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 May ~~7, 2021,~~4, 2022, the registrant had ~~46,958,198~~47,695,639 shares of voting and non-voting common stock, $0.0001 par value per share, outstanding.

(in thousands, except share data)	March 31, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	362,990		$	218,309		$	51,634		$	31,828
Marketable securities								214,555			259,405
Prepaid expenses and other current assets		2,028			2,500			3,783			3,882
Total current assets		365,018			220,809			269,972			295,115
Restricted cash								4,044			4,044
Property and equipment, net		2,627			2,480			4,122			3,929
Right-of-use asset		2,186			—			2,224			1,707
Deferred offering costs		—			301
Other assets								309			303
Total assets	$	369,831		$	223,590		$	280,671		$	305,098
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,842		$	3,920		$	7,390		$	7,840
Accrued expenses and other current liabilities		6,179			7,455			6,820			9,621
Operating lease liability		1,403			—			1,859			1,740
Total current liabilities		12,424			11,375			16,069			19,201
Other liabilities		—			32			2,400			—
Operating lease liability		840			—			390			—
Total liabilities		13,264			11,407			18,859			19,201
Commitments (Note 7)
Commitments (Note 8)
Stockholders’ equity:
Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 35,388,909 and 32,595,301 shares issued and outstanding at March 31, 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 March 31, 2021 and December 31, 2020, respectively		1			1
Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 36,293,331 and 36,200,299 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								4			4
Non-voting common stock, $0.0001 par value; 12,850,259 shares authorized; 11,402,037 and 11,402,037 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								1			1
Additional paid-in capital		485,288			319,605			512,705			505,723
Accumulated other comprehensive income (loss)								(2,313	)		(711	)
Accumulated deficit		(128,726	)		(107,426	)		(248,585	)		(219,120	)
Total stockholders’ equity		356,567			212,183			261,812			285,897
Total liabilities and stockholders’ equity	$	369,831		$	223,590		$	280,671		$	305,098

	Three Months Ended March 31,						Three Months Ended March 31,
(in thousands, except share and per share data)	2021			2020			2022			2021
Operating expenses:
Research and development	$	16,470		$	8,536		$	22,821		$	16,470
General and administrative		5,497			1,201			7,467			5,497
Total operating expenses		21,967			9,737			30,288			21,967
Loss from operations		(21,967	)		(9,737	)		(30,288	)		(21,967	)
Other income, net		667			226			823			667
Net loss	$	(21,300	)	$	(9,511	)	$	(29,465	)	$	(21,300	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.47	)	$	(5.12	)	$	(0.63	)	$	(0.47	)
Weighted average common shares outstanding, basic and diluted		45,121,955			1,857,023			47,066,427			45,121,955
Comprehensive loss
Net loss							$	(29,465	)	$	(21,300	)
Unrealized loss on marketable securities, net of tax								(1,602	)		—
Comprehensive loss							$	(31,067	)	$	(21,300	)

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

	Stockholders’ equity																Stockholders’ equity (deficit)
	Voting common stock				Non-voting common stock				Additional paid-in		Accumulated						Voting common stock				Non-voting common stock						Accumulated Other
(in thousands, except shares)	Shares		Amount		Shares		Amount		capital		deficit			Total			Shares		Amount		Shares		Amount		Additional paid-in capital		Comprehensive Income (Loss)			Accumulated deficit			Total
Balance at January 1, 2021		32,595,301	$	3		11,110,371	$	1	$	319,605	$	(107,426	)	$	212,183
Balance at January 1, 2022																		36,200,299	$	4		11,402,037	$	1	$	505,723	$	(711	)	$	(219,120	)	$	285,897
Exercise of stock options		210,274		—		—		—		386		—			386			93,032		—		—		—		153		—			—			153
Sale of common stock, net of offering costs of $739		2,583,334		1		291,666		—		161,411		—			161,412
Unrealized loss on marketable securities																		—		—		—		—		—		(1,602	)		—			(1,602	)
Stock-based compensation expense		—		—		—		—		3,886		—			3,886			—		—		—		—		6,829		—			—			6,829
Net loss		—		—		—		—		—		(21,300	)		(21,300	)		—		—		—		—		—		—			(29,465	)		(29,465	)
Balance at March 31, 2021		35,388,909	$	4		11,402,037	$	1	$	485,288	$	(128,726	)	$	356,567
Balance at March 31, 2022																		36,293,331	$	4		11,402,037	$	1	$	512,705	$	(2,313	)	$	(248,585	)	$	261,812

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
)

	Stockholders’ equity (deficit)
	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

	Three months ended March 31,						Three months ended March 31,
(in thousands)	2021			2020			2022			2021
Cash flows used in operating activities:
Net loss	$	(21,300	)	$	(9,511	)	$	(29,465	)	$	(21,300	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		160			132			307			160
Noncash lease expense		282			—			411			282
Stock-based compensation		3,886			362			6,829			3,886
Amortization of premium and discount on marketable securities, net								748			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		761			436			93			761
Accounts payable		1,601			(72	)		2			1,601
Accrued expenses and other liabilities		(1,372	)		(1,268	)		(401	)		(1,372	)
Operating lease liabilities		(161	)		—			(419	)		(161	)
Net cash used in operating activities		(16,143	)		(9,921	)		(21,895	)		(16,143	)
Cash flows used in investing activities:
Cash flows provided by (used in) investing activities:
Proceeds from maturities of marketable securities								42,500			—
Purchases of property and equipment		(986	)		(80	)		(952	)		(986	)
Net cash used in investing activities		(986	)		(80	)
Net cash provided by (used in) investing activities								41,548			(986	)
Cash flows provided by financing activities:
Proceeds from the sale of common stock, net of offering costs		161,424			—			—			161,424
Proceeds from the sale of Series B convertible preferred stock, net of offering costs		—			29,942
Payment of capital lease obligation		—			(95	)
Proceeds from the exercise of stock options		386			—			153			386
Net cash provided by financing activities		161,810			29,847			153			161,810
Net increase in cash and cash equivalents		144,681			19,846			19,806			144,681
Cash and cash equivalents at beginning of period		218,309			18,879
Cash and cash equivalents at end of period	$	362,990		$	38,725
Cash, cash equivalents, and restricted cash at beginning of period								35,872			218,309
Cash, cash equivalents, and restricted cash at end of period							$	55,678		$	362,990
Supplemental disclosures:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities							$	928		$	—
Property and equipment in accounts payable	$	86		$	33		$	354		$	86
Reclassification of offering costs paid in a prior period	$	12		$	—
Unrealized loss on marketable securities							$	(1,602	)	$	—

Prelude Therapeutics Incorporated (the “Company”) was incorporated in Delaware on February 5, 2016 and is a clinical-stage ~~precision~~fully integrated oncology company ~~focused~~built on ~~discovering and developing small molecule therapies optimized~~a foundation of drug discovery excellence to ~~target the key driver mechanisms in cancers with high unmet need.~~deliver novel precision cancer medicines to underserved patients. 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.

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 ~~$128.7~~$248.6 million at March 31, ~~2021.~~2022. 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, cash equivalents, and ~~cash equivalents~~marketable securities as of March 31, ~~2021~~2022 will be sufficient to fund its operating expenses and capital expenditure requirements into ~~2023.~~the second half of 2024.

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 and emerging variants 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, ~~2020~~2021 can be found in “Note 3. Summary of significant accounting policies” of the Company’s Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March ~~16, 2021.~~17, 2022. 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 ~~month periods~~months ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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, ~~2020~~2021 found in the Form 10-K filed with the SEC on March ~~16, 2021.~~17, 2022. 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”).

The preparation of the unaudited interim financial statements in conformity with 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. The 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 March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

The Company’s cash equivalents include short-term highly liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value in the accompanying balance sheets.

Restricted cash comprises a letter of credit for the benefit of the landlord in connection with the Company’s Chestnut Run Lease. See Note 8 for further details.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that total to the amounts shown in the statement of cash flows:

The Company’s marketable securities consist of investments in corporate debt securities and commercial paper that are classified as available-for-sale. The securities are carried at fair value with the unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss), a component of stockholders’ equity (deficit). Realized gains and losses as well as credit losses, if

any, on marketable securities are included in the Company's statements of operations. The Company classifies marketable securities that are available for use in current operations as current assets on the balance sheets.

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 ~~convertible preferred stock and~~ stock options, and the effect from unvested restricted stock awards and restricted stock units 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. The Company’s ~~convertible preferred stock and~~ unvested restricted stock ~~entitles~~awards entitle 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 awards 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.

InJune 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” which has subsequently been amended by ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11, and ASU No. 2020-03 (“ASU 2016-03”). This guidance replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company early adopted this standard as of January 1, 2021, the Company adopted ASC 842 issued by the FASB in February 2016, which was subsequently supplemented by clarifying guidance to improve financial reporting of leasing transactions. The new lease accounting guidance requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for all leases with initial terms longer than 12 months and provides enhanced disclosures on key information of leasing arrangements.

~~The Company adopted the new standard~~2022 using ~~the~~a modified retrospective ~~transition method utilizing the optional transition method and elected the package of practical expedients. Accordingly, prior periods will not be 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 the lease and non-lease components of each of its operating leases 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. Refer to Note 7 for the Company’s lease disclosures.

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 consolidated balance sheet. The Company had no Short-Term Leases as of March 31, 2021.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the remaining lease payments using the 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 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 lease term. Rent expense is recorded on a straight-line basis over the expected lease term.

~~The adoption of the new lease accounting standard~~approach. It did not have a material impact on the Company’s ~~results~~financial statements and related disclosures.

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance: Disclosures by Business Entities about Government Assistance”. The amendments in this Update improve financial reporting by requiring disclosures that increase the transparency of ~~operations~~transactions with a government. The amendments require the following annual disclosures about transactions with a government that are accounted for by applying a grant or ~~cash flows~~contribution accounting model by analogy (i) the type of transaction (ii) the accounting for the ~~three months ended March 31, 2021.~~transaction, and (iii) the effect of the transaction on the entity’s financial statements. The Company adopted this

standard as of January 1, 2022 using a prospective approach and it did not have a material impact on the Company’s financial statements and related disclosures.

(in thousands)	Amortized Cost		Gross unrealized gain		Gross unrealized loss			Fair Value
March 31, 2022
Corporate debt securities	$	180,532	$	—	$	(2,237	)	$	178,295
Commercial paper		36,336		—		(76	)		36,260
Total	$	216,868	$	—	$	(2,313	)	$	214,555

December 31, 2021
Corporate debt securities	$	193,798	$	1	$	(696	)	$	193,103
Commercial paper		66,318		1		(17	)		66,302
Total	$	260,116	$	2	$	(713	)	$	259,405

The Company’s marketable securities generally have contractual maturity dates of 15 months or less. The Company believes that any unrealized losses associated with the decline in value of its securities is temporary, is primarily related to market factors and believes that it is more likely than not that it will be able to hold its debt securities to maturity. Therefore, the Company anticipates a full recovery of the amortized cost basis of its debt securities at maturity and an allowance for credit losses was not recognized.

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:

	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)
March 31, 2021:
March 31, 2022:
Assets:
Cash equivalents (Money Market Funds)	$	360,549	$	—	$	—	$	47,920	$	—	$	—
December 31, 2020:
Marketable securities
Corporate debt securities								—		178,295		—
Commercial paper								—		36,260		—
Total							$	47,920	$	214,555	$	—

December 31, 2021:
Assets:
Cash equivalents (Money Market Funds)	$	217,072	$	—	$	—	$	30,520	$	—	$	—
Marketable securities
Corporate debt securities								—		193,103		—
Commercial paper								—		66,302		—
Total							$	30,520	$	259,405	$	—

In January 2021, the Company sold 2,875,000 shares of its common stock at a public offering price of $60.00 per share. The Company received net proceeds of $161.4 million after deducting underwriting discounts, commissions, and other offering expenses paid by the Company.

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.~~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~~(the “Lease”). During the first quarter of 2022, the Lease was amended to allow the Company ~~has an~~the option to renew the ~~leases~~Lease for two 6-month periods and the Company exercised its option to renew the lease for an additional ~~1-year period.~~ ~~This~~6 months until June 30, 2023. The second optiontoextend the Lease for an additional 6 monthswasnotrecognizedas partof theCompany’s measurementof theright-of-useassetand operatingleaseliabilityas of March 31, ~~2021~~2022. ThediscountrateusedtoaccountfortheCompany’s operatingleaseunderASC 842istheCompany’sestimatedincrementalborrowingrateof~~10.0%~~6.0%.

Rentexpenseforthethree monthsended March 31, 2022 and2021 was$0.5millionand ~~2020 was~~ $0.3 million, ~~and $0.2 million,~~ respectively.

Futureminimumannualleasepaymentsunder the ~~Company’s~~ ~~noncancelable lease~~ Leaseat March 31, ~~2021~~ 2022isasfollows:

During the fourth quarter of 2021, the Company entered into a lease agreement (the “Chestnut Run Lease”) with a commencement date of the earlier of (i) the Landlord Work Substantial Completion Date (as such term is defined in the Chestnut Run Lease), or (ii) the date the Company takes possession of the premises for the conduct of the Company’s business (the “Commencement Date”). The Chestnut Run Lease premises includes approximately 81,000 square feet, located at Chestnut Run Plaza in Wilmington, Delaware (the Premises). The Premises contains both office and lab space the Company intends to use for administrative, research and development and other activities. Upon the Commencement Date, the Company will recognize a right-of-use asset and operating lease liability in accordance with ASC 842. The Chestnut Run Lease has an initial term of 162 months with 3 five-year extension options and certain expansion rights. The aggregate estimated rent payments due over the initial term of the Chestnut Run Lease is approximately $33.8 million. The estimated rent payments due for the remainder of 2022 along with each of the next five years and thereafter is as follows:

The Company paid a security deposit for the Chestnut Run Lease in the form of a letter of credit of $4.0 million, which is included in the balance sheet as restricted cash as of March 31, 2022. The security deposit may be reduced to $0.5 million over time in accordance with the terms of the Chestnut Run Lease.

In connection with the Company’s expansion of operations in the State of Delaware, the Company was approved for a grant from the State of Delaware in 2021 that will provide up to $5.5 million in reimbursements over three years for the development of lab space in addition to increasing jobs in Delaware to meet specific targeted levels through 2023. During the first quarter of 2022, the Company received cash of $2.4 million from the grant for the development of lab space. The Company has deferred the recognition of these grant funds as they relate to capitalized costs and has classified them as long-term liabilities on the balance sheet. The Company will recognize the grant funds in other income as grant income over the useful life of the related assets. If, after two years from the disbursement date, the incurred costs for lab space are less than the $2.4 million received, the Company is required to pay back the difference between total funds received and allowable costs incurred. Additionally, if the Company leaves the State of Delaware within five years of the disbursement, the Company is required to return an amount equal to the amount of grant funds disbursed on a pro-rated basis. During the first quarter of 2022, the Company also received cash of $0.3 million for satisfying the first performance benchmark measurement. The Company recognized this in other income, net on the statement of operations and comprehensive loss.

To the extent the Company’s employee headcount is fewer than the performance benchmark, the Company is required to repay the amount of grant funds received for the number of employees below the benchmark.

The Company entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment ~~agreements~~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 4%3% of the participant’s compensation. ~~During~~For both the three months ended March 31, 2022 and 2021, the Company made matching contributions of $0.2 million.

In September 2021, the Company entered into a research collaboration agreement estimated to last for approximately one year (the “Darwin Health Agreement”) with Darwin Health, Inc. (“DarwinHealth”). Under the terms of the Darwin Health Agreement, DarwinHealth will utilize their drug discovery technologies and certified methodologies in precision oncology to advance and accelerate clinical development for certain of the Company’s programs across a broad range of tumor subtypes. The Company will pay DarwinHealth a total of $3.0 million in 3 equal installments over the one-year term (the “Research Term”) to fund the research and, if the Company adopts any of DarwinHealth’s development ideas, the Company will be responsible for the development, manufacturing, and commercialization of any such products. In addition to research funding, DarwinHealth is eligible to receive future research, development and regulatory milestones of up to $3.0 million for each product candidate and is also eligible to receive tiered royalties in the low single digits on net sales of each product developed using DarwinHealth’s development technologies or methods. However, within eighteen-months following the Research Term, the Company, in its sole discretion, may notify DarwinHealth that it will not utilize its development ideas and will be entitled to receive a refund of $0.5 million.

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”) and as of March 31, ~~2021, 6,555,615~~2022, 6,240,398 shares were available for future 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, restricted stock units 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~~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 adopted the 2020 Employee Stock Purchase Plan (the “ESPP”), which, as of March 31, 2021, had 957,056 shares of common stock reserved for future issuance. No shares have been issued from the ESPP as of March 31, 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:

	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, 2021		6,839,091		$	8.46		9.17
Outstanding at January 1, 2022									7,179,482		$	15.36		8.66
Granted		115,575		$	80.10				1,646,416		$	10.60
Exercised		(210,274	)	$	1.84				(93,032	)	$	1.64
Forfeited		(11,423	)	$	7.94				(191,849	)	$	17.86
Outstanding at March 31, 2021		6,732,969		$	9.90		8.96
Exercisable at March 31, 2021		1,209,260		$	1.99		8.26
Outstanding at March 31, 2022									8,541,017		$	14.54		8.70
Exercisable at March 31, 2022									2,285,520		$	8.08		7.85

At March 31, ~~2021,~~2022, the aggregate intrinsic value of outstanding options and exercisable options was ~~$232.3~~$11.3 million and ~~$50.0~~$6.7 million, respectively.

The following table summarizes information about stock options outstanding at March 31, ~~2021~~2022 under the Plan:

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 - $7.37

3,300,710

8.46

$
1.80

1,181,544

$
1.73

$7.38 - $15.93

3,118,268

9.42

12.85

26,564

12.85

$15.94 - $88.98

313,991

9.74

65.66

1,152

19.00

6,732,969

1,209,260

	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 - $5.99		2,213,458		7.52	$	1.80		1,300,092	$	1.76
$6.00 - $11.72		1,625,800		9.88		10.58		2,250		10.09
$11.73 - $13.04		2,392,956		8.42		12.85		893,074		12.85
$13.05 - $31.13		607,804		9.48		20.34		11,469		15.72
$31.14 - $88.98		1,700,999		9.23		35.21		78,635		57.34
		8,541,017						2,285,520

The weighted-average grant date fair value of options granted was ~~$68.39~~$7.62 and ~~$2.87~~$68.39 per share for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The aggregate intrinsic value of options exercised was ~~$9.5~~$0.6 million for the three months ended March 31, ~~2021.~~2022. The Company recorded stock-based compensation expense of ~~$3.7~~$6.5 million and ~~$0.3~~$3.7 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, related to stock options. As of March 31, ~~2021,~~2022, the total unrecognized compensation expense related to unvested stock option awards was ~~$52.5~~$72.2 million, which the Company expects to recognize over a weighted-average period of ~~3.34~~3.01 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 $0.2 million ~~and $0.1 million~~ for both the three months ended March 31, ~~2021~~2022 and ~~2020, respectively,~~2021 related to RSAs. As of March 31, ~~2021,~~2022, the total unrecognized expense related to all RSAs was ~~$2.0~~$1.1 million, which the Company expects to recognize over a weighted-average period of ~~2.49~~1.63 years.

In 2021, the Company granted restricted stock units (“RSU”) to employees that generally 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 March 31, 2022 there were 20,000 RSUs outstanding which had a weighted-average grant date fair value of $18.32. There were 0 RSUs granted or forfeited during the three months ended March 31, 2022. The Company recorded stock-based compensation expense of $24 thousand for the three months ended March 31, 2022 related to RSUs. At March 31, 2022 the total unrecognized expense related to the RSUs was $0.3 million, which the Company expects to recognize over 3.51 years.

The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of March 31, 2022, had 1,407,365 shares of common stock reserved for future issuance. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year and continuing for ten years beginning in 2021, in an amount equal to 1 percent of the total number of shares of all classes 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. On January 1, 2022, 476,023 shares were added to the ESPP.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee. Eligible employees may purchase the Company’s common stock at 85% of the lower of the fair market value of the Company’s common stock on the first day of the offering period or on the last day of the offering period. Eligible employees may contribute up to 15% of their eligible compensation. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding.

The ESPP is considered compensatory under the FASB stock compensation rules. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period. The Company recognized share-based compensation expense of $0.1 million and nil for the three months ended March 31, 2022 and 2021, respectively, related to the ESPP.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our 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~~fully integrated oncology company ~~focused~~built on ~~discovering and developing small molecule therapies optimized~~a foundation of drug discovery excellence to ~~target the key driver mechanisms in cancers with high unmet need.~~deliver novel precision cancer medicines to underserved patients. 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.~~trials. 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 ~~four~~six investigational new drug applications, or INDs, and successfully advanced ~~three of~~ these programs into clinical ~~development, with the fourth expected to begin clinical development in the coming months.~~trials. In addition, we have ~~three~~two unique programs in various stages of preclinical development that we plan to advance into clinical development ~~beginning~~ in ~~2021.~~2022.

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~~We have advanced four candidates in clinical trials and intend to file two INDs in the second half of 2022.

We have two clinical candidates that 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. WeOur PRMT5 candidates are currently ~~advancing our first clinical candidate, PRT543,~~being studied in a Phase 1 clinical ~~trial~~trials in ~~select~~ solid tumors and myeloid ~~malignancies in patients who are refractory to or intolerant of established therapies. Interim~~malignancies.

Based on data from the ongoing Phase 1 ~~results indicate dose-dependent increases~~dose expansion studies of our PRMT5 candidates, we are concentrating our further development efforts on our PRT811 candidate in ~~exposure and~~biomarker-selected patients in specific cancer types. PRT811 was selected based on its superior safety profile, higher level of target engagement, and unique brain penetrant properties.

Specifically, for the PRMT5 program, we have observed early signs of clinical activity, including an ongoing confirmed complete response, or CR, in a patient with HRD+ high grade serous ovarian cancer through nine months of therapy. A complete response is defined as the disappearance of all target lesions. 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 as of the date of this Quarterly Report on Form 10-Q. Patient enrollment is complete in the adenoid cystic carcinoma expansion cohort of the Phase 1 trial, and enrollment is underway in additional expansion cohorts of solid tumors and hematological malignancies. We anticipate presenting initial clinical data from the Phase 1 trial at medical meetings in the second half of 2021.intend to:

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. As 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 subsequently underwent a follow-up MRI at week 18 and the regression has improved to 77% from baseline, confirming a partial response, or PR, per RANO (response assessment in neuro-oncology) criteria. We expect to begin enrolling patients in the expansion portion of the Phase 1 clinical trial by mid-2021 and anticipate obtaining initial clinical data from this trial by the end of 2021.

PRT1419, our ~~third~~next clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1. The potency and selectivity 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 have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloid leukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or MM, into the Phase 1 ~~open-label, multicenter~~ clinical trial for the oral formulation of PRT1419. ~~We expect to add~~The dose ~~expansion and combination cohorts to this Phase 1 clinical trial in~~escalation portion of the ~~second half of 2021. Additionally, in March 2021, the FDA cleared our IND for an intravenous (IV) formulation of PRT1419. A~~ Phase 1 trial of both oral formulation and the IV formulation, which leverages the optimized physicochemical properties of ~~MRT1419, is expected~~PRT1419, are underway in patients with solid tumors and hematologic tumors.

Based on the data to ~~commence~~date, we have prioritized development of the IV formulation of PRT1419 which demonstrated a desirable pharmacokinetic, pharmacodynamic and safety profile with potential for differentiation from competitor compounds. We intend to evaluate combinations with PRT1419 by mid-year, with the goal of establishing safety, clinical activity and a recommended Phase 2 dose in the ~~coming months.~~second half of 2022.

PRT2527 is designed to be a potent and selective Cyclin-dependent kinase 9, or CDK9, inhibitor. In preclinical studies, PRT2527 was shown to reduce MCL1 and MYC protein levels and was highly active in preclinical models at well-tolerated doses. PRT2527 has demonstrated high potency and kinase selectivity which may offer improved efficacy and safety compared to less selective CDK9 inhibitors. Preclinical data demonstrated that treatment with PRT2527 depleted oncogenic drivers with short half-lives, such as MYC and MCL1, and effectively induced apoptosis. PRT2527 treatment demonstrated robust efficacy in both hematological malignancies and solid tumor models with MYC dysregulation. A phase one trial is underway evaluating escalating IV doses of PRT2527 as a monotherapy in patients with selected solid tumors, including sarcoma, prostate cancer, lung cancer, and other cancers with genomic alterations that lead to MYC dependence. We anticipate completing enrollment in the Phase 1 dose escalation study of PRT2527 with the goal of identifying a recommended Phase 2 dose in the second half of 2022.

In addition to our four clinical stage candidates, we are advancing two new preclinical programs. Our most advanced preclinical program has led to the identification of PRT3645, a brain penetrant molecule that potently and selectively targets CDK4/6. IND-enabling studies for PRT3645 are ongoing and we intend to complete IND-enabling studies, file an IND and initiate a Phase 1 clinical trial in the second half of 2022. Our second pre-clinical program targets Brahma homologue, or BRM, otherwise known as SMARCA2. We have identified SMARCA2 protein degraders that appear to be potent based on preclinical data demonstrating degradation of SMARCA2 at sub-nanomolar concentrations. Optimization of the lead compound, PRT-SCA2, is progressing, and we intend to complete IND-enabling studies and submit an IND application by year-end 2022.

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. Our net loss was $29.5 million and $21.3 million for the three months ended March 31, 2022 and 2021, ~~as compared to $9.5 million for the three months ended March 31, 2020, and as~~respectively. As of March 31, ~~2021,~~2022, we had an accumulated deficit of ~~$128.7~~$248.6 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 March 31, ~~2021,~~2022, we had ~~$363.0~~$266.2 million in cash, cash equivalents, and ~~cash equivalents.~~marketable securities. We expect our existing cash, ~~and~~ cash equivalents and marketable securities will enable us to fund our operating ~~expenses~~expense and capital expenditures into ~~2023.~~the second half of 2024.

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. See the Risk Factor “The COVID-19 pandemic could adversely impact our business, including our clinical trials and clinical trial operations” in Part II, Item 1A. “Risk Factors” below.

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 and potential commercialization ~~efforts and increased costs of operating as a public company.~~efforts. 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 marketable securities 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 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.

The following table sets forth our results of operations for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

	Three months ended March 31,						Change			Three months ended March 31,						Change
(in thousands)	2021			2020						2022			2021
Operating expenses:
Research and development	$	16,470		$	8,536		$	7,934		$	22,821		$	16,470		$	6,351
General and administrative		5,497			1,201			4,296			7,467			5,497			1,970
Total operating expenses		21,967			9,737			12,230			30,288			21,967			8,321
Loss from operations		(21,967	)		(9,737	)		(12,230	)		(30,288	)		(21,967	)		(8,321	)
Other income, net		667			226			441			823			667			156
Net loss	$	(21,300	)	$	(9,511	)	$	(11,789	)	$	(29,465	)	$	(21,300	)	$	(8,165	)

Research and development expenses increased by ~~$7.9~~$6.4 million to $22.8 million for the three months ended March 31, 2022 from $16.5 million for the three months ended March 31, ~~2021 from $8.5~~2021. Included in research and development expenses for the quarter ended March 31, 2022, was $3.2 million of non-cash expense related to stock-based compensation expense, including employee stock options, compared to $1.8 million for the three months ended March 31, ~~2020.~~ 2021. The increase in research and development expense was ~~mainly~~primarily due to increased clinical research costs for the PRT543 and PRT811 clinical trials and increased costs associated with the initiation of the clinical trial for oral PRT1419, as well as preparation for the anticipated initiation of the Phase 1 trial for IV PRT1419 in the coming months. We also incurred an increase in discovery-stage program expenses and from the growth and advancement of our clinical pipeline. Our chemistry, manufacturing and other costs for ~~those trials.~~the 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 ~~$4.3~~$2.0 million to $7.5 million for the three months ended March 31, 2022 from $5.5 million for the three months ended March 31, ~~2021 from $1.2~~2021. Included in the general and administrative expenses for the quarter ended March 31, 2022, was $3.6 million of non-cash expense related to stock-based compensation expense, including employee stock options, as compared to $2.0 million for the ~~three months ended March 31, 2020.~~same period in 2021. The increase in general and administrative expense was primarily due to an increase in ~~personnel related~~non-cash stock-based compensation expense ~~due to increases in employee headcount and an increase in our~~along with professional fees as we expanded our operations to support our research and development ~~efforts and incurred additional costs to operate as a public company.~~efforts.

Other income, net increased by ~~$0.4~~$0.2 million to $0.8 million for the three months ended March 31, 2022 from $0.7 million for the three months ended March 31, 2021, primarily due to the receipt and recognition of a research and development tax ~~credit~~credits from the State of Delaware induring 2022, as well as interest earned on the ~~first quarter~~investment of ~~2021.~~our cash proceeds.

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, we have funded our operations through the sale of convertible preferred stock and common stock. As of March 31, ~~2021,~~2022, we had ~~$363.0~~$266.2 million in cash, ~~and~~ cash equivalents and marketable securities and had an accumulated deficit of ~~$128.7~~$248.6 million. We expect our existing cash, ~~and~~ cash equivalents and marketable securities to enable us to fund our operating expenses and capital expenditure requirements into ~~2023.~~the second half of 2024. 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 three months ended March 31, 2022, we used $21.9 million of cash in operating activities. Cash used in operating activities reflected our net loss of $29.5 million and a $0.7 million net increase in our operating assets and liabilities, offset by noncash charges of $8.3 million, which consisted of $6.8 million in stock-based compensation, $0.7 million in amortization of premiums and discounts on marketable securities, $0.4 million noncash lease expense, and $0.3 million in depreciation. The primary use of cash was to fund our operations related to the development of our product candidates.

During the three months ended March 31, 2021, we used $16.1 million of cash in operating activities. Cash used in operating activities reflected our net loss of $21.3 million, offset by a $0.8 million net decrease in our operating assets and liabilities and noncash charges of $4.3 million, which consisted of $0.2 million in depreciation and $3.9 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 three months ended March 31, ~~2020, we used $9.9 million~~2022, net cash provided by investing activities consisted primarily of ~~cash in operating activities. Cash used in operating activities reflected our net loss of $9.5 million and a net increase of $0.9~~$42.5 million in ~~our operating assets and liabilities, offset by $0.5 million~~proceeds from maturities of noncash charges, which consisted of $0.1 million in depreciation and amortization and $0.4 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

marketable securities. During the three months ended March 31, 2021 ~~and 2020,~~ we used $1.0 million ~~and $0.1 million~~ of cash ~~respectively,~~ for the purchase of property and equipment.

During the three months ended March 31, 2022, financing activities provided $0.2 million from the exercise of stock options. During the three months ended March 31, 2021, financing activities provided $161.8 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $0.4 million from the exercise of stock options. During the three months ended March 31, 2020 net cash provided by financing activities consisted of $29.8 million from the sale of our Series B convertible preferred stock, offset by payments of $95,000 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 three months ended March 31, ~~2021,~~2022, 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” onin our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~16, 2021.~~17, 2022.

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~~Subject to certain conditions, as an emerging growth company, we may rely on certain 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 ~~Qualitati~~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 March 31, ~~2021,~~2022, 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 March 31, ~~2021,~~2022, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Management determined that, as of March 31, ~~2021,~~2022, 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 on Form 10-Q, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, 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.

Our business is subject to ~~a number of~~several risks and uncertainties, including those immediately following this summary. Some of these risks are:

If we are unable to obtain and maintain patent protection or other necessary rights for our products and technology, or if the scope of the patent protection obtained is not sufficiently broad or our rights under licensed patents is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products and technology may be adversely affected.

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 yet

commercializedany productand we do not expectto generaterevenuefrom salesofany productsforseveralyears,ifatall.Consequently,therehave been limitedoperationsupon which we oryoucanevaluateour ~~business, and predictions~~ business. Predictionsaboutour futuresuccessor viabilitymaynot be as accurateas theycouldbeifwehada longeroperatinghistoryor a historyof successfullydevelopingand commercializing cancertherapies.Forthe ~~three~~ three months ended March 31,~~, 2021~~ 2022 and ~~2020,~~ 2021,wereportedanetlossof ~~$21.3~~

$29.5million and ~~$9.5~~$21.3 million, respectively.AsofMarch31~~2021,~~, 2022,wehadanaccumulateddeficitof$~~128.7~~248.6million.Weexpecttocontinue to incursignificantresearchand developmentand otherexpensesrelatedto our ongoing operations.

Sinceourinception,wehavefocusedsubstantiallyallofoureffortsandfinancialresourceson theresearch, preclinicalandclinicaldevelopmentofour productcandidates,PRT543,PRT811, PRT1419 and ~~clinical development of our product candidates, PRT543, PRT811 and PRT1419,~~ PRT2527,and our research effortsonotherpotentialproductcandidatestargeting ~~Protein Arginine Methyltransferase 5, or~~ PRMT5, ~~Myeloid Cell Leukemia Sequence 1, or~~ MCL1, ~~Cyclin-dependent kinase 9, or~~ CDK9, and ~~Brahma homologue, or~~ BRM, otherwiseknownasSMARCA2.As of March 31, ~~2021,~~2022, our cash, cashequivalents, and ~~cash equivalents~~ marketable securitieswere ~~$363.0~~$266.2 million.

Weexpecttoincurincreasinglevelsofoperatinglossesfortheforeseeablefuture,particularlyaswe advance PRT543, PRT811, PRT1419 and ~~PRT1419~~PRT2527 through clinical development. Our prior losses, combined with expectedfuturelosses,havehadandwillcontinueto have an adverseeffecton our stockholders’equityand workingcapital.Weexpectourresearchanddevelopmentexpensestosignificantlyincreasein connectionwith our additionalplannedclinicaltrialsforour leadproductcandidates,includingtheongoing Phase 1 clinicaltrials andtheexpansioncohortsofPRT543 andPRT811, theongoingPhase1clinicaltrialsfor both the ~~planned expansion cohorts~~oral formulation and IV formulation of ~~PRT543 and PRT811,~~PRT1419, the ongoing Phase 1 clinical trial for ~~oral~~ ~~PRT1419~~ PRT2527, and developmentandsubsequentINDsofotherfutureproductcandidateswemaychooseto pursue,including PRT3645, a CDK 4/6 inhibitor, andaSMARCA2 proteindegrader.Inaddition,ifweobtain marketingapprovalfor any of ~~other future product candidates we may choose to pursue, including IV PRT1419, PRT2527,~~ our ~~CDK9 inhibitor, a SMARCA2 protein degrader and a kinase inhibitor. In addition, if~~ productcandidates,we ~~obtain marketing approval for PRT543, PRT811, PRT1419 or another product candidate, we~~ willincursignificantsales, marketing and outsourced manufacturing expenses in connection with the ~~commercialization of PRT543, PRT811, PRT1419 or such other product candidate, respectively.~~ commercialization.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, PRT2527, oranotherproductcandidate.Ourabilitytogeneraterevenuedependson a numberof factors, including,but not limitedto, our abilityto:

To become and remain profitable, we must succeed in designing, developing, and eventually commercializingproductsthatgeneratesignificantrevenue.Thiswillrequireustobesuccessfulinarangeof challengingactivities,includingcompleting ~~preclinical testing and clinical trials for our product candidates, designing additional product candidates, establishing arrangements~~

preclinicaltestingandclinicaltrialsforour productcandidates, designingadditionalproductcandidates,establishingarrangementswith third partiesfor the manufactureof clinicalsuppliesofourproductcandidates,obtainingmarketingapprovalforour productcandidatesand 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,PRT811 ~~and~~ , PRT1419 and PRT2527, andotherpipelineproductcandidates throughclinicaldevelopment,and seekto designadditionalproductcandidatesfromour discoveryprograms.We expectincreasedexpensesaswecontinueourresearchanddevelopment, expand operations and build our ~~research and development,~~ new facility,initiateadditionalclinicaltrials,and seekmarketingapprovalforourleadprogramsandourotherproductcandidates.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.

Webelievethatourexistingcash,cashequivalents, and ~~cash equivalents~~marketable securities willenableustofundouroperatingexpenses,andcapitalexpenditurerequirementsinto ~~2023.~~the second half of 2024. 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 available capital before that time, including changes in and progress of our drug development activities and changes in regulation. Our futurecapitalrequirementswilldepend on manyfactors,including:

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 stockholders,restrictour 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.

We are highlydependenton the successof our productcandidates,PRT543,PRT811, PRT1419 and ~~PRT1419,~~PRT2527, which are in earlyclinical ~~development, and PRT2527, which is in preclinical~~ development.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,PRT811, PRT1419 and ~~PRT1419.~~PRT2527. Weareearlyinourdevelopmentefforts andourleadproductcandidates,

PRT543,PRT811, PRT1419 and~~PRT1419,~~ PRT2527,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 PRT2527,willdepend on severalfactors,includingthefollowing:

Manyofthesefactorsarebeyondourcontrol,anditispossiblethatnone of our productcandidateswillever obtainregulatoryapprovalevenifweexpendsubstantialtimeandresourcesseekingsuchapproval.Ifwedo not achieveoneormoreofthesefactorsinatimelymanneroratall,we couldexperiencesignificantdelaysor an inabilityto successfullycommercializeour productcandidates,which would materiallyharmour business. For example,ourbusinesscouldbeharmedifresultsofourongoingclinicaltrialsofPRT543, PRT811, PRT1419 or ~~PRT1419,~~PRT2527, varyadverselyfromour expectations.

Drug developmentinvolvesa lengthyand expensiveprocess,and clinicaltestingisuncertainas to the outcome.

We currentlyhave threeproductcandidatesin Phase 1 clinicaldevelopmentand 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 observedencouraging 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:

the impact of the ongoing COVID-19 pandemic, which may slow potential enrollment, reduce the number of eligible patients for clinical trials, or reduce the number of patients that remain in our trials.

Delays,includingdelayscausedbytheabove factors,can be costlyand couldnegativelyaffectour abilityto completeaclinicaltrialorobtaintimelymarketingapprovals.Wedonotknowwhetheranyofourplanned preclinicalstudiesorclinicaltrialswillbeginon a timelybasisor atall,willneed 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:

~~availability and efficacy of approved medications for the disease under investigation;~~

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

The COVID-19pandemiccould adverselyimpactour business,includingour clinicaltrialsand clinical trialoperations.

TheCOVID-19 pandemicintheUnitedStatesand in othercountriesin which we have plannedor have activeclinical ~~trials;~~trialsitesand where our third-partymanufacturersoperate, could cause significantdisruptionsthat couldseverelyimpactour businessand clinicaltrials,including:

~~Our inability~~ Suchdisruptionscouldimpede,delay,limitorpreventcompletionofour ongoing clinicaltrialsand preclinicalstudiesor commencementof new clinicaltrialsand ultimatelyleadto ~~enroll~~ thedelayor denialof regulatory approvalofourproductcandidates,whichwouldseriouslyharmour operationsand ~~maintain a sufficient number~~ financialconditionand increaseourcostsandexpenses.WeareinclosecontactwithourCROs, CMOsandclinicalsitesasweseekto mitigatetheimpactof ~~patients for~~ the COVID-19 pandemic onour ~~clinical trials would result~~ studiesand currenttimelines.Measureswe have takenin ~~significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials, including due~~ responseto the COVID-19 pandemic ~~may result~~ include,where feasible,conductingremoteclinicaltrialsiteactivationsand datamonitoring,and limitingon-sitepatientvisitsby adjustingpatientassessmentsand protocol.However, despitetheseefforts,we haveexperiencedlimiteddelaysin ~~increased development costs, which would cause the value~~ trialsiteinitiations,patientparticipationand patientenrollmentin someof our ~~company~~ clinicaltrialsandwemaycontinueto ~~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:

Such disruptions could impede, delay, limit or prevent completion of our ongoing clinical trials and preclinical studies or commencement of new clinical trials and ultimately lead to the delay or denial of regulatory approval of our product candidates, which would seriously harm our operations and financial condition and increase our costs and expenses. We are in close contact with

~~ourCROs, CMOsandclinicalsites~~aswe~~seekto mitigatetheimpact~~of~~COVID-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 clinicaltrialsand~~we~~maycontinueto experiencesomedelaysin our clinicaltrialsand preclinicalstudiesand delaysin datacollection~~and 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,PRT1419, PRT2527or 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,PRT811, PRT1419 and PRT2527, a materialpercentageof ~~many~~ patientsin ~~our ongoing~~ theseclinicaltrialsmaydieduringa trial,which couldimpactdevelopmentof PRT543, PRT811, PRT1419 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,~~PRT2527, 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 that

preventedfurtherdevelopment.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 regardingaparticularstudyorclinicaltrialistypicallyselectedfromamoreextensive

amountof 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 or , PRT1419 or PRT2527, 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, PRT1419 and ~~reports, and other possible activities relating to PRT543, PRT811 and PRT1419,~~PRT2527, 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, onlyasmallpercentagewillsuccessfully

completetheFDA 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,dependingupontheresults~~of~~theexpansionportions~~of~~thePhase~~1~~clinicaltrials~~of~~PRT543 or PRT811,~~we~~maychoose~~to~~seekSubpart~~H~~acceleratedapprovalforPRT543~~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:

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

IfweexperiencedelaysinobtainingapprovalorifwefailtoobtainapprovalofPRT543, PRT811, PRT1419 or ~~if we fail to obtain approval of PRT543, PRT811 or PRT1419,~~PRT2527, 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 believeisreasonablylikelyto predictclinicalbenefit.

Fordrugsgrantedacceleratedapproval,post-marketingconfirmatorytrialsarerequiredto describethe anticipatedeffectonirreversiblemorbidityormortalityorotherclinicalbenefit.Theseconfirmatorytrialsmust becompletedwithduediligenceand,insomecases,theFDAmayrequirethatthetrialbedesigned,initiated, and/orfullyenrolledpriortoapproval.Ifany of our competitorswere to receivefullapprovalon thebasisof a confirmatorytrialforanindicationforwhichweareseekingacceleratedapprovalbeforewe ~~are seeking~~ receiveaccelerated approval, ~~before~~ theindicationwe ~~receive accelerated approval, the indication we~~ areseekingmayno longerqualifyas a conditionforwhich thereisan unmetmedical needandacceleratedapprovalofour productcandidatewould be moredifficultor maynot occur.Moreover,the FDA maywithdrawapprovalofourproductcandidateapprovedundertheacceleratedapprovalpathway if,for example:

Our failureto obtainmarketingapprovalin foreignjurisdictionswould preventour productcandidates frombeing marketedin 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 theseproductcandidatesfortheorphan- 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 other

productcandidatewillbe 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 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-submissionmeetingandtherequirementtosubmitaninvestigationaldeviceexemptionapplication.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 approvalforcompaniondiagnostic

testsonourown,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 preventus

frominitiatingapivotaltrial.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 broaddiscretionwhetherto 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 thatqualitycontrolandmanufacturingproceduresconformtocurrentgoodmanufacturingpractices,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 documents,and requirementsregardingdrug distributionand thedistributionof samplesto physiciansand recordkeeping.

TheFDA and otherfederaland 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:

•refusalto approvependingapplicationsor supplementsto approvedapplicationsthatwe submit;

Non-compliancebyusor any futurecollaboratorwith regulatoryrequirements,includingsafetymonitoring or pharmacovigilance,and with requirementsrelatedto thedevelopmentof productsfor the pediatricpopulation can alsoresultin significantfinancialpenalties.

Our currentand futurerelationshipswith customersand third-partypayorsmaybe subjectto applicable anti-kickback,fraud and abuse, transparency,healthprivacy,and otherhealthcarelaws and regulations, which could exposeus to significantpenalties,includingcriminal,civil,and administrativepenalties, contractualdamages,reputationalharm and diminishedprofitsand futureearnings.

Healthcareproviders,includingphysicians,andthird-partypayorswillplaya primaryrolein the recommendationandprescriptionofanyproductcandidatesforwhichweobtainmarketingapproval.Our current andfuturearrangementswithhealthcareproviders,third-partypayorsand customersmayexposeus to broadly applicablefraudand abuseand otherhealthcarelaws and regulationsthatmayconstrainthebusinessor financial arrangementsandrelationshipsthroughwhichweresearch,aswellas,market,sellanddistributeanyproducts forwhichweobtainmarketingapproval.Restrictionsunderapplicablefederaland statehealthcarelaws and regulationsthatmaybe applicableto our businessincludethefollowing:

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.

Health care policy changes, including ~~exclusions from government funded healthcare programs, which could~~U.S. health care reform legislation, may have a material adverse effect on our ~~business, results~~business.

In response to perceived increases in health care costs in recent years, there have been and continue to be proposals by the federal government, state governments, regulators, and third-party payors to control these costs and, more generally, to reform the U.S. health care system. Certain of ~~operations,~~these proposals could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products and could limit the acceptance and availability of our products. Further, while the United States has begun shifting to pay-for-performance rather than fee-for-service models and has been embracing many shared-risk arrangements, CMS and OIG specifically excluded medical device manufacturers from utilizing the new, more flexible Stark Law exceptions and Anti-Kickback Statute safe harbors under the Final Rules, part of the U.S. Department of Health and Human Services’ Regulatory Sprint to Coordinated Care, which were published on December 2, 2020 in the Federal Register and were largely effective January 19, 2021. The exclusion of manufacturers from utilizing these exceptions and safe harbors will not allow us to avail ourselves of immunity from liability under the laws, potentially inviting greater scrutiny over our shared risk arrangements.

Additionally, on November 16, 2020 the OIG published a Special Fraud Alert addressing manufacturer Speaker Programs signaling both a more narrow government view of AKS compliance with respect to such programs as well as the potential for increased enforcement in this space by government oversight agencies such as the OIG and DOJ. In response to this Special Fraud Alert, PhRMA issued its Statement on Revisions to the PhRMA Code on Interactions with Health Care Professionals on August 6, 2021 asserting, among other things, that pharmaceutical companies should not pay for or provide alcohol in connection with speaker programs. The updated PhRMA Code updates also clarified that repeat attendance at a speaker program on the same or substantially the same topic where a meal is provided to the attendee is generally not appropriate. The updated PhRMA Code was made effective as of January 1, 2022. AdvaMed has not made corollary revisions to its Code of Ethics to date. We continue to assess industry response to the Special Fraud Alert and have and may continue to make modifications to certain aspects of our speaker programs, which may have a detrimental impact on our ability to educate healthcare providers about our products and to promote use of our products, which may lead to decreased product sales and negatively impact our business, financial condition and ~~prospects.~~results of operations.

~~Recently enacted and future~~Comprehensive healthcare legislation, ~~may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and decrease the prices we may obtain.~~

Insigned into law in the United States in March 2010, titled the Patient Protection and ~~some foreign jurisdictions, there have been a number~~Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of ~~legislative~~2010, collectively, the ACA, imposes certain stringent compliance, recordkeeping, and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

For example, he ACA was enacted, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparencyreporting requirements ~~for the healthcare and health insurance industries, impose new taxes and fees~~ on ~~the health industry and impose additional health policy reforms.~~

~~Among the provisions~~companies in various sectors of the ~~ACA of importance to our potential product candidates are the following:~~

~~There~~decade ago, there have been ~~legislative~~numerous legal and ~~judicial efforts~~Congressional challenges to ~~repeal or replace certain aspects~~the law’s provisions and the effect of ~~the ACA, including measures taken during the Trump administration. While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify~~ certain provisions ofhave made compliance costly. More recently, in June 2021, a case challenging the ~~ACA such as removing penalties, starting January 1, 2019, for not complying with~~constitutionality of the ACA’s individual mandate ~~to carry health insurance, eliminating~~(California v. Texas) was overturned at the ~~implementation of certain ACA-mandated fees,~~Supreme Court.

We cannot predict what additional new legislation, agency priorities, and ~~increasing~~rulemakings may be on the ~~point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D. In November 2020,~~horizon as the United States ~~Supreme Court~~ ~~held oral arguments on the U.S. Court of Appeals~~continues to reassess how it pays for ~~the Fifth Circuit’s decision that held that the individual mandate is unconstitutional.~~ ~~It is unclear how such litigation and other efforts to repeal and replace the ACA will impact the ACA and our business.~~

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals for spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction, triggering the legislation’s automatic reduction to several government programs. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which began in 2013, and due to subsequent legislative amendments to the statute, will remain in effect through 2030 unless additional Congressional action is taken. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which was signed into law in March 2020 and is designed to provide financial support and resources to individuals and businesses affected by the COVID-19 pandemic, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through 2030. The Consolidated Appropriations Act, 2021 extended the suspension of the 2% Medicare sequester through March 31, 2021. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other healthcare funding.

Further, there has been heightened governmental scrutiny recently over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and

~~manufacturerpatientprograms,and reform governmentprogramreimbursementmethodologiesfordrugproducts.At thefederallevel,theTrumpadministrationissuedbudgetproposalsforfiscalyear2021 includesa $135 billionallowanceto supportlegislativeproposalsseeking~~to~~reducedrugprices,increasecompetition,lowerout-of-pocketdrug costs forpatients,andincreasepatientaccess~~to~~lower-costgenericandbiosimilardrugs.~~

In particular, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals.healthcare. As a result, we cannot quantify or predict what impact any changes might have on our business and results of operations. However, any changes that lower reimbursement for our products could materially and adversely affect our business, financial condition and results of operations.

Other legal, regulatory and commercial policy influences are subjecting our industry to significant changes, and we cannot predict whether new regulations or policies will emerge from U.S. federal or state governments, foreign governments, or third-party payors. Government and commercial payors may, in the ~~FDA also released a final rule on September 24, 2020 providing guidance for states to build~~future, consider healthcare policies and ~~submit importation plans for drugs from Canada.~~ ~~The Trump and Biden administrations both issued executive orders~~proposals intended to ~~favor government procurement from domestic manufacturers. In addition,~~curb rising healthcare costs, including those that could significantly affect reimbursement for healthcare products such as our systems. These policies have included, and may in the ~~Trump administration issued an executive order specifically aimed at~~future include: basing reimbursement policies and rates on clinical outcomes, the ~~procurement~~comparative effectiveness, and costs, of ~~pharmaceutical products, which instructed the federal government to develop a list of “essential” medicines~~different treatment technologies and ~~then buy those~~modalities; imposing price controls and taxes on medical device providers; and other ~~medical supplies that are manufactured, including~~measures. Future significant changes in the ~~manufacture of the API,~~healthcare systems in the United ~~States. It is unclear whether this executive order~~States or ~~something similar will~~elsewhere could also have a negative impact on the demand for our current and future products. These include changes that may reduce reimbursement rates for our products and changes that may be proposed or implemented by the ~~Biden Administration.~~

~~Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly~~current or through pharmacy benefit managers, unless the price reduction is required by law. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers. The ~~Centers for Medicare and Medicaid Services,~~future laws or ~~CMS~~ also published an interim final rule that establishes a Most Favored Nation, or MFN, Model for Medicare Part B drug payment. This regulation would substantially change the drug reimbursement landscape as it bases Medicare Part B payment for 50 selected drugs on prices in foreign countries instead of average sales price, or ASP, and establishes a fixed add-on payment in place of the current 6 percent (4.3 percent after sequestration) of ASP. The MFN drug payment amount is expected to be lower than the current ASP-based payment limit because U.S. drug prices are generally the highest in the world. On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule, and it faces uncertain prospects for implementation.

At the state level, individual states have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. It is also possible that additional governmental action is taken to address the COVID-19 pandemic.

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

In some countries, particularly the countries of the European Union, or the EU, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidates to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states, and parallel trade, such as arbitrage between low-priced and high-priced member states, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries. In addition, the recent withdrawal of the United Kingdom from its membership in the

~~fromits membership~~in~~the~~EU, oftenreferredtoas~~“Brexit”~~ “Brexit”,couldleadtolegalandregulatoryuncertaintyintheUnited KingdomandmayleadtotheUnitedKingdomandEU adoptingdivergentlawsandregulations,includingthose relatedtothepricingofprescriptionpharmaceuticals,astheUnitedKingdomdetermineswhichEU lawsto replicateor replace.IftheUnitedKingdom were to significantlyalterits regulationsaffectingthe pricing of prescriptionpharmaceuticals,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,PRT811 ~~and~~ , PRT1419 and PRT2527, 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 rely on to 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, PRT2527 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 tomanufactureourproductcandidatesarecomplex

materials,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, ~~or public health epidemics such as~~including the ~~recent~~ ongoing conflict in Ukraine,orpublichealthepidemicssuchastheCOVID-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 our abilityto commercializeany productsthatobtain marketingapprovalon a timelyand competitivebasis.

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

Wemayseekthird-partycollaboratorsforthedevelopmentand commercializationof someof our product candidatesonaselectbasis.Wehave 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, PRT2527 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.

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.There area numberofpharmaceuticalandbiotechnologycompaniesthatcurrentlyarepursuingthedevelopmentof precision oncologytherapiesoptimizedto effectivelytargetthekey drivermechanismsin cancerswith high unmetneed, includingArvinas Inc., Aurigene, Black DiamondTherapeutics,Inc., Boehringer Ingelheim, C4 Therapeutics, ConstellationPharmaceuticals,Inc., Eli Lilly and Company, F. Hoffman-La Roche, Foghorn Therapeutics Inc., Fochon Pharmaceuticals, G1 Therapeutics Inc., Genentech, Kronos Bio, Inc., Kura Oncology, Inc., Kymera Therapeutics Inc., Mirati Therapeutics Inc., Nuvation Bio Inc. RepareTherapeuticsInc.,RevolutionMedicines,Inc., Relay Therapeutics,Inc., Springworks Therapeutics, Inc., Syndax Pharmaceuticals, Inc., and ZentalisPharmaceuticals,Inc.In addition,wemayfacecompetitionfromcompaniesdevelopingproductcandidatesthatarebasedontargeting pathwaysofadaptiveresistance,includingAmgen Inc., AbbVie Inc., AstraZeneca plc,GlaxoSmithKline plc,Ideaya Biosciences, Johnson & Johnson Services, Inc., Pfizer Inc., Tango Therapeutics, Inc., Vincerx Pharma, Inc., Novartis AG, and Gilead Sciences, Inc.

Specifically,with respect to our current product candidates and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and existing or emerging biotechnology companies, academic research institutions and governmental agencies and public and private research institutions worldwide. There are a number of pharmaceutical and biotechnology companies that currently are pursuing the development of precision oncology therapies optimized to effectively target the key driver mechanisms in cancers with high unmet need, including Black Diamond Therapeutics, Inc., Constellation Pharmaceuticals, Inc., Kronos Bio, Inc., Repare Therapeutics Inc., Revolution Medicines, Inc., Relay Therapeutics, Inc., and Zentalis Pharmaceuticals, LLC. In addition, we may face competition from companies pursuing the development of product candidates that are based on targeting pathways of adaptive resistance, including Amgen Inc., or Amgen, AbbVie Inc., or AbbVie, AstraZeneca PLC, or AstraZeneca, GlaxoSmithKline plc, or GlaxoSmithKline, Johnson & Johnson, Pfizer Inc., or Pfizer, Bayer AG, or Bayer, and Novartis International AG, or Novartis.

~~Specifically, with respect to our lead product candidates, we expect that our current product candidates~~PRMT5 programs, PRT543 and PRT811, ~~will compete against other~~several companies are developing PRMT5 inhibitors ~~which are currently in~~with clinical ~~development,~~trials ongoing, including ~~those of~~Amgen (AMG193), GlaxoSmithKline (GSK3326595), Ideaya Biosciences (IDE397), Johnson & Johnson (JNJ-64619178), Pfizer (PF-06939999), and ~~Pfizer (PF-06939999)~~Tango Therapeutics (TNG908). Development efforts and clinical results of these other product candidates may be unsuccessful, which could result in a negative perception of PRMT5 inhibitors, for instance, and negatively impact the regulatory approval process of our product candidates, which would have a material and adverse effect on our business. For our ~~product candidate~~MCL1 program, PRT1419, other companies are developing MCL1 inhibitors with monotherapy and/or combination trials ongoing, including Amgen (AMG176), AstraZeneca (AZD5991), Novartis (MIK665), and ~~Novartis (MIK665)~~Gilead (GS-9716). For our ~~preclinical~~ CDK9 program, PRT2527, both AstraZeneca ~~Bayer~~(AZD4573), Vincerx (VIP512), and Kronos ~~Bio~~(KB-0742) have CDK9 programs in Phase 1 clinical trials. For our CDK4/6 program, PRT3645, Novartis (ribociclib), Lilly (abemaciclib), Pfizer (palbociclib), G1 Therapeutics (G1T38), and Fochon Pharmaceuticals (FCN-437) have clinical trials ongoing. For our SMARCA2 (BRM) degrader program, other companies, including Amgen, Aurigene, C4 Therapeutics, F. Hoffmann-La Roche, Foghorn Therapeutics, Inc., Kymera Therapeutics, Arvinas, Genentech, Boehringer Ingelheim, and Lilly have publicly disclosed their pre-clinical research efforts.

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 ableto 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 clinicaltrialthatcomparesthecost- 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. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in

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 qualifiedpersonneland 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 and ~~research institutions,~~ in addition, the COVID-19 pandemic has increased companies’ willingness to hire remote workers,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 March 31, ~~2021,~~ 2022,wehad ~~105~~118 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,PRT811, PRT1419 and PRT2527, oranyfutureproductcandidates.Wecannotassureyouthatthe ~~manufacture of PRT543, PRT811 and PRT1419, or any future product candidates. We cannot assure you that the~~ servicesof such third-partycontract organizations,advisorsandconsultantswillcontinuetobeavailabletousonatimelybasiswhen needed,or that wecanfindqualifiedreplacements.Inaddition,ifweareunabletoeffectivelymanageouroutsourcedactivities orifthequalityoraccuracyoftheservicesprovidedbyourvendorsorconsultantsiscompromisedforany reason,ourclinicaltrialsmaybeextended,delayedorterminated,andwemaynotbe ableto obtainmarketing approvalofPRT543, PRT811, PRT1419, PRT2527 or any futureproductcandidatesor otherwiseadvanceour business.We cannotassureyouthatwewillbeabletoproperlymanageour existingvendorsor consultantsor findother competentoutsidevendorsand consultantson economicallyreasonableterms,or atall.

Ifwearenotabletoeffectivelymanagegrowthandexpandourorganization,we maynot be ableto successfullyimplementthetasksnecessarytofurtherdevelopandcommercializePRT543, PRT811, PRT1419 or ~~PRT1419,~~PRT2527, 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”hopingtousethe ~~recent~~ COVID-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, PRT2527 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.

Whilewehavenotexperiencedanysuchsystemfailure,accidentorsecuritybreachto date,and believethat ourdataprotectioneffortsandourinvestmentininformationtechnologyreducethelikelihoodofsuchincidents inthefuture,we cannotassureyou thatour dataprotectioneffortsand our investmentin 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 willpreventsignificantbreakdowns,dataleakages,breachesin our systems,or thoseof our third-partyCROs, CMOs,vendorsandothercontractorsandconsultants,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, PRT2527 or anyotherproductcandidatescouldresultindelaysinourmarketingapprovaleffortsandsignificantlyincrease ourcoststorecoverorreproducethedata.Furthermore,significantdisruptionsofour internalinformation technologysystemsorthoseofourthird-partyCROs, CMOs,vendorsandother

contractorsand consultants,or securitybreachescouldresultintheloss,misappropriationand/orunauthorizedaccess,use,ordisclosureof,or thepreventionofaccessto,confidentialinformation(includingtradesecretsor otherintellectualproperty, proprietarybusinessinformationandpersonalinformation),which couldresultin ~~the loss, misappropriation and/or~~financial,legal,businessand reputationalharmto us. For example,any such eventthatleadsto unauthorizedaccess,use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), which could result in financial, legal, business and reputational harm to

~~us. For example,any such eventthatleadsto unauthorizedaccess,use, or disclosure~~of 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.

International data protection laws, including Regulation 2016/679, known as the General Data Protection Regulation, or GDPR, may also apply to health-related and other personal information obtained outside of the United States. The GDPR went into effect on May 25, 2018. The GDPR introduced new data protection requirements in the EU, as well as potential fines for noncompliant companies of up to the greater of €20 million or 4% of annual global revenue. The regulation imposes numerous new requirements for the collection, use and disclosure of personal information, including more stringent requirements relating to consent and the information that must be shared with data subjects about how their personal information is used, the obligation to notify regulators and affected individuals of personal data breaches, extensive new internal privacy governance obligations and obligations to honor expanded rights of individuals in relation to their personal information (e.g., the right to access, correct and delete their data). In addition, the GDPR includes restrictions on cross-border data transfer. The GDPR will increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensure compliance with the new EU data protection rules. In addition, the GDPR prohibits the transfer of personal data to countries outside of the European Economic Area, or EEA, such as the United States, which are not considered by the European Commission to provide an adequate level of data protection. Switzerland has adopted similar restrictions. Although there are legal mechanisms to allow for the transfer of personal data from the EEA and Switzerland to the United States, they are subject to pending legal challenges that, if successful, could invalidate these mechanisms, restrict our 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. On August 10, 2020, the U.S. Department of Commerce and the European Commission announced new discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework to comply with the July 16 judgment of the Court of Justice. While the Court of Justice upheld the use of other data transfer mechanisms, such as the Binding Corporate Rules, the decision has led to some uncertainty regarding the use of such mechanisms for data transfers to the United States, and the court made clear that reliance on Binding Corporate Rules alone may not necessarily be sufficient in all circumstances. Use of the data transfer mechanisms must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals. The European Data Protection Board issued additional guidance regarding the Court of Justice’s decision on November 11, 2020 which imposes higher burdens on the use of data transfer mechanisms, such as the Binding Corporate Rules, for cross-border data transfers. To comply with this guidance, we may need to implement additional safeguards to further enhance the security of data transferred out of the European Economic Area, which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business. To the extent that we were to rely on Privacy Shield, we will not be able to do so in the future, which could increase our costs and our ability to efficiently process personal data from the EU.

Further, Brexit has created uncertainty with regard to data protection regulation in the United Kingdom. In particular, while the Data Protection Act of 2018, that “implements” and complements the GDPR achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under GDPR. During the period of “transition” (i.e., until December 31, 2020), EU law will continue to apply in the United Kingdom, including the GDPR, after which the GDPR will be converted into United Kingdom law. Beginning in 2021, the United Kingdom ~~will be~~became a “third country” under the GDPR. We may, however, incur liabilities,

expenses, costs, and other operational losses under GDPR and applicable EU Member States and the United Kingdom privacy laws in connection with any measures we take to comply with 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 protected healthinformation.Additionally,althoughnot effectiveuntilJanuary1, 2023, theCaliforniaPrivacy Rights Act (the ~~“CPRA”~~“CPRA”), whichexpandsupontheCCPA, waspassedinthe ~~recent~~ electionon November3, 2020. The CCPA gives ~~(and~~ (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 mayincreaseourcompliance costsandpotentialliability,particularlyintheeventofadatabreach.Additionally,theCCPA hasprompteda numberofproposalsintheU.S. fornewfederalandstate-levelprivacylegislationthat,ifpassed,couldincrease our potentialliability,increaseour compliancecosts,and ~~potential liability, particularly~~adverselyaffectour business. Other states are also seeking to regulate consumer privacy stringently, and both Virginia and Colorado signed comprehensive privacy legislation in 2021. These laws (the Virginia Consumer Data Protection Act and the ~~event of a data breach. Additionally, the CCPA has prompted~~Colorado Privacy Act) are set to come into force in 2023 and a number of ~~proposals~~other state legislatures are actively considering passing similar consumer privacy laws, including those in ~~the U.S. for new federal~~New York and ~~state-level privacy legislation that, if passed, could increase our potential liability, increase our compliance costs, and adversely affect our business.~~Washington.

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.In addition, the ~~COVID-19 pandemic,~~ long-term effects of climate change on general economic conditions and the pharmaceutical industry in particular are unclear, and may heighten or intensify existing risk of natural disasters.Ifa naturaldisaster,power ~~shortage, telecommunication failure~~outage orother ~~natural~~ eventoccurredthatpreventedusfromusingallor ~~manmade accidents or incidents~~ asignificantportionofourheadquarters,that ~~result in us being unable to fully utilize~~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.Any

businessinterruptioncouldhavea ~~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,theTaxCutsandJobsAct,enactedmanysignificantchangestotheU.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, 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:

~~difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel;~~

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, PRT1419 and ~~PRT1419,~~PRT2527, 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.

To protect our proprietary position, we have currently filed patent applications in the United States related to our product candidates that we consider important to our business, including patent applications relating to compositions of matter covering our compounds, the processes for manufacturing such compounds and use of such compounds in therapies. We have also filed patent applications ~~abroad~~in foreign jurisdictions relating to PRT543, PRT811, and ~~PRT811.~~PRT1419.

The patent application and approval process is expensive, time-consuming and complex. We may not be able to file, prosecute and maintain all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions. We also cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdictions. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, depending on the terms of any future license agreements to which we may become a party, we may not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain the patents, covering technology licensed from third parties. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

Furthermore, the patent position of biotechnology and pharmaceutical companies generally is highly uncertain. No consistent policy regarding the breadth of claims allowed in biotechnology and pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. The standards applied by the United States Patent and Trademark Office, or the USPTO, and foreign patent offices in granting patents are not always applied uniformly or predictably. In addition, the determination of patent rights with respect to biological and pharmaceutical products commonly involves complex legal and factual questions, which have in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Thus, we cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents,

whether any issued patents will be found invalid and unenforceable or will be threatened by third parties or whether any issued patents will effectively prevent others from commercializing competing technologies and product candidates. While we have filed patent applications covering aspects of our current product candidates, we currently have only one issued U.S. patent covering PRT543 that

isexpectedto expirenoearlierthanAugust9,2038,~~and~~oneissuedU.S. patentcoveringPRT811 thatisexpectedtoexpireno earlierthanMarch14, 2039; and one issued U.S. patent covering PRT1419 that is expected to expire no earlier than November 8, 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 manufactureorcommercializeproductswithoutinfringingthird-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, ourcompetitors

orotherthirdpartiesmayseektomarketgenericversionsor “follow-on”versionsof any approvedproductsbysubmittingabbreviatednewdrugapplications,orANDAs, ornewdrug applicationsunder Section505(b)(2)oftheFDCA, respectively,totheFDA duringwhichtheymayclaimthatpatentsownedbyus areinvalid,unenforceableornotinfringed.Inthesecircumstances,wemayneedtodefendorassertourpatents, orboth,includingbyfilinglawsuitsallegingpatentinfringement.Inanyof thesetypesof proceedings,a courtor otheragencywith jurisdictionmayfindour patentsinvalidor 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 couldchangeinunpredictablewaysthat

couldhaveamaterialadverseeffecton 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.

Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Furthermore, third parties may also raise invalidity or unenforceability claims before administrative bodies in the United States or foreign authorities, even outside the context of litigation. Such mechanisms include re-examination, inter partes review, post-grant review, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation, cancellation or amendment to our patents in such a way that they no longer cover and protect our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or written description. Grounds for an unenforceability assertion could be an allegation that someone connected with the prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution of the patent. With respect to the validity of our patents, for example, we cannot be certain that there is no invalidating prior art of which we, our licensors, our patent counsel and the patent examiner were unaware during prosecution. Moreover, it is possible that prior art may exist that we are aware of but do not believe is relevant to our current or future patents, but that could nevertheless be determined to render our patents invalid. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we could lose at least part, and perhaps all, of the patent protection on one or more of our product candidates. Any

such loss of patent protection could have a material adverse impact on our business, financial condition, results of operations and 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 productcandidateinfringesits

patentrights,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 validityenjoyedby 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.In

addition,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~~bringclaims againstthirdparties,~~or~~defendclaimsthattheymaybringagainst~~usto~~determinetheownership~~of~~whatwe regard~~as~~ourintellectualproperty.~~Ifwe~~fail~~in~~prosecuting~~or~~defendinganysuchclaims,~~in~~additionto paying monetarydamages,~~we~~maylosevaluableintellectualproperty.Even~~ifwe~~aresuccessfulin prosecutingor defendingagainstsuchclaims,litigationcouldresult~~in~~substantialcostsand~~be~~a distractionto our senior managementand scientificpersonnel,which would have a materialadverseeffecton our business, financial condition,resultsof operationsand 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,ortheHatch- 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~~ (oranyadditionalindicationsapprovedduringtheperiodofextension),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.and ~~non-~~

~~U.S.~~non-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 haveexecutedsuchanagreementmaybreachthatagreementand 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 independentlydevelopedbyacompetitororotherthirdparty,wewouldhave no rightto preventsuch thirdparty, orthosetowhomtheycommunicatesuchtechnologyorinformation,fromusingthattechnologyorinformation tocompetewithus.Ifanyofourtradesecretsweretobedisclosedtoorindependentlydevelopedbya competitororotherthirdparty,ourbusiness,financialcondition,resultsofoperationsandprospectsour business and competitivepositioncouldbe materiallyharmed.

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

~~we may choose not to file a patent in order to maintain certain trade secrets or know how, and a third party may subsequently file a patent covering such intellectual property.~~

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

Anactiveand liquidtradingmarketforour commonstockmayneverbe sustained.As a result,you may not be ableto resellyour sharesof commonstockat or above the purchase price.

Anactivetradingmarketforourcommonstockmayneverbe sustained.The market valueofourcommonstockmaydecreasefromthepurchaseprice.Asaresultoftheseandotherfactors, youmaybe unableto resellyour sharesof our commonstock ~~may decrease from the purchase price. As a result of these and other factors, you may be unable to resell your shares of our common stock~~ ator above thepurchaseprice.The lackof an activemarketmayimpairyourabilitytosellyoursharesatthetimeyou wish to sellthemor ata pricethatyou considerreasonable.Thelackofanactivemarketmayalsoreducethefairmarketvalueof your shares. Furthermore,aninactivemarketmayalsoimpairourabilitytoraisecapitalbysellingsharesofourcommon stockand mayimpairour ability ~~to raise capital by selling shares of our common stock and may impair our ability~~ to enterintostrategiccollaborationsor acquirecompaniesor productsby using our sharesof commonstockas consideration.

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

Weexpectouroperatingresultstobesubjectto quarterlyfluctuations.Our netlossand otheroperating results ~~to be subject to quarterly fluctuations. Our net loss and other operating results~~ willbe affectedby numerousfactors,including:

Ifourquarterlyoperatingresultsfallbelowtheexpectationsof investorsor securitiesanalysts,thepriceof ourcommonstockcoulddeclinesubstantially.Furthermore,any quarterlyfluctuationsin our ~~quarterly~~ operatingresults ~~fall below~~ may,in turn,causethe ~~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, or ~~IPO, and has ranged from $23.69~~IPO. From March 31, 2021 to ~~$95.38 per share. The market~~March 31, 2022, the closing price of common stock on theNasdaq Global Select Market hasrangedfrom$6.76 to$45.42pershare.Themarketpriceof our commonstockislikelyto continueto be highlyvolatileand subject towidefluctuationsinresponsetovariousfactors,someof which we cannotcontrol.As a resultof thisvolatility, investorsmaynotbeabletoselltheircommonstockatorabovethepricepaid.The marketprice forourcommonstockmaybeinfluencedbymanyfactors,includingtheotherrisksdescribedinthissectionof 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.

Our principalstockholdersand managementowna significantpercentageof our stockand are ableto exertsignificantcontrolovermatterssubjectto stockholderapproval.

AsofMarch 31, ~~2021,~~ 2022,ourexecutiveofficers,directors,beneficialownersof5% ormoreofourcapitalstockandtheirrespectiveaffiliatesbeneficiallyowned a substantial portion of our commonstock.The votingpower of this group mayincreaseto theextenttheyconvertsharesof non-votingcommonstocktheyhold intocommonstock.

Thisgroupofstockholdershavetheabilitytocontrolusthroughthisownershippositionandareableto determine all matters requiring stockholder approval.For example, these stockholders 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 classstructureof our commonstockmaylimityour abilityto influencecorporatemattersand maylimityour visibilitywith respectto certaintransactions.

Thedualclassstructureofourcommonstockmaylimityourabilityto influencecorporatematters.Holders ofourcommonstockareentitledtoone votepershare,whileholdersof our non-votingcommonstock ~~may limit your ability~~ arenot entitledto ~~influence corporate matters. Holders~~ any votes.Nonetheless,eachshareof our non-votingcommonstock ~~are entitled~~ maybe convertedatany time into oneshareofourcommonstockattheoptionof itsholderby providingwrittennoticeto ~~one vote per share, while~~ 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. 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,atMarch 31, ~~2021,~~ 2022,thecommonstockwillhave100%ofthevotingpower,butiftheholdersof non-votingcommonstockwere to convertallof theirsharesintocommonstock,thepriorcommonstockwould have ~~75.6%~~76.1%ofthevotingpower,and theformernon-votingcommonstockwould represent23.9% of the ~~voting power, and the former non-voting common stock would represent 24.4% 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.

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 disclosureobligationsregardingexecutivecompensationin ~~this Quarterly Report~~our Annual Reports onForm ~~10-Q~~ 10-Kaswellasourperiodicreportsand proxystatementsand(iii)exemptionsfromtherequirementsofholdingnonbindingadvisorystockholdervotes onexecutivecompensationandstockholderapprovalof any goldenparachutepaymentsnot approvedpreviously. Inaddition,asanemerginggrowth company,we areonly requiredto providetwo yearsof auditedfinancial statements ~~and two years of selected financial data~~ in ~~this Quarterly Report~~our Annual Reports onForm ~~10-Q.~~10-K.

We couldbe an emerginggrowth companyuntilDecember31, 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 billion

or moreduringany fiscalyearbeforethattime, inwhichcaseswewouldnolongerbeanemerginggrowthcompanyasofthefollowingDecember31, or ifwe issuemorethan$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~~our Annual Reports on Form ~~10-Q~~10-Kas 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~~$700.0 million as of the 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.Section203 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~~Exchange Act or therulesand regulations thereunder. Our restated bylaws 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 thereundermustbe broughtin federal ~~court and cannot be brought in state~~ court.

~~Section 27~~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.

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.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

We are subject to the reporting requirements of the Exchange Act, ~~creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by~~ the ~~Exchange~~Sarbanes-Oxley Act orand the rules and ~~regulations thereunder. In addition, neither~~ the ~~exclusive forum provision nor~~ listingrequirements ofthe 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 thereunder must be brought in federal court.

~~Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.~~

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.

We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an emerging growth company, we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.Nasdaq GlobalSelectMarket. The Sarbanes-Oxley Act ~~the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Select Market and~~requires, among other ~~applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of~~things, that we maintain effective disclosure ~~and financial~~ controls and ~~corporate governance practices. Our management~~procedures and ~~other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and~~internal control over financial compliance costs and to make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could

~~alsomake~~it~~moredifficult for~~usto~~attractandretainqualifiedpersons~~to~~serve~~on~~ourboard~~of~~directors,ourboardcommitteesor as executiveofficers.Theincreasedcostsmayrequire~~usto~~reducecosts~~in~~otherareas~~of~~ourbusiness~~or~~increase theprices~~of~~ourproductsoncecommercialized.Moreover,theserulesandregulationsareoftensubjectto varyinginterpretations,~~in~~manycasesdue~~to~~theirlack~~of~~specificity,and,~~asa~~result,theirapplicationin practice mayevolveovertimeas new guidance~~is~~providedby regulatoryand governingbodies.This could resultin continuinguncertaintyregardingcompliancemattersandhighercostsnecessitatedby ongoing revisionsto disclosureand governancepractices.~~

We ~~are not currently required~~perform system and process evaluation and testing of our internal control over financial reporting to ~~comply with the SEC’s rules that implement Section 404 of the Sarbanes- Oxley Act, and are therefore not required~~allow management to ~~make a formal assessment of~~report on the effectiveness of our internal control over financial reporting in our Annual Report on Form 10-K filing for that ~~purpose. Pursuant~~year, as required by Section 404(a) of the Sarbanes-Oxley Act. This requires that we incur substantial additional professional fees and internal costs to ~~Section 404,~~expand our accounting and finance functions and that we ~~will be required to furnish a report by our~~expend significant management ~~on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on~~efforts.

Our internal control over financial reporting issued by our independent registered public accounting firm. In addition, for as long as we are a smaller reporting company with less than $100 million in annual revenue, we would be exempt from the requirement to obtain an external audit on the effectiveness of internal control over financial reporting provided in Section 404(b) of the Sarbanes-Oxley Act. To achieve compliance with Section 404 within the prescribed period, we 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 or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Global Select Market.

~~Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.~~

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

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. 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 disclosure controls and procedures may~~ not prevent or detect all errors ~~or acts of~~and all 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, A control system, no matter how ~~well-conceived~~well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the ~~control system are met.~~

~~These~~ inherent limitations ~~include the realities~~in all control systems, no evaluation of controls can provide absolute assurance that ~~judgments in decision-making can be faulty, and that breakdowns can occur because of simple~~misstatements due to error or ~~mistake. For example, our directors~~fraud will not occur or ~~executive officers could inadvertently fail~~that all control issues and instances of fraud will be detected.

If we are not able to ~~disclose a new relationship or arrangement causing us to fail to make any related party transaction disclosures. Additionally, controls can be~~

~~circumvented~~bycomply with the~~individualacts~~of~~somepersons,by collusion~~of~~two~~or~~morepeopleor by an unauthorizedoverride~~ requirements of ~~thecontrols.Accordingly,because~~Section 404 of the ~~inherentlimitations~~Sarbanes-Oxley Act in~~ourcontrolsystem,misstatementsdue~~to~~error~~ a timely manner, or ~~fraud~~if we are unable to maintain proper and effective internal controls, we may~~occurand~~ not be ~~detected.In addition,~~wedo~~nothave a riskmanagementprogramor processesor proceduresforidentifying~~able to produce timely and ~~addressing risks~~accurate financial statements. If that were to ~~our businessin otherareas.~~

~~We may be subject to securities litigation, which is expensive and could divert management attention.~~

~~The~~happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the Securities and Exchange Commission, or SEC, or other regulatory authorities.

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 and Comprehensive Loss (Unaudited)	2
	Statements of Changes in ~~Convertible Preferred Stock and Stockholder’s~~Stockholders’ Equity (Deficit) (Unaudited)	3
	Statements of Cash Flows (Unaudited)	4
	Notes to Unaudited Interim Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1214
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1921
Item 4.	Controls and Procedures	1921
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	1921
Item 1A.	Risk Factors	2022
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6769
Item 3.	Defaults Upon Senior Securities	6769
Item 4.	Mine Safety Disclosures	6769
Item 5.	Other Information	6769
Item 6.	Exhibits	6870
Signatures		6971

(in thousands)
2021 (remaining)	$	1,053
2022		1,403
2022 (remaining)				$	1,377
2023					964
Total undiscounted lease payments		2,456			2,341
Less imputed interest		(213	)		(92	)
Current and noncurrent lease liability	$	2,243		$	2,249

(in thousands)
2022 (remaining 9 months)	$	-
2023		140
2024		1,873
2025		2,326
2026		2,384
2027		2,444
Thereafter		24,670

	Three months ended March 31,						Three months ended March 31,
	2021			2020			2022			2021
Expected volatility		117.13	%		91.60	%		84.57	%		117.13	%
Risk-free interest rate		0.76	%		1.88	%		1.97	%		0.76	%
Expected life (in years)		6.06			6.25			6.06			6.06
Expected dividend yield		—			—			—			—

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

~~Emerging growth company~~	☒		Emerging growth company	☒

	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	)

	March 31,				March 31,
	2021		2020		2022		2021
Series A convertible preferred stock		—		11,736,119
Series B convertible preferred stock		—		15,257,692
Unvested restricted stock awards		1,009,462		1,719,052		514,641		1,009,462
Unvested restricted stock units						20,000		—
Stock options		6,732,969		3,458,988		8,541,017		6,732,969
Employee stock purchase plan						40,127		—
		7,742,431		32,171,851		9,115,785		7,742,431

	Number of shares			Weighted-average grant date fair value
Unvested balance at January 1, 2021		1,214,778		$	2.09
Vested		(205,316	)	$	2.31
Unvested balance at March 31, 2021		1,009,462		$	2.05

	Number of shares			Weighted-average grant date fair value
Unvested balance at January 1, 2022		611,608		$	2.29
Vested		(96,967	)	$	2.08
Unvested balance at March 31, 2022		514,641		$	2.33

Exhibit Number	Description	Form	File No.	Exhibit No.	Exhibit Filing Date	Filed/Furnished Herewith
~~31.1~~10.1	Executive Employment Agreement, dated January 21, 2022, by and between the Registrant and Jane Huang					X
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	Inline XBRL Instance Document					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)					X

	Prelude Therapeutics Incorporated

Date: May ~~11, 2021~~10, 2022	By:	/s/ Krishna Vaddi
		Krishna Vaddi, PhD
		Chief Executive Officer
		(Principal Executive Officer)
Date: May ~~11, 2021~~10, 2022	By:	/s/ ~~Brian Piper~~Laurent Chardonnet
		~~Brian Piper, M.B.A.~~Laurent Chardonnet
		Chief Financial Officer
		(Principal Accounting Officer)