18

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The following discussion and analysis and the unaudited interim condensed
consolidated financial statements included in this Quarterly Report on Form 10-Q
should be read in conjunction with the financial statements and notes thereto
for the year ended December 31, 2020 and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations, both of which are
contained in the Prospectus dated July 28, 2021 filed pursuant to Rule 424(b)
under the Securities Act of 1933, as amended (the Securities Act), with the
Securities and Exchange Commission (SEC) on July 30, 2021 (the Prospectus).



Forward-Looking Statements



This Quarterly Report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange
Act). All statements other than statements of historical facts contained in this
Quarterly Report, including statements regarding our future results of
operations and financial position, business strategy, research and development
plans, the anticipated timing, costs, design and conduct of our ongoing and
planned preclinical studies and clinical trials for our vaccine candidates, the
timing and likelihood of regulatory filings and approvals for our vaccine
candidates, our ability to commercialize our vaccine candidates, if approved,
the impact of COVID-19 on our business, the pricing and reimbursement of our
vaccine candidates, if approved, the potential to develop future vaccine
candidates, the potential benefits of strategic collaborations and our intent to
enter into any strategic arrangements, the timing and likelihood of success,
plans and objectives of management for future operations, and future results of
anticipated product development efforts, are forward-looking statements. These
statements involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements.



In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "expect," "plan," "anticipate," "could," "intend,"
"target," "project," "contemplates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other similar
expressions. The forward-looking statements in this Quarterly Report are only
predictions. We have based these forward-looking statements largely on our
current expectations and projections about future events and financial trends
that we believe may affect our business, financial condition and results of
operations. These forward-looking statements speak only as of the date of this
Quarterly Report and are subject to a number of risks, uncertainties and
assumptions, including those described in Part II, Item 1A, "Risk Factors" of
this Quarterly Report. The events and circumstances reflected in our
forward-looking statements may not be achieved or occur and actual results could
differ materially from those projected in the forward-looking statements.
Moreover, we operate in an evolving environment. New risk factors and
uncertainties may emerge from time to time, and it is not possible for
management to predict all risk factors and uncertainties. Except as required by
applicable law, we do not plan to publicly update or revise any forward-looking
statements contained herein, whether as a result of any new information, future
events, changed circumstances or otherwise.

Overview





We are a biopharmaceutical company leveraging our innovative VLP platform
technology to develop vaccines against infectious diseases, with an initial
focus on life-threatening respiratory diseases. Our VLP platform technology is
designed to enable multivalent, particle-based display of complex viral
antigens, which we believe will induce broad, robust, and durable protection
against the specific viruses targeted. Our pipeline includes vaccine candidates
targeting some of the most prevalent viral causes of pneumonia. We are
developing these candidates for older adults, a patient population with high
unmet need. Our vaccine candidate IVX-A12 is a bivalent candidate, or a mixture
of two different VLP candidates. IVX-A12 combines IVX-121, a vaccine candidate
designed to target RSV, and IVX-241, a vaccine candidate designed to target
hMPV. There are currently no vaccines approved for either RSV or hMPV, which are
two common causes of pneumonia in older adults. We recently initiated a clinical
trial of IVX-121 in Belgium, with interim topline data expected in the first
half of 2022. Assuming favorable results from the IVX-121 clinical trial and
favorable preclinical data for IVX-241, we plan to submit an investigational new
drug application ("IND") to the FDA in the first half of 2022 and, thereafter,
initiate a Phase 1 clinical trial for our combination vaccine candidate,
IVX-A12. Additionally, we are developing two SARS-CoV-2 vaccine candidates,
IVX-411 and IVX-421, and initiated a Phase 1/2 clinical trial of IVX-411 in
Australia in June 2021, with proof-of-concept data expected in the first half of
2022. Part 1 of this trial is in adults who have neither had COVID-19 nor been
vaccinated with a licensed COVID-19 vaccine, and Part 2 is in adults who have
previously completed a vaccine regimen using a licensed COVID-19 vaccine. Part 1
and Part 2 have completed dosing.



We commenced our operations in 2017 and have devoted substantially all of our
resources to date to organizing and staffing our company, business planning,
raising capital, in-licensing intellectual property rights, developing vaccine
candidates, scaling up manufacturing of vaccine candidates, and preparing for
our ongoing and planned preclinical studies and clinical trials. Our operations
to date have been funded primarily through the sale and issuance of our
convertible preferred stock and our common stock, generating net proceeds of
$340.2 million. In August 2021, we completed our IPO with the sale of 13,953,332
shares of common stock at an IPO price of $15.00 per share with net proceeds of
$190.7 million, which included the exercise in full by the underwriters of their
option to purchase 1,819,999 additional shares. Prior to our IPO, we had funded
our operations primarily through the sale of convertible



                                       19

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preferred stock and had previously raised $149.5 million in net proceeds. As of
September 30, 2021, we had cash of $291.3 million and restricted cash of $2.7
million.



We have incurred significant operating losses since inception. Our net loss for
the nine months ended September 30, 2021, was $48.8 million. As of September 30,
2021, we had an accumulated deficit of $75.9 million. Our net losses may
fluctuate significantly from quarter-to-quarter and year-to-year, depending on
the timing of our clinical development activities, other research and
development activities and capital expenditures. We expect to continue to incur
significant expenses and increasing operating losses for the foreseeable future.
We anticipate our expenses will increase substantially as we seek to advance our
vaccine candidates through preclinical and clinical development, expand our
research and development activities, develop new vaccine candidates, complete
clinical trials, seek regulatory approval and, if we receive regulatory
approval, commercialize our products, as well as hire additional personnel,
protect our intellectual property and incur costs associated with being a public
company.

Based on our current operating plan, we believe that our existing cash and
restricted cash will be sufficient to fund our operations through at least 2024.
We have never generated any revenue from product sales and do not expect to
generate any revenues from product sales unless and until we successfully
complete development of and obtain regulatory approval for our vaccine
candidates, which will not be for several years, if ever. As a result, we will
need substantial additional funding to support our continuing operations and
pursue our growth strategy. Until such time as we can generate significant
revenue from sales of our vaccine candidates, if ever, we expect to finance our
cash needs through equity offerings, or debt financings or other capital
sources, including potential collaborations, licenses, and other similar
arrangements. However, we may not be able to raise additional funds or enter
into such other arrangements when needed or on favorable terms, or at all. If we
are unable to raise additional capital or enter into such arrangements when
needed, we could be forced to delay, limit, reduce or terminate our research and
development programs or future commercialization efforts, or grant rights to
develop and market our vaccine candidates to third parties where we might
otherwise prefer to develop and market such vaccine candidates ourselves.

COVID-19



The global COVID-19 pandemic continues to 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 its
impact on our clinical trial enrollment, trial sites, manufacturers, contract
research organizations (CROs) and other third parties with whom we do business,
as well as its impact on regulatory authorities and our key scientific and
management personnel. The ultimate impact of the COVID-19 pandemic, including
the impact of new variants of the virus that causes COVID-19, or a similar
health epidemic is highly uncertain and subject to change. To the extent
possible, and consistent with applicable guidance from federal, state and local
authorities, we are conducting business as usual, with necessary or advisable
modifications to employee travel. We will continue to actively monitor the
evolving situation related to COVID-19 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 development
timelines and plans, including the resulting impact on our expenditures and
capital needs, remains uncertain and is subject to change.

Components of Results of Operations

Grant Revenue



To date, we have not generated any revenues from the commercial sale of approved
products, and we do not expect to generate revenues from the commercial sale of
our vaccine candidates for at least the foreseeable future, if ever. For the
three and nine months ended September 30, 2021, revenue was derived from our
September 2020 grant agreement (the Grant Agreement) with the Bill & Melinda
Gates Foundation (BMGF), pursuant to which BMGF awarded a grant totaling up to
$10.0 million, in support of our development of a SARS-CoV-2 vaccine. We have
received the full $10.0 million under the Grant Agreement. Unless terminated
earlier by BMGF, the Grant Agreement will continue in effect until March 31,
2022. We do not currently expect future grant revenues to be a material source
of funding. No revenue was recognized for the three and nine months ended
September 30, 2020.

Operating Expenses

Research and Development

Research and development expenses consist primarily of external and internal
costs related to the development of vaccine candidates. Research and development
expenses are recognized as incurred and payments made prior to the receipt of
goods or services to be used in research and development are capitalized until
the goods or services are received.



                                       20

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External costs include:



?
expenses incurred in connection with outsourced research and preclinical
studies;
?
expenses incurred in connection with conducting clinical trials and site
payments for time and pass-through expenses and expenses incurred under
agreements with CROs, other vendors, or service providers engaged to conduct our
trials;
?
expenses incurred in connection with manufacturing of our vaccine candidates and
related intermediates under agreements with contract development and
manufacturing organizations or other service providers;
?
the cost of consultants engaged in research and development related services and
the cost to manufacture vaccine candidates for use in our preclinical studies
and clinical trials;
?
costs related to regulatory compliance; and
?
the cost of annual license fees and milestone payments under our license
agreements.

Internal costs include:

?
employee-related expenses, including salaries, related benefits, travel and
stock-based compensation expenses for employees engaged in research and
development functions;
?
facilities, depreciation and other expenses, which include allocated expenses
for rent and maintenance of facilities, insurance, laboratory consumables and
supplies.

Research and development activities are central to our business model. There are
numerous factors associated with the successful development and regulatory
approval of any of our vaccine candidates, including future trial design and
various regulatory requirements, as well as the safety and efficacy of our
vaccine candidates, which cannot be determined with accuracy at this time. We
may never succeed in obtaining regulatory approval for any of our vaccine
candidates. Vaccine 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. At this time, we cannot reasonably estimate or know the nature,
timing and costs of the efforts that will be necessary to complete the
preclinical and clinical development of any of our vaccine candidates. In
addition, we cannot forecast which vaccine candidates may be subject to future
collaborations, when such arrangements will be secured, if at all, and to what
degree such arrangements would affect our development plans and capital
requirements. However, we expect that our research and development expenses will
increase substantially in connection with our planned preclinical and clinical
development activities in the near term and in the future.

Our future development costs may vary significantly based on factors such as:



?
the number and scope of preclinical and regulatory filing-enabling studies;
?
the number of trials required for approval;
?
the number of sites included in the trials;
?
the countries in which the trials are conducted;
?
the length of time required to enroll eligible subjects;
?
the number of subjects that participate in the trials;
?
the number of doses evaluated in the trials;
?
the costs and timing of manufacturing our vaccine candidates;
?
the drop-out or discontinuation rates of clinical trial subjects;
?
potential additional safety monitoring requested by regulatory agencies;
?
the duration of subject participation in the trials and follow-up;
?
the phase of development of the vaccine candidate;
?
the impact of any interruptions to our operations or to those of the third
parties with whom we work due to the ongoing COVID-19 pandemic; and
?
the efficacy and safety profile of the vaccine candidate.



                                       21

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General and Administrative



General and administrative expenses consist of personnel-related costs,
including salaries, payroll taxes, employee benefits, and stock-based
compensation charges for personnel in executive, finance and other
administrative functions. Other significant costs include facility-related
costs, legal fees relating to intellectual property and corporate matters,
professional fees for accounting and consulting services, and insurance costs.
We anticipate that our general and administrative expenses will increase
substantially for the foreseeable future to support our continued research and
development activities, pre-commercial preparation activities for our vaccine
candidates, and, if any vaccine candidate receives marketing approval,
commercialization activities. We also anticipate increased expenses related to
audit, legal, regulatory, and tax-related services associated with maintaining
compliance with exchange listing and SEC requirements, director and officer
insurance premiums, and investor relations costs associated with operating as a
public company.

Change in Fair Value of Derivative Liability



We issued a convertible promissory note in August 2020. We bifurcated certain
embedded features that were required to be accounted for separately as a single
derivative liability. The initial recognition of the fair value of the
derivative resulted in a reduction to the carrying value of the convertible
promissory note, a discount which is then amortized to interest expense over the
term of the note. We adjusted the carrying value of the derivative liability to
its estimated fair value at each reporting date, with any related changes in
fair value recorded as change in fair value of derivative liability in our
statements of operations and comprehensive loss. The convertible promissory note
converted into 2,805,850 shares of our Series B-2 convertible preferred stock in
March 2021.

Prior to the conversion of the convertible promissory note into our Series B-2
convertible preferred stock in March 2021, the fair value of the derivative
liability was estimated using a scenario-based analysis comparing the
probability-weighted present value of the convertible promissory note payoff at
maturity with and without the bifurcated features, considering possible outcomes
available to the noteholders, including various financing dissolution scenarios.

Loss on Extinguishment of Convertible Promissory Note



We recorded a loss on extinguishment of convertible promissory note of $0.8
million during the three and nine months ended September 30, 2021 in connection
with the conversion of our convertible promissory note issued in August 2020.
See Note 7 to the unaudited interim condensed financial statements included
elsewhere in this Quarterly Report for more information on this transaction.

Interest and Other Income (Expense)

Interest income consists of interest income earned on interest bearing demand accounts.



Interest expense consisted of interest on our outstanding convertible promissory
note at a per annum interest rate of 6.0% and non-cash interest expense related
to discount amortization prior to its conversion into shares of our Series B-2
convertible preferred stock in March 2021.



Results of Operations



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Comparison of the Three and Nine Months Ended September 30, 2021 and 2020

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





                                    Three Months Ended                         Nine Months Ended
                                       September 30,                             September 30,
                                     2021          2020        Change         2021          2020         Change
Grant revenue                          1,827     $      -     $   1,827     $   5,732     $       -     $   5,732
Operating expenses:
Research and development              10,883        4,752         6,131        24,713        12,338        12,375
General and administrative            25,357          704        24,653        28,669         1,857        26,812
Total operating expenses              36,240        5,456        30,784        53,382        14,195        39,187
Loss from operations                 (34,413 )     (5,456 )     (28,957 )     (47,650 )     (14,195 )     (33,455 )
Other income (expense)
Change in fair value of
embedded derivative liability              -            -             -          (205 )           -          (205 )
Loss on extinguishment of
convertible promissory note                -            -             -          (754 )           -          (754 )
Interest and other income
(expense)                                 27         (121 )         148

(180 ) (51 ) (129 ) Net loss and comprehensive loss $ (34,386 ) $ (5,577 ) $ (28,809 ) $ (48,789 ) $ (14,246 ) $ (34,543 )








Grant Revenue

We recognized $1.9 million in grant revenue for the three months ended September
30, 2021 compared to $0 for the three months ended September 30, 2020. We
recognized $5.7 million in grant revenue for the nine months ended September 30,
2021, compared to $0 for the nine months ended September 30, 2020. For the three
and nine months ended September 30, 2021, revenue was derived from the Grant
Agreement we entered into in September 2020 with BMGF, under which we were
awarded a grant totaling up to $10.0 million, in support of our development of a
SARS-CoV-2 vaccine.

Research and Development Expenses



Research and development expenses were $10.9 million for the three months ended
September 30, 2021, compared to $4.8 million for the three months ended
September 30, 2020. The increase of $6.1 million was primarily due to a $4.3
million increase in direct costs related to clinical development and
manufacturing, a $0.9 million increase related to stock-based compensation
expense, a $0.7 million increase in personnel related expenses due to increased
headcount to support our development activities, and a $0.2 million increase in
direct costs related to non-clinical development and manufacturing.



For the nine months ended September 30, 2021, research and development expenses
were $24.7 million compared to $12.3 million for the same period in 2020. The
increase of $12.4 million was primarily due to a $9.2 million increase in direct
costs related to clinical development and manufacturing, a $1.5 million increase
in personnel related expenses due to increased headcount to support our
development activities, a $1.4 million increase related to stock-based
compensation expense, and a $0.3 million increase in direct costs related to
non-clinical development and manufacturing.

We track outsourced development, outsourced personnel costs and other external research and development costs of specific programs. We do not track our internal research and development costs on a program-by-program basis.



Research and development expenses are summarized by program in the table below
(in thousands):



                                            Three Months Ended            Nine Months Ended
                                               September 30,                September 30,
                                            2021           2020           2021          2020
IVX-121                                  $       690     $   3,430     $    4,042     $   9,293
IVX-241                                        2,110           293          4,429           306
IVX-411                                        4,209            12          9,651            16
Unallocated research and development
expense                                        3,874         1,017

6,591 2,723 Total research and development expense $ 10,883 $ 4,752 $ 24,713 $ 12,338








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General and Administrative Expenses



General and administrative expenses were $25.4 million for the three months
ended September 30, 2021, compared to $0.7 million for the three months ended
September 30, 2020. The increase of $24.7 million consisted of increased
non-cash stock-based compensation expense of $22.7 million, inclusive of $21.0
in expense related to the modification of options accelerated in connection with
the death of Tadataka (Tachi) Yamada, M.D., our former Chairman, increase in
other operating expenses of $0.7 million, increased professional services
including legal fees of $0.7 million, and increased personnel-related expenses
of $0.6 million.

General and administrative expenses were $28.7 million for the nine months ended
September 30, 2021, compared to $1.9 million for the nine months ended September
30, 2020. The increase of $26.9 million consisted of increased non-cash
stock-based compensation expense of $23.9 million, inclusive of $21.0 in expense
related to the modification of options accelerated in connection with the death
of Dr. Yamada, increased professional services including legal fees of $1.1
million, increased personnel-related expenses of $1.0 million, and increased
other expenses of $0.9 million.

Other Income (Expense)



Other income (expense) was expense of $1.1 million for the nine months ended
September 30, 2021, compared to income of $0.1 million for the nine months ended
September 30, 2020. The increase of $1.0 million in expense for the nine months
ended September 30, 2021 was the result of a loss on extinguishment of
convertible promissory note of $0.8 million, an increase in expense recognized
on the change in fair value of derivative liability of $0.2 million, and an
increase in interest expense of $0.1 million.

Liquidity and Capital Resources





We have incurred significant operating losses since our inception and anticipate
we will continue to incur significant operating losses for the foreseeable
future as we continue to develop our current and future vaccine candidates, and
may never become profitable. As of September 30, 2021, we had been financed
primarily through net proceeds of approximately $340.2 million from the sale of
our convertible preferred stock and common stock. In August 2021, we completed
our IPO with the sale of 13,953,332 shares of common stock, which included the
exercise in full by the underwriters of their option to purchase 1,819,999
additional shares, at an IPO price of $15.00 per share with net proceeds of
$190.7 million. Prior to our IPO, we had funded our operations primarily through
the sale of convertible preferred stock and had previously raised $149.5 million
in net proceeds. Additionally, in July 2021, we received the final $3.3 million
in restricted cash awarded under the Grant Agreement. As of September 30, 2021,
we had cash of $291.3 million, restricted cash of $2.7 million and an
accumulated deficit of $75.9 million.

Funding Requirements



Based on our current operating plan we believe that our existing cash and
restricted cash will be sufficient to meet our anticipated operating expenses
and capital expenditures through at least 2024. However, our forecast of the
period of time through which our financial resources will be adequate to support
our operations is a forward-looking statement that involves risks and
uncertainties, and actual results could vary materially. We have based this
estimate on assumptions that may prove to be wrong, and we could deplete our
capital resources sooner than we expect. Additionally, the process of testing
vaccine candidates in clinical trials is costly, and the timing of progress and
expenses in these trials is uncertain.

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



?
the initiation, type, number, scope, results, costs and timing of, our ongoing
and planned clinical trials and preclinical studies or clinical trials of other
potential vaccine candidates we may choose to pursue in the future, including
feedback received from regulatory authorities;
?
the costs and timing of manufacturing for current or future vaccine candidates,
including commercial scale manufacturing if any vaccine candidate is approved;
?
the costs, timing and outcome of regulatory review of current or future vaccine
candidates;
?
any delays and cost increases that may result from the COVID-19 pandemic;
?
the costs of obtaining, maintaining and enforcing our patents and other
intellectual property rights;
?
our efforts to enhance operational systems and hire additional personnel to
satisfy our obligations as a public company, including enhanced internal
controls over financial reporting;
?
the costs associated with hiring additional personnel and consultants as our
business grows, including additional executive officers and clinical development
personnel;
?
the terms and timing of establishing and maintaining collaborations, licenses
and other similar arrangements;



                                       24

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?
the timing and amount of the milestone or other payments we must make to current
and future licensors;
?
the costs and timing of establishing or securing sales and marketing
capabilities if a current or future vaccine candidate is approved;
?
our ability to achieve sufficient market acceptance, coverage and adequate
reimbursement from third-party payors and adequate market share and revenue for
any approved products;
?
patients' willingness to pay out-of-pocket for any approved products in the
absence of coverage and/or adequate reimbursement from third-party payors; and
?
costs associated with any products or technologies that we may in-license or
acquire.

Our existing cash and restricted cash, will not be sufficient to complete development of IVX-A12, IVX-411, IVX-421 or any other vaccine candidate. Accordingly, we will be required to obtain further funding to achieve our business objectives.



Until such time, if ever, as we can generate substantial product revenues to
support our cost structure, we expect to finance our cash needs through equity
offerings, debt financings or other capital sources, including potential
collaborations, licenses, and other similar arrangements. However, we may be
unable to raise additional funds or enter into such other arrangements when
needed on favorable terms or at all. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, the ownership
interest of our stockholders could be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect the rights of
our common stockholders. Debt financing and equity financing, if available, may
involve agreements that include covenants limiting or restricting our ability to
take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise funds through collaborations,
or other similar arrangements with third parties, we may have to relinquish
valuable rights to our technologies, future revenue streams, research programs
or vaccine candidates or grant licenses on terms that may not be favorable to us
and/or may reduce the value of our common stock. If we are unable to raise
additional funds through equity or debt financings when needed, we may be
required to delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market our vaccine
candidates to third parties where we might otherwise prefer to develop and
market such vaccine candidates ourselves.

Cash Flows

The following table sets forth a summary of the net cash flow activity for each of the periods set forth below (in thousands):





                                            Nine Months Ended
                                              September 30,
                                           2021          2020
Net cash (used in) provided by
Operating activities                     $ (25,504 )   $ (10,520 )
Investing activities                          (583 )         (10 )
Financing activities                       304,512         4,928

Net change in cash and restricted cash $ 278,425 $ (5,602 )






Operating Activities

Net cash used in operating activities for the nine months ended September 30,
2021 was $25.5 million, consisting primarily of our net loss incurred during the
period of $48.8 million adjusted for $26.7 million of non-cash charges, and $3.3
million for net changes in operating assets and liabilities. Non-cash charges
consisted primarily of $25.4 million in stock-based compensation expense
inclusive of $21.0 million in expense related to the modification of options
accelerated in connection with the death of Dr. Yamada, $0.8 million loss on
extinguishment of convertible promissory note, $0.3 million non-cash interest
expense, and $0.2 million of non-cash expense recognized related to the change
in fair value of the derivative liability. The net change in operating assets
and liabilities consisted of a $5.7 million decrease in prepaids and other
current assets, a $2.1 million increase in accounts payable and accrued and
other current liabilities, and a $0.3 million decrease in deferred revenue

Net cash used in operating activities for the nine months ended September 30,
2020 was $10.5 million, consisting primarily of our net loss incurred during the
period of $14.2 million adjusted for non-cash charges of $2.0 million, and net
changes in operating assets and liabilities of $1.7 million. Non-cash charges
consisted of $1.8 million related to the change in fair value of the derivative
liability, and $0.2 million in stock-based compensation expense. The net change
in operating assets and liabilities consisted of a



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decrease in accounts payable and accrued other current liabilities of $2.0 million offset by changes in operating assets consisting of a decrease in prepaid and other current assets of $0.3 million.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2021 and 2020 was $0.6 million and less than $0 million, respectively, and related to purchases of property and equipment.

Financing Activities



Net cash provided by financing activities for the nine months ended September
30, 2021 was $304.5 million consisting of $190.7 million in proceeds related to
the issuance of common stock in the IPO in August 2021, $92.6 million in
proceeds related to the issuance of Series B-1 convertible preferred stock in
March 2021, $21.0 million in proceeds related to the issuance of Series A-1
convertible preferred stock in February 2021, and $0.2 million proceeds from
exercises of stock options, including early exercises.

Net cash provided by financing activities for the nine months ended September
30, 2020 was $4.9 million consisting of $4.7 million in proceeds related to the
issuance of convertible preferred stock, and $0.2 million proceeds from
exercises of stock options, including early exercises.

Contractual Obligations and Commitments





During the three and nine months ended September 30, 2021, there have been no
material changes to our contractual obligations and commitments outside the
ordinary course of business from those described under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Contractual Obligations and Commitments" in the Prospectus.

Under our license agreements, we have milestone payment obligations that are
contingent upon the achievement of specified development, regulatory, and
commercial sales milestones and are required to make certain royalty payments in
connection with the sale of products developed under the agreements. As of
September 30, 2021 and December 31, 2020, we are unable to estimate the timing
or likelihood of achieving the milestones or making future product sales and,
therefore, any related payments are not reflected as contractual obligations
herein. See the descriptions of these agreements provided above and in the
section of the Prospectus titled "Business-Material Agreements" for additional
information on these license agreements.

We enter into contracts in the normal course of business for contract research
services, contract manufacturing services, professional services and other
services and products for operating purposes. These contracts generally provide
for termination after a notice period, and, therefore, are cancelable contracts
and not included as contractual obligations herein.

Critical Accounting Policies and Significant Judgments and Estimates



Our financial statements are prepared in accordance with generally accepted
accounting principles in the United States (GAAP). The preparation of our
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities, costs, and expenses and the
disclosure of contingent assets and liabilities in our financial statements and
accompanying notes. We base our estimates and assumptions on historical
experience and other factors that we believe to be reasonable under the
circumstances. We evaluate our estimates and judgments on an ongoing basis. We
base our estimates on historical experience, known trends and events, and on
various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Our actual results may differ materially from these estimates under
different assumptions or conditions. During the three and nine months ended
September 30, 2021, there were no material changes to our critical accounting
policies from those described in the Prospectus.

Applicability of JOBS Act and Smaller Reporting Company Rules



As an emerging growth company under the Jumpstart Our Business Startups Act of
2012 (JOBS Act), we can take advantage of an extended transition period for
complying with new or revised accounting standards. This allows an emerging
growth company to 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 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. We intend to
rely on other exemptions provided by the JOBS Act, including without limitation,
not being required to comply with the auditor attestation requirements of
Section 404(b) of Sarbanes-Oxley. 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 earliest of (i) the last day
of the fiscal year following the fifth anniversary of the consummation of our
IPO, (ii) the last day of the fiscal year in which we have total annual gross
revenue of at least $1.07 billion, (iii) the last day of the fiscal 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.

We are also a smaller reporting company as defined in the Exchange Act. We may
continue to be a smaller reporting company even after we are no longer an
emerging growth company. We may take advantage of certain of the scaled
disclosures available to smaller reporting companies and will be able to take
advantage of these scaled disclosures for so long as our voting and non-voting
common stock held by non-affiliates is less than $250.0 million measured on the
last business day of our second fiscal quarter, or our annual revenue is less
than $100.0 million during the most recently completed fiscal year and our
voting and non-voting common stock held by non-affiliates is less than $700.0
million measured on the last business day of our second fiscal quarter.

Recent Accounting Pronouncements

See Note 2 to our unaudited interim condensed financial statements included for discussion of recent accounting pronouncements, if any.

Off-Balance Sheet Arrangements

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

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