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 included elsewhere in this Annual Report on Form 10-K (this "report").
This discussion and analysis and other parts of this report contain
forward-looking statements based upon current beliefs, plans and expectations
related to future events and our future financial performance that involve
risks, uncertainties and assumptions, such as statements regarding our
intentions, plans, objectives, expectations, forecasts and projections. Our
actual results and the timing of selected events could differ materially from
those anticipated in these forward-looking statements as a result of several
factors, including those set forth under the section titled "Risk Factors" and
elsewhere in this report.

Overview

We are a clinical-stage gene therapy company pioneering the development of
product candidates using our targeted and evolved AAV vectors. We seek to unlock
the full potential of gene therapy using our platform, Therapeutic Vector
Evolution, which combines the power of directed evolution with our approximately
one billion synthetic capsid sequences to invent evolved vectors for use in
targeted gene therapy products. Our targeted and evolved vectors are invented
with the goal of being delivered through clinically routine, well-tolerated and
minimally invasive routes of administration, of transducing diseased cells in
target tissues efficiently, of having reduced immunogenicity and, where
relevant, of having resistance to pre-existing antibodies. We believe these key
design features will help us to potentially create targeted gene therapy product
candidates with improved therapeutic profiles, and address a broad range of
diseases from rare to large patient populations, including those that other gene
therapies are unable to address. Each of our product candidates is created with
our targeted and evolved AAV vectors. Our platform is designed to be modular, in
that an evolved vector invented for a given set of diseases can be equipped with
different transgene payloads to treat other diseases affecting the same tissue
types. We believe this modularity will help inform the clinical development of
subsequent product candidates using the same vector.

We have built a deep portfolio of gene therapy product candidates initially
focused in three therapeutic areas: ophthalmology (intravitreal vector),
cardiology (intravenous vector) and pulmonology (aerosol vector). We have three
product candidates that are in clinical trials. We are developing 4D-125 for the
treatment of X-linked retinitis pigmentosa ("XLRP"), currently in Phase 1/2
clinical trial with initial clinical data expected in the second half of 2021.
We are advancing 4D-110 for the treatment of choroideremia, currently in a Phase
1 clinical trial with initial clinical data expected in 2022. Roche holds an
exclusive worldwide license to 4D-110 and has the exclusive option to in-license
4D-125 prior to initiation of pivotal clinical trials. We received FDA Fast
Track designation for 4D-310 for the treatment of Fabry disease, which is
currently in a Phase 1/2 clinical trial, with initial clinical data expected in
the second half of 2021. Our two IND candidates are 4D-150 for the treatment of
wet age-related macular degeneration ("wet AMD"), and 4D-710 for the treatment
of cystic fibrosis lung disease. We expect to file the IND and to initiate
clinical trials for both of these programs in the second half of 2021.

We have funded our operations primarily through the sale and issuance of equity
securities and to a lesser extent from cash received pursuant to our
collaboration and license agreements. In December 2020, we completed our IPO and
issued and sold 9,660,000 shares of common stock at a price to the public of
$23.00 per share. The aggregate net proceeds from our IPO were $204.7 million
after deducting underwriting discounts and commissions and other offering costs.
As of December 31, 2020, we had cash and cash equivalents of $276.7 million.

We have incurred significant operating losses and expect that our operating
losses will increase significantly as we, among other things, continue to
advance our product candidates through preclinical and clinical development,
seek regulatory approval, and prepare for, and, if approved, proceed to
commercialization; broaden and improve our platform; acquire, discover, validate
and develop additional product candidates; maintain, protect and enforce our
intellectual property portfolio; and hire additional personnel. In addition, we
expect to incur additional costs associated with operating as a public company.

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Our net losses were $56.7 million and $49.3 million for the years ended
December 31, 2020 and 2019, respectively. As of December 31, 2020, we had an
accumulated deficit of $135.7 million. We do not expect positive cash flows from
operations in the foreseeable future. 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 do not have any products approved for sale and have not generated any revenue
from product sales since our inception. Our ability to generate product revenue
will depend on the successful development, regulatory approval and eventual
commercialization of one or more of our product candidates, if approved.

We will require substantial additional funding to support our continuing
operations and further the development of our product candidates. Until such
time as we can generate significant revenue from product sales, if ever, we
expect to finance our operations through the sale of equity, debt financings, or
other capital sources, which could include income from collaborations, strategic
partnerships or other strategic arrangements, for the foreseeable future.
Adequate funding may not be available when needed or on terms acceptable to us,
or at all. If we are unable to raise additional capital as needed, we may have
to significantly delay, scale back or discontinue development of our product
candidates. Our ability to raise additional funds may be adversely impacted by
potential worsening global economic conditions and the recent disruptions to,
and volatility in, the credit and financial markets in the United States and
worldwide resulting from the ongoing COVID-19 pandemic and otherwise. If we fail
to obtain necessary capital when needed on acceptable terms, or at all, it could
force us to delay, limit, reduce or terminate our product development programs,
commercialization efforts or other operations. Insufficient liquidity may also
require us to relinquish rights to product candidates at an earlier stage of
development or on less favorable terms than we would otherwise choose. We cannot
assure you that we will ever be profitable or generate positive cash flow from
operating activities.

The global COVID-19 pandemic continues to rapidly evolve, and we will continue
to monitor the COVID-19 situation closely. The extent of the impact of the
COVID-19 pandemic on our business, operations and clinical development timelines
and plans remains uncertain, and will depend on certain developments, including
the duration and spread of the outbreak and its impact on our clinical trial
enrollment, trial sites, CROs, third-party manufacturers, and other third
parties with whom we do business, as well as its impact on regulatory
authorities and our key scientific and management personnel. To the extent
possible, we are conducting business as usual, with necessary or advisable
modifications to employee travel and the majority of our employees working
remotely. We will continue to actively monitor the rapidly evolving situation
related to the COVID-19 pandemic and may take further actions that alter our
operations, including those that may be required by federal, state or local
authorities, or that we determine are in the best interests of our employees and
other third parties with whom we do business. At this point, the extent to which
the COVID-19 pandemic may affect our business, operations and clinical
development timelines and plans, including the resulting impact on our
expenditures and capital needs, remains uncertain.

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Components of Results of Operations

Revenue



Our revenue to date has been generated through payments from our collaboration
and license agreements, primarily from upfront and milestone payments and
expense reimbursement. We have not generated any revenue from the sale of
approved products and do not expect to do so for the foreseeable future. The
primary drivers for revenue consist of the following:

• Roche: In November 2017, we entered into a collaboration and license

agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc.

(together, "Roche"). We received an upfront payment of $21.0 million in


         2017 and are reimbursed for our internal and third-party costs and are
         entitled to contingent payments, including milestone payments. In 2020,
         we received milestone payments totaling $10.0 million, which was
         comprised of a $5.0 million milestone payment upon the release of
         clinical trial material for our Phase 1 clinical trial for 4D-110 to

treat choroideremia in the second quarter of 2020 and an additional $5.0

million milestone payment upon dosing our first patient in the trial in


         the third quarter of 2020. We began recognizing revenue related to this
         in 2017 and expect to continue to recognize revenue over the next three

to four years. See Note 6 to our financial statements included elsewhere

in this report for further discussion regarding the accounting treatment

of this agreement.




      •  uniQure: In August 2019, we amended our agreement with uniQure and
         entered into a separate new collaboration and license agreement with
         uniQure. Neither party was required to pay monetary consideration in
         connection with the amendment or new agreement. We determined the
         incremental transaction price of the amendment and new agreement to be
         $5.1 million and recorded the amount as deferred revenue. We began

recognizing revenue related to this in 2020 and expect to recognize

revenue over the next two to three years. See Note 6 to our financial

statements included elsewhere in this report for further discussion

regarding the accounting treatment of this transaction.




Future collaboration and license revenue is highly dependent on the successful
development and commercialization of products by our collaboration partners,
which is uncertain, and revenue may fluctuate significantly from period to
period. Additionally, we may never receive the consideration from our license
agreements that is contemplated for option fees, development and sales-based
milestone payments or royalties on sales of licensed products, given the
contingent nature of these payments. We expect that our collaboration and
license revenue in 2021 will primarily be from Roche and uniQure. If our
agreements with Roche or uniQure were terminated, it may materially impact the
amount of license revenue we recognize in future periods.



Operating Expenses

Research and Development

Our research and development expenses primarily consist of costs incurred for
the discovery and preclinical and clinical development of our product
candidates. These expenses include salaries and personnel-related costs,
including stock-based compensation of our scientific personnel performing
research and development activities; laboratory supplies; research materials;
fees paid to CROs to execute preclinical studies and clinical trials; fees paid
to CMOs to manufacture materials for preclinical studies and clinical trials;
fees related to obtaining technology licenses; consulting costs; costs related
to seeking regulatory approval of our product candidates; and allocated
facility-related costs, information technology costs, depreciation expense and
other overhead.

We expense all research and development costs in the periods in which they are
incurred. We have entered into various agreements with CROs and CMOs. Costs of
certain activities are recognized based on an evaluation of the progress to
completion of specific tasks. Payments made prior to the receipt of goods or
services that will be used or rendered for future research and development
activities are deferred and capitalized as prepaid expenses and other current
assets on our balance sheet. The

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capitalized amounts are recognized as expense as the goods are delivered or the related services are performed.



We do not allocate our costs by product candidate, as a significant amount of
research and development expenses includes internal costs, such as payroll and
other personnel expenses, laboratory supplies and allocated overhead, and
external costs, such as fees paid to third parties to conduct research and
development activities on our behalf, none of which are tracked by product
candidate. In particular, with respect to internal costs, several of our
departments support multiple product candidate research and development
programs, and therefore the costs cannot be allocated to a particular product
candidate or development program.

At this time, we cannot reasonably estimate or know the nature, timing or
estimated costs of the efforts that will be necessary to complete the
development of, and obtain regulatory approval for, any of our product
candidates. We expect our research and development expenses to increase
substantially for the foreseeable future as we continue to invest in research
and development activities related to developing our product candidates, as our
product candidates advance into later stages of development, as we begin to
conduct larger clinical trials, as we seek regulatory approvals for any product
candidates that successfully complete clinical trials, and incur expenses
associated with hiring additional personnel to support our research and
development efforts. The process of conducting the necessary clinical research
to obtain regulatory approval is costly and time-consuming, and the successful
development of our product candidates is highly uncertain. See the section
titled "Risk Factors" for additional risks regarding regulatory development and
approval.

General and Administrative

Our general and administrative expenses consist primarily of personnel-related
expenses, including salaries, employee benefit costs and stock-based
compensation expense for our personnel in executive, finance and accounting,
human resources, business development and other administrative functions.
General and administrative expenses also include professional fees for legal,
patent, consulting, accounting and tax services, allocated overhead, including
rent, equipment, depreciation, information technology costs and utilities, and
other general operating expenses not otherwise classified as research and
development expenses.

We expect our general and administrative expenses to increase as a result of
increased personnel-related costs, patent costs for our product candidates,
consulting, legal and accounting services associated with maintaining compliance
with stock exchange listing and requirements of the SEC, investor relations
costs, director and officer insurance premiums and other costs associated with
being a public company.

Other Income (Expense)

Our other income (expense) primarily consists of interest income earned on our cash equivalents and adjustments for the change in the fair value of our derivative liability which must be remeasured at each reporting period.


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Results of Operations

Comparison of the Years Ended December 31, 2020 and 2019

The following table summarizes our results of operations for the periods indicated (dollars in thousands):





                                                 Year Ended
                                                December 31,
                                             2020          2019         $ Change       % Change
Revenue:
Collaboration and license revenue          $  13,363     $   6,960     $    6,403              92 %
Collaboration and license revenue,
related parties                                  249            26            223               *
Total revenue                                 13,612         6,986          6,626              95 %
Operating Expenses:
Research and development                      53,038        38,718         14,320              37 %
Acquired in-process research and
development                                        -         5,137         (5,137 )             *
General and administrative                    17,238        13,895          3,343              24 %
Total operating expenses                      70,276        57,750         12,526              22 %
Loss from operations                         (56,664 )     (50,764 )       (5,900 )            12 %
Other Income (Expense)                           (29 )       1,458         (1,487 )             *
Net loss and comprehensive loss            $ (56,693 )   $ (49,306 )   $   (7,387 )            15 %



* Percentage is not meaningful

Revenue



Revenue increased $6.6 million, or 95%, from the year ended December 31, 2019 to
the year ended December 31, 2020 due to a $6.6 million increase in revenue
recognized under our collaboration and license agreement with Roche and a $0.7
million increase in revenue recognized under our collaboration and license
agreement with uniQure, which was partially offset by a decline in revenue
recognized from other collaboration and license agreements.

Research and Development Expenses

The following table provides a breakout of research and development expenses for the periods indicated (dollars in thousands):





                                               Year Ended
                                              December 31,
                                            2020         2019       $ Change       % Change
External expenses                         $ 29,455     $ 21,342         8,113             38 %
Payroll and personnel expenses              16,064       12,206         3,858             32 %

Other research and development expenses 7,519 5,170 2,349

             45 %

Total research and development expenses $ 53,038 $ 38,718 $ 14,320

             37 %




Research and development expense increased $14.3 million, or 37%, from the year
ended December 31, 2019 to the year ended December 31, 2020. The increase was
due to the following:

      •  an $8.1 million increase in external costs as we continue to develop
         novel vectors, identify potential product candidates and progress our
         preclinical studies and clinical trials;


      •  a $3.9 million increase in payroll and personnel expenses due to

increased headcount of research and development personnel, including a

$0.5 million increase in employee stock-based compensation expense; and




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• a $2.3 million increase in other research and development expenses

primarily for allocated overhead, including rent, equipment,

depreciation, information technology costs and utilities.

Acquired In-Process Research and Development Expenses



We recorded acquired in-process research and development expenses of
$5.1 million in the year ended December 31, 2019. This was due to the
acquisition of in-process research and development from uniQure as a result of
the execution of an Amended and Restated Collaboration and License Agreement and
a separate Collaboration and License Agreement with uniQure. See Note 6 to our
financial statements included elsewhere in this report for further discussion
regarding the accounting treatment of this transaction. We did not incur any
acquired in-process research and development expenses in 2020.

General and Administrative Expenses



General and administrative expenses increased $3.3 million, or 24%, from the
year ended December 31, 2019 to the year ended December 31, 2020. The increase
was due to the following:

• a $3.0 million increase for personnel costs including a $1.2 million

increase in employee and nonemployee director stock-based compensation

expense;

• a $2.2 million increase for professional services, including legal,


         accounting and other advisory services; and


      •  a $0.8 million increase for allocated overhead, including rent,

equipment, depreciation, information technology costs and utilities.

These increases were partially offset by a $2.6 million decrease for public offering costs expensed in the year ended December 31, 2019, as a result of delays in the IPO process in 2019. We completed our IPO in December 2020 and the related offering costs were recorded within additional paid-in capital and reduced the IPO gross proceeds.

Other Income (Expense)



Other income (expense) decreased $1.5 million from the year ended December 31,
2019 to the year ended December 31, 2020 primarily due to lower interest income
because of lower interest rates.



Liquidity and Capital Resources

Sources of Liquidity



We have funded our operations primarily through the sale and issuance of our
equity securities, including from the sale of our common stock in our IPO and
the sale of our Series A, Series A-1, Series B and Series C redeemable preferred
stock, and to a lesser extent from cash received pursuant to our collaboration
and license agreements.

In December 2020, we completed our IPO. We issued and sold 9,660,000 shares of
common stock at a price to the public of $23.00 per share. The aggregate net
proceeds from our IPO were $204.7 million after deducting underwriting discounts
and commissions and other offering costs. As of December 31, 2020, we had cash
and cash equivalents of $276.7 million.

Future Funding Requirements

We have experienced recurring net losses and had an accumulated deficit of $135.7 million for the year ended December 31, 2020. Our transition to profitability is dependent upon the successful development, approval and commercialization of our product candidates and those of our collaboration partners and achieving a level of revenue adequate to support our cost structure. We expect to continue to incur losses for the foreseeable future.


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We expect that our research and development and general and administrative
expenses will continue to increase for the foreseeable future. Additionally, we
expect our capital expenditures will increase significantly in the future for
costs associated with building additional manufacturing capacity. As a result,
we will need significant additional capital to fund our operations, which we may
obtain through one or more equity offerings, debt financings or other
third-party funding, including potential strategic alliances and licensing or
collaboration arrangements.

Because of the numerous risks and uncertainties associated with the development
and commercialization of gene therapy product candidates, we are unable to
estimate the amount of increased capital we will need to raise to support our
operations and the outlays and operating expenditures necessary to complete the
development of our product candidates and build additional manufacturing
capacity, and we may use our available capital resources sooner than we
currently expect.

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

• the progress of our current and future product candidates through

preclinical and clinical development;

• potential delays in our preclinical studies and clinical trials, whether


         current or planned, due to the COVID-19 pandemic, or other factors;


      •  expanding our manufacturing facilities and working with our contract

manufacturers to scale up the manufacturing processes for our product


         candidates;


  • continuing our research and discovery activities;


  • continuing the development of our Therapeutic Vector Evolution platform;


      •  initiating and conducting additional preclinical, clinical or other

         studies for our product candidates;


  • changing or adding additional contract manufacturers or suppliers;

• seeking regulatory approvals and marketing authorizations for our product


         candidates;


      •  establishing sales, marketing and distribution infrastructure to
         commercialize any products for which we obtain approval;

• acquiring or in-licensing product candidates, intellectual property and

technologies;

• making milestone, royalty or other payments due under any current or


         future collaboration or license agreements;


      •  obtaining, maintaining, expanding, protecting and enforcing our
         intellectual property portfolio;


  • attracting, hiring and retaining qualified personnel;


  • potential delays or other issues related to our operations;


  • meeting the requirements and demands of being a public company;

• defending against any product liability claims or other lawsuits related

to our products; and

• the impact of the COVID-19 pandemic, which may exacerbate the magnitude

of the factors discussed above.




We believe that our existing cash and cash equivalents will allow us to fund our
planned operations for at least one year from the date of the issuance of the
financial statements for the year ended December 31, 2020.

We have based our estimates as to how long we expect we will be able to fund our
operations on assumptions that may prove to be wrong, and we could use our
available capital resources sooner than we currently expect, in which case we
would be required to obtain additional financing sooner than

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currently projected, which may not be available to us on acceptable terms, or at
all. Our failure to raise capital as and when needed would have a negative
impact on our financial condition and our ability to pursue our business
strategy. See the section titled "Risk Factors" for additional risks associated
with our substantial capital requirements.

We do not have any committed external sources of funds. Accordingly, we will be
required to obtain further funding through public or private equity offerings,
debt financings, collaborations and licensing arrangements or other sources to
complete the clinical development for the product candidates in treatment of
Fabry disease, XLRP or choroideremia or any other indication we may pursue. If
we raise additional funds by issuing equity securities, our stockholders may
experience dilution. Any future debt financing into which we enter would result
in fixed payment obligations and may involve agreements that include grants of
security interests on our assets and restrictive covenants that limit our
ability to take specific actions, such as incurring additional debt, making
capital expenditures, granting liens over our assets, redeeming stock or
declaring dividends, that could adversely impact our ability to conduct our
business. Any debt financing or additional equity that we raise may contain
terms that could adversely affect our common stockholders. Further, additional
funds may not be available when we need them, on terms that are acceptable to
us, or at all. Our ability to raise additional capital may be adversely impacted
by potential worsening global economic conditions and the recent disruptions to
and volatility in the credit and financial markets in the United States and
worldwide resulting from the ongoing COVID-19 pandemic.

If we are unable to obtain additional funding, we expect to delay, reduce or
eliminate some or all of our research and development programs, product
portfolio expansion or investment in internal manufacturing capabilities, which
could adversely affect our business. If we raise additional funds through
collaborations or marketing, distribution or licensing arrangements with third
parties, we may have to relinquish valuable rights to future revenue streams or
product candidates or grant licenses on terms that may not be favorable to us.

Summary Statement of Cash Flows



The following is a summary of cash flows for the periods indicated below (in
thousands):



                                                 Year Ended
                                                December 31,
                                             2020          2019

Net cash used in operating activities $ (50,909 ) $ (36,711 ) Net cash used in investing activities (1,000 ) (3,203 ) Net cash provided by (used in) financing


  activities                                 278,983        (2,195 )

Net increase (decrease) in cash and cash


  equivalents                              $ 227,074     $ (42,109 )

Net Cash Used in Operating Activities



Net cash used in operating activities was $50.9 million for the year ended
December 31, 2020. This was primarily due to the net loss of $56.7 million and
an increase in prepaid expenses of $2.6 million, which were partially offset by
stock-based compensation expense of $5.0 million and depreciation and
amortization expense of $1.4 million and an increase in accrued and other
liabilities of $1.9 million.

Net cash used in operating activities was $36.7 million for the year ended December 31, 2019. This was primarily due to the net loss of $49.3 million, which was partially offset by the acquisition of in-process research and development of $5.1 million, stock-based compensation expense of $3.5 million, write-off of public offering costs of $2.6 million and depreciation and amortization expense of $1.0 million.


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Net Cash Used in Investing Activities

Net cash used in investing activities was $1.0 million for the year ended December 31, 2020, all of which was used to purchase property and equipment.

Net cash used in investing activities was $3.2 million for the year ended December 31, 2019, all of which was used to purchase property and equipment.

Net Cash Provided by (Used in) Financing Activities



Net cash provided by financing activities was $279.0 million for the year ended
December 31, 2020, which was primarily due to $205.7 million of proceeds from
our IPO net of paid underwriting discounts and commissions and offering costs
and $72.5 million of net proceeds received from the issuance of our Series C
redeemable convertible preferred stock in April and June 2020.

Net cash used in financing activities was $2.2 million for the year ended December 31, 2019, which was primarily for payments of public offering costs of $2.3 million.

Contractual Obligations, Commitments and Contingencies



Our commitments include obligations under vendor contracts to provide research
services and other purchase commitments with our vendors. In the normal course
of business, we enter into services agreements with contract research
organizations, contract manufacturing organizations and other third parties.
Generally, these agreements provide for termination upon notice, with specified
amounts due upon termination based on the timing of termination and the terms of
the agreement. The actual amounts and timing of payments under these agreements
are uncertain and contingent upon the initiation and completion of the services
to be provided. These amounts are not fixed and determinable and therefore are
not included in the table below.

The following table summarizes our contractual obligations, commitments and contingencies as of December 31, 2020 (in thousands):





                                                                Payments Due by Period
                                               Less Than                                       More Than
                                  Total         1 Year         1-3 Years       3-5 Years        5 Years
Operating lease payments        $  27,389     $     2,956     $     6,150     $     6,463     $    11,820
Total contractual obligations   $  27,389     $     2,956     $     6,150     $     6,463     $    11,820




 In October 2018, we entered into a long-term lease for additional office and
laboratory space in Emeryville, California, at a cost of $9.3 million over an
87-month term (the "Second Lease"). We concurrently amended our existing lease
to extend the lease term to end at the same time as the Second Lease.

In May 2019, we amended the Second Lease (the "Second Lease Amendment") to add
17,497 square feet to the space being leased pursuant to the Second Lease. The
Second Lease Amendment extended the term of the Second Lease to December 31,
2029.

Critical Accounting Policies and Significant Judgments and Estimates



Our financial statements have prepared in accordance with generally accepted
accounting principles in the United States. The preparation of our financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of our financial statements, as well as the
reported revenue and expenses during the reported periods. We evaluate these
estimates and assumptions on an ongoing basis. We base our estimates on
historical experience and on various other factors that we believe are

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reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.



Our significant accounting policies are described in Note 2 to our financial
statements included elsewhere in this report. We believe the following
accounting policies are critical to the process of making significant judgments
and estimates in the preparation of our financial statements and understanding
and evaluating our reported financial results.

Revenue Recognition



We determine revenue recognition for arrangements within the scope of ASC 606 by
performing the following five steps: (i) identification of the promised goods or
services in the contract; (ii) determination of whether the promised goods or
services are performance obligations including whether they are distinct in the
context of the contract; (iii) measurement of the transaction price, including
the constraint on variable consideration; (iv) allocation of the transaction
price to the performance obligations based on estimated selling prices; and
(v) recognition of revenue when (or as) we satisfy each performance obligation.

Our revenue is primarily derived through our license, research, development and
commercialization agreements. The terms of these types of agreements may include
(i) licenses to our technology, (ii) research and development services, and
(iii) services or obligations in connection with participation in research or
steering committees. Payments to us under these arrangements typically include
one or more of the following: nonrefundable upfront and license fees, research
funding, milestone and other contingent payments to us for the achievement of
defined collaboration objectives and certain preclinical, clinical, regulatory
and sales-based events, as well as royalties on sales of any commercialized
products. Arrangements that include upfront payments are recorded as deferred
revenue upon receipt or when due and may require deferral of revenue recognition
to a future period until performance obligations are met. The event-based
milestone payments, royalties and cost reimbursements represent variable
consideration, and we use the most likely amount method to estimate this
variable consideration. Royalty payments are recognized when earned or as the
sales occur. We record cost reimbursements as accounts receivable when right to
consideration is unconditional.

A performance obligation is a promise in a contract to transfer a distinct good
or service to the customer and is the unit of account in ASC 606. We allocate
the total transaction price to each performance obligation based on the
estimated selling price and recognize revenue when, or as, the performance
obligation is satisfied. We include the unconstrained amount of estimated
variable consideration in the transaction price. At the end of each reporting
period, we re-evaluate the estimated variable consideration included in the
transaction price and any related constraint, and if necessary, adjust our
estimate of the overall transaction price.

Significant management judgment is required to determine the level of effort
required under an arrangement, and the period over which the Company expects to
complete its performance obligations under the arrangement. Changes in these
estimates can have a material effect on revenue recognized.

Accrued Research and Development Expenses



We estimate our accrued research and development expenses as of each balance
sheet date. This process involves reviewing contracts and purchase orders with
service providers, identifying services that have been performed on our behalf
and estimating the level of service performed, the expected remaining period of
performance and the associated expenses incurred for the service when we have
not yet been invoiced or otherwise notified of actual cost. Depending on the
timing of payments to the service providers and the estimated expenses incurred,
we may record net prepaid or accrued research and development expenses relating
to these costs.

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Examples of estimated accrued research and development expenses include fees paid to:

• CROs in connection with preclinical development and clinical studies; and

• CMOs and other vendors related to process development and manufacturing

of materials for use in preclinical development and clinical studies.

Our understanding of the status and timing of services performed relative to the actual status and timing may vary and may result in us reporting changes in estimates in any particular period. To date, there have been no material differences from our estimates to the amounts actually incurred.

Stock-Based Compensation Expense



We use a fair value-based method to account for all stock-based compensation
arrangements with employees and nonemployees including stock options and stock
awards. Our determination of the fair value of stock options on the date of
grant utilizes the Black-Scholes option pricing model.

The fair value of the option granted is recognized on a straight-line basis over
the period during which an optionee is required to provide services in exchange
for the option award, known as the requisite service period, which usually is
the vesting period. Prior to January 1, 2020, the stock-based compensation
expense for nonemployees was subject to remeasurement until the related vesting
conditions were met. Effective January 1, 2020, the measurement date for
nonemployee awards is the date of grant without changes in the fair value of the
award. We account for forfeitures as they occur for both employees and
nonemployees.

Estimates of the fair value of equity awards as of the grant date using valuation models such as the Black-Scholes option pricing model are affected by assumptions with a number of complex variables.



Changes in the following assumptions can materially affect the estimate of fair
value and ultimately how much stock-based compensation expense is recognized;
and the resulting change in fair value, if any, is recognized in our statement
of operations and comprehensive loss during the period the related services are
rendered. These inputs are subjective and generally require significant analysis
and judgment to develop:

• Expected Term-The expected term for employee options is calculated using

the simplified method as we do not have sufficient historical information


         to provide a basis for estimate. The simplified method is based on the
         average of the vesting tranches and the contractual life of each grant.

• Expected Volatility-For all stock options granted to date, the expected

volatility was estimated based on a study of publicly traded industry


         peer companies as we did not have sufficient trading history for our
         common stock. We selected the peer group based on similarities in
         industry, stage of development, size and financial leverage with our

principal business operations. For each grant, we measured historical

volatility over a period equivalent to the expected term.

• Risk-Free Interest Rate-The risk-free interest rate is based on the yield

available on U.S. Treasury zero-coupon issues whose term is similar in

duration to the expected term of the respective stock option.

• Expected Dividend Yield-We have not paid and do not currently anticipate

paying any dividends on our common stock. Accordingly, we have estimated

the dividend yield to be zero.




As of December 31, 2020, the unrecognized stock-based compensation expense
related to stock options was $19.4 million and is expected to be recognized as
expense over a weighted-average period of approximately 3.1 years. The intrinsic
value of all outstanding stock options as of December 31, 2020 was approximately
$97.1 million, of which approximately $44.8 million related to vested options
and approximately $52.3 million related to unvested options.

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Common Stock Valuations



Prior to our IPO in December 2020, the estimated fair value of the common stock
underlying our stock options and stock awards was determined at each grant date
by our board of directors, with assistance from management and external
appraisers. All options to purchase shares of our common stock were intended to
be exercisable at a price per share not less than the per-share fair value of
our common stock underlying those options on the date of grant. The approach to
estimate the fair value of our common stock was consistent with the methods
outlined in the American Institute of Certified Public Accountants' Practice
Aid, Valuation of Privately-Held-Company Equity Securities Issued as
Compensation. Subsequent to our IPO, the fair value of our common stock is
determined based on its closing market price as reported on the Nasdaq Global
Select Market.

Income Taxes

We account for income taxes under the asset and liability method, which
requires, among other things, that deferred income taxes be provided for
temporary differences between the financial statement reporting and tax basis of
our assets and liabilities. In addition, deferred tax assets are recorded for
the future benefit of utilizing net operating losses and research and
development credit carryforwards and are measured using the enacted tax rates
and laws that will be in effect when such items are expected to reverse. A
valuation allowance is provided against deferred tax assets unless it is more
likely than not that they will be realized.

We account for uncertain tax positions by assessing all material positions taken
in any assessment or challenge by relevant taxing authorities. Assessing an
uncertain tax position begins with the initial determination of the position's
sustainability and is measured at the largest amount of benefit that is greater
than fifty percent likely of being realized upon ultimate settlement. Our policy
is to recognize interest and penalties related to the underpayment of income
taxes as a component of income tax expense or benefit. To date, there have been
no interest or penalties charged in relation to the unrecognized tax benefits.

NOLs and tax credit carryforwards are subject to review and possible adjustment
by the Internal Revenue Service (IRS) and may become subject to an annual
limitation in the event of certain cumulative changes in the ownership interest
of significant stockholders over a three-year period in excess of 50% as defined
under Sections 382 and 383 in the Internal Revenue Code, which could limit the
amount of tax attributes that can be utilized annually to offset future taxable
income or tax liabilities. The amount of the annual limitation is determined
based on our value immediately prior to the ownership change. We have
experienced ownership changes in the past. As a result of the ownership changes,
we determined that $0.9 million of our NOLs will expire unutilized for federal
income tax purposes and such amounts are excluded from our NOLs as of
December 31, 2020. Subsequent ownership changes may result in additional
limitations.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

JOBS Act



We are 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 may 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 avail ourselves of this exemption
from new or revised accounting standards and, therefore, while we are an
emerging growth company, we will not be subject to new or revised accounting
standards at the same time that they become applicable to 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.

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We will remain an emerging growth company until the earlier of (i) the last day
of the year following the fifth anniversary of the completion of our IPO,
(ii) the last day of the year in which we have total annual gross revenue of at
least $1.07 billion, (iii) the last day of the year in which we are deemed to be
a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act,
which would occur if the market value of our common stock held by non-affiliates
exceeded $700.0 million as of the last business day of the second fiscal quarter
of such year, or (iv) the date on which we have issued more than $1.0 billion in
non-convertible debt securities during the prior three-year period. An emerging
growth company may take advantage of specified reduced reporting requirements
and is relieved of certain other significant requirements that are otherwise
generally applicable to public companies. As an emerging growth company:

      •  we will present only two years of audited financial statements for any
         interim period, and related management's discussion and analysis of
         financial condition and results of operations;

• we will avail ourselves of the exemption from the requirement to obtain

an attestation and report from our auditors on the assessment of our

internal control over financial reporting pursuant to the Sarbanes-Oxley


         Act of 2002 (the "Sarbanes-Oxley Act");


      •  we will provide less extensive disclosure about our executive
         compensation arrangements;

• we will not require stockholder non-binding advisory votes on executive

compensation or golden parachute arrangements; and

• we will take advantage of extended transition periods to comply with new

or revised accounting standards, delaying the adoption of these

accounting standards until they would apply to private companies.

As a result, the information in this report in the future may be different than what you might receive from other public reporting companies.

Recent Accounting Pronouncements

See Note 2 to our financial statements included elsewhere in this report for information.

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