The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q and our Annual Report on Form 10-K for the year ended
December 31, 2020 filed with the Securities and Exchange Commission, or SEC, on
February 23, 2021. Some of the information contained in this discussion and
analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including
information with respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. As a result of
many factors, including those factors set forth in the "Risk Factors" section of
this Quarterly Report on Form 10-Q, our actual results could differ materially
from the results described in, or implied by, the forward-looking statements
contained in the following discussion and analysis.

Overview



We are a clinical-stage biopharmaceutical company that is genetically
engineering red blood cells to create an entirely new class of cellular
medicines called Red Cell Therapeutics (RCTs). Based on the premise that human
red blood cells are the foundation of the next significant innovation in
medicine, we have designed a proprietary and highly versatile platform, called
the RED PLATFORM, to genetically engineer and culture RCTs that are selective,
potent and ready-to-use cellular therapies for the treatment of cancer and
autoimmune diseases. RCTs are expected to provide advantages over other cell
therapies, or agonist antibody and recombinant cytokine approaches, including
generating a broad anti-tumor response with a wide therapeutic window and
limited side effects given the biodistribution of RCTs to the vasculature and
spleen. Additionally, RCTs do not have the complex logistics of other cell
therapies, as RCT are prepared in the pharmacy, administered in an outpatient
setting and do not require lymphodepletion prior to administration.

In the first quarter of 2021, we demonstrated strong execution across our
pipeline of Red Cell Therapeutics with significant progress in our oncology
programs with our lead clinical candidates, RTX-240, and our lead artificial
antigen presenting cell, or aAPC, program, RTX-321. We reported initial clinical
data from RTX-240 Phase 1/2 clinical trial in relapsed/refractory or locally
advanced solid tumors in March 2021. The data in solid tumors was presented at
the American Association for Cancer Research (AACR) conference in April 2021. In
the preliminary safety (n=16) and efficacy (n=15) findings, we observed
single-agent activity of RTX-240 with no Grade 3 or 4 adverse events or
dose-limiting toxicities reported. We are currently dosing patients in the Phase
1/2 clinical trial in relapsed/refractory or locally advanced solid tumors for
RTX-240. We continue to enroll patients in the third and fourth dose cohorts of
the Phase 1 clinical trial of RTX-240 for relapsed/refractory acute myeloid
leukemia (AML). We are also currently dosing additional patients in the Phase 1
clinical trial of RTX-321 in patients with advanced HPV 16-positive cancers,
including cervical cancer, head and neck cancer and anal cancer. Our
manufacturing facility in Smithfield, Rhode Island, continues to provide cGMP
supply for these three ongoing clinical trials.

Finally, we continue to advance our earlier-stage autoimmune program in Type I diabetes and explore ways in which to apply the RED PLATFORM across the remainder of our pipeline.



We believe the initial clinical data from the RTX-240 clinical trial provides
initial proof-of-concept of the RED PLATFORM by providing evidence that red
blood cells can be engineered to mimic the human immune system and stimulate
adaptive and innate immunity to generate clinical responses in cancer patients
with refractory disease.

Highlights of our most advanced RCT product candidates, RTX-240 and RTX-321, are described further below.



RTX-240

We are currently enrolling patients in a Phase 1/2 clinical trial evaluating
RTX-240. The study contains two Phase 1 dose escalation arms: one in patients
with relapsed/refractory or locally advanced solid tumors and another in
patients with relapsed/refractory AML. RTX-240 is an allogeneic, off-the-shelf
cellular therapy product candidate that is engineered to replicate human immune
system function by stimulating adaptive and innate immunity to generate an
anti-tumor immune response. As shown in preclinical studies, RTX-240 expresses
hundreds of thousands of copies of the

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costimulatory molecule 4-1BB ligand (4-1BBL) and the cytokine IL-15TP (a fusion
of IL-15 and IL-15 receptor alpha) on the cell surface in their native forms. By
activating existing agonist pathways, RTX-240 has the potential to enhance
potency and improve anti-tumor activity, overcome resistance to immunotherapy
and have a reduced toxicity profile given its biodistribution in the vasculature
and the spleen.

In March 2021, we reported initial safety (n=16) and efficacy (n=15) data from
the RTX-240 Phase 1/2 clinical trial in relapsed/refractory or locally advanced
solid tumors. The solid tumor data was presented at the American Association for
Cancer Research (AACR) conference in April. Five dose cohorts were completed in
the solid tumor trial at the time of the data cutoff on February 28, 2021 and
the data analysis was based on RECIST v1.1. criteria. We observed the following:

? no treatment-related Grade 3 or Grade 4 adverse events or dose limiting

toxicities;

most common treatment-related Grade 1/2 adverse events were fatigue, chills, ? nausea, decreased appetite and arthralgias. There was a single Grade 1 event of

liver toxicity;

two responses were observed in the study including a confirmed partial response ? (PR) in a patient with metastatic anal cancer and an unconfirmed PR in a

patient with metastatic uveal melanoma. Both patients' disease had progressed

on prior anti-PD-1 or anti-PD-L1 therapy;

stable disease (SD) was observed in six patients, including four patients with ? stable disease for at least 12 weeks in non-small cell lung cancer, soft tissue

sarcoma, pancreatic cancer and prostate cancer;

? pharmacodynamic effects showed the activation and/or expansion of the key NK

and/or T cells types in all patients (n=16); and

analysis of tumor biopsies from two solid tumor and one AML patient showed ? evidence of immune cell trafficking of activated NK and T cells into the tumor

microenvironment.




In January 2021, we announced that initial clinical data from the solid tumor
trial shows that RTX-240 stimulates innate and adaptive immunity, supporting
proof of mechanism. Key observations from initial data include:

? no treatment-related Grade 3 or Grade 4 adverse events and no dose limiting

toxicities observed (n=14);

? all patients showed activation of NK or T cells or both cell types (n=14); and

? in the majority of patients (n=8), activation and expansion of both NK cells

and T cells were observed across dose levels.

We are currently continuing with dose and schedule optimization and enrollment continues in our RTX-240 Phase 1/2 clinical trial in relapsed/refractory or locally advanced solid tumors.



Additionally, we are currently dosing patients in the third and fourth cohorts
of the second Phase 1 arm of the ongoing Phase 1/2 RTX-240 clinical trial for
the treatment of relapsed/refractory AML.

In March 2021, we presented preliminary trafficking data from the first patient
in the trial indicating strong accumulation of activated, granzyme B-positive NK
and T cells in the bone marrow, which is the site of disease in AML. NK cells
can exhibit potent anti-tumor activity against AML, but tumor-associated
mechanisms often suppress the proper function of NK cells leading to disease
progression. When NK cells are restored to their full anti-tumor potential,
their cytolytic activity predicts a better long-term outcome for patients with
AML. Reconstitution of NK cells post high-dose chemotherapy or transplant are
strong prognostic indicators of overall survival. We believe RTX-240 has the
potential to improve the standard of care in treatment of advanced AML,
especially as a maintenance therapy following remission,

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given its encouraging emerging safety profile and unique mechanism of action designed to activate and expand NK and T cells.

RTX-321



We are dosing patients in a Phase 1 clinical trial for RTX-321 for the treatment
of patients with human papillomavirus (HPV) 16-positive cancers. RTX-321 is an
allogeneic, off-the-shelf artificial antigen-presenting cell (aAPC) therapy
product candidate that is engineered to induce a tumor-specific immune response
by expanding antigen-specific T cells. RTX-321 expresses hundreds of thousands
of copies of an HPV peptide antigen bound to major histocompatibility complex
(MHC) class I proteins, the costimulatory molecule 4-1BBL and the cytokine IL-12
on the cell surface to mimic human T cell-APC interactions. As part of our IND
filing, we included frozen drug substance for the first time as part of the
manufacturing process, allowing a truly off-the-shelf cellular therapy product
candidate with a potential shelf life of several years based on preliminary
stability data.

HPV 16 is associated with approximately 70% of cervical cancers, approximately
40% of head and neck squamous cell carcinoma (HNSCC) arising in the oropharynx,
approximately 25%-40% of HNSCC arising in other locations and approximately
80%-85% of anal cancers. A critical need remains for better treatment options
for advanced HPV 16 associated cancers. The prognosis remains poor for patients
with metastatic disease with few treatment options beyond the first-line
setting.

In November 2020, we presented preclinical data at the Federation of Clinical
Immunology Societies Annual Meeting and the American Association of Cancer
Research Tumor Immunology and Immunotherapy Conference, from our lead aAPC
program, RTX-321, for the treatment of HPV 16-positive tumors, and demonstrating
the following:

? RTX-321 and its mouse surrogates demonstrated a dual mechanism of action in

vivo and in vitro:

o functions as an aAPC to boost HPV 16 E7-specific CD8+ T-cell responses; and

o promotes HPV 16-independent stimulation of innate (NK cells) and adaptive

immune (non-HPV antigen-specific CD8+ T cells) responses;

? mouse surrogates of RTX-321 promote tumor control, memory formation and epitope

spreading in tumor models in vivo;

? treatment with the RTX-321 mouse surrogate results in minimal, reversible

effects in vivo (body weight change, IFN? and ALT levels);

? RTX-321 functions as an aAPC to boost HPV 16 antigen-specific T cells in vitro;

and

? RTX-321 promotes HPV 16-independent adaptive and innate immune responses in

vitro.

Taken together, we believe these findings support the potential of RTX-321 as an effective therapy for the treatment of HPV 16+ cancers.

Manufacturing


We have generated hundreds of RCT product candidates using our RED PLATFORM and
are utilizing our universal engineering and manufacturing processes to advance a
broad pipeline of RCT product candidates into clinical trials in cancer and
autoimmune diseases. Common design and manufacturing elements of our RCTs should
enable us to achieve significant advantages in product development. Recognizing
the importance of controlling our own manufacturing capabilities to produce
consistent and reproducible product at greater scale, we acquired, renovated and
operationalized a manufacturing facility in Smithfield, RI, that is are
currently providing cGMP supply for our three ongoing Phase 1

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clinical trials: RTX-240 in advanced solid tumors, RTX-240 in relapsed/refractory AML and RTX-321 in HPV-16-positive cancers. Since operationalizing the facility, we have achieved the following milestones:

? increased productivity in manufacturing of cGMP supply of RTX-240 in 50L

bioreactors;

? increased RTX-240 liquid in-vial shelf life from approximately 28 to 52 days;

for RTX-240, continuously met red blood cell identity (CD233+, mean corpuscular ? hemoglobin, purity, enucleation cell population) and target product profile

criteria (protein expression, cell viability) for clinical supply lots; and

introduced frozen drug substance for the first time as part of the IND ? application for RTX-321, resulting in a truly off-the-shelf potential cellular

therapy with a potential shelf life of up to several years. Following liquid

reformulation, RTX-321 drug product has an in-vial shelf life of 52 days.


Since our inception, we have focused substantially all of our resources on
building our proprietary RED PLATFORM, establishing and protecting our
intellectual property portfolio, conducting research and development activities,
developing our manufacturing process and manufacturing drug product material,
organizing and staffing our company, business planning, raising capital and
providing general and administrative support for these operations. We do not
have any products approved for sale and have not generated any revenue from
product sales. To date, we have funded our operations with proceeds from the
sale of preferred stock and issuance of debt and with proceeds from our initial
public offering, or IPO.

On July 20, 2018, we completed our IPO pursuant to which we issued and sold
12,055,450 shares of common stock, inclusive of 1,572,450 shares pursuant to the
full exercise of the underwriters' option to purchase additional shares. We
received proceeds of $254.3 million after deducting underwriting discounts and
commissions and other offering costs. In August 2019, we entered into a
Distribution Agreement with J.P. Morgan Securities LLC, Jefferies LLC and SVB
Leerink LLC with respect to an at-the-market, or ATM, offering program under
which we may offer and sell, from time to time at our sole discretion, shares of
our common stock, having aggregate gross proceeds of up to $100.0 million. We
have not yet sold any shares of our common stock under the ATM offering program.
In March 2021, we completed the Offering, pursuant to which we issued and sold
6,896,552 shares of common stock. We received proceeds of $188.0 million, after
deducting underwriting discounts and commissions, but before deducting offering
costs payable by us, which are estimated to be $0.8 million.

Since our inception, we have incurred significant operating losses. Our ability
to generate any product revenue or product revenue sufficient to achieve
profitability will depend on the successful development and eventual
commercialization of one or more of our product candidates. We reported net
losses of $42.3 million for the three months ended March 31, 2021 and
$167.7 million for the year ended December 31, 2020. As of March 31, 2021, we
had an accumulated deficit of $522.8 million. We expect to continue to incur
significant expenses and operating losses for at least the next several years.
We expect that our expenses and capital requirements will increase in connection
with our ongoing activities, particularly if, and as, we:

conduct clinical trials for our product candidates and to the extent we ? experience any delays, setbacks or disruptions to our preclinical studies,


  clinical trials or clinical supply chain due to the COVID-19 pandemic;

? further develop our RED PLATFORM;

? continue to discover and develop additional product candidates;

? maintain, expand and protect our intellectual property portfolio;

? hire additional clinical, scientific manufacturing and commercial personnel;




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? expand in-house manufacturing capabilities, including through the operation and

any future renovation or expansion of our manufacturing facility;

establish a commercial manufacturing source and secure supply chain capacity ? sufficient to provide commercial quantities of any product candidates for which

we may obtain regulatory approval;

? acquire or in-license other product candidates and technologies;

? seek regulatory approvals for any product candidates that successfully complete

clinical trials;

? establish a sales, marketing and distribution infrastructure to commercialize

any products for which we may obtain regulatory approval; and

add operational, financial and management information systems and personnel, ? including personnel to support our product development and planned future

commercialization efforts, as well as to continue to support the requirements

of a public company.




We will not generate revenue from product sales unless and until we successfully
complete clinical development and obtain regulatory approval for our product
candidates. If we obtain regulatory approval for any of our product candidates,
we expect to incur significant expenses related to developing our
commercialization capability to support product sales, marketing and
distribution. Further, we expect to continue to incur costs associated with
operating as a public company.

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 product sales, if ever, we expect to finance
our operations through a combination of public or private equity financings,
debt financings, collaborations, strategic alliances and marketing, distribution
or licensing arrangements. We may be unable to raise additional funds or enter
into such other agreements or arrangements when needed on favorable terms, or at
all. Furthermore, the terms of any financing may adversely affect the holdings
or the rights of our stockholders. If we are unable to obtain funding, we may
need to delay, scale back or discontinue some or all of our research and
development programs, product portfolio expansion or commercialization efforts,
which could adversely affect our business prospects.

Because of the numerous risks and uncertainties associated with pharmaceutical
product development, we are unable to accurately predict the timing or amount of
increased expenses or when, or if, we will be able to achieve or maintain
profitability. Even if we are able to generate product sales, we may not become
profitable. If we fail to become profitable or are unable to sustain
profitability on a continuing basis, then we may be unable to continue our
operations at planned levels and be forced to reduce or terminate our
operations.

As of March 31, 2021, we had cash, cash equivalents and investments of $330.7
million. We believe that our existing cash, cash equivalents and investments
will enable us to fund our operating expenses, capital expenditure requirements
and debt service payments for at least 12 months from the issuance date of these
condensed consolidated financial statements. See "-Liquidity and Capital
Resources."


Recent Developments



In March 2020, we began precautionary measures to protect the health and safety
of our employees, partners and prospective clinical trial participants during
the novel coronavirus, or COVID-19, pandemic. Because COVID-19 infections have
been reported throughout the United States and worldwide, numerous national,
state and local governmental authorities have issued orders, proclamations
and/or directives aimed at minimizing the spread of COVID-19. Additional, more
restrictive orders, proclamations and/or directives may be issued in the future.
As a result, we have eliminated business travel and substantially reduced the
number of employees working on-site at any one time at each of our facilities by
shifting to remote work wherever possible and implementing rotating laboratory
work schedules. In addition, the conduct of our clinical studies with our
external partners has been adjusted to institute virtual clinical trial site
training and site monitoring, along with partnering with sites to minimize
patient visits and institute telemedicine to

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minimize patient exposure. These precautionary measures will remain in place until such time as the COVID-19 pandemic is contained.





While the COVID-19 pandemic did not significantly impact our results of
operations during 2020, the ultimate impact on our operations is unknown and
will depend on future developments, which are highly uncertain and cannot be
predicted with confidence, including the duration of the COVID-19 outbreak, new
information which may emerge concerning the severity of the COVID-19 pandemic,
and any additional preventative and protective actions that governments, or we,
may direct, which may result in an extended period of continued business
disruption, reduced patient traffic and reduced operations. In particular, the
speed of the continued spread of COVID-19 globally, including the identification
of new strains of COVID-19, and the magnitude of interventions to contain the
spread of the virus, such as government-imposed quarantines, including
shelter-in-place mandates, sweeping restrictions on travel, mandatory shutdowns
for non-essential businesses, requirements regarding social distancing,
distribution of vaccines, and other public health safety measures, will
determine the impact of the pandemic on our business. We are continuing to
monitor the latest developments regarding the COVID-19 pandemic and its impact
on our business, financial condition, results of operations and prospects.
However, any resulting financial impact cannot be reasonably estimated at this
time and may have a material adverse impact on our business, financial condition
and results of operations.

Components of Our Results of Operations

Revenue



To date, we have not generated any revenue from product sales and do not expect
to generate any revenue from the sale of products in the near future. If our
development efforts for our product candidates are successful and result in
regulatory approval or license or collaboration agreements with third parties,
we may generate revenue in the future from product sales, payments from
collaboration or license agreements that we may enter into with third parties,
or any combination thereof.

Operating Expenses

Research and Development Expenses

Research and development expenses consist of costs incurred for our research activities, including our drug discovery efforts, and the development and manufacturing of our product candidates, which include:

employee-related expenses, including salaries, related benefits and stock-based ? compensation expense for employees engaged in research and development

functions;

expenses incurred in connection with the preclinical and clinical development ? of our product candidates and research programs, including under agreements

with third parties, such as consultants, contractors and contract research

organizations, or CROs;

the cost of developing and scaling our manufacturing process and manufacturing

drug products for use in our preclinical studies and clinical trials, including ? under agreements with third parties, such as consultants, contractors and any

contract manufacturing organizations, or CMOs, that we may engage, as well as

in our manufacturing facility;

? laboratory supplies and research materials;

? facilities, depreciation and other expenses, which include direct and allocated

expenses for rent and maintenance of facilities and insurance; and

? payments made under third-party licensing agreements.




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We expense research and development costs as incurred. Advance payments that we
make for goods or services to be received in the future for use in research and
development activities are recorded as prepaid expenses. The prepaid amounts are
expensed as the related goods are delivered or the services are performed.

Our direct research, manufacturing and development expenses are tracked on a
program-by-program basis for clinical candidates. These consist mostly of fees,
reimbursed materials, testing and other costs paid to consultants, contractors,
CMOs and CROs, as well as the cost of materials incurred for internal
manufacturing. In addition, we allocate the cost of operating our manufacturing
facility to research and development program costs, consisting of associated
personnel costs, other than stock-based compensation expense, and manufacturing
facility costs, including depreciation. We do not allocate costs associated with
our platform development, early stage research and shared research and
development, including associated personnel costs, laboratory supplies,
non-manufacturing facilities expenses and other indirect costs, to research and
development programs, because these costs are deployed across multiple programs
and our technology platform and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development, due to
the increased size and duration of later-stage clinical trials. We expect that
our research and development expenses will increase substantially in connection
with our planned preclinical and clinical development activities in the future.
At this time, we cannot accurately 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 product candidates. The successful development and
commercialization of our product candidates is highly uncertain. This is due to
the numerous risks and uncertainties associated with product development and
commercialization, including the following:

? the timing and progress of preclinical and clinical development activities;

? the number and scope of preclinical and clinical programs we decide to pursue;

? raising additional funds necessary to complete preclinical and clinical

development of and commercialize our drug candidates;

? the progress of the development efforts of parties with whom we may enter into

collaboration arrangements;

? our ability to maintain our current research and development programs and to

establish new ones;

? our ability to establish new licensing or collaboration arrangements;

the successful initiation and completion of clinical trials with safety, ? tolerability and efficacy profiles that are satisfactory to the U.S. Food and

Drug Administration, or FDA, or any comparable foreign regulatory authority;

? the impact of the COVID-19 pandemic on our operations, clinical trials and

supply chain;

? the receipt and related terms of regulatory approvals from applicable

regulatory authorities;

? the availability of specialty raw materials for use in production of our

product candidates;

? our ability to consistently manufacture our product candidates for use in

clinical trials;

? our ability to operate a manufacturing facility, or secure manufacturing supply

through relationships with third parties;

? our ability to obtain and maintain patents, trade secret protection and

regulatory exclusivity, both in the United States and internationally;

? our ability to protect our rights in our intellectual property portfolio;




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? the commercialization of our product candidates, if and when approved;


? obtaining and maintaining third-party insurance coverage and adequate

reimbursement;

? the acceptance of our product candidates, if approved, by patients, the medical

community and third-party payors;

? competition with other products; and

? a continued acceptable safety profile of our therapies following approval.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses



General and administrative expenses include salaries and related costs,
including stock-based compensation, for personnel in executive, finance and
administrative functions. General and administrative expenses also include
direct and allocated facility-related costs, as well as professional fees for
legal, patent, consulting, investor and public relations, accounting and audit
services. We anticipate that our general and administrative expenses may
increase in the future as we continue to build infrastructure to support the
expansion of our research activities, development of our product candidates and
any expanded compliance requirements.

Other Income (Expense)

Interest Income

Interest income consists of interest earned on our invested cash balances.

Interest Expense



Interest expense consists of interest expense on outstanding borrowings under
our loan and security agreements, as well as amortization of debt discount

and
debt issuance costs.

Other Income, Net


Other income, net consists of income earned under a sublease agreement and miscellaneous income and expense unrelated to our core operations.

Income Taxes



Since our inception, we have not recorded any income tax benefits for the net
losses we have incurred in each year or for our research and development tax
credits generated, as we believe, based upon the weight of available evidence,
that it is more likely than not that all of our net operating loss, or NOL,
carryforwards and tax credits will not be realized. As of December 31, 2020, we
had U.S. federal and state net operating loss carryforwards of $357.3 million
and $360.1 million, respectively, which may be available to offset future
taxable income. The federal NOLs include $37.2 million, which expire at various
dates through 2037, and $320.1 million, which carryforward indefinitely. The
state NOLs expire at various dates through 2040. As of December 31, 2020, we
also had U.S. federal and state research and development tax credit
carryforwards of $15.3 million and $9.0 million, respectively, which may be
available to offset future tax liabilities and begin to expire in 2034 and 2026,
respectively. We have recorded a full valuation allowance against our net
deferred tax assets at each balance sheet date.



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Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:




                                       Three Months Ended March 31,
                                         2021                2020           Change

                                                     (in thousands)
Revenue                             $             -     $             -    $       -
Operating expenses:
Research and development                     27,677              36,186      (8,509)
General and administrative                   13,240              12,664          576
Total operating expenses                     40,917              48,850      (7,933)
Loss from operations                       (40,917)            (48,850)        7,933
Other income (expense):
Interest income                                  26               1,049      (1,023)
Interest expense                            (1,748)               (985)        (763)
Other income, net                               309                 300            9

Total other income (expense), net           (1,413)                 364    

 (1,777)
Net loss                            $      (42,330)     $      (48,486)    $   6,156

Research and Development Expenses




                                                          Three Months Ended March 31,
                                                             2021                2020          Change

                                                                        (in thousands)
Research and development program expenses:
Rare disease                                            $          197      $        6,898    $ (6,701)
Cancer                                                          11,742               9,915        1,827
Platform development, early-stage research and
unallocated expenses:
Personnel-related                                                6,388               8,147      (1,759)
Stock-based compensation expense                                 2,531               2,111          420
Contract research and development                                1,328               2,616      (1,288)
Laboratory supplies and research materials                       1,759               3,002      (1,243)
Facility related and other                                       3,732               3,497          235
Total research and development expenses                 $       27,677
$       36,186    $ (8,509)




Research and development expenses were $27.7 million for the three months ended
March 31, 2021, compared to $36.2 million for the three months ended March 31,
2020. The decrease in direct costs related to our rare disease program of
$6.7 million was due to the decision in March 2020 to deprioritize development
of our rare disease programs and discontinue the RTX-134 Phase 1b clinical
trial. The increase in direct costs of $1.8 million in our lead cancer programs,
including RTX-240 and RTX-321, was principally related to CRO and internal
manufacturing costs incurred in connection with both arms of our Phase 1/2
clinical trial of RTX-240 for the treatment of solid tumors and AML and for our
Phase 1 clinical trial of RTX-321 for the treatment of HPV16-positive cancers.
We expect these costs to continue to increase as we expand our clinical
development activities in our cancer programs. Platform development, early-stage
research and unallocated expenses decreased by $3.6 million due to reductions in
contract research and development of $1.3 million and laboratory supplies and
research materials of $1.2 million resulting from the shift in activities to
support our oncology clinical programs and a reduction in onsite activities in
connection with our response to the COVID-19 pandemic. Personnel-related costs
also reduced by $1.8 million as a result of non-recurring expenses incurred in
the first quarter of 2020. The increase in stock-compensation expense of $0.4
million was driven by an increase in the market price of our common stock
resulting in a higher valuation of options granted during the first quarter

of
2021.



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General and Administrative Expenses




                                                          Three Months Ended March 31,
                                                             2021                2020         Change

                                                                       (in thousands)
Personnel-related                                       $        3,125      $        3,085    $    40

Stock-based compensation expense                                 6,111               6,377      (266)
Professional and consultant fees                                 2,275               1,837        438
Facility related and other                                       1,729               1,365        364
Total general and administrative expenses               $       13,240
$       12,664    $   576
General and administrative expenses were $13.2 million for the three months
ended March 31, 2021, compared to $12.7 million for the three months ended March
31, 2020. The increase in general and administrative expenses of $0.6 million
was primarily due to increases in professional and consultant fees of $0.4
million driven by increased patent costs as we expand our patent portfolio and
an increase of $0.4 million in facility related and other costs due to increases
in building operating costs and non-capitalized software costs. These increases
are offset by a $0.3 million reduction in stock-based compensation expense due
to restricted stock awards that fully vested during the first quarter of 2020.



Interest Income

Interest income was less than $0.1 million for the three months ended March 31,
2021, compared to $1.0 million for the three months ended March 31, 2020.
Interest income decreased due to reduced invested balances as cash was used to
fund operations, as well as reduced interest rates.



Interest Expense



Interest expense was $1.7 million for the three months ended March 31, 2021,
compared to $1.0 million for the three months ended March 31, 2020. The increase
in interest expense was principally due to higher outstanding borrowings in
connection with our 2018 Credit Facility (as defined below).

Other Income, Net



Other income, net was $0.3 million for the three months ended March 31, 2021,
compared to $0.3 million for the three months ended March 31, 2020. The change
in other income, net was not significant during the period.



Liquidity and Capital Resources


Since our inception, we have incurred significant operating losses. We have not
yet commercialized any of our product candidates and we do not expect to
generate revenue from sales of any product candidates for several years, if at
all. To date, we have funded our operations with proceeds from the sale of
preferred stock and issuance of debt with proceeds from our IPO and, most
recently, with proceeds from our March 2021 underwritten equity offering,
described further below. As of March 31, 2021, we had cash, cash equivalents and
investments of $330.7 million. In July 2018, we completed our IPO, pursuant to
which we issued and sold 12,055,450 shares of common stock, inclusive of
1,572,450 shares pursuant to the full exercise of the underwriters' option to
purchase additional shares. We received proceeds of $254.3 million, after
deducting underwriting discounts and commissions and other offering costs. In
December 2018, we entered into a loan and security agreement which provides for
aggregate borrowings of up to $75.0 million, all of which were outstanding as of
March 31, 2021. In March 2021, we completed the Offering, pursuant to which we
issued and sold 6,896,552 shares of common stock. We received proceeds of $188.0
million, after deducting underwriting discounts and commissions, but before
deducting offering costs payable by the Company, which are estimated to be
$0.8
million.

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Cash Flows

The following table summarizes our sources and uses of cash for each of the
periods presented:


                                                                  Three Months Ended March 31,
                                                                    2021                2020

                                                                         (in thousands)
Cash used in operating activities                              $      (38,739)     $      (40,015)
Cash provided by investing activities                                   41,752              92,148
Cash provided by financing activities                                  193,908                 486

Net increase in cash, cash equivalents and restricted cash $ 196,921 $ 52,619




Operating Activities

During the three months ended March 31, 2021, operating activities used
$38.7 million of cash, primarily resulting from our net loss of $42.3 million,
offset by net non-cash charges of $10.9 million, predominantly consisting of
stock-based compensation expense. Net cash used in our operating assets and
liabilities for the three months ended March 31, 2021 consisted of a $8.3
million decrease in accounts payable, accrued expenses and other current
liabilities, other long-term liabilities and operating lease liabilities, offset
by a decrease in prepaid expenses and other current assets and operating lease,
right-of-use asset of $1.0 million.

During the three months ended March 31, 2020, operating activities used
$40.0 million of cash, primarily resulting from our net loss of $48.5 million,
offset by net non-cash charges of $10.3 million, predominantly consisting of
stock-based compensation expense. Net cash used in our operating assets and
liabilities for the three months ended March 31, 2020 consisted of a $4.4
million decrease in accounts payable, accrued expenses and other current
liabilities and operating lease liabilities, offset by a decrease in prepaid
expenses and other current assets and operating lease, right-of-use asset of
$2.5 million.



Investing Activities

During the three months ended March 31, 2021, net cash provided by investing
activities was $41.8 million, consisting of sales and maturities of investments
of $42.5 million, offset by purchases of property, plant and equipment of
$0.7 million. Our cash purchases of property, plant and equipment relate to the
purchase of computer and laboratory equipment installed in our manufacturing
facility in Smithfield, Rhode Island and our laboratory space in Cambridge,
Massachusetts.

During the three months ended March 31, 2020, net cash provided by investing
activities was $92.1 million, consisting of sales and maturities of investments
of $105.0 million, offset by net purchases of investments of $10.0 million and
purchases of property, plant and equipment of $2.9 million. Our cash purchases
of property, plant and equipment consisted of $1.6 million for purchases related
to our manufacturing facility in Smithfield, Rhode Island, including
manufacturing equipment and construction costs, and $1.3 million for the
purchase of computer and laboratory equipment installed in our manufacturing
facility and our laboratory space in Cambridge, Massachusetts.

Financing Activities



During the three months ended March 31, 2021, net cash provided by financing
activities of $193.9 million consisted primarily of proceeds of $188.0 million,
net of commissions and underwriting discounts, and proceeds received from
issuance of common stock upon exercise of stock options of $5.9 million from the
Offering completed in March 2021.

During the three months ended March 31, 2020, net cash provided by financing activities of $0.5 million consisted of proceeds received from issuance of common stock upon exercise of stock options.





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Loan and Security Agreements


In December 2018, or the Closing Date, we entered into a loan and security
agreement, or the Loan Agreement, with Solar Capital Ltd. as collateral agent
for the lenders party thereto for an aggregate principal amount of $75.0
million, or the 2018 Credit Facility. The aggregate principal amount was funded
in three tranches of term loans of $25.0 million each, on the Closing Date,

in
June 2019 and in June 2020.



Interest on the outstanding loan balance accrues at a rate of the one-month U.S.
LIBOR rate plus 5.50%. Monthly principal payments will commence 36 months after
the Closing Date and will be amortized over the following 24 months. The term
loans are subject to a prepayment fee of 1.00% in the first year, 0.50% in the
second year and 0.25% in the third year. In conjunction with 2018 Credit
Facility, we incurred issuance costs of $0.8 million.



The Loan Agreement contains financial covenants that require us to maintain
either a certain minimum cash balance or a minimum market capitalization
threshold. We were in compliance with all such financial covenants as of March
31, 2021. The Loan Agreement contains customary representations, warranties and
covenants and also includes customary events of default, including payment
defaults, breaches of covenants, change of control and a material adverse change
default. Upon the occurrence of an event of default, a default interest rate of
an additional 4.00% per annum may be applied to the outstanding loan balances,
and the lenders may declare all outstanding obligations immediately due and
payable. Borrowings under the Loan Agreement are collateralized by substantially
all of our assets, other than our intellectual property.



Common Stock Sales Agreement





On August 1, 2019, we entered into a Distribution Agreement (the "Distribution
Agreement"), with multiple sales agents, pursuant to which the Company may offer
and sell to or through the agents, from time to time, shares of the Company's
common stock, par value $0.001 per share, having an aggregate gross sales price
of up to $100.0 million. Sales, if any, of the Company's shares of common stock
will be made primarily in "at-the-market" offerings, as defined in Rule 415
under the Securities Act. The shares of common stock will be offered and sold
pursuant to our registration statement on Form S-3 and a related prospectus
supplement, both filed with the SEC on August 1, 2019. We intend to use
substantially all of the net proceeds from any sale of shares of the Company's
common stock for working capital and other general corporate purposes. There
have been no shares of the Company's common stock sold under the Distribution
Agreement as of March 31, 2021.



Funding Requirements



We expect our expenses to increase substantially in the future as we conduct the
activities necessary to advance our product candidates through development. The
timing and amount of our operating and capital expenditures will depend largely
on:


? the timing and progress of preclinical and clinical development activities;

the commencement, enrollment or results of the planned clinical trials of our ? product candidates or any future clinical trials we may conduct, or changes in

the development status of our product candidates;

? the timing and outcome of regulatory review of our product candidates;

? the impact of the COVID-19 pandemic on our operations;

? our decision to initiate a clinical trial, not to initiate a clinical trial or

to terminate an existing clinical trial;

? changes in laws or regulations applicable to our product candidates, including

but not limited to clinical trial requirements for approvals;




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? developments concerning our key vendors;


? our ability to obtain materials to produce adequate product supply for any

approved product or inability to do so at acceptable prices;

the costs associated with the operation of our multi-suite manufacturing ? facility and the costs and timing of any future renovation or expansion of the

facility;

? our ability to establish collaborations if needed;

the costs and timing of future commercialization activities, including product ? manufacturing, marketing, sales and distribution, for any of our product

candidates for which we obtain marketing approval;

? the legal patent costs involved in prosecuting patent applications and

enforcing patent claims and other intellectual property claims;

? additions or departures of key scientific or management personnel;

? unanticipated serious safety concerns related to the use of our product

candidates; and

? the terms and timing of any collaboration, license or other arrangement,

including the terms and timing of any milestone payments thereunder.




We believe that our existing cash, cash equivalents and investments, will be
sufficient to fund our operating expenses, capital expenditure requirements and
debt service payments for at least 12 months from the issuance date of these
condensed consolidated financial statements. We have based this estimate on
assumptions that may prove to be wrong, and we could utilize our available
capital resources sooner than we expect.



Until such time, if ever, as we can generate substantial product revenue, we
expect to finance our operations through a combination of public or private
equity financings, 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,
investors' ownership interest will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect investors'
rights as a common stockholder. 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 drug candidates, or grant licenses on terms that may not be
favorable to us. If we are unable to obtain funding, we may need to delay, scale
back or discontinue some or all of our research and development programs,
product portfolio expansion or commercialization efforts, which could adversely
affect our business prospects.



Contractual Obligations and Commitments


The following table summarizes our contractual obligations as of March 31, 2021
and the effects that such obligations are expected to have on our liquidity and
cash flows in future periods:









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                                                                     Payments Due by Period
                                                         Less Than                                        More Than
                                              Total        1 Year       1 to 3 Years     4 to 5 Years      5 Years

                                                                         (in thousands)
Operating lease commitments (1)             $  51,509    $    8,897    $   

   14,837    $       7,655    $   20,120
Debt obligations (2)                           85,500        13,538            71,962                -             -
Total                                       $ 137,009    $   22,435    $       86,799    $       7,655    $   20,120


(1)Amounts in table reflect payments due for our leases of office and laboratory
space in Cambridge, Massachusetts under three operating lease agreements that
expire in September 2021, January 2027 and August 2028.

(2)Amounts in table reflect the contractually required principal and interest
payments payable under the 2018 Credit Facility. For purposes of this table, the
interest due under the 2018 Credit Facility was calculated using an assumed
interest rate of 7.49% per annum, which was the interest rate in effect as of
March 31, 2021.

Critical Accounting Policies and Significant Judgments and Estimates


Our condensed consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States, or GAAP. The
preparation of our condensed consolidated financial statements and related
disclosures requires us to make estimates, assumptions and judgments that affect
the reported amounts of assets, liabilities, revenue, costs and expenses, and
related disclosures. Our critical accounting policies are described under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations-Critical Accounting Policies and Significant Judgments and
Estimates" in our Annual Report on Form 10-K for the year ended December 31,
2020, filed with the SEC on February 23, 2021. If actual results or events
differ materially from the estimates, judgments and assumptions used by us in
applying these policies, our reported financial condition and results of
operations could be materially affected.

There have been no significant changes to our critical accounting policies from
those described in our Annual Report on Form 10-K for the year ended December
31, 2020 filed with the SEC on February 23, 2021.

Off-Balance Sheet Arrangements


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

Recently Issued Accounting Pronouncements



A description of recently issued accounting pronouncements that may potentially
impact our financial position and results of operations is disclosed in Note 2
to our condensed consolidated financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.

Emerging Growth Company Status


The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth
company" such as us to take advantage of an extended transition period to comply
with new or revised accounting standards applicable to public companies until
those standards would otherwise apply to private companies. We have elected not
to "opt out" of such extended transition period, which means that when a
standard is issued or revised and it has different application dates for public
or private companies, we will adopt the new or revised standard at the time
private companies adopt the new or revised standard and will do so until such
time that we either (i) irrevocably elect to "opt out" of such extended
transition period or (ii) no longer qualify as an emerging growth company. While
we have not made such an irrevocable election, we have not delayed the adoption
of any applicable accounting standards.





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