,alloftherisksrelatingto productdevelopment,regulatory approvalandcommercializationdescribedhereinwouldalsoapplyto theactivitiesof any such future collaborators.

The incidenceand prevalencefortargetpatientpopulationsof our productcandidateshave not been establishedwith precision.Ifthe marketopportunitiesforour productcandidatesare smallerthan we estimateor ifany approvalthatwe obtainisbased on a narrower definitionof the patientpopulation,our revenuepotentialand abilityto achieveprofitabilitywillbe adverselyaffected.

ThetotaladdressablemarketopportunityforPRT543, PRT811, PRT1419 andanyotherproductcandidates wemaydevelopwillultimatelydependupon,amongotherthings,thediagnosiscriteriaincludedinthefinal labelingforeachsuchproductcandidateifourproductcandidatesareapprovedforsalefortheseindications, acceptancebythemedicalcommunity,patientaccess,drugandanyrelatedcompaniondiagnosticpricingand theirreimbursement.Wemayinitiallyseekregulatoryapprovalofsomeofourproductcandidatesastherapies forrelapsedorrefractorypatients.Thenumberofpatientsinourtargetedcommercialmarketsandelsewhere mayturnouttobelowerthanexpected,patientsmaynot be otherwiseamenableto treatmentwith our drugs,or newpatientsmaybecomeincreasinglydifficulttoidentifyor gainaccessto, allof which would adverselyaffect our resultsof operationsand our business.

Even ifany of our productcandidatesreceivesmarketingapproval,itmayfailto achievethe degreeof marketacceptanceby physicians,patients,third-partypayorsand othersin the medicalcommunity necessaryforcommercialsuccess.

Ifanyofourproductcandidatesreceivesmarketingapproval,itmaynonethelessfailtogainsufficient marketacceptancebyphysicians,patients,third-partypayorsandothersin themedicalcommunity.For example, currentcancertreatments,suchasexistingtargetedtherapies,chemotherapy,and radiationtherapy,arewell establishedinthemedicalcommunity,anddoctorsmaycontinueto relyon thesetreatments.Ifour product candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments, such as existing targeted therapies, chemotherapy, and radiation therapy, are well established in the medical community, and doctors may continue to rely on these treatments. If our product candidates do not achievean adequatelevelof acceptance,we maynot generatesignificantproduct revenues and we maynot becomeprofitable.The degreeof marketacceptanceof our productcandidates,if approved for commercialsale,willdepend on a numberof factors,including:

We currentlyhave no marketingand salesorganizationand have no experienceas a companyin commercializingproductsand we mayhave to investsignificantresourcesto developthesecapabilities.If we are unable to establishsalesand marketingcapabilitiesor enterintoagreementswith thirdpartiesto marketand sellour products,we maynot be ableto generaterevenue.

Wecurrentlyhavenosalesormarketinginfrastructureandhavenoexperiencein thesale,marketingor distributionofpharmaceuticalproducts.Toachievecommercialsuccessforanyproductforwhich we obtain marketingapproval,we willneed to establishsales,marketingand distributioncapabilities,eitherourselvesor throughcollaborationor otherarrangementswith thirdparties.

Therearerisksinvolvedwith establishingour own salesand marketingcapabilities.For example,recruiting and training a sales force is expensive and time-consuming and could delay any product launch. If the commerciallaunchofaproductcandidateforwhichwerecruitasalesforceandestablishmarketingcapabilities isdelayedor does not occurforany reason,we would have prematurelyor unnecessarilyincurredthese commercializationexpenses.These effortsareexpectedto be costly,and our investmentwould be lostifwe cannotretainor repositionour salesand marketingpersonnel.

~~If we enter into arrangements with third parties to perform sales and marketing services,~~

Ifweenterintoarrangementswiththirdpartiestoperformsalesandmarketingservices,ourproduct revenuesandourprofitability,ifany,arelikelytobe lowerthanifwe were to marketand sellany productsthat wedevelopourselves.Inaddition,wemaynot be successfulin enteringintoarrangementswith thirdpartiesto marketandsellourproductcandidatesormaybeunabletodosoontermsthatareacceptabletous.Welikely willhavelittlecontroloversuchthirdparties,andanyofthesethirdpartiesmayfailtodevotethenecessary resourcesandattentionto selland marketour productseffectively.Ifwe do not establishsalesand marketing capabilitiessuccessfully,eitheronourownorincollaborationwiththirdparties,wewillnotbesuccessfulin commercializingany of our productcandidatesforwhich we receivemarketingapproval.

We facesubstantialcompetition,which mayresultin othersdiscovering,developingor commercializing productsbeforeor moresuccessfullythan we do.

Thedevelopmentand commercializationof pharmaceuticalproductsishighlycompetitive.We face competitionwithrespectto our currentproductcandidatesand willfacecompetitionwith respectto any product candidatesthatwemayseektodevelopor commercializein thefuture,frommajorpharmaceuticalcompanies, specialtypharmaceuticalcompaniesand existingor emergingbiotechnologycompanies,academicresearch institutionsandgovernmentalagenciesandpublicandprivateresearchinstitutionsworldwide.Therearea numberofpharmaceuticalandbiotechnologycompaniesthatcurrentlyarepursuingthedevelopmentof precision oncologytherapiesoptimizedto effectivelytargetthekey drivermechanismsin cancerswith high unmetneed, includingBlackDiamondTherapeutics,Inc.,ConstellationPharmaceuticals,Inc.,Kronos Bio, Inc.,Repare TherapeuticsInc.,RevolutionMedicines,Inc.,RelayTherapeutics,Inc.,andZentalisPharmaceuticals,LLC. In addition,wemayfacecompetitionfromcompaniespursuingthedevelopmentofproductcandidatesthatare basedon targetingpathwaysof adaptiveresistance,includingAmgen Inc.,or Amgen, AbbVie Inc.,or AbbVie, AstraZenecaPLC,orAstraZeneca,GlaxoSmithKlineplc,orGlaxoSmithKline,Johnson&Johnson,PfizerInc., or Pfizer, ~~Bayer AG,~~ Vincerx Pharma ,or ~~Bayer,~~Vincerx, and NovartisInternationalAG,or Novartis.

Specifically,withrespecttoourleadproductcandidates,weexpectthatour currentproductcandidates PRT543 andPRT811 willcompeteagainstotherPRMT5 inhibitorswhicharecurrentlyinclinicaldevelopment, including those of GlaxoSmithKline (GSK3326595), Johnson & Johnson (JNJ-64619178) and Pfizer (PF-06939999).Developmenteffortsand clinicalresultsof theseotherproductcandidatesmaybe unsuccessful, whichcould result inanegative perception ofPRMT5inhibitors, for instance, andnegatively impact the regulatoryapprovalprocessofourproductcandidates,whichwouldhave a materialand adverseeffecton our business.ForourproductcandidatePRT1419, othercompaniesaredevelopingMCL1inhibitorswith monotherapyand/orcombinationtrialsongoing, includingAmgen (AMG176), AstraZeneca(AZD5991) and Novartis(MIK665).ForourpreclinicalCDK9 program, ~~both~~ AstraZeneca,Vincerxand ~~Bayer~~Kronos Bio have CDK9 programsin Phase 1 clinicaltrials.

Manyofthecompaniesagainstwhich we arecompetingor againstwhich we maycompetein thefuture, eitheraloneor throughcollaborations,have significantlygreaterfinancialresourcesand expertisein researchand development,manufacturing,preclinicaltesting,conducting clinicaltrials,obtaining regulatoryapprovals and marketingapprovedproductsthanwe do. Mergersand acquisitionsin thepharmaceuticaland biotechnology industriesmayresultinevenmoreresourcesbeingconcentratedamongasmallernumberofourcompetitors. Smallerand otherearly-stagecompaniesmayalsoproveto be significantcompetitors,particularlythrough collaborative arrangements with large and established companies. These third parties compete with us in recruitingandretainingqualifiedscientific,managementandsalesand marketingpersonnel,establishingclinical trialsitesandpatientregistrationforclinicaltrials,aswellasinacquiringtechnologiescomplementaryto,or necessaryfor,our programs.

Furthermore,we also face competitionmore broadly across the oncology marketfor cost-effectiveand reimbursablecancertreatments.Therearea varietyof availabledrug therapiesmarketedforcancer.In many cases,thesedrugsareadministeredincombinationtoenhanceefficacy.Whileour productcandidates,ifany are approved,maycompetewiththeseexistingdrugsand othertherapies,to theextenttheyareultimatelyused in combinationwith or as an adjunctto thesetherapies,our productcandidatesmaynot be competitivewith them. Someofthesedrugsarebrandedandsubjecttopatentprotection,and othersareavailableon a genericbasis. Insurers and other third-party payors may also encourage the use ofgeneric products orspecific branded products.As a result,obtainingmarketacceptanceof, and gainingsignificantshareof themarketfor,any of our product candidates that we successfully introduce to the market may pose challenges. In addition, many companiesaredevelopingnew oncologytherapeutics,and we cannotpredictwhat thestandardof carewillbe as our productcandidatesprogressthroughclinicaldevelopment.

Ourcommercialopportunitycouldbereducedoreliminatedifourcompetitorsdevelopand commercialize productsthataresafer,moreeffective,have feweror lessseveresideeffects,aremoreconvenientto administer, are less expensive or with a more favorable labeling than our current or future product candidates. Our competitorsalsomayobtainFDA,foreignregulatoryauthority,orothermarketingorregulatoryapprovalfor theirproductsmorerapidlythananyapprovalwemayobtainforours,whichcouldresultin our competitors establishingastrongmarketpositionbeforeweareabletoenterthemarket.Thekeycompetitivefactors affectingthesuccessofallofourproductcandidates,ifapproved,arelikelyto be theirefficacy,safety, convenience,price,thelevelof genericcompetitionand theavailabilityof reimbursementfromgovernmentand otherthird-partypayors.

Even ifwe are able to enter the market. The key competitive factors affecting the success of all of our product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.

~~Even if we are able~~ to commercializeany productcandidates,the productsmaybecomesubjectto unfavorablepricingregulations,third-partyreimbursementpracticesor healthcarereforminitiatives, which would harm our business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug productsvarywidelyfromcountryto country.Currentand futurelegislationmaysignificantlychangethe approvalrequirementsin ways thatcouldinvolveadditionalcostsand causedelaysin obtainingapprovals.Some countriesrequireapprovalof thesalepriceof a drug beforeitcan be marketed.In manycountries,the pricing reviewperiodbeginsaftermarketingorproductlicensingapprovalisgranted.Toobtainreimbursementor pricingapprovalinsomecountries,wemaybe requiredto conducta clinicaltrialthatcomparesthe ~~cost-effectiveness~~ cost- effectivenessofourproductcandidateto otheravailabletherapies.In someforeignmarkets,prescription pharmaceuticalpricingremainssubjectto continuinggovernmentalcontroleven afterinitialapprovalis granted. Asaresult,wemightobtainmarketingapprovalforaproductcandidateinaparticularcountry,butthenbe subjecttopriceregulationsthatdelayourcommerciallaunchoftheproduct,possiblyforlengthytimeperiods, andnegativelyimpacttherevenues,ifany, we areableto generatefromthesaleof theproductin thatcountry. Adversepricinglimitationsmayhinderour abilityto recoupour investmentin one or moreproductcandidates, even ifsuch productcandidatesobtainmarketingapproval.

Ourabilitytocommercializeany productcandidatessuccessfullyalsowilldepend in parton theextentto whichcoverageandadequatereimbursementfortheseproductsand relatedtreatmentswillbe availablefrom third-partypayors,includinggovernmenthealthcareprograms,privatehealthinsurersandotherorganizations. Third-partypayorsdecidewhichmedicationstheywillpay forand establishreimbursementlevels.In theUnited States,theprincipaldecisionsaboutreimbursementfornewmedicinesaretypicallymadebytheCMS,which decideswhetherandtowhat extenta new medicinewillbe coveredand reimbursedunderMedicare.Private payorsoften,but not always,followCMS’s decisionsregardingcoverageand reimbursement.

AprimarytrendintheU.S. healthcareindustryandelsewhereiscostcontainment.Third-partypayorshave attemptedto controlcostsby limitingcoverageand theamountof reimbursementfor particularmedications. Increasingly,third-partypayorsarerequiringthatdrugcompaniesprovidethemwithpredetermineddiscounts fromlistpricesandarechallengingthepriceschargedformedicalproducts.Coverageandreimbursementmay not be available for any product that we commercialize and, even if these are available, the level of reimbursementmaynotbesatisfactory.Reimbursementmayaffectthedemandfor,or thepriceof, any product candidateforwhichweobtainmarketingapproval.Obtainingandmaintainingcoverageand adequate reimbursementforour productsmaybe difficult.We maybe requiredto conductexpensivepharmacoeconomic studiestojustifycoverageandreimbursementorthelevelofreimbursementrelativetoothertherapies.If coverageandadequatereimbursementarenotavailableorreimbursementisavailableonly to limitedlevels,we maynot be ableto successfullycommercializeany productcandidateforwhich we obtainmarketing approval. Obtaining and maintaining coverage and adequate reimbursement for our products may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.

Additionally,wemaydevelop,eitherby ourselvesor with collaborators,companiondiagnostictestsforour productcandidatesforcertainindications.We,orourcollaborators,ifany,willberequiredtoobtaincoverage andreimbursementforthesetestsseparateandapartfromthecoverageand reimbursementwe seekforour productcandidates,once approved.Whilewe have not yetdevelopedany companiondiagnostictestforour product candidates, if we do, there is significant uncertainty regarding our ability to obtain coverage and adequatereimbursementforthesamereasonsapplicableto our productcandidates.

Theremayalsobesignificantdelaysinobtainingcoverageandreimbursementfornewlyapproveddrugs, andcoveragemaybemorelimitedthanthepurposesforwhichthedrugisapprovedbytheFDA orsimilar regulatoryauthoritiesoutsideoftheUnitedStates.Moreover,eligibilityforcoverageandreimbursementdoes notimplythata drug willbe paidforin allcasesor ata ratethatcoversour costs,includingresearch, development,intellectualproperty,manufacture,saleand distributionexpenses. Interimreimbursementlevels for new drugs,ifapplicable,mayalsonot be sufficientto coverour costsand maynot be madepermanent. Reimbursementratesmayvaryaccordingtotheuseofthedrugandtheclinicalsettinginwhichitisused,may bebasedonreimbursement levelsalreadysetforlowercostdrugsandmaybeincorporatedintoexisting paymentsforotherservices.Netpricesfordrugsmaybe reducedby mandatorydiscountsor rebatesrequiredby governmenthealthcareprogramsorprivatepayorsandbyanyfuturerelaxationoflaws thatpresentlyrestrict importsofdrugsfromcountrieswhere theymaybe soldatlowerpricesthanin

theUnitedStates.Third-party payorsoftenrelyuponMedicarecoveragepolicyandpaymentlimitationsinsettingtheirownreimbursement policies, but also have their own methods and approval process apart from Medicare determinations. Our inabilitytopromptlyobtaincoverageand adequatereimbursementratesfromthird-partypayorsforany approved productsthatwedevelopcouldhave a materialadverseeffecton our operatingresults,our abilityto raisecapital neededto commercializeproductsand our overallfinancialcondition.

Product liabilitylawsuitsagainstus could cause us to incur substantialliabilitiesand to limit commercializationof any productsthatwe maydevelop.

Wefaceaninherentriskofproductliabilityexposurerelatedtothetestingof our productcandidatesin humanclinicaltrialsand willfacean even greaterriskifwe commercializeany productsthatwe maydevelop.If wecannotsuccessfullydefendourselvesagainstany claimsthatour productcandidatesor productscaused injuries,wewillincursubstantialliabilities.Regardlessof meritor eventualoutcome,liabilityclaimsmayresult in:

OurcurrentproductliabilityinsurancecoveragefortheUnitedStatesand certainotherjurisdictionsmaynot beadequatetocoverallliabilitiesthatwemayincur.Welikelywillneedtoincreaseourinsurancecoverageas we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverageisincreasinglyexpensive.Wemaynotbeableto maintaininsurancecoverageata reasonablecostor in anamountadequatetosatisfyanyliabilitythatmayarise.Asuccessfulproductliabilityclaimor seriesof claims broughtagainstus coulddecreaseour cashand adverselyaffectour businessand financialcondition.

Our futuresuccessdepends on our abilityto retainkey employeesand to attract,retainand motivate qualified ~~personnel.~~personneland manage our human capital.

Ourabilitytocompetein thehighlycompetitivebiotechnologyand pharmaceuticalindustriesdependsupon ourabilityto attract,motivateand retainhighlyqualifiedmanagerial,scientificand medicalpersonnel.We are highlydependentonthedevelopmentandmanagementexpertiseofKrisVaddi,Ph.D.,ourfounderandChief ExecutiveOfficer,aswellastheotherprincipalmembersof our management,scientificand clinicalteam.We currentlydo not maintainkey personinsuranceon theseindividuals.Although we have entered into employment agreementswith our executiveofficers,eachof themmayterminatetheiremploymentwith us atany time.

Ourindustryhasexperiencedahighrateofturnoverinrecentyears.Our abilityto competein thehighly competitivepharmaceuticalsindustrydependsupon our abilityto attract,retainand motivatehighlyskilledand experiencedpersonnelwithscientific,clinical,regulatory,manufacturingandmanagementskillsand experience. We conductour operationsin thegreaterDelawarearea,a regionthatishometo otherpharmaceuticalcompanies aswellasmanyacademicandresearchinstitutions,resultingin fiercecompetitionforqualifiedpersonnel.We maynotbeabletoattractorretainqualifiedpersonnelinthefuturedueto theintensecompetitionfora limited numberofqualifiedpersonnelamongpharmaceuticalcompanies.Many of theotherpharmaceuticalcompanies againstwhichwecompetehavegreaterfinancialandotherresources,differentriskprofilesandalongerhistory intheindustrythanwe do. Our competitorsmayprovidehighercompensation,morediverseopportunitiesand/or betteropportunitiesforcareeradvancement.Anyorallofthesecompetingfactorsmaylimitourabilityto continuetoattractand retainhigh qualitypersonnel,which couldnegativelyaffectour ability ~~to continue to attract and retain high quality personnel, which could negatively affect our ability~~ to successfully developandcommercializeourproductcandidatesand to grow our businessand operationsas currently contemplated.

We expectto expand our developmentand regulatorycapabilitiesand potentiallyimplementsales, marketingand distributioncapabilities,and as a result,we mayencounterdifficultiesin managing our growth, which could disruptour operations.

Asof ~~September~~June 30, ~~2020,~~ 2021,wehad 55100 full-timeemployees.Weexpectsignificantgrowthinthenumberof our employeesand thescopeof our operations,particularlyin theareasof clinicaldevelopment,clinical operations,manufacturing,regulatoryaffairsand, ifany of our product candidatesreceivesmarketingapproval, sales,marketingand distribution.To manageour anticipatedfuturegrowth, we mustcontinueto implementand improveourmanagerial,operationaland financialsystems,expand our facilitiesand continueto recruitand train additionalqualifiedpersonnel.Duetoour limitedfinancialresourcesand thelimitedexperienceof our managementteaminmanagingacompanywithsuchanticipatedgrowthandwithdevelopingsales,marketing anddistributioninfrastructure,wemaynotbeabletoeffectivelymanagetheexpansionofouroperationsor recruitand trainadditionalqualifiedpersonnel.The expansionof our operations ~~or recruit and train additional qualified personnel. The expansion of our operations~~ mayleadto significantcosts and maydivertour managementand businessdevelopmentresources.

Further,wecurrentlyrely,andfortheforeseeablefuturewillcontinueto rely,in substantialparton certain third-partycontractorganizations,advisorsand consultantsto providecertainservices,includingassuming substantialresponsibilitiesfortheconductofourclinicaltrialsandthemanufactureofPRT543,PRT811and PRT1419, oranyfutureproductcandidates.Wecannotassureyouthattheservicesof such third-partycontract organizations,advisorsandconsultantswillcontinuetobeavailabletousonatimelybasiswhen needed,or that wecanfindqualifiedreplacements.Inaddition,ifweareunabletoeffectivelymanageouroutsourcedactivities orifthequalityoraccuracyoftheservicesprovidedbyourvendorsorconsultantsiscompromisedforany reason,ourclinicaltrialsmaybeextended,delayedorterminated,andwemaynotbe ableto obtainmarketing approvalofPRT543, PRT811, PRT1419 or any futureproductcandidatesor otherwiseadvanceour business.We cannotassureyouthatwewillbeabletoproperlymanageour existingvendorsor consultantsor findother competentoutsidevendorsand consultantson economicallyreasonableterms,or atall.

Ifwearenotabletoeffectivelymanagegrowthandexpandourorganization,we maynot be ableto successfullyimplementthetasksnecessarytofurtherdevelopandcommercializePRT543, PRT811 orPRT1419, ourotherpipelineproductcandidatesor any futureproductcandidatesand, accordingly,maynot achieveour research,developmentand commercializationgoals.

Our employees,clinicaltrialinvestigators,CROs,CMOs, consultants,vendorsand any potential commercialpartnersmayengage in misconductor otherimproperactivities,includingnon-compliance with regulatorystandardsand requirementsand insidertrading.

Weareexposedtotheriskoffraudorothermisconductbyouremployees,clinicaltrialinvestigators, CROs,CMOs,consultants,vendorsandanypotentialcommercialpartners.Misconductbythesepartiescould includeintentional,recklessand/ornegligentconductordisclosureofunauthorizedactivitiestousthatviolates: (i)FDA regulationsorthoseofcomparableforeignregulatoryauthorities,includingthoselaws thatrequirethe reportingoftrue,completeandaccurateinformation,(ii)manufacturingstandards,(iii)federalandstatehealth anddataprivacy,security,fraudand abuse,governmentpricereporting,transparencyreportingrequirements,and other healthcare laws and regulations in the United States and abroad, (iv) sexual harassment and other workplacemisconduct,or (v)laws thatrequirethetrue,completeand accuratereportingof financialinformation ordata.Suchmisconductcouldalsoinvolvetheimproperuse of informationobtainedin thecourseof clinical trials,which couldresultin regulatorysanctionsand causeseriousharmto our reputation.

Wehaveadoptedacodeofconductapplicableto allof our employees,as wellas a disclosureprogramand otherapplicablepoliciesandprocedures,butitisnotalwayspossibletoidentifyanddeteremployeemisconduct, andtheprecautionswetaketodetectandpreventthisactivitymaynotbeeffectivein controllingunknown or unmanagedrisksorlossesorinprotectingus fromgovernmentalinvestigationsor otheractionsor lawsuits stemmingfromafailuretocomplywiththeselawsorregulations.Ifanysuchactionsareinstitutedagainstus, andwearenotsuccessfulindefendingourselvesorassertingourrights,thoseactionscouldhavea significant impactonourbusiness,includingtheimpositionof significantcivil,criminaland administrativepenalties, damages,fines,disgorgement,imprisonment,exclusionfromgovernmentfundedhealthcareprograms,suchas Medicare,Medicaidand otherfederalhealthcareprograms,contractualdamages,reputationalharm, diminished profitsandfutureearnings,additionalintegrityreportingand oversightobligations,and thecurtailmentor restructuringofouroperations,anyofwhichcouldadverselyaffectourabilityto operateour businessand our resultsof operations.

Our internalinformationtechnologysystems,or thoseof our third-partyCROs,CMOs, or othervendors, contractorsor consultants,mayfailor suffersecuritybreaches,cyber-attacks,lossor leakageof data and otherdisruptions,which could resultin a materialdisruptionof our developmentprograms,compromise sensitiveinformationrelatedto our businessor preventus fromaccessingcriticalinformation,potentially exposingus to liabilityor otherwiseadverselyaffectingour business.

Weareincreasinglydependentupon informationtechnologysystems,infrastructureand datato operateour business.Intheordinarycourseofbusiness,wecollect,storeandtransmitconfidentialinformation ~~(including~~(including butnotlimitedto intellectualproperty,proprietarybusinessinformationand personalinformation).Itiscritical thatwedosoinasecuremannertomaintaintheconfidentialityandintegrityofsuchconfidentialinformation. Wealsohaveoutsourcedelementsofouroperationstothirdparties,andasaresultwemanageanumberof third-partyCROs, CMOs,vendors,andothercontractorsandconsultantswho have accessto our confidential information.Ourinternalinformationtechnologysystemsandinfrastructurearealsovulnerableto damagefrom naturaldisasters,terrorism,war,telecommunicationandelectricalfailures.Systemfailuresor outages,including any potentialdisruptionsdue to significantlyincreasedglobaldemandon certaincloud-basedsystemsduring the COVID-19 ~~situation,~~ pandemic,couldcompromiseour abilityto performthesefunctionsin a timelymanner,which could harmourabilitytoconductbusinessordelayourfinancialreporting.Such failurescouldmateriallyadversely affectour operatingresultsand financialcondition.

Despite the implementation of security measures, given their size and complexity and the increasing amountsofconfidentialinformationthattheymaintain,ourinternalinformationtechnologysystemsand thoseof ourthird-partyCROs, CMOs,vendorsandothercontractorsandconsultantsarepotentiallyvulnerableto breakdownor otherdamageor interruptionfromserviceinterruptions,systemmalfunction,accidentsby our employeesorthirdpartyserviceproviders,naturaldisasters,terrorism,war and telecommunicationand electrical failures,aswellas securitybreachesfrominadvertentor intentionalactionsby our employees,third-partyCROs, CMOs, vendors, ~~and other~~ contractors, ~~and~~ consultants, are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, accidents by our employees or third party service providers, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our employees, third-party CROs, CMOs, vendors, contractors, consultants, businesspartnersand/orotherthirdparties,or from cyber-attacksby maliciousthirdparties ~~(including~~ (includingthedeploymentof harmfulmalware,ransomware,denial-of-serviceattacks, socialengineeringand othermeansto affectservicereliabilityand threatentheconfidentiality,integrityand availabilityofinformation),whichmaycompromiseoursysteminfrastructure,orthatofour third-partyCROs, CMOs,vendorsandothercontractorsandconsultants,or leadto dataleakage.The riskof a securitybreachor disruption,particularlythroughcyber-attacksor cyberintrusion,includingby computerhackers,foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attemptedattacksandintrusionsfromaroundtheworldhaveincreased.TheCOVID-19 pandemicisgenerally increasingtheattacksurfaceavailableforexploitation,as morecompaniesand individualswork onlineand work remotely,andassuch,theriskofacybersecurityincidentpotentiallyoccurring,and our investmentin risk mitigationsagainstsuchanincident,isincreasing.Forexample,therehasbeenanincreasein phishingand spam emailsaswellassocialengineeringattemptsfrom ~~“hackers”~~ “hackers”hopingtousetherecentCOVID-19 pandemicto theiradvantage.Wemaynotbeabletoanticipatealltypesofsecuritythreats,normaywebeableto implement preventivemeasureseffectiveagainstallsuchsecuritythreats.Thetechniquesused by cybercriminalschange frequently,maynotberecognizeduntillaunchedand can originatefroma wide varietyof sources,including outsidegroupssuchasexternalserviceproviders,organizedcrimeaffiliates,terroristorganizationsorhostile foreigngovernmentsoragencies.Totheextentthatanydisruptionorsecuritybreachweretoresultinalossof, ordamageto,ourdataorapplications,orthoseofourthird-partyCROs,CMOs,vendorsandothercontractors andconsultants,orinappropriatedisclosureofconfidentialorproprietaryinformation,wecouldincurliability andreputationaldamageandthefurtherdevelopmentandcommercializationofPRT543, PRT811, PRT1419 or anyfutureproductcandidatescouldbe delayed.Any breach,lossor compromiseof clinicaltrialparticipant personaldatamayalsosubjectustocivilfinesandpenalties,includingunderHIPAA,andotherrelevantstate andfederalprivacylawsintheUnitedStates.Thecostsrelatedtosignificantsecuritybreachesordisruptions couldbe materialand exceedthelimitsof thecybersecurityinsurancewe maintainagainstsuch risks.If the informationtechnologysystemsofourthird-partyCROs, CMOs,vendorsandothercontractorsand consultants becomesubjectto disruptionsor securitybreaches,we mayhave insufficientrecourseagainstsuch thirdparties andwemayhavetoexpendsignificantresourcestomitigatetheimpactofsuchanevent,andtodevelopand implementprotectionsto preventfutureeventsof thisnaturefromoccurring.

While we have not experienced any such system failure, accident or security breach to date, and believe that our data protection efforts and our investment in information technology reduce the likelihood of such incidents in the future, we cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems, or those of our third-party CROs, CMOs, vendors and other contractors and consultants, or othercyberincidentsthatcouldhave a materialadverse effectuponourreputation,business,operationsorfinancialcondition.Forexample,ifsuchaneventwereto occurandcauseinterruptionsinouroperations,orthoseofourthird-partyCROs, CMOs,vendorsandother contractorsandconsultants,itcouldresultin a materialdisruptionof our programsand thedevelopmentof our productcandidatescouldbedelayed.Inaddition,thelossofclinicaltrialdataforPRT543, PRT811, PRT1419 or anyotherproductcandidatescouldresultindelaysinourmarketingapprovaleffortsandsignificantlyincrease ourcoststorecoverorreproducethedata.Furthermore,significantdisruptionsofour internalinformation technologysystemsorthoseofourthird-partyCROs, CMOs,vendorsandother

contractorsand consultants,or securitybreachescouldresultintheloss,misappropriationand/orunauthorizedaccess,use,ordisclosureof,or thepreventionofaccessto,confidentialinformation ~~(including~~ (includingtradesecretsor otherintellectualproperty, proprietarybusinessinformationand

personalinformation),which couldresultin financial,legal,businessand reputationalharmto us. For example,any such eventthatleadsto unauthorizedaccess,use, or disclosureof personalinformation,includingpersonalinformationregardingourclinicaltrialsubjectsor employees,could harmourreputationdirectly,compelustocomplywithfederaland/orstatebreachnotificationlaws and foreign lawequivalents,subjectusto mandatorycorrectiveaction,and otherwisesubjectus to liabilityunderlaws and regulationsthatprotecttheprivacyandsecurityofpersonalinformation,whichcouldresultinsignificantlegal and financialexposureand reputationaldamagesthatcouldpotentiallyhave an adverseeffecton our business.

Failureto complywith healthand data protectionlaws and regulationscould leadto government enforcementactions ~~(which~~(which could includecivilor criminalpenalties),privatelitigationand/or adverse publicityand could negativelyaffectour operatingresultsand business.

Weandanypotentialcollaboratorsmaybesubjecttofederal,stateand foreigndataprotectionlaws and regulations ~~(i.e.~~(i.e.,lawsandregulationsthataddressprivacyanddatasecurity).In theUnitedStates,numerous federalandstatelaws and regulations, ~~that address~~ includingfederalhealthinformationprivacy ~~and data security). In the United States, numerous federal and state laws and regulations, including federal health information privacy~~ laws, statedatabreach notificationlaws,statehealthinformationprivacylaws and federaland stateconsumerprotectionlaws (e.g., Section5oftheFederalTradeCommissionAct),thatgovernthecollection,use,disclosureandprotectionof health-relatedandotherpersonalinformationcouldapplytoouroperationsortheoperationsofour collaborators. In addition,we mayobtainhealthinformationfromthirdparties ~~(including~~ (includingresearchinstitutionsfromwhich we obtainclinicaltrialdata)thataresubjecttoprivacyandsecurityrequirementsunderHIPAA, asamendedby HITECH. Dependingonthefactsandcircumstances,wecouldbesubjecttocriminalpenaltiesifweknowingly obtain,use,or discloseindividuallyidentifiablehealthinformationmaintainedby a HIPAA-covered entityin a mannerthatisnot authorizedor permittedby HIPAA.

Internationaldataprotectionlaws,includingRegulation2016/679,knownastheGeneralDataProtection Regulation,orGDPR,mayalsoapplytohealth-relatedandotherpersonalinformationobtainedoutsideofthe UnitedStates.TheGDPR wentintoeffectonMay25,2018.TheGDPR introducednew dataprotection requirementsintheEU, aswellaspotentialfinesfornoncompliantcompaniesofup to thegreaterof €20 million or4%ofannualglobalrevenue.Theregulationimposesnumerousnewrequirementsforthecollection,use and disclosureofpersonalinformation,includingmorestringentrequirementsrelatingto consentand theinformation thatmustbesharedwithdatasubjectsabouthowtheirpersonalinformationisused, theobligationto notify regulatorsandaffectedindividualsof personaldatabreaches,extensivenew internalprivacygovernance obligationsandobligationstohonorexpandedrightsofindividualsin relationto theirpersonalinformation ~~(e.g.~~(e.g., therighttoaccess,correctanddeletetheirdata).Inaddition,theGDPR includesrestrictionsoncross-borderdata transfer.TheGDPR willincreaseourresponsibilityandliabilityin relationto personaldatathatwe process,and wemayberequiredtoputinplaceadditionalmechanismstoensurecompliancewiththenewEU dataprotection rules. In addition, the GDPR prohibits the transfer of personal data to countries outside of the European EconomicArea,orEEA, suchastheUnitedStates,whicharenotconsideredbytheEuropeanCommissionto provideanadequatelevelofdataprotection.Switzerlandhasadoptedsimilarrestrictions.Althoughthereare legalmechanismstoallowforthetransferofpersonaldatafromtheEEA andSwitzerlandtotheUnitedStates, theyaresubjectto pendinglegalchallengesthat,ifsuccessful,couldinvalidatethesemechanisms,restrictour abilitytoprocesspersonaldataofEuropeansoutsideofEuropeandadverselyimpactourbusiness.For example, inJuly2020,theEuropeanCourtsofJusticeinvalidatedtheEU-U.S.PrivacyShield,whichenabledthetransfer ofpersonaldatafromEUtotheU.S.forcompaniesthathadself-certifiedtothePrivacyShield.OnAugust10, 2020,theU.S. DepartmentofCommerceandtheEuropeanCommissionannouncednewdiscussionstoevaluate thepotentialforanenhancedEU-U.S.PrivacyShieldframeworktocomplywiththeJuly16judgmentofthe CourtofJustice.WhiletheCourtofJusticeupheldtheuseofotherdatatransfermechanisms,suchasthe BindingCorporateRules,thedecisionhas ledto someuncertaintyregardingtheuse of such mechanismsfordata transferstotheUnitedStates,andthecourtmadeclearthatrelianceonBinding CorporateRules alonemaynot necessarilybesufficientinallcircumstances.Useofthedatatransfermechanismsmustnowbe assessedon a case-by-casebasistakingintoaccountthelegalregimeapplicablein thedestinationcountry,in particular applicablesurveillancelawsandrightsofindividuals.The EuropeanData ProtectionBoard issuedadditional guidanceregardingtheCourtofJustice’sdecisiononNovember11,2020 which imposeshigherburdenson the useof datatransfermechanisms,such as the ~~United States, which are not considered by the European Commission~~Binding CorporateRules, forcross-borderdatatransfers.To comply withthisguidance,wemayneed to ~~provide an adequate level~~ implementadditionalsafeguardsto furtherenhancethesecurityof data ~~protection. Switzerland has adopted similar restrictions. Although there are legal mechanisms~~transferredout of theEuropeanEconomicArea, which couldincreaseour compliancecosts,exposeus to ~~allow for the transfer of personal data from the EEA~~ further regulatoryscrutinyand ~~Switzerland to the United States, they are subject to pending legal challenges that, if successful, could invalidate these mechanisms, restrict~~ liability,andadverselyaffectour ~~ability to process personal data of Europeans outside of Europe and adversely impact our~~ business. For example, in July 2020, the European Courts of Justice invalidated the EU-U.S. Privacy Shield, which enabled the transfer of personal data from EU to the U.S. for companies that had self-certified to the Privacy Shield. To theextentthatwe were to relyon Privacy Shield,wewillnotbeabletodosointhefuture,which couldincreaseour costsand our abilityto efficiently processpersonaldatafromtheEU.

Further,BrexithascreateduncertaintywithregardtodataprotectionregulationintheUnitedKingdom. In particular,whiletheDataProtectionActof2018,that ~~“implements”~~ “implements”andcomplementstheGDPRachievedRoyal Assenton May 23, 2018 and isnow effectivein theUnitedKingdom, itisstillunclearwhethertransferof data fromtheEEAtotheUnitedKingdomwillremainlawfulunderGDPR.Duringtheperiodof ~~“transition” (i.e.~~“transition”(i.e., untilDecember31,2020),EUlawwillcontinuetoapplyintheUnitedKingdom,includingtheGDPR,after whichtheGDPR willbeconvertedintoUnitedKingdomlaw. Beginningin 2021, theUnitedKingdom ~~will be~~became a “thirdcountry”undertheGDPR.Wemay,however,incurliabilities,expenses,costs,andotheroperational lossesunderGDPR andapplicableEU MemberStatesandtheUnitedKingdom privacylaws in connectionwith any measureswe taketo complywith them.

Inaddition,thestateofCaliforniarecentlyenactedtheCaliforniaConsumerPrivacyAct,orCCPA, which createsnewindividualprivacyrightsforCaliforniaconsumers ~~(as~~ (asdefinedintheCCPA)andplacesincreased privacyandsecurityobligationsonentitieshandlingcertainpersonaldataofconsumersorhouseholds.The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection,useandsharingpractices,providesuchconsumersnewways to opt-outof certainsalesor transfersof personalinformation,andprovideconsumerswithadditionalcausesofaction.TheCCPAwentintoeffecton January1,2020andbecameenforceableby theCaliforniaAttorneyGeneralon July1, 2020, alongwith related regulationswhichcameintoforceonAugust14,2020andmayimpactourbusinessactivitiesandexemplifies thevulnerabilityofourbusinesstotheevolvingregulatoryenvironmentrelatedtopersonaldataand ~~provide consumers with additional causes of action.~~protected healthinformation.Additionally,althoughnot effectiveuntilJanuary1, 2023, theCaliforniaPrivacy Rights Act (the“CPRA”), whichexpandsupontheCCPA, waspassedintherecentelectionon November3, 2020. The CCPA ~~went into effect on January 1, 2020~~ gives(andtheCPRA willgive)Californiaresidentsexpandedprivacyrights,includingtherightto request correction,access,anddeletionoftheirpersonalinformation,therightto opt out of certainpersonalinformation sharing,and therightto receivedetailedinformationabouthow theirpersonalinformationis processed. The CCPA andCPRA provideforunlimitedcivilpenaltiesforviolations,aswellasaprivaterightofactionfordata breachesthatisexpectedtoincreasedatabreachlitigation.TheCCPA andCPRA may ~~impact~~increaseourcompliance costsandpotentialliability,particularlyintheeventofadatabreach.Additionally,theCCPA hasprompteda numberofproposalsintheU.S. fornewfederalandstate-levelprivacylegislationthat,ifpassed,couldincrease our ~~business activities~~ potentialliability,increaseour compliancecosts,and ~~exemplifies the vulnerability of~~ adverselyaffectour ~~business to the evolving regulatory environment related to personal data and protected health information.~~business.

CompliancewithU.S.andinternationaldataprotectionlawsandregulationscouldrequireustotakeon moreonerousobligationsinour contracts,restrictour abilityto collect,use and disclosedata,or in somecases, impactourabilitytooperateincertainjurisdictions.FailuretocomplywithU.S. andinternationaldataprotection laws and regulationscould require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with U.S. and international data protection laws and regulations could resultin governmentenforcementactions ~~(which~~ (whichcouldincludecivil,criminal,and administrativepenalties),privatelitigationand/oradversepublicityand couldnegativelyaffectour operating resultsand business.Moreover,clinicaltrialsubjectsaboutwhom we or our potentialcollaboratorsobtain information,aswellastheproviderswhosharethisinformationwithus,maycontractuallylimitourabilityto useanddisclosetheinformation.Claimsthatwe have violatedindividuals’privacyrights,failedto complywith dataprotectionlaws,orbreachedourcontractualobligations,evenifwearenotfoundliable,couldbe expensive and timeconsumingto defendand couldresultin adversepublicitythatcouldharmour business.

We or the thirdpartiesupon whom we depend maybe adverselyaffectedby naturaldisastersand our businesscontinuityand disasterrecoveryplans maynot adequatelyprotectus froma seriousdisaster.

Ourcompanyislocatedin Delaware.Any unplannedevent,such as flood,fire,explosion,earthquake, extremeweathercondition,medicalepidemic,includingtheCOVID-19 pandemic,powershortage, telecommunicationfailureorothernaturalormanmadeaccidentsorincidentsthatresultinusbeingunableto fullyutilizeourfacilities,orthemanufacturingfacilitiesofourthird-partyCMOs, mayhave a materialand adverseeffecton our abilityto operateour business,particularlyon a dailybasis,and have significantnegative consequenceson our financialand operatingconditions.For example,our operationsareconcentratedprimarily ontheeastcoastoftheUnitedStates,andanyadverseweathereventor naturaldisaster,such as a hurricaneor heavysnowstorm,couldhaveamaterialadverseeffectonasubstantialportionofouroperations.Extreme weatherconditionsorothernaturaldisasterscouldfurtherdisruptour operations,and have a materialand adverse effectonourbusiness,financialcondition,resultsofoperationsandprospects.Ifa naturaldisaster,power outage orothereventoccurredthatpreventedusfromusingallorasignificantportionofourheadquarters,that damagedcriticalinfrastructure,such as our researchfacilitiesor themanufacturingfacilitiesof our third-party CMOs,orthatotherwisedisruptedoperations,itmay have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions. For example, our operations are concentrated primarily on the east coast of the United States, and any adverse weather event bedifficultor, natural disaster, such as a hurricane or heavy snowstorm, could have a material adverse effect on a substantial portion of our operations. Extreme weather conditions or other natural disasters could further disrupt our operations, and have a material and adverse effect on our business, financial condition, results of operations and prospects. If a natural disaster, power outage or other event occurred that prevented incertaincases,impossible,forus from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities or the manufacturing facilities of our third-party CMOs, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continueourbusinessforasubstantialperiodoftime.Thedisasterrecoveryandbusinesscontinuityplanswe have in placemayproveinadequatein theeventof a seriousdisasteror similarevent.We mayincur substantial expensesasaresultofthelimitednatureofourdisasterrecoveryandbusinesscontinuityplans,whichcould haveamaterialadverseeffectonourbusiness.Aspartof our riskmanagementpolicy,we maintaininsurance coverageatlevelsthatwebelieveareappropriateforourbusiness.However,intheeventofan accidentor incidentatthesefacilities,wecannotassureyouthattheamountsofinsurancewillbe sufficientto satisfyany damagesandlosses.Ifourfacilities,orthemanufacturingfacilitiesofourthird-partyCMOs,areunableto operatebecauseofanaccidentorincidentorforanyotherreason,evenforashortperiodoftime,anyorallof our ~~third-party CMOs, are unable to operate because of an accident or incident or for any other reason, even for~~ researchanddevelopmentprogramsmaybeharmed.Anybusinessinterruptioncouldhavea ~~short period of time, any or all of our research and development programs may be harmed. Any business interruption could have a~~ materialand adverseeffecton our business,financialcondition,resultsof operationsand prospects.

Changes in tax laws or regulationsthatare appliedadverselyto us mayhave a materialadverseeffecton our business,cash flow, financialconditionor resultsof operations.

New income,sales,use or othertaxlaws, statutes,rules,regulationsor ordinancescouldbe enactedatany time,which couldadverselyaffectour businessoperationsand financialperformance.Further,existingtax laws, statutes,rules,regulationsorordinancescould ~~be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could~~ be interpreted,changed,modifiedor appliedadverselyto us. For example,the ~~legislation~~ TaxCutsandJobsAct,enacted ~~in 2017, informally titled~~ manysignificantchangestothe ~~Tax Cuts~~ U.S.taxlaws.Futureguidance fromtheInternalRevenue Serviceand ~~Jobs Act, enacted many significant changes~~ othertaxauthoritieswith respectto the ~~U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the~~ Tax Cuts and Jobs Act mayaffect us,andcertainaspectsoftheTaxCuts and Jobs Act couldbe repealedor modifiedin futurelegislation.For example,theCARES ActmodifiedcertainprovisionsoftheTaxCutsandJobsAct.Inaddition,itisuncertainif andtowhatextentvariousstateswillconformtotheTaxCutsandJobsAct,theCARESAct,oranynewly enactedfederaltaxlegislation.Changesincorporatetaxrates,therealizationof netdeferredtaxassetsrelatingto ~~what extent various states will conform to~~ ouroperations,thetaxationofforeignearnings,andthedeductibilityofexpensesundertheTaxCutsandJobs Act,theCARES Actor ~~any newly enacted federal tax legislation. Changes in corporate tax rates,~~ futurereformlegislationcouldhaveamaterialimpactonthe ~~realization~~ valueof ~~net~~ ourdeferredtax assets, ~~relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Cuts and Jobs Act, the CARES Act or future reform legislation~~ could ~~have a material impact on the value of our deferred tax assets, could~~ resultin significantone-timecharges,and couldincreaseour futureU.S.taxexpense.

Our abilityto use our net operatinglosscarryforwardsand certainothertax attributesmaybe limited.

We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability. Unused losses incurred in taxable years beginning on or prior to December 31, 2017, will carry forward to offset future taxable income, if any, until such unused losses expire. Under the Tax Cuts and Jobs Act, as modified by the CARES Act, unused U.S. federal net operating losses generated in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely but the deductibility of such federal net operating losses (particularly those generated in taxable years beginning after December 31, 2020) in taxable years beginning after December 31, 2020, is limited to 80% of current year taxable income. It is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act or the CARES Act. In addition, both our current and our future unused losses and other tax attributes may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code) if we undergo, or have undergone, an “ownership change,” generally defined

as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders over a three-year period. We have not completed a Section 382 study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since our formation due to the complexity and cost associated with such a study and the fact that there may be additional ownership changes in the future. As a result, our net operating loss carryforwards generated in taxable years beginning on or before December 31, 2017, ~~(particularly those generated in taxable years beginning after December 31, 2020),~~ may expire prior to being used, and the deductibility of our net operating loss carryforwards generated in taxable years beginning after December 31, 2017 in taxable years beginning after December 31, 2020, may be limited, and, if we undergo an ownership change (or if we previously underwent such an ownership change), our ability to use all of our pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset our post-change income or taxes may be limited. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of net operating losses is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, even if we attain profitability, we may be unable to use all or a material portion of our net operating losses and other tax attributes, which could adversely affect our future cash flows.

We mayengage in strategictransactionsthatcould impactour liquidity,increaseour expensesand presentsignificantdistractionsto our management.

Fromtimeto time,we mayconsiderstrategictransactions,such as acquisitionsof companies,businessesor assetsandout-licensingorin-licensingof products,productcandidatesor technologies.Additionalpotential transactionsthatwe mayconsiderincludea varietyof differentbusinessarrangements,including spin-offs, strategicpartnerships,jointventures,restructurings,divestitures,businesscombinationsand investments.Any suchtransactionmayrequireustoincurnon-recurringorothercharges,mayincreaseourneartermorlong-term expendituresandmayposesignificantintegrationchallengesordisruptourmanagementorbusiness,which couldadverselyaffectour operationsand financialresults.For example,thesetransactionsmayentailnumerous operationaland financialrisks,including:

~~disruption of our business and diversion of our management’s time and attention in order to develop acquired products, product candidates or technologies;~~

Our portfolioof investmentsmaybe subjectto market,interestand creditriskthatmayreduceitsvalue.

Thevalueof our investmentsmaydeclinedue to increasesin interestrates,downgradesof thebonds and othersecuritiesincludedin our commercialmoneymarketaccountportfolioand instabilityin theglobalfinancial marketsthatreducestheliquidityofsecuritiesincludedinourportfolio.Inaddition,theCOVID-19pandemic hasandmaycontinuetoadverselyaffectthefinancialmarketsin someor allcountriesworldwide.Each of these eventsmaycauseus to recordchargesto reducethecarryingvalueof our investmentportfolioor sellinvestments forlessthanouracquisitioncost.Althoughweattempttomitigatetheserisksthroughdiversificationof our investmentsandcontinuousmonitoringof our portfolio’soverallriskprofile,thevalueof our investmentsmay neverthelessdecline.

Ifwe are unable to obtainand maintainsufficientpatentprotectionforour productcandidates,or ifthe scopeof the patentprotectionisnot sufficientlybroad, thirdparties,includingour competitors,could developand commercializeproductssimilaror identicalto ours, and our abilityto commercializeour productcandidatessuccessfullymaybe adverselyaffected.

Oursuccessdependsinlargepartonour abilityto protectour proprietarytechnologiesthatwe believeare importanttoourbusiness,includingpursuing,obtainingandmaintainingpatentprotectionintheUnitedStates and other countries intended to cover the compositions of matter ofourproduct candidates, for example, PRT543, PRT811 and PRT1419, their methods of use, related technologies and other inventions that are importanttoourbusiness.Inadditiontopatentprotection,wealsorelyon tradesecretsto protectaspectsof our businessthatarenotamenableto,orthatwedonotconsiderappropriatefor,patentprotection.Ifwe do not adequatelypursue,obtain,maintain,protectorenforceour intellectualproperty,thirdparties,includingour competitors,maybeabletoerodeor negateany competitiveadvantagewe mayhave, which couldharmour businessand abilityto achieveprofitability.

Toprotectourproprietaryposition,wehavecurrentlyfiledpatentapplicationsintheUnitedStatesrelated toourproductcandidatesthatweconsiderimportanttoourbusiness,includingpatentapplicationsrelatingto compositionsofmattercoveringourcompounds,theprocessesformanufacturingsuch compoundsand use of suchcompoundsintherapies.Wehavealsofiledpatentapplicationsabroadrelatingto ~~PRT543.~~ PRT543andPRT811.

Thepatentapplicationand approvalprocessisexpensive,time-consumingand complex.We maynot be ableto file,prosecuteandmaintainallnecessaryordesirablepatentapplicationsatareasonablecostor in a timely manneror in alljurisdictions.We alsocannotpredictwhetherthepatentapplicationswe arecurrentlypursuing willissueaspatentsinanyparticularjurisdictions.Itisalsopossiblethatwewillfailtoidentifypatentable aspectsofourresearchanddevelopmentoutputbeforeitistoo lateto obtainpatentprotection.Moreover, dependingonthetermsofanyfuturelicenseagreementstowhichwemaybecomeaparty,we may ~~become a party, we may~~ not have the righttocontrolthepreparation,filing,and prosecutionof patentapplications,or to maintainthepatents,covering technologylicensedfromthirdparties.Therefore,thesepatentsandpatentapplicationsmaynotbeprosecuted and enforcedin a mannerconsistentwith thebestinterestsof our business.

Furthermore,thepatentpositionof biotechnologyand pharmaceuticalcompaniesgenerallyishighly uncertain.Noconsistentpolicyregardingthebreadthofclaimsallowedin biotechnologyand pharmaceutical patentshas emergedto datein theUnitedStatesor in manyforeignjurisdictions.The standardsappliedby the UnitedStatesPatentandTrademarkOffice,ortheUSPTO, andforeignpatentofficesingrantingpatentsarenot alwaysapplieduniformlyorpredictably.Inaddition,thedeterminationofpatentrightswithrespectto biological andpharmaceuticalproductscommonlyinvolvescomplexlegalandfactualquestions,which have in recentyears beenthesubjectofmuchlitigation.Asaresult,theissuance,scope,validity,enforceabilityand commercialvalue ofourpatentrightsarehighlyuncertain.Thus,wecannotofferany assurancesaboutwhich, ifany, patentswill issue,thebreadthofanysuchpatents,whetheranyissuedpatentswillbefoundinvalidand unenforceableor will bethreatenedbythirdpartiesor whetherany issuedpatentswilleffectivelypreventothersfromcommercializing competingtechnologiesandproductcandidates.Whilewehavefiledpatentapplicationscoveringaspectsof our currentproductcandidates,wecurrentlyhaveonlyoneissuedU.S. patentcoveringPRT543 thatisexpectedto expirenoearlierthanAugust9,2038,andoneissuedU.S. patentcoveringPRT811 thatisexpectedtoexpireno earlierthan ~~August 9, 2038, and one issued U.S. patent covering PRT811 that is expected to expire no earlier than~~ March14, 2039. We do not yethave issuedpatentson allof our productcandidates.

Ourpendingpatentapplicationscannotbeenforcedagainstthirdpartiespracticingthetechnologyclaimed in such applicationsunlessand untilatleastone patentissuesfromsuch applications.Assuming the other requirementsforpatentabilityaremet,currently,thefirsttofileapatentapplicationisgenerallyentitledto the patent.However,priortoMarch16,2013,intheUnitedStates,thefirstto ~~March 16, 2013,~~ inventwas entitledto thepatent. Publicationsof discoveriesin the ~~United States,~~ scientificliteratureoftenlagbehindthe ~~first to invent was entitled to the patent. Publications of~~ actualdiscoveries, ~~in the scientific literature often lag behind the actual discoveries,~~ and patent applicationsintheUnitedStatesandotherjurisdictionsaretypicallynot publisheduntil18 monthsafterfiling,or insomecasesnotatall.SincepatentapplicationsintheUnitedStatesandmostothercountriesareconfidential foraperiodoftimeafterfiling,andsomeremainsountilissued,wecannotbecertainthatwewerethefirstto fileorinvent ~~(prior~~ (priortoMarch16,2013)anypatentapplicationrelatedtoourproductcandidates.In addition,we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentableaspectsofourresearchanddevelopmentoutput,suchasouremployees,collaborators,CROs, CMOs, hospitals,independenttreatmentcenters,consultants,independentcontractors,suppliers,advisorsand otherthird parties;however,anyofthesepartiesmaybreachtheagreementsand disclosesuch outputbeforea patent applicationisfiled,therebyjeopardizingour abilityto seekpatentprotection.Furthermore,ifthirdpartieshave filedpatentapplicationsrelatedto our productcandidatesor technology,we maynot be ableto obtainour own patentrightsto thoseproductcandidatesor technology.

Moreover,becausetheissuanceofapatentisnot conclusiveas to itsinventorship,scope,validityor enforceability,our patentsor pendingpatentapplicationsmaybe challengedin thecourtsor patentofficesin the UnitedStatesand abroad.For example,we maybe subjectto a third-partypre-issuancesubmissionof priorartto theUSPTO or becomeinvolvedin post-grantreviewprocedures,oppositions,derivations,revocation, reexaminations,interpartesrevieworinterferenceproceedings,intheUnitedStatesorelsewhere,challenging ourpatentrightsorthepatentrightsofothers.Anadversedeterminationin any such submission,proceedingor litigationcouldreducethescopeof, or invalidate,our patentrights,allowthirdpartiesto commercializeour technologyorproductsandcompetedirectlywithus,withoutpaymenttous,or resultin our inabilityto manufactureorcommercializeproductswithout

infringingthird-partyrights.Moreover,we mayhave to participateininterferenceproceedingsdeclaredbytheUSPTOtodeterminepriorityofinventionorinpost-grant challengeproceedings,suchasoppositionsina foreignpatentoffice,thatchallengepriorityof invention ~~or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge priority of invention~~ or other featuresofpatentability.Suchchallengesmayresultinlossof exclusivityor in our patentclaimsbeingnarrowed, invalidatedor heldunenforceable,in whole or in part,which couldlimitour abilityto stopothers from using or commercializingsimilaroridenticaltechnologyandproductsorlimitthedurationofthepatentprotectionof our technologyandproducts.Suchchallengesalsomayresultinsubstantialcostandrequiresignificanttimefrom ourscientistsandmanagement,eveniftheeventualoutcomeisfavorabletous.Anyoftheforegoingcouldhave a materialadverseeffecton our business,financialcondition,resultsof operations,and prospects.

Inaddition,giventheamountof timerequiredforthedevelopment,testingand regulatoryreviewof new productcandidates,ourpatentsprotectingsuchproductcandidatesmightexpirebeforeor shortlyaftersuch productcandidates ~~might expire before or shortly after such product candidates~~ arecommercialized.Asaresult,our intellectualpropertymaynot provideus with sufficient rightstoexcludeothersfromcommercializingproductssimilaroridenticaltoours.Moreover,someofour patentsandpatentapplicationsmayinthefuturebeco-ownedwiththirdparties.Ifweareunableto obtainan exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitorscouldmarketcompetingproductsandtechnology.Inaddition,wemayneedthecooperationof any suchco-ownersofourpatentsinordertoenforcesuchpatentsagainstthirdparties,and such cooperationmaynot beprovidedtous.Anyoftheforegoingcouldhaveamaterialadverseeffectonourcompetitiveposition, business,financialconditions,resultsof operations,and prospects.

Ourpendingandfuturepatentapplicationsmaynotresultinpatentsbeingissuedthatprotectour product candidates,in whole or in part,or which effectivelypreventothers from commercializingcompetitiveproducts. Changesineitherthepatentlaws or interpretationof thepatentlaws in theUnitedStatesand othercountriesmay diminishthevalueofourpatentsornarrowthescopeof our patentprotection.In addition,thelaws of foreign countriesmaynotprotectourrightstothesameextentorinthesamemannerasthelawsoftheUnitedStates. Forexample,Europeanpatentlawrestrictsthepatentabilityofmethodsoftreatmentofthehumanbodymore thanUnitedStateslaw does.

Evenifourpatentapplicationsissueas patents,theymaynot issuein a formthatwillprovideus with any meaningfulprotection,preventcompetitorsor otherthirdpartiesfromcompetingwith us or otherwiseprovideus withanycompetitiveadvantage.Moreover,thecoverageclaimedin a patentapplicationcan be significantly reducedbeforethepatentisissuedanditsscopecanbereinterpretedafterissuance.Consequently,wedonot knowwhetheranyofourproductcandidateswillbeprotectableorremainprotectedbyvalidandenforceable patents.Our competitorsand otherthirdpartiesmaybe ableto circumventour patentsby developingsimilaror alternativetechnologiesor productsin a non-infringingmanner.Our competitorsand otherthirdpartiesmayalso seekapprovalto markettheirown productssimilarto or otherwisecompetitivewith our products.Alternatively, ourcompetitorsorotherthirdpartiesmayseektomarketgenericversionsor “follow-on”versionsof any approvedproductsbysubmittingabbreviatednewdrugapplications,orANDAs, ornewdrug applications ~~or ANDAs, or new drug applications~~ under Section505(b)(2)oftheFDCA, respectively,totheFDA duringwhichtheymayclaimthatpatentsownedbyus areinvalid,unenforceableornotinfringed.Inthesecircumstances,we

mayneedtodefendorassertourpatents, orboth,includingbyfilinglawsuitsallegingpatentinfringement.Inanyof thesetypesof proceedings,a courtor ~~not infringed. In these circumstances, we~~ otheragencywith jurisdictionmay ~~need to defend or assert~~ findour patents ~~or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents~~ invalidor unenforceable,or thatour competitorsare competinginanon-infringingmanner.Thus,evenifwehavevalidandenforceablepatents,thesepatentsstill maynotprovideprotectionagainstcompetingproductsor processessufficientto achieveour businessobjectives. Anyoftheforegoingcouldhaveamaterialadverseeffecton our competitiveposition,business,financial conditions,resultsof operations,and prospects.

Furthermore,futurepatentsmaybe subjectto a reservationof rightsby one or morethirdparties.For example,totheextenttheresearchresultingin futurepatentrightsor technologiesisfundedin thefuturein part bytheU.S. government,thegovernmentcouldhave certainrightsin any resultingpatentsand technology, includinganon-exclusivelicenseauthorizingthegovernmentto use theinventionor to have othersuse the inventiononitsbehalffornon-commercialpurposes.IftheU.S.governmentthendecidestoexercisethese rights,itisnotrequiredtoengageusasitscontractorin connectionwith doing so. These rightsmayalsopermit thegovernmenttodiscloseourconfidentialinformationtothirdpartiesandtoexercisemarch-inrightsto use or allowthirdpartiesto use our licensedtechnology.The governmentmayalsoexerciseitsmarch-inrightsifit determinesthatactionisnecessarybecausewe failedto achievepracticalapplicationof thegovernment-funded technology,becauseactionisnecessarytoalleviatehealthorsafetyneeds,tomeetrequirementsof federal regulations,ortogivepreferencetoU.S. industry.Inaddition,ourrightsin such government-fundedinventions maybesubjectto certainrequirementsto manufactureproductsembodyingsuch inventionsin theUnitedStates. Anyexercisebythegovernmentofaforementionedproprietaryrightscouldharmour competitiveposition, business,financialcondition,resultsof operations,and prospects.

Changes to the patentlaw in the United Statesand otherjurisdictionscould diminishthe valueof patents in general,therebyimpairingour abilityto protectour products.

Asisthecasewithotherpharmaceuticalcompanies,oursuccessisheavilydependenton intellectual property,particularlypatents.Obtainingand enforcingpatentsin thepharmaceuticalindustryinvolvesboth technologicalandlegalcomplexityandisthereforecostly,timeconsumingand inherentlyuncertain.Changes in eitherthepatentlawsor interpretationof thepatentlaws in theUnitedStatescouldincreasetheuncertaintiesand costssurroundingtheprosecutionofpatentapplicationsandtheenforcementor defenseof issuedpatents.Recent patentreformlegislationintheUnitedStatesandothercountries,includingtheLeahy-SmithAmericaInvents Act,ortheLeahy-SmithAct,signedintolawinSeptember2011,couldincreasethoseuncertaintiesandcosts. TheLeahy-SmithActincludesanumberofsignificantchangestoU.S. patentlaw.Theseincludeprovisionsthat affecttheway patentapplicationsareprosecuted,redefinepriorartand providemoreefficientand cost-effective avenuesforcompetitorstochallengethevalidityofpatents.For example,theLeahy-SmithAct allowsthird-party submissionofpriorarttotheUSPTOduringpatentprosecutionandadditionalprocedurestoattackthevalidity of ~~patents. For example, the Leahy-Smith Act allows third-party submission of prior art to the USPTO during~~ apatent ~~prosecution and additional procedures to attack the validity of a patent~~ byUSPTO administeredpost-grantproceedings,includingpost-grantreview,interpartesreview,and derivation proceedings. In addition, the Leahy-Smith Act has transformed the U.S. patent system from a “first-to-invent”systemto a “first-to-file”systemin which, assumingthatotherrequirementsforpatentabilityare met,thefirstinventorto filea patentapplicationwillbe entitledto thepatenton an invention regardlessof whetherathirdpartywasthefirsttoinventtheclaimedinvention.Thefirst-to-fileprovisions,however,only becameeffectiveon March16, 2013. Itisnot yetclearwhat, ifany, impacttheLeahy-SmithAct willhave on the operationof our business.However, theLeahy-SmithAct and itsimplementationcouldmakeit more difficultto obtainpatentprotectionforourinventionsandincreasetheuncertaintiesand costssurroundingtheprosecutionof ourorourfuturecollaborationpartners’patentapplicationsandtheenforcementor defenseof our or our future collaborationpartners’ ~~patent applications and the enforcement or defense~~ issuedpatents,allofwhichcouldharmour ~~or our future collaboration partners’ issued patents, all of which could harm our~~ business,resultsof operations,financial conditionand prospects.

Inaddition,thepatentpositionsof companiesin thedevelopmentand commercializationof biologicsand pharmaceuticalsareparticularlyuncertain.TheU.S. SupremeCourt has ruledon severalpatentcasesin recent years,eithernarrowingthescopeofpatentprotectionavailableincertaincircumstancesorweakeningtherights ofpatentownersincertainsituations.This combinationof eventshas createduncertaintywith respectto the validity and enforceability of patents, once obtained. Additionally, there have been recent proposals for additionalchangesto thepatentlaws of theUnitedStatesand other countriesthat, if adopted, could impactour abilitytoenforceourproprietarytechnology.DependingonfutureactionsbytheU.S. Congress,theU.S. courts, theUSPTO andtherelevantlaw-makingbodiesinothercountries,thelaws and regulationsgoverningpatents couldchangeinunpredictablewaysthatcouldhaveamaterialadverseeffecton our existingpatentportfolioand weakenourabilitytoobtainnewpatentsortoenforceourexistingpatentsandpatentsthatwe mightobtainin the future.

We maybecomeinvolvedin lawsuitsor administrativedisputesto protector enforceour patentsor other intellectualproperty,which could be expensive,timeconsumingand unsuccessful.

Competitors and other third parties may infringe, misappropriate or otherwise violate our patents, trademarks,copyrights,tradesecretsorotherintellectualproperty.Tocounterinfringement,misappropriationor other ~~intellectual property. To counter~~ violations,wemayberequiredtofileinfringement,misappropriationorother ~~violations, we may be required to file infringement, misappropriation or other~~ violationclaims,whichcan beexpensiveandtimeconsuminganddivertthetimeandattentionofourmanagementandbusinessand scientificpersonnel.Inaddition,manyof our adversariesin theseproceedingsmayhave theabilityto dedicate substantiallygreaterresourcesto prosecutingtheselegalactionsthanwe can.

Anyclaimsweassertagainstperceivedinfringerscouldprovokethesepartiestoassertcounterclaims againstusallegingthatwe infringe,misappropriateor otherwiseviolatetheirpatentsor theirotherintellectual property,inadditiontocounterclaimsassertingthatourpatentsareinvalidor unenforceable,or both. In patent litigationintheUnitedStates,counterclaimschallengingthevalidity,enforceabilityor scopeof assertedpatents arecommonplace.Similarly,thirdpartiesmayinitiatelegalproceedingsagainstusseekinga declarationthat certain of our intellectual property is non-infringed, invalid or unenforceable. The outcome of any such proceedingisgenerallyunpredictable.

Inanypatentinfringementproceeding,thereisariskthatacourtwilldecidethatapatentofoursisinvalid orunenforceable,inwholeorinpart,andthatwedonot have therightto stoptheotherpartyfromusingthe inventionatissue.Thereisalsoariskthat,evenifthevalidityofsuchpatentsisupheld,thecourtwillconstrue thepatent’sclaimsnarrowlyor ~~in part, and~~ decidethatwe do not have therightto stoptheotherpartyfromusingthe inventionat ~~issue. There is also a risk~~ issueonthegroundsthat ~~even if~~ ourpatentclaimsdonotcoverthe validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention.Anadverseoutcomeina litigationorproceedinginvolvingour patentscouldlimitour abilityto assertour patentsagainstthosepartiesor othercompetitors,andmaycurtailorprecludeourabilitytoexcludethirdpartiesfrommakingand sellingsimilar orcompetitiveproducts.Ifadefendantweretoprevailon a legalassertionof invalidityor unenforceabilityof our patentscoveringoneofourproductcandidates,wecouldloseatleastapart,and perhapsall,of thepatent protectioncoveringsuchaproductcandidate.Competingdrugsmayalsobe soldin othercountriesin which our patentcoveragemightnotexistorbeasstrong.Ifwe losea foreignpatentlawsuit,allegingour infringementof a competitor’spatents,wecouldbepreventedfrommarketingourdrugsinoneormoreforeigncountries.Any of theseoccurrencescouldadverselyaffectourcompetitivebusinessposition,businessprospectsand financial condition.Similarly,ifweasserttrademarkinfringementclaims,acourtmaydeterminethatthemarkswe have assertedareinvalidorunenforceable,orthatthepartyagainstwhomwehaveassertedtrademarkinfringement hassuperiorrightstothemarksinquestion.In thiscase,we couldultimatelybe forcedto ceaseuse of such trademarks.

Evenifwe establishinfringement,thecourtmaydecidenot to grantan injunctionagainstfurtherinfringing activityand insteadaward only monetarydamages,which mayor maynot be an adequateremedy.Furthermore, becauseofthesubstantialamountofdiscoveryrequiredinconnectionwithintellectualpropertylitigation,there isariskthatsomeofour confidentialinformationcouldbe compromisedby disclosureduringlitigation.There couldalsobepublicannouncementsoftheresultsofhearings,motionsor otherinterimproceedingsor developments.Ifsecuritiesanalystsorinvestorsperceivetheseresultstobenegative,itcouldhaveamaterial adverseeffectonthepriceofsharesofourcommonstock.Moreover,therecanbenoassurancethatwe willhave sufficientfinancialor otherresourcesto fileand pursuesuch infringementclaims,which typicallylast for years beforetheyareconcluded.Evenifweultimatelyprevailinsuchclaims,themonetarycostof such litigationand thediversionoftheattentionofourmanagementandscientificpersonnelcouldoutweighany benefitwe receive as a resultof theproceedings.

Furthermore,thirdpartiesmayalsoraiseinvalidityorunenforceabilityclaimsbeforeadministrativebodies intheUnitedStatesorforeignauthorities,evenoutsidethecontextoflitigation.Suchmechanismsinclude re-examination,inter partes review, post-grantreview, interferenceproceedings,derivationproceedingsand equivalentproceedingsin foreignjurisdictions ~~(e.g.~~(e.g.,oppositionproceedings).Such proceedingscould resultin revocation,cancellationoramendmenttoourpatentsinsuchawaythattheynolongercoverandprotectour productcandidates.Theoutcomefollowinglegalassertionsofinvalidityand unenforceabilityisunpredictable. Groundsforavaliditychallengecouldbeanallegedfailureto meetany of severalstatutoryrequirements, includinglackofnovelty,obviousness,non-enablementorwrittendescription.Grounds foran unenforceability assertioncouldbeanallegationthatsomeoneconnectedwiththeprosecutionofthepatentwithheldrelevant informationfromtheUSPTO, or madea misleadingstatement,duringprosecutionof thepatent.Withrespectto thevalidityofourpatents,forexample,wecannotbecertainthatthereisno invalidatingpriorartof which we, our licensors,our patentcounseland thepatentexaminerwere unawareduringprosecution.Moreover,itis possiblethatpriorartmayexistthatweareawareofbutdonotbelieveisrelevanttoourcurrentorfuture patents,butthatcouldneverthelessbedeterminedtorenderourpatentsinvalid.Ifathirdpartyweretoprevailon alegalassertionofinvalidityorunenforceability,wecouldloseatleastpart,and perhapsall,of thepatent protectionononeormoreofourproductcandidates.Anysuch lossof patentprotectioncouldhave a material adverseimpacton our business,financialcondition,resultsof operationsand prospects.

We maynot be ableto effectivelyprotector enforceour intellectualpropertyand proprietaryrights throughout the world.

Filing,prosecutinganddefendingpatentswithrespecttoourproductcandidatesin allcountriesthroughout theworldwouldbeprohibitivelyexpensive,andthelawsofforeigncountriesmaynotprotectour rightsto the sameextentasthelawsoftheUnitedStates.The requirementsforpatentabilitymaydifferin certaincountries, particularlyin developingcountries.In addition,any futureintellectualpropertylicenseagreementsmaynot alwaysincludeworldwiderights.Consequently,competitorsandotherthirdpartiesmayuse our technologiesin jurisdictionswherewehavenotobtainedpatentprotectiontodeveloptheirownproductsand,further,may exportotherwiseinfringingproductstoterritorieswherewemayobtainpatentprotection,but where patent enforcementisnotasstrongasthatin theUnitedStatesand where our abilityto enforceour patentsto stop infringingactivitiesmaybeinadequate.Theseproductsmaycompetewith our productsin such territoriesand in jurisdictionswhere we do not have any patentrightsor where any futurepatentclaimsor other intellectual propertyorproprietaryrightsmaynot be effectiveor sufficientto preventthemfromcompetingwith us, which couldhave a materialadverseeffecton our business,financialcondition,resultsof operationsand prospects.

Moreover, our ability to protect and enforce our intellectual property and proprietary rights may be adverselyaffectedby unforeseenchangesin foreignintellectualpropertylaws. Additionally,thelaws of some countriesoutsideoftheUnitedStatesand Europe do not affordintellectualpropertyprotectionto thesameextent as the laws of the United States and Europe. Many companies have encountered significant problems in protectinganddefendingintellectualpropertyandproprietaryrightsincertainforeignjurisdictions.The legal systemsofsomecountries,including,forexample,India,Chinaand otherdevelopingcountries,do not view favorablytheenforcementof patentsand otherintellectualpropertyor proprietaryrights,particularlythose relating to biotechnology products, which could make it difficult for us to stop the infringement, misappropriation or other violation of our patents or other intellectual property or proprietary rights. For example,manyforeigncountrieshavecompulsorylicensinglaws underwhich a patentowner mustgrantlicenses tothirdparties.Consequently,wemaynotbeabletopreventthirdpartiesfrompracticingourinventionsin certaincountriesoutsidetheUnitedStatesandEurope.Inaddition,manycountrieslimittheenforceabilityof patentsagainstgovernmentagenciesorgovernmentcontractors.Inthesecountries,thepatentowner mayhave limitedremedies,whichcouldmateriallydiminishthevalueofsuchpatent.Ifweareforcedtogranta licenseto thirdpartieswithrespecttoany patentsrelevantto our business,our competitivepositionmaybe impaired,and ourbusiness,financialcondition,resultsofoperations,and prospectsmaybe adverselyaffected.Proceedingsto enforceourintellectualpropertyandproprietaryrightsinforeignjurisdictions,whetherornot successful,could resultin substantialcostsand divertour effortsand resourcesfromotheraspectsof our business,couldput our patents,trademarksorotherintellectualpropertyandproprietaryrightsatriskofbeinginvalidatedor interpreted narrowly,couldput our patentapplicationsatriskof not issuing,and couldprovokethirdpartiesto assertclaims againstus.Wemaynotprevailinanylawsuitsthatweinitiate,andthedamagesorotherremediesawarded,if any, maynot be commerciallymeaningful.Furthermore,whilewe intendto protectour intellectualproperty and proprietaryrightsin foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business, could put our patents, trademarks or other intellectual property and proprietary rights at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Furthermore, while we intend to protect our intellectual property and proprietary rights in majormarketsforour products,we cannotensurethatwe willbe ableto initiateor maintain similareffortsinalljurisdictionsinwhichwemaywishtomarketourproducts.Accordingly,oureffortsto protectour intellectualpropertyand proprietaryrightsin such countriesmaybe inadequate.

Ifwe are sued forinfringing,misappropriatingor otherwiseviolatingintellectualpropertyor proprietary rightsof thirdparties,such litigationor disputescould be costlyand timeconsumingand could prevent or delayus fromdevelopingor commercializingour productcandidates.

Ourcommercialsuccessdepends,inpart,onourabilitytodevelop,manufacture,marketandsellour productcandidatesand use our proprietarytechnologieswithoutinfringing,misappropriatingor otherwise violatingtheintellectualpropertyand otherproprietaryrightsof thirdparties.Ifany third-partypatents,patent applicationsorotherproprietaryrightsarefound to coverour productcandidatesor any relatedcompanion diagnosticsor theircompositions,methodsof use or manufacturing,we maybe requiredto pay damages,which couldbesubstantial,andwewouldnotbefreeto manufactureor marketour productcandidatesor to do so withoutobtaininga license,which maynot be availableon commerciallyreasonableterms,or atall.

Wemayinthefuturebecomepartyto,orthreatenedwith, adversarialproceedingsor litigationregarding intellectualpropertyorproprietaryrightswithrespecttoourproductcandidatesandtechnologieswe use in our business.Ourcompetitorsorotherthirdpartiesmayassertinfringementclaimsagainstus, allegingthatour productcandidatesarecoveredbytheirpatents.Wecannotbecertainthatwe do not infringeexistingpatentsor thatwewillnotinfringepatentsthatmaybe grantedin thefuture.Furthermore,becausepatentapplicationscan takemanyyearstoissueandmaybeconfidentialfor18monthsormoreafterfiling,andbecausepatentclaims canberevisedbeforeissuance,theremaybe applicationsnow pendingwhich maylaterresultin issuedpatents thatmay be granted in the future. Furthermore, because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because patent claims can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringedby themanufacture,use or saleof our productcandidates.Ifa patentholderbelievesour productcandidateinfringesitspatentrights,thepatentholdermaysue us even ifwe have receivedpatent protectionforourtechnology.Moreover,wemayfacepatentinfringementclaimsfromnon-practicingentities thathave no relevantdrug revenueand againstwhom our own patentportfoliomaythushave no deterrenteffect.

Thereisasubstantialamountofintellectualpropertylitigationin thebiotechnologyand pharmaceutical industries,and we maybecomepartyto, or threatenedwith, litigationor otheradversarialproceedingsregarding intellectualpropertyor proprietaryrightswith respectto our productcandidates,includinginterference proceedingsbeforetheUSPTO.Thirdpartiesmayassertinfringement,misappropriationorotherclaimsagainst usbasedonexistingorfutureintellectualpropertyor proprietaryrights.The outcomeof intellectualproperty litigationand otherdisputesissubjectto uncertaintiesthatcannotbe adequatelyquantifiedin advance.The pharmaceuticalandbiotechnologyindustrieshaveproducedasignificantnumberofpatents,anditmaynot alwaysbecleartoindustryparticipants,includingus,whichpatentscovervarioustypesofproductsormethods ofusingormanufacturingproducts.Thecoverageofpatentsissubjecttointerpretationbythecourts,andthe interpretationisnotalwaysuniform.Ifweweresuedforpatentinfringement,wewouldneedto demonstratethat ourproductcandidates,productsormethodsofuse,manufacturingorotherapplicableactivitieseitherdonot infringethepatentclaimsoftherelevantpatentorthatthepatentclaimsareinvalidorunenforceable,andwe maynotbesuccessfulindoingso.However,provinginvalidityorunenforceabilityisdifficult.Forexample,in theUnitedStates,provinginvalidityrequiresashowing of clearand convincingevidenceto overcomethe presumptionof validity

enjoyedby issuedpatents.Even ifwe believethird-partyintellectualpropertyclaimsare withoutmerit,thereisno assurancethata courtwould findin our favoron questionsof infringement,validity,or enforceability.Even ifwe aresuccessfulin theseproceedings,we mayincursubstantialcostsand thetimeand attentionofourmanagementand businessand scientificpersonnelcouldbe divertedin pursuingthese proceedings,whichcouldsignificantlyharmourbusinessandoperatingresults.Inaddition,wemaynothave sufficientresourcesto bringtheseactionsto a successfulconclusion.

Ifwearefoundtoinfringe,misappropriateor otherwiseviolatea thirdparty’sintellectualpropertyor proprietaryrightsandweareunsuccessfulindemonstratingthatsuchintellectualpropertyorproprietaryrights areinvalidor unenforceable,we couldbe forced,includingby courtorder,to cease developing, manufacturingor commercializingtheinfringingproductcandidateorproduct.Alternatively,wemayberequiredtoobtaina licensefromsuchthirdpartyin orderto use theinfringingtechnologyand continuedeveloping,manufacturingor marketingtheinfringingproductcandidate.However,wemaynot be ableto obtainany requiredlicenseon commerciallyreasonabletermsoratall.Evenifwewereabletoobtainsuchalicense,itcouldbegrantedon non-exclusiveterms,therebygivingour competitorsand otherthirdpartiesaccessto thesametechnologies licensedto us. In addition,we couldbe found liablefor significantmonetarydamages, including trebledamages andattorneys’feesifwe arefound to have willfullyinfringedsuch third-partypatentrights.A findingof infringementcouldpreventusfromcommercializingourproductcandidatesorforceustoceasesomeofour businessoperations,whichcouldmateriallyharmourbusiness.Claimsthatwe have misappropriatedthe confidentialinformationortradesecretsofthirdpartiescouldhave a similarnegativeimpacton our business, financialcondition,resultsof operationsand prospects.

We maybe subjectto claimsby thirdpartiesassertingthatour employeesor consultantsor we have misappropriatedtheirintellectualproperty,or claimingownership of what we regardas our own intellectualproperty.

Someofouremployeesandconsultantsarecurrentlyor have been previouslyemployedatuniversitiesor at otherbiotechnologyor pharmaceuticalcompanies,includingour competitorsor potentialcompetitors.These employees and consultants may have executed proprietary rights, non-disclosure and non-competition agreements,orsimilaragreements,inconnectionwithsuch othercurrentor previousemployment.Although we trytoensurethatouremployeesandconsultantsdo not use theproprietaryinformationor know-how of othersin theirwork forus, we maybe subjectto claimsthatwe or theseindividualshave used or disclosedintellectual property,includingtradesecretsor otherproprietaryinformation,of thirdparties.Litigationmaybe necessaryto defendagainstsuch claims.Ifwe failin defendingany such claims,in additionto payingmonetarydamages, we maylosevaluableintellectualpropertyor personnelor sustaindamages.Such intellectualpropertycouldbe awardedtoathirdparty,andwecouldberequiredtoobtainalicensefromsuchthirdpartyto commercializeour technologyorproducts.Suchalicensemaynotbeavailableoncommerciallyreasonabletermsoratall.Even if wearesuccessfulindefendingagainstsuch claims,litigationcouldresultin substantialcostsand be a distraction toourmanagement.Anyoftheforegoingwouldhave a materialadverseeffecton our ~~management. Any~~ business,financial condition,resultsof operationsand prospects.

Inaddition,whileitisourpolicytorequireouremployees,consultantsandcontractorswhomaybe involvedinthe ~~foregoing~~conceptionor developmentof intellectualpropertyto executeagreementsassigningsuch intellectualpropertytous,we maybe unsuccessfulin executingsuch an agreementwith eachpartywho, in fact, conceivesordevelopsintellectualpropertythatweregardasourown,whichmayresultinclaimsbyoragainst usrelatedtotheownershipofsuchintellectualproperty.Inaddition,suchagreementsmaynot be self-executing suchthattheintellectualpropertysubjecttosuchagreementsmaynotbeassignedto us withoutadditional assignmentsbeingexecuted,and we mayfailto obtainsuch assignments.In addition,such agreementsmaybe breached.Inaddition,wehavemultiplesponsoredresearchagreementsrelatingto our leadproductcandidates withvariousacademicinstitutions.Someoftheseacademicinstitutionsmaynot have intellectualproperty assignmentsorsimilaragreementswiththeiremployeesandconsultants,whichmayresultinclaimsbyor againstusrelatedtoownershipofanyintellectualproperty.Accordingly,wemaybeforcedtobringclaims againstthirdparties,ordefendclaimsthattheymaybringagainstustodeterminetheownershipofwhatwe regardasourintellectualproperty.Ifwefailinprosecutingordefendinganysuchclaims,inadditionto paying monetarydamages,wemaylosevaluableintellectualproperty.Evenifwearesuccessfulin prosecutingor defendingagainstsuchclaims,litigationcouldresultinsubstantialcostsandbea distractionto our senior managementand scientificpersonnel,which would have a materialadverseeffecton our business, financial condition,resultsof operationsand prospects.

In addition, while it is our policy to require our employees, consultants and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own, which may result in claims by or against us related to the ownership of such intellectual property. In addition, such agreements may not be self-executing such that the intellectual property subject to such agreements may not be assigned to us without additional assignments being executed, and we may fail to obtain such assignments. In addition, such agreements may be breached. In addition, we have multiple sponsored research agreements relating to our lead product candidates with various academic institutions. Some of these academic institutions may not have intellectual property assignments or similar agreements with their employees and consultants, which may result in claims by or against us related to ownership of any intellectual property. Accordingly, we may be forced to bring claims against third parties, or defend claims that they may bring against us to determine the ownership of what we regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our senior management and scientific personnel, which would have a material adverse effect on our business, financial condition, results of operations and prospects.

Inthecourseoftestingourproductcandidates,wehaveenteredintoagreementswiththirdpartiesto conductclinicaltesting,whichprovidethatimprovementsto our productcandidatesmaybe owned solelyby a partyor jointlybetweentheparties.Ifwe determinethatrightsto such improvementsowned solelyby a third partyarenecessarytocommercializeourproductcandidatesormaintainourcompetitiveadvantage,wemay needtoobtainalicensefromsuchthirdpartyinordertousetheimprovementsandcontinuedeveloping, manufacturingormarketingtheproductcandidates.However,wemaynotbeableto obtain ~~a license from such third party in order to use the improvements and continue developing, manufacturing or marketing the product candidates. However, we may not be able to obtain~~

any requiredlicense oncommerciallyreasonabletermsoratall.Evenifwewereabletoobtainsuchalicense,itcouldbe grantedon non-exclusiveterms,therebygivingour competitorsand otherthirdpartiesaccessto thesametechnologies licensedtous.Failuretoobtainalicenseoncommerciallyreasonabletermsoratall,or to obtainan exclusive license,couldpreventusfromcommercializingourproductcandidatesor forceus to ceasesomeof our business operations,whichcouldmateriallyharmourbusiness.Ifwedeterminethatrightsto improvementsjointlyowned betweenusandathirdpartyarenecessarytocommercializeour productcandidatesor maintainour competitive advantage,wemayneedtoobtainanexclusivelicensefromsuchthirdparty.Ifwe ~~may need~~ areunableto obtainan exclusivelicense ~~from~~ toanysuch ~~third party. If we are unable to obtain an exclusive license to any~~ third-partyco-owners’interestinsuch ~~third-party co-owners’ interest in~~ improvements,such ~~improvements, such~~ co-ownersmaybeable tolicensetheirrightstootherthirdparties,includingour competitors,and our competitorscouldmarket competingproductsandtechnology.Inaddition,wemayneedthecooperationof any such co-ownersof our intellectualpropertyin orderto enforcesuch intellectualpropertyagainstthirdparties,and such cooperationmay notbeprovidedtous.Anyoftheforegoingcouldhaveamaterialadverseeffectonourcompetitiveposition, business,financialconditions,resultsof operations,and prospects.

The termof our patentsmaybe inadequateto protectour competitivepositionon our products.

Giventheamountoftimerequiredforthedevelopment,testingand regulatoryreviewof new product candidates,patentsprotectingsuch candidatesmightexpirebeforeor shortlyaftersuch candidatesare commercialized.Dependinguponthetiming,durationandotherfactorsrelatingtoanyFDA marketingapproval wereceiveforanyofourproductcandidates,oneormoreofourU.S. patentsmaybeeligibleforlimitedpatent termextensionundertheDrugPriceCompetitionandPatentTermRestorationActionof1984,orthe ~~Hatch-Waxman~~ Hatch- WaxmanAmendments.Weexpecttoseekextensionsofpatenttermsin theUnitedStatesand, ifavailable,in othercountrieswhere we areprosecutingpatents.In the United States, the Hatch-WaxmanAmendments permita patenttermextensionofup to fiveyearsbeyond thenormalexpirationof thepatent,limitedto theapproved indication ~~(or~~ (oranyadditional

indicationsapprovedduringtheperiodofextension),ascompensationforpatent termlosttotheregulatoryreviewprocessduringwhich thesponsorwas unableto commerciallymarketitsnew product.Apatenttermextensioncannotextendtheremainingtermofapatentbeyondatotalof14yearsfrom thedateofproductapproval,onlyonepatentapplicabletoanapproveddrugiseligiblefortheextensionand only thoseclaimscoveringtheapproveddrug,amethodforusingit,oramethodformanufacturingitmaybe extended,andtheapplicationfortheextensionmustbesubmittedpriortotheexpirationof thepatent.However, theapplicableauthorities,includingtheFDA andtheUSPTO intheUnitedStates,and any equivalentregulatory authorityin othercountries,maynot agreewith our assessmentof whethersuch extensionsare availablefor our patents,mayrefusetograntextensionsto our patents,or maygrantmorelimitedextensionsthanwe request.We maynotbegrantedanextensionbecauseof,forexample,failingtoexerciseduediligenceduringthetesting phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expirationofrelevantpatents,orotherwisefailingtosatisfyapplicablerequirements.Ifwe areunableto obtain patenttermextensionorthetermofanysuchextensionislessthanwe request,our competitorsand otherthird partiesmaybeabletoobtainapprovalofcompetingproductsfollowingour patentexpirationand takeadvantage ofourinvestmentindevelopmentandclinicaltrialsbyreferencingourclinicalandpreclinicaldataand launch theirproductearlierthanmightotherwisebe thecase.Any of theforegoingwould have a materialadverseeffect on our business,financialcondition,resultsof operationsand prospects.

Obtaining and maintainingour patentprotectiondepends on compliancewith variousprocedural, documentary,feepaymentand otherrequirementsimposedby governmentalpatentoffices,and our patentprotectioncould be reducedor eliminatedfornoncompliancewith theserequirements.

Periodicmaintenancefees,renewalfees,annuityfeesandvariousothergovernmentfeesonanyissued patentareduetobepaidtotheUSPTOandpatentofficesinforeigncountriesinseveralstagesoverthelifetime of the patent. The USPTO and patent offices in foreign countries require compliance with a number of procedural,documentary,feepaymentandotherrequirementsduringthepatentapplicationprocess.Inthe future,wemayrelyonlicensingpartnerstopaythesefeesduetoU.S.andnon-U.S.patentagenciesandto complywiththeseotherrequirementswithrespecttoanyfuturelicensedpatentsandpatentapplications.While aninadvertentlapsecanbecuredbypaymentofalatefeeor by othermeansin accordancewith theapplicable rules,therearesituationsinwhichnoncompliancecan resultin abandonmentor lapseof thepatentor patent application, resulting in partial or complete loss of a patent or patent rights in the relevant jurisdiction. Non-complianceeventsthatcouldresultinabandonmentorlapseofapatentorpatentapplicationinclude,but arenotlimitedto,failureto respondto officialactionswithinprescribedtimelimits,non-paymentof feesand failuretoproperlylegalizeandsubmitformaldocuments.Insuchanevent,ourcompetitorsandotherthird partiesmightbeableto enterthemarketwith similaror identicalproductsof technology,which would have a materialadverseeffecton our business,financialcondition,resultsof operationsand prospects.

Ifwe are unable to protectthe confidentialityof our tradesecrets,the valueof our technologycould be materiallyadverselyaffectedand our businesswould be harmed.

Werelyonproprietaryknow-howandtradesecretprotectionandconfidentialityagreementsto protect proprietaryknow-howortradesecretsthatarenotpatentableorthatweelectnottopatent.Weseektoprotect our trade secrets and proprietary know-how in part by entering into non-disclosure and confidentiality agreementswith partieswho have accessto such knowledge, such as our employees,consultants,independent contractors,advisors,CMOs,CROs, hospitals,independenttreatmentcenters,suppliers,collaboratorsand other thirdparties.Wealsoenterintoconfidentialityandinventionorpatentassignmentagreementswithemployees andcertainconsultants.However,wecannotguaranteethatwehaveenteredintosuchagreementswitheach partythatmayhaveorhavehadaccesstoourtradesecretsor proprietaryknow-how. Additionally,our confidentialityagreementsandothercontractualprotectionsmaynotbeadequateto protectour intellectual propertyfromunauthorizeddisclosure,third-partyinfringementor misappropriation.Any partywith whom we ~~cannot guarantee~~ haveexecutedsuchanagreementmaybreachthat ~~we have entered into such agreements with each party that may have or have had access to~~agreementand discloseour proprietaryinformation,including our tradesecrets,and we maynot be ableto obtainadequateremediesforsuch breaches.Enforcinga claimthat a partyillegallydisclosedormisappropriateda tradesecretisdifficult,expensiveand time-consuming,and the outcomeisunpredictable.In addition,somecourtsin theUnitedStatesand certainforeignjurisdictionsare less willingorunwillingtoprotecttradesecrets.Ifany of our tradesecretswere to be lawfullyobtainedor ~~proprietary know-how. Additionally,~~ independentlydevelopedbyacompetitororotherthirdparty,wewouldhave no rightto preventsuch thirdparty, orthosetowhomtheycommunicatesuchtechnologyorinformation,fromusingthattechnologyorinformation tocompetewithus.Ifanyofourtradesecretsweretobedisclosedtoorindependentlydevelopedbya competitororotherthirdparty,ourbusiness,financialcondition,resultsofoperationsandprospectsour ~~confidentiality agreements~~business and ~~other contractual protections~~competitivepositioncouldbe materiallyharmed.

The degreeof futureprotectionaffordedby our intellectualpropertyrights is uncertainbecause intellectual propertyrightshavelimitationsand maynot adequatelyprotectour businessor permitus to maintainour competitiveadvantage.For example:

Shouldanyoftheseeventsoccur,theycouldhave a materialadverseeffecton our business,financial condition,resultsof operationsand prospects.

Anactiveand liquidtradingmarketforour commonstockmayneverbe sustained.As a result,you may not be ~~adequate~~ ableto ~~protect our intellectual property from unauthorized disclosure, third-party infringement~~resellyour sharesof commonstockat or ~~misappropriation. Any party with whom we have executed such an agreement~~ above the purchase price.

Anactivetradingmarketforourcommonstockmay ~~breach that agreement and disclose our proprietary information, including our trade secrets, and we may not~~ neverbe ~~able~~ sustained.The market valueofourcommonstockmaydecreasefromthepurchaseprice.Asaresultoftheseandotherfactors, youmaybe unableto obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts in the United States and certain foreign jurisdictions are less willing or unwilling to protect trade secrets. If any resellyour sharesof our ~~trade secrets were~~commonstockator above thepurchaseprice.The lackof an activemarketmayimpairyourabilitytosellyoursharesatthetimeyou wish to ~~be lawfully obtained~~ sellthemor ~~independently developed by~~ ata ~~competitor or other third party, we would have no right to prevent such third party, or those to whom they communicate such technology or information, from using~~ pricethat ~~technology or information to compete with us. If any~~ you considerreasonable.Thelackofanactivemarketmayalsoreducethefairmarketvalueof your shares. Furthermore,aninactivemarketmayalsoimpairour ~~trade secrets were~~ abilityto ~~be disclosed to or independently developed~~ raisecapitalby ~~a competitor or other third party,~~ sellingsharesofour ~~business, financial condition, results of operations and prospects our business and competitive position could be materially harmed.~~

~~Intellectual property rights do not necessarily address all potential threats.~~

~~The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations~~ common stockand may ~~not adequately protect~~ impairour ~~business~~ abilityto enterintostrategiccollaborationsor ~~permit us to maintain~~acquirecompaniesor productsby using our ~~competitive advantage. For example:~~

~~Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.~~consideration.

Our quarterlyoperatingresultsmayfluctuatesignificantlyor mayfallbelow the expectationsof investors or securitiesanalysts,each of which maycause our stockpriceto fluctuateor decline.

Weexpectouroperatingresultstobesubjectto quarterlyfluctuations.Our netlossand otheroperating resultswillbe affectedby numerousfactors,including:

Ifourquarterlyoperatingresultsfallbelowtheexpectationsof investorsor securitiesanalysts,thepriceof ourcommonstockcoulddeclinesubstantially.Furthermore,any quarterlyfluctuationsin our operatingresults ~~to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including:~~

~~If our quarterly operating results fall below the expectations of investors or securities analysts, the~~ priceof our commonstock ~~could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our common stock~~ to fluctuatesubstantially.We believethat quarterly comparisonsofourfinancialresultsarenotnecessarilymeaningfuland shouldnot be reliedupon as an indication of our futureperformance.

The marketpriceof our commonstockislikelyto be highlyvolatile,which could resultin substantial lossesforpurchasersof our commonstock.

Themarketpriceofourcommonstockhasbeenhighlyvolatilesinceour initial public offering, orIPO,andhasrangedfrom$23.69 to$95.38pershare.Themarketpriceof our commonstockislikelyto continueto be highlyvolatileand subject towidefluctuationsinresponsetovariousfactors,someof which we cannotcontrol.As a resultof thisvolatility, investorsmaynotbeabletoselltheircommonstockatorabovethepricepaid.The marketprice forourcommonstockmaybeinfluencedbymanyfactors,includingtheotherrisksdescribedinthissectionof ~~the~~this Quarterly Report on Form 10-Qand thefollowing:

In addition,thestockmarketin general,and themarketsforpharmaceutical,biopharmaceuticaland biotechnologystocksin particular,have experiencedextremepriceand volumefluctuationsthathave been often unrelatedor disproportionateto theoperatingperformanceof theissuer.These broadmarketand industry factors mayseriouslyharmthemarketpriceofourcommonstock,regardlessof our actualoperatingperformance.The realizationofanyoftheaboverisksor any of a broadrangeof otherrisks,includingthosedescribedin this ~~“Risk~~“Risk Factors”section,couldhave a dramaticand adverseimpacton themarketpriceof our commonstock.

In the past, securities class action litigation has often been brought against public companies following declines in the market price of their securities. This risk is especially relevant for biopharmaceutical companies, which have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and our resources, which could harm our business.

~~A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.~~

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market before or after the lock-up and other legal restrictions on resale lapse in connection with our IPO, the market price of our common stock could decline significantly. Each of our officers, directors, and substantially all of our pre-IPO stockholders have entered into lock-up agreements with the underwriters in our IPO that restrict their ability to sell or transfer their shares. These lock-up agreements will expire March 23, 2021. However, the underwriters in our IPO may, in their sole discretion, permit our officers, directors, and other current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements. After the lock-up agreements expire, a substantial number of shares of common stock will be eligible for sale in the public market.

We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.

We also expect that significant additional capital may be needed in the future to continue our planned operations, including conducting our planned clinical trials, manufacturing and commercialization efforts, expanded research and development activities and costs associated with operating as a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of our outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.

We also expect that significant additional capital may be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. To the extent that additional capital is raised through the sale and issuance of shares or other securities convertible into shares, our stockholders will be diluted. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our common stock could be impacted negatively. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our preclinical studies and clinical trials and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of such analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause a decline in our stock price or trading volume.

Our principalstockholdersand managementowna significantpercentageof our stockand ~~will be~~are ableto exertsignificantcontrolovermatterssubjectto stockholderapproval.

Asof ~~September~~June 30, ~~2020,~~ 2021,ourexecutiveofficers,directors,beneficialownersof5% ormoreofourcapitalstockandtheirrespectiveaffiliatesbeneficiallyowned a substantial portion of our ~~capital stock and their respective affiliates beneficially owned approximately 71.6% of our~~ commonstock.The votingpower of this group mayincreaseto theextenttheyconvertsharesof non-votingcommonstocktheyhold intocommonstock.

Thisgroupofstockholdershavetheabilitytocontrolusthroughthisownershippositionand ~~may be~~ areableto determine all matters requiring stockholder approval.For example, these stockholders ~~may be~~are ableto control electionsofdirectors,amendmentsofourorganizationaldocumentsorapprovalof any merger,saleof assetsor othermajorcorporatetransaction.Thismaypreventor discourageunsolicitedacquisitionproposalsor offersfor ourcommonstockthatyoumayfeelareinyourbestinterestasoneofourstockholders.Theinterestsofthis groupofstockholdersmaynot alwayscoincidewith your interestsor theinterestsof otherstockholdersand they mayactinamannerthatadvancestheirbestinterestsand not necessarilythoseof otherstockholders,including seekingapremiumvaluefortheircommonstock,andmightaffecttheprevailingmarketpriceforour common stock.

~~The dual class structure of our common stock may limit your ability to influence corporate matters and may limit your visibility with respect to certain transactions.~~

The dual classstructureof our commonstockmaylimityour abilityto influencecorporatemattersand maylimityour visibilitywith respectto certaintransactions.

Thedualclassstructureofourcommonstockmaylimityourabilityto influencecorporatematters.Holders ofourcommonstockareentitledtoone votepershare,whileholdersof our non-votingcommonstockarenot entitledto any votes.Nonetheless,eachshareof our non-votingcommonstockmaybe convertedatany time into one ~~vote per~~ share ~~while~~ ofourcommonstockattheoptionof itsholderby providingwrittennoticeto us, subjectto the limitationsprovidedforinourrestatedcertificateofincorporation.Consequently,ifholdersof our non-voting commonstock ~~are not entitled~~ exercisetheiroptionto ~~any votes. Nonetheless, each share~~ makethisconversion,thiswillhave theeffectof increasingtherelative votingpowerofthosepriorholdersof our non-votingcommonstock, ~~may be converted at any time into one share of our common stock at~~ and correspondinglydecreasingthe option of its holder by providing written notice to us, subject to the limitations provided for in our restated certificate of incorporation to become effective. Consequently, if holders of our non-voting common stock exercise their option to make this conversion, this will have the effect of increasing the relative voting powerof ~~those prior~~ theholdersofour ~~non-voting~~ commonstock, ~~and correspondingly decreasing the voting power of the holders of our common stock,~~ whichmaylimityourabilityto influencecorporatematters.For example,at ~~September~~June 30, ~~2020,~~ 2021,thecommonstockwillhave100%ofthevotingpower,butiftheholdersof non-votingcommonstockwere to convertallof theirsharesintocommonstock,thepriorcommonstockwould have ~~74.6%~~75.8%ofthevotingpower,and theformernon-votingcommonstockwould represent24.2% of the ~~voting power, and the former non-voting common stock would represent 25.4% of the~~ voting power. Additionally, stockholders who hold, in the aggregate, more than 10% of our common stock and non-votingcommonstock,but10%orlessofourcommonstock,andarenototherwiseaninsiderofthe company,maynotberequiredtoreportchangesintheirownershipduetotransactionsinournon-voting commonstockpursuantto Section16(a)of the ~~company, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the~~ SecuritiesExchange Act of 1934, as amended,or the Exchange Act, and maynot be subjectto theshort-swingprofitprovisionsof Section16(b)of theExchange Act.

~~Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.~~

We are subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make any related party transaction disclosures. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. In addition, we do not have a risk management program or processes or procedures for identifying and addressing risks to our business in other areas.

We are an “emerginggrowth company”and a “smallerreportingcompany”and we cannot be certainif the reducedreportingrequirementsapplicableto emerginggrowth companiesor smallerreporting companieswillmakeour commonstocklessattractiveto investors.

Wearean ~~“emerging~~ “emerginggrowthcompany”asdefinedintheJumpstartOurBusinessStartupsActof2012,or theJOBSAct.Foraslongaswecontinuetobeanemerginggrowthcompany,wemaytakeadvantageof exemptionsfromvariousreportingrequirementsthatareapplicableto otherpubliccompaniesthatarenot emerginggrowthcompanies,including(i)not beingrequiredto complywith theauditorattestationrequirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, (ii) reduced disclosureobligationsregardingexecutivecompensationinthisQuarterly Report onForm 10-Qaswellasourperiodicreportsand proxystatementsand(iii)exemptionsfromtherequirementsofholdingnonbindingadvisorystockholdervotes onexecutivecompensationandstockholderapprovalof any goldenparachutepaymentsnot approvedpreviously. Inaddition,asanemerginggrowth company,we areonly requiredto providetwo yearsof auditedfinancial statementsand two yearsof selectedfinancialdatain this ~~report.~~Quarterly Report onForm 10-Q.

We couldbe an emerginggrowth company ~~for up to five years following the completion of our IPO,~~untilDecember31, 2025, althoughcircumstancescouldcauseus to losethatstatusearlier,includingifwe aredeemedto be a “largeacceleratedfiler,”which occurswhen the marketvalueofourcommonstockthatisheldby non-affiliatesequalsor exceeds ~~$700~~$700 millionas of theprior June30,orifwehavetotalannualgrossrevenueof $1.07 billionor moreduringany fiscalyearbeforethattime, inwhichcaseswewouldnolongerbeanemerginggrowthcompanyasofthefollowingDecember31, or ifwe issuemorethan ~~$1.0~~$1.0 billionin non-convertibledebtduringany three-yearperiodbeforethattime,in which case wewouldnolongerbeanemerginggrowthcompanyimmediately.Even afterwe no longerqualifyas an emerginggrowth company,we maystillqualifyas a “smallerreportingcompany,”which would allowus to take advantageof manyof thesameexemptionsfromdisclosurerequirements,includingnot beingrequiredto comply withtheauditorattestationrequirementsofSection404oftheSarbanes-OxleyAct,ifour revenuesremainless than$100.0million,andreduceddisclosureobligationsregardingexecutivecompensationin thisQuarterly Report on Form 10-Qas wellasourperiodicreportsandproxystatements.Wecannotpredictifinvestorswillfindour commonstockless attractivebecausewemayrelyontheseexemptions.Ifsomeinvestorsfindour commonstocklessattractiveas a result,theremaybe a lessactivetradingmarketforour commonstockand our sharepricemaybe morevolatile.

UndertheJOBS Act,emerginggrowthcompaniescan alsodelayadoptingnew or revisedaccounting standardsuntilsuchtimeas thosestandardsapplyto privatecompanies.We have electedto takeadvantageof the benefitsofthisextendedtransitionperiod.Our financialstatementsmaythereforenot be comparableto thoseof companiesthatcomplywithsuchneworrevisedaccountingstandards.Untilthedatethatwe areno longeran “emerging growth company” or affirmatively and irrevocably opt out of the exemption provided by Section7(a)(2)(B)oftheSecuritiesAct,uponissuanceofaneworrevisedaccountingstandardthatappliesto our financialstatementsand thathas a differenteffectivedateforpublicand privatecompanies,we willdisclose thedateonwhichadoptionisrequiredfornon-emerginggrowthcompaniesandthedateon which we willadopt therecentlyissuedaccountingstandard.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliatesislessthan ~~$700.0~~ $700.0million as of the prior June 30and our annualrevenueislessthan ~~$100.0~~$100.0 millionduringthemost recentlycompletedfiscalyear.Wemaycontinueto be a smallerreportingcompanyifeither(i)themarketvalue of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0millionduringthemostrecentlycompletedfiscalyearandthemarketvalueofourstockheldby non-affiliatesislessthan$700.0 million ~~during~~as of the ~~most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.~~ prior June 30.Ifwe area smallerreportingcompanyatthetimewe ceaseto be an emerginggrowth company,we maycontinueto relyon exemptionsfromcertaindisclosurerequirementsthatare availabletosmallerreportingcompanies.Specifically,as a smallerreportingcompanywe maychooseto present onlythetwomostrecentfiscalyearsofauditedfinancialstatementsin our Annual Reporton Form10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regardingexecutivecompensation.

Anti-takeoverprovisionsin our charterdocumentsand under Delaware law could preventor delayan acquisitionof us, which maybe beneficialto our stockholders,and maypreventattemptsby our stockholdersto replaceor removeour currentmanagement.

Our restatedcertificateof incorporationand our restatedbylaws containprovisionsthatcould delay or preventachangeincontrolofourcompany.Theseprovisionscouldalsomakeitdifficultforstockholdersto electdirectorswhoarenotnominatedbycurrentmembersofourboardofdirectorsortakeothercorporate actions,includingeffectingchangesin our management.These provisions:

Inaddition,Section203oftheDelawareGeneralCorporationLaw,orDGCL,maydiscourage,delayor preventa changein controlof our company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions:

~~In addition,~~ Section ~~203 of the Delaware General Corporation Law, or DGCL, may discourage, delay or prevent a change in control of our company. Section~~ 203 imposescertainrestrictionson mergers,business combinationsand othertransactionsbetweenus and holdersof 15% or moreof our commonstock.

The exclusiveforumprovisionin our organizationaldocumentsmaylimita stockholder’sabilityto bring a claimin a judicialforumthatitfindsfavorablefordisputeswith us or any of our directors,officers,or otheremployees,which maydiscouragelawsuitswith respectto such claims.

OurrestatedcertificateofincorporationprovidesthattheCourtofChanceryoftheStateof Delawareisthe exclusiveforumfor:anyderivativeactionorproceedingbroughtonourbehalf;anyactionassertinga breachof fiduciaryduty;anyactionassertingaclaimagainstusarisingpursuanttotheDGCL, ourrestatedcertificateof incorporation, ~~provides~~ orourrestatedbylaws;oranyactionassertingaclaimagainstusthat ~~the Court of Chancery of the State of Delaware~~ is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our restated bylaws; or any action asserting a claim against us that is governedby theinternal affairsdoctrine.Thisexclusiveforumprovisiondoes not applyto suitsbroughtto enforcea duty or liability createdby theExchange Act. Itcouldapply,however, to a suitthatfallswithinone or moreof the categories enumeratedin theexclusiveforumprovision.

This choiceof forumprovisionmaylimita stockholder’sabilityto bringa claimin a judicialforum that it findsfavorablefordisputeswithusorany of our directors,officers,or otheremployees,which maydiscourage lawsuitswithrespecttosuchclaims.Alternatively,ifacourtweretofindthechoiceofforumprovisions containedinourrestatedcertificateofincorporationtobeinapplicableorunenforceableinanaction,wemay incuradditionalcostsassociatedwithresolvingsuch actionin otherjurisdictions,which couldharmour business, resultsof operationsand financialcondition.

Section22oftheSecuritiesActcreatesconcurrentjurisdictionforfederaland statecourtsoverallclaims broughttoenforceanydutyorliabilitycreatedbytheSecuritiesAct or therulesand regulationsthereunder.Our restatedbylaws providethatthefederaldistrictcourtsof theUnitedStatesof Americawill,to thefullest extentpermittedbylaw,betheexclusiveforumforresolvinganycomplaintassertingacauseof actionarising undertheSecuritiesAct,oraFederalForumProvision.OurdecisiontoadoptaFederalForumProvision followedadecisionbytheSupremeCourtoftheStateof Delawareholdingthatsuch provisionsarefaciallyvalid underDelawarelaw.Whiletherecanbenoassurancethatfederalorstatecourtswillfollowtheholdingof the DelawareSupremeCourtordeterminethattheFederalForumProvisionshouldbeenforcedinaparticularcase, applicationoftheFederalForumProvisionmeansthatsuitsbroughtbyourstockholderstoenforceanydutyor liabilitycreatedby theSecuritiesAct ~~creates concurrent jurisdiction for~~mustbe broughtin federalcourtand cannotbe broughtin state ~~courts~~ court.

Section27oftheExchangeActcreatesexclusivefederaljurisdictionoverallclaimsbroughtto enforceany dutyorliabilitycreatedbytheExchangeActortherulesandregulationsthereunder.In addition,neitherthe exclusiveforumprovisionnortheFederalForumProvisionappliestosuitsbroughttoenforceanydutyor liabilitycreatedbytheExchangeAct.Accordingly,actionsbyourstockholdersto enforceany duty or liability createdby the Securities Act or the rules and regulations thereunder. Our restated bylaws will provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.

~~Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the~~ Exchange Act or therulesand regulations thereunder. In addition, neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereundermustbe broughtin federalcourt.

Ourstockholderswillnotbedeemedtohavewaivedourcompliancewiththefederalsecuritieslaws and the regulationspromulgatedthereunder.

Anypersonorentitypurchasingorotherwiseacquiringorholdingany interestin any of our securitiesshall bedeemedtohavenoticeofandconsentedto our exclusiveforumprovisions,includingtheFederalForum Provision.Theseprovisionsmaylimitastockholders’abilitytobringaclaiminajudicialforumoftheir choosingfordisputeswithusorourdirectors,officers,orotheremployees,whichmaydiscouragelawsuits againstus and our directors,officers,and otheremployees.

We willcontinueto incur increasedcostsas a resultof operatingas a publiccompany,and our managementwillbe requiredto devotesubstantialtimeto new complianceinitiativesand corporate governancepractices.

Asapubliccompany,andparticularlyafterwearenolongeranemerginggrowthcompany,wewill continuetoincursignificantlegal,accountingand otherexpensesthatwe did not incuras a privatecompany.The Sarbanes-OxleyAct, theDodd-Frank WallStreetReformand ConsumerProtectionAct, thelistingrequirements oftheNasdaq GlobalSelectMarketand otherapplicablesecuritiesrulesand regulationsimposevarious requirementsonpubliccompanies,includingestablishmentand maintenanceof effectivedisclosureand financial controlsandcorporategovernancepractices.Our managementand otherpersonnelwillneed to devotea substantialamountoftimeto thesecomplianceinitiatives.Moreover,we expecttheserulesand regulationsto substantiallyincreaseourlegalandfinancialcompliancecostsand to makesomeactivitiesmoretimeconsuming andcostly.Forexample,weexpectthattheserulesandregulationsmaymakeitmoredifficultandmore expensiveforustoobtaindirectorandofficerliabilityinsuranceandwemayberequiredtoincursubstantial coststo maintainsufficientcoverage.We cannotpredictor estimate

theamountor timingof additionalcosts we mayincurtorespondtotheserequirements.Theimpactoftheserequirementscouldalsomakeitmoredifficult forustoattractandretainqualifiedpersonstoserveonourboardofdirectors,ourboardcommitteesor as executiveofficers.Theincreasedcostsmayrequireustoreducecostsinotherareasofourbusinessorincrease thepricesofourproductsoncecommercialized.Moreover,theserulesandregulationsareoftensubjectto varyinginterpretations,inmanycasesduetotheirlackofspecificity,and,asaresult,theirapplicationin practice mayevolveovertimeas new guidanceisprovidedby regulatoryand governingbodies.This could resultin continuinguncertaintyregardingcompliancemattersandhighercostsnecessitatedby ongoing revisionsto disclosureand governancepractices.

WearenotcurrentlyrequiredtocomplywiththeSEC’s rulesthatimplementSection404 of the ~~Sarbanes-Oxley~~ Sarbanes- OxleyAct,andarethereforenotrequiredtomakeaformalassessmentoftheeffectivenessof our internalcontrol overfinancialreportingforthatpurpose.PursuanttoSection404,wewillberequiredtofurnishareportby our managementonourinternalcontroloverfinancialreporting.However,whilewe remainan emerginggrowth company,wewillnotberequiredtoincludeanattestationreportoninternalcontroloverfinancialreporting issuedbyourindependentregisteredpublicaccountingfirm.Inaddition,foraslongaswearea smallerreporting companywithlessthan$100millionin annualrevenue,we would be exemptfromtherequirementto obtainan externalauditon theeffectivenessof internalcontroloverfinancialreportingprovidedin Section404(b)of the Sarbanes-OxleyAct.ToachievecompliancewithSection404withintheprescribedperiod,wewillbeengaged inaprocesstodocumentandevaluateour internalcontroloverfinancialreporting,which isboth costlyand challenging.Inthisregard,wewillneedtocontinuetodedicateinternalresources,potentiallyengageoutside consultantsandadoptadetailedwork planto assessand documenttheadequacyof internalcontroloverfinancial reporting,continuestepsto improvecontrolprocessesas appropriate,validatethroughtestingthatcontrolsare functioningasdocumentedandimplementacontinuousreportingand improvementprocessforinternalcontrol overfinancialreporting. ~~However, while~~ Thisprocesswillbetime-consuming,costlyandcomplicated.Despiteourefforts,there isariskthatwe ~~remain an emerging growthcompany, we~~ willnotbe ~~required~~ ableto ~~include an attestation report on~~conclude,withintheprescribedtimeframeor atall,thatour internalcontrol overfinancialreporting ~~issued~~ iseffectiveasrequiredby ~~our independent registered public accounting firm. To achieve compliance with~~ Section ~~404 within the prescribed period,~~ 404.Ifwe will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. This process will be time-consuming, costly and complicated. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe identifyoneor ~~at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or~~ morematerialweaknesses, itcouldresultinanadversereactioninthefinancialmarketsdue to a lossof confidencein thereliabilityof our financialstatements.In addition,ifwe arenot ableto continueto meettheserequirements,we maynot be ableto remainlistedon theNasdaq GlobalSelectMarket.

Because we do not anticipatepaying any cash dividendson our capitalstockin the foreseeablefuture, capitalappreciation,ifany, willbe your solesourceof gain.

Wehaveneverdeclaredor paidcashdividendson our capitalstock.We currentlyintendto retainallof our futureearnings,ifany,tofinancethegrowthanddevelopment,operationandexpansionofourbusinessanddo notanticipatedeclaringorpayinganycashdividendsfortheforeseeablefuture.Asaresult,capitalappreciation, ifany, of our commonstockwillbe your solesourceof gainfortheforeseeablefuture.

Ifsecuritiesor industryanalystsdo not publishresearchor reportsabout our business,or iftheyissuean adverseor misleadingopinion regardingour stock,our stockpriceand tradingvolumecould decline.

Thetradingmarketforourcommonstockwillbeinfluencedbytheresearchandreportsthatindustryor securitiesanalystspublishaboutus or our business.Ifno or few securitiesor industryanalystscommence coverageofus,thetradingpriceforourcommonstockcouldbeimpactednegatively.Intheeventweobtain securitiesorindustryanalystcoverage,ifanyoftheanalystswhocoverusissueanadverseormisleading opinionregardingus,ourbusinessmodel,our intellectualpropertyor our stockperformance,or ifour preclinical studiesandclinicaltrialsandoperatingresultsfailto meettheexpectationsof analysts,our stockpricewould likelydecline.Ifoneormoreofsuchanalystsceasecoverageof us or failto publishreportson us regularly,we couldlosevisibilityinthefinancialmarkets,whichinturncouldcausea declinein our stockpriceor trading volume.

Our disclosurecontrolsand proceduresmaynot preventor detectallerrorsor actsof fraud.

WearesubjecttotheperiodicreportingrequirementsoftheExchange Act. We designedour disclosure controlsandprocedurestoreasonablyassurethatinformationwemustdiscloseinreportswefileor submitunder theExchangeActisaccumulatedandcommunicatedtomanagement,and recorded,processed,summarizedand reportedwithinthetimeperiodsspecifiedintherulesandformsoftheSEC. Webelievethatanydisclosure controlsandproceduresorinternalcontrolsandprocedures,nomatterhow well-conceivedand operated,can provideonly reasonable,not absolute,assurancethattheobjectivesof thecontrolsystemaremet.

Theseinherentlimitationsincludetherealitiesthatjudgmentsin decision-makingcan be faulty,and that breakdownscan occurbecauseof simpleerroror mistake.For example,our directorsor executiveofficerscould inadvertentlyfailtodiscloseanewrelationshiporarrangementcausingus to failto makeany relatedparty transactiondisclosures.Additionally,controlscanbecircumventedbytheindividualactsofsomepersons,by collusionoftwoormorepeopleor by an unauthorizedoverrideof thecontrols.Accordingly,becauseof the ~~foreseeable future.~~inherentlimitationsinourcontrolsystem,misstatementsduetoerroror fraudmayoccurand not be detected.In addition,wedonothave a riskmanagementprogramor processesor proceduresforidentifyingand addressing risksto our businessin otherareas.

We maybe subjectto securitieslitigation,which isexpensiveand could divertmanagementattention.

Themarketpriceofourcommonstockmaybevolatile.Thestockmarketingeneral,and Nasdaq and biopharmaceuticalcompaniesin particular,have experiencedextremepriceand volumefluctuationsthat have oftenbeenunrelatedordisproportionatetotheoperatingperformanceof thesecompanies.In thepast,companies thathaveexperiencedvolatilityin themarketpriceof theirstockhave been subjectto securitiesclassaction litigation.Wemaybethetargetofthistypeoflitigationinthefuture.Securitieslitigationagainstuscouldresult in substantialcostsand divertour management’sattentionfromotherbusinessconcerns,which could seriously harmour business.

In the third quarter of 2020, we completed our IPO and sold 9,573,750 shares of common stock at an IPO price of $19.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to registration statements on Form S-1 (File No. 333-248628), which was declared effective by the SEC on September 24, 2020, as supplemented by a registration statement on Form S-1 filed pursuant to Rule 462(b) (File No. 333-248628). We received net proceeds from the IPO of approximately $166.6 million, after deducting underwriting discounts and commissions of approximately $12.7 million and offering expenses of approximately $2.5 million. Morgan Stanley, Goldman Sachs & Co. LLC and BofA Securities acted as joint book-running managers of the offering and as representatives of the underwriters. None of the expenses associated with the IPO were paid to directors, officers, persons owning 10% or more of any class of equity securities, or to their associates, or to our affiliates.

There has been no material change in the planned use of proceeds from our IPO as described in the prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on September 25, 2020.

Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).

*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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

Delaware	81-1384762
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Powder Mill Road Wilmington, Delaware	19803
(Address of principal executive offices)	(Zip Code)

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets (Unaudited)	1
	Statements of Operations (Unaudited)	2
	Statements of Changes in Convertible Preferred Stock and Stockholder’s Equity (Deficit) (Unaudited)	3
	Statements of Cash Flows (Unaudited)	54
	Notes to Unaudited Interim Financial Statements	65
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1312
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2120
Item 4.	Controls and Procedures	2120
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2220
Item 1A.	Risk Factors	2221
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6768
Item 3.	Defaults Upon Senior Securities	6768
Item 4.	Mine Safety Disclosures	6768
Item 5.	Other Information	6768
Item 6.	Exhibits	6869
Signatures		6970

	Fair value measurement at reporting date using						Fair value measurement at reporting date using
(in thousands)	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020:
June 30, 2021:
Assets:
Cash equivalents (Money Market Funds)	$	233,364	$	—	$	—	$	341,198	$	—	$	—
December 31, 2019:
December 31, 2020:
Assets:
Cash equivalents (Money Market Funds)	$	18,779	$	—	$	—	$	217,072	$	—	$	—

(in thousands)
2021 (remaining)	$	702
2022		1,403
Total undiscounted lease payments		2,105
Less imputed interest		(159	)
Current and noncurrent lease liability	$	1,946

	Number of shares			Weighted average exercise price per share		Weighted average remaining contractual term (years)		Number of shares			Weighted average exercise price per share		Weighted average remaining contractual term (years)
Outstanding at January 1, 2020		2,269,742		$	1.66		9.20
Outstanding at January 1, 2021									6,839,091		$	8.46		9.17
Granted		4,594,130		$	9.38				423,395		$	45.30
Exercised		(98,254	)	$	0.98				(458,060	)	$	1.76
Forfeited		(115,736	)	$	1.37				(34,988	)	$	43.36
Outstanding at September 30, 2020		6,649,882		$	7.00		9.40
Exercisable at September 30, 2020		783,236		$	1.64		8.40
Outstanding at June 30, 2021									6,769,438		$	11.04		8.79
Exercisable at June 30, 2021									1,255,060		$	2.21		8.13

	Convertible preferred stock																		Stockholders’ equity (deficit)
	Series A						Series B						Series C						Voting common stock				Non-voting common stock				Additional paid-in		Accumulated
(in thousands, except shares)	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at January 1, 2020		11,736,119		$	36,595			7,628,846		$	29,848			—		$	—			3,161,653	$	—		—	$	—	$	1,085	$	(50,497	)	$	(49,412	)
Sale of Series B convertible preferred stock, net of issuance costs of $58		—			—			7,628,846			29,942			—			—			—		—		—		—		—		—			—
Stock-based compensation expense, including issuance of restricted stock awards		—			—			—			—			—			—			432,301		—		—		—		362		—			362
Net loss		—			—			—			—			—			—			—		—		—		—		—		(9,511	)		(9,511	)
Balance at March 31, 2020		11,736,119			36,595			15,257,692			59,790			—			—			3,593,954		—		—		—		1,447		(60,008	)		(58,561	)
Exercise of stock options		—			—			—			—			—			—			36,745		—		—		—		31		—			31
Stock-based compensation expense		—			—			—			—			—			—			—		—		—		—		627		—			627
Net loss		—			—			—			—			—			—			—		—		—		—		—		(11,408	)		(11,408	)
Balance at June 30, 2020		11,736,119			36,595			15,257,692			59,790			—			—			3,630,699		—		—		—		2,105		(71,416	)		(69,311	)
Exercise of stock options		—			—			—			—			—			—			61,509		—		—		—		65		—			65
Sale of Series C convertible preferred stock, net of issuance costs of $174		—			—			—			—			3,443,612			49,826			—		—		—		—		—		—			—
Conversion of convertible preferred stock into voting and non-voting common stock upon initial public offering		(11,736,119	)		(36,595	)		(15,257,692	)		(59,790	)		(3,443,612	)		(49,826	)		19,327,052		2		11,110,371		1		146,208		—			146,211
Sale of common stock in initial public offering, net of offering costs of $2,538		—			—			—			—			—			—			9,573,750		1		—		—		166,629		—			166,630
Stock-based compensation expense		—			—			—			—			—			—			—		—		—		—		1,472		—			1,472
Net loss		—			—			—			—			—			—			—		—		—		—		—		(16,760	)		(16,760	)
Balance at September 30, 2020		—		$	—			—		$	—			—		$	—			32,593,010	$	3		11,110,371	$	1	$	316,479	$	(88,176	)	$	228,307

	September 30,				June 30,
	2020		2019		2021		2020
Series A convertible preferred stock		—		11,736,119		—		11,736,119
Series B convertible preferred stock		—		7,628,846		—		15,257,692
Unvested restricted stock awards		1,312,024		1,394,056		841,965		1,409,250
Unvested restricted stock units						25,000		—
Stock options		6,649,882		2,189,333		6,769,438		3,578,863
		7,961,906		22,948,354		7,636,403		31,981,924

	Three Months Ended September 30,				Nine Months September 30,				Three Months Ended June 30,				Six Months June 30,
(in thousands)	2020		2019		2020		2019		2021		2020		2021		2020
Research and development	$	630	$	135	$	1,047	$	250	$	2,203	$	244	$	4,043	$	417
General and administrative		842		162		1,414		270		2,034		383		4,080		572
	$	1,472	$	297	$	2,461	$	520	$	4,237	$	627	$	8,123	$	989

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.31 - $1.02		253,931		7.43	$	0.98		162,037	$	0.96
$1.43 - $1.89		3,259,095		9.05		1.85		619,998		1.79
$12.85 - $19.00		3,136,856		9.92		12.86		1,201		12.85
		6,649,882						783,236

	Nine months ended September 30,						Six months ended June 30,
	2020			2019			2021			2020
Expected volatility		115.09	%		91.60	%		115.05	%		111.81	%
Risk-free interest rate		0.42	%		1.88	%		0.93	%		0.51	%
Expected life (in years)		6.25			6.25			5.91			6.25
Expected dividend yield		—			—			—			—

	Number of shares			Weighted-average grant date fair value
Unvested balance at January 1, 2020		1,335,349		$	1.42
Granted		432,301		$	3.26
Vested		(455,626	)	$	1.40
Unvested balance at September 30, 2020		1,312,024		$	2.03

	Number of shares			Weighted-average grant date fair value
Unvested balance at January 1, 2021		1,214,778		$	2.09
Vested		(372,813	)	$	1.95
Unvested balance at June 30, 2021		841,965		$	2.16

	Three months ended September 30,						Change			Three months ended June 30,						Change
(in thousands)	2020			2019						2021			2020
Operating expenses:
Research and development	$	15,293		$	5,490		$	9,803		$	22,409		$	9,776		$	12,633
General and administrative		2,851			1,394			1,457			5,513			1,660			3,853
Total operating expenses		18,144			6,884			11,260			27,922			11,436			16,486
Loss from operations		(18,144	)		(6,884	)		(11,260	)		(27,922	)		(11,436	)		(16,486	)
Other income, net		1,384			150			1,234			1,057			28			1,029
Net loss	$	(16,760	)	$	(6,734	)	$	(10,026	)	$	(26,865	)	$	(11,408	)	$	(15,457	)

Exhibit Number	Description	Form	File No.	Exhibit No.	Exhibit Filing Date	Filed/Furnished Herewith
3.1	Restated Certificate of Incorporation of Prelude Therapeutics Incorporated					X
3.2	Restated Bylaws of Prelude Therapeutics Incorporated					X
4.1	Form of Common Stock Certificate.	S-1/A	333-248628	4.1	09/16/2020
10.1	Form of Indemnification Agreement with directors and officers.	S-1	333-248628	10.1	09/04/2020
10.2	2016 Stock Incentive Plan and forms of award agreements.	S-1	333-248628	10.2	09/04/2020
10.3	2020 Equity Incentive Plan and forms of award agreements.	S-1/A	333-248628	10.3	09/21/2020
10.4	2020 Employee Stock Purchase Plan and forms of award agreements.	S-1/A	333-248628	10.4	09/21/2020
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
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.					X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
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.					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document.					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.					X

	~~Company Name~~Prelude Therapeutics Incorporated

Date: ~~November 10, 2020~~August 12, 2021	By:	/s/ Krishna Vaddi
		Krishna Vaddi, PhD
		Chief Executive Officer
		(Principal Executive Officer)
Date: ~~November 10, 2020~~August 12, 2021	By:	/s/ Brian Piper
		Brian Piper, M.B.A.
		Chief Financial Officer
		(Principal Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company