CATALYST BIOSCIENCES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Unless otherwise indicated, in this Quarterly Report on Form 10-Q, references to
"Catalyst," "we," "us," "our" or the "Company" mean Catalyst Biosciences, Inc.
and our subsidiary. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with the
unaudited condensed consolidated financial statements and related notes that
appear in this Quarterly Report on Form 10-Q (this "Report") and with the
audited consolidated financial statements and related notes that are included as
part of our Annual Report on Form 10-K for the year ended December 31, 2021
("Annual Report").

In addition to historical information, this Report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended
("the Exchange Act"). Forward-looking statements are identified by words such as
"believe," "will," "may," "estimate," "continue," "anticipate," "intend,"
"should," "plan," "expect," "predict," "could," "potentially" or the negative of
these terms or similar expressions. You should read these statements carefully
because they discuss future expectations, contain projections of future results
of operations or financial condition, or state other "forward-looking"
information. These statements relate to our future plans, objectives,
expectations, intentions and financial performance and the assumptions that
underlie these statements. For example, forward-looking statements include any
statements regarding the strategies, prospects, plans, expectations or
objectives of management for future operations, the progress, scope or duration
of the development of product candidates or programs, clinical trial plans,
timelines and potential results, the benefits that may be derived from product
candidates or the commercial or market opportunity in any target indication, our
ability to protect intellectual property rights, our anticipated operations,
financial position, revenues, costs or expenses, statements regarding future
economic conditions or performance, statements of belief and any statement of
assumptions underlying any of the foregoing. These forward-looking statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this report in Part II, Item 1A - "Risk Factors," elsewhere
in this Report and in Part I - Item 1A - "Risk Factors" in the Annual Report.
Forward-looking statements are based on our management's beliefs and assumptions
and on information currently available to our management. These statements, like
all statements in this Report, speak only as of their date, and we undertake no
obligation to update or revise these statements in light of future developments.
We caution investors that our business and financial performance are subject to
substantial risks and uncertainties.

Insight

We are a biopharmaceutical company with expertise in protease engineering and
several protease assets that may address unmet medical needs in disorders of the
complement or coagulation systems. Proteases are an important class of enzymes,
which are key natural regulators of many biological processes, including the
complement system. Our complement pipeline includes the development candidates
CB 4332 and CB 2782-PEG. CB 4332 is a wholly owned, first-in-class improved
albumin-fused Complement Factor I ("CFI") molecule intended for prophylactic
subcutaneously ("SQ") or intravitreal ("IVT") administration in individuals with
an imbalance in complement homeostasis or a CFI deficiency. CB 2782-PEG is a
potential best-in-class component 3 ("C3") degrader product candidate in
preclinical development for the treatment of dry age-related macular
degeneration ("AMD"). We have proteases from our ProTUNE™ C3b/C4b degrader and
ImmunoTUNE™ C3a/C5a degrader platforms designed to target specific disorders of
the complement or inflammatory pathways. These programs all target diseases
caused by deficient regulation of the complement system and inflammation. We
have also used our protein engineering platform to develop potential therapies
for coagulation disorders, including marzeptacog alfa (activated) ("MarzAA"), a
SQ administered next-generation engineered coagulation Factor VIIa ("FVIIa") for
the treatment of episodic bleeding and prophylaxis in subjects with rare
bleeding disorders, and dalcinonacog alfa ("DalcA"), a next-generation SQ FIX,
both of which has shown sustained efficacy and safety in mid-stage clinical
trials. As of March this year we ceased the development of our protease programs
and are focused on the monetization of our assets.

The product candidates generated by our protease engineering platform are
designed to have improved functional properties such as longer half-life,
improved specificity and targeting, higher potency, and increased
bioavailability. These characteristics potentially allow for improved safety and
efficacy for SQ administration of recombinant complement regulators, or less
frequently dosed intravitreal products than current therapeutics in development.

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The following table summarizes our current programs with their latest stage of development.

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In February 2022, we announced that we had engaged Perella Weinberg Partners as
a financial advisor to assist us in exploring strategic alternatives to monetize
our assets.

Program Status

Complement

Our protease programs are designed to take advantage of nature's natural
complement regulators that restore complement homeostasis and potentially treat
a variety of complement-mediated disorders. We have several protease programs
currently in preclinical discovery or early non-clinical development. These
programs target diseases caused by aberrant regulation of the complement system
including both ocular programs, specifically for dry AMD, and systemic
complement disorders, all of which are wholly owned by Catalyst.

The complement system is an enzyme-based innate immune defense system with the
primary role of protecting the body from pathogens. The system is naturally
regulated by proteases which is the basis for our approach to addressing
complement-driven diseases. Deficient or excessive activation of the complement
system may lead to severe disorders, including microthrombotic, autoimmune
and/or immune-complex diseases, severe infectious diseases, and degenerative
ophthalmic or neurologic diseases affecting a variety of tissues and organ
systems. The absence of regulation can cause the complement system to become
self-destructive or not provide the necessary protection when needed. The
protease therapeutic candidates generated by our platforms are designed to
correct or restore the missing balance in the complement system that drives
several diseases.

Proteases are uniquely poised to regulate key biological functions such as the
complement system, either by promoting or limiting the cascade of events that
leads to eventual clearing of foreign and damaged proteins, inflammation, and
formation of the membrane attack complex, which is deposited on the surface of
cells and drives their destruction. Compared with antibodies and small molecule
inhibitors that generally require a sustained excess of therapeutic compound
over that of the target, Catalyst's protease therapeutic candidates are based on
natural regulatory proteins that are capable of rapidly engaging and modulating
large quantities of target molecules, as each protease molecule can degrade many
target molecules over their effective lifetime. This means that our proteases
are ideal for regulating high abundancy targets such as complement proteins in a
way antibodies and small molecule inhibitors cannot.

CB 2782-PEG is an engineered pegylated C3 degrader previously licensed to Biogen
that we designed with a best-in-class anti-C3 profile for geographic atrophy
("GA") in dry AMD. Dry AMD is an ocular disease that leads to vision loss and
blindness for which there is currently no approved therapy. CB 2782-PEG degrades
C3 in the eye reducing the steady state level of C3 activity. It is expected

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that maintaining low C3 levels in the eye can significantly slow disease
progression and vision loss in patients with dry AMD. We have demonstrated in
preclinical non-human primate models that we have the potential to reduce C3
levels in humans based on modeling studies for up to 3 months with a single
intravitreal injection. In September 2021, Apellis released the results of the
DERBY and OAKS phase 3 trials for GA secondary to dry AMD, showing that
once-monthly pegcetacoplan, a pegylated C3 targeted inhibitor, was safe and
efficacious, meeting its primary endpoint in one trial and narrowly missing the
primary endpoint in a second trial for reducing GA lesion growth over a 12-month
period. Further subpopulation analyses demonstrated a greater effect of reducing
GA lesion growth in those subjects with extrafoveal lesions at baseline. CB
2782-PEG provides a differentiated mechanism of action by degrading both C3 and
one of its byproducts, C3a potentially offering not only less frequent dosing
but a more efficacious mechanism than pegcetacoplan or other complement
inhibitors in development for GA. In March 2022, Biogen terminated the license
agreement and returned full rights to CB 2782-PEG.

CB 4332 is an engineered albumin-fused version of the CFI protease with an
extended half-life that can be dosed subcutaneously or intravitreally in
individuals who would benefit from enhanced regulation of complement. CFI is the
central regulator of the complement system and CB 4332 has the potential to
address several mechanistically related diseases driven by complement imbalance
such as: Lupus Nephritis ("LN"), Systemic Lupus Erythematosus ("SLE"), warm
Autoimmune Hemolytic Anemia ("wAIHA"), atypical Hemolytic Uremic Syndrome
("aHUS"), C3 Glomerulonephritis ("C3G"), and Immune Complex
Membranoproliferative Glomerulonephritis ("IC-MPGN"), dry AMD and complete CFI
deficiency ("CFID"), a rare immunodeficiency primarily affecting children. These
are severe, chronic, life-threatening diseases that result in a significantly
decreased quality of life for the afflicted individual.

CB 4332 can be dosed subcutaneously for systemic diseases and has the potential
for infrequent IVT injections for ophthalmic indications. As a key complement
regulator, CFI has the potential to be used in several complement dysregulated
diseases (e.g., those associated with hyperactive complement) in which
additional upstream regulation may prove more effective than inhibiting specific
downstream targets such as C3 or C5, where many of current molecules in
development are targeted.

Individuals with complete or significant absence of endogenous CFI may present
with a variety of disease manifestations, such as recurrent invasive infections
with encapsulated bacteria, but these patients are also at risk of developing
autoimmune and/or immune-complex diseases such as chronic inflammation of the
blood vessels of the brain, spinal cord, heart, or kidneys. No CFI replacement
therapy, including for prophylactic use, has been approved, and patients often
receive supportive care with lifelong antibiotic treatment, which may cause a
range of additional problems. We have received pre-IND guidance from the FDA as
well as Rare Pediatric Disease Designation of CB 4332 for treatment of CFI
deficiency in January 2022.

Low circulating serum CFI levels have been shown to be associated with rare CFI
genetic variants and all forms of AMD ranging from early to late-stage
manifestations. Studies have estimated the prevalence rates of CFI deficiency in
GA to be approximately 20%, suggesting that CFI is a prognostic biomarker for
progression of GA. Approximately 1 million individuals globally are predicted to
have low serum CFI levels and may potentially benefit from targeted CFI therapy.
Gyroscope released interim results from its FOCUS phase 1/2a trial for patients
with GA and having rare CFI variants, showing that gene therapy with GT005, an
AAV-delivered CFI rebalanced the overactivation of complement observed in the
vitreous with sustained expression of CFI. The FOCUS data also showed that
AAV-delivered CFI reduced complement biomarkers in the broader GA population who
do not have a rare CFI genetic variant.

We have other early-stage complement discovery programs that target different complement system proteins, including proteases from our ProTUNE™ C3b/C4b and ImmunoTUNE™ C3a/C5a degrader platforms. These proteases are designed to target specific complement disorders or inflammatory pathways. The ProTUNE™ platform generates next-generation optimized CFI molecules that are selectively enhanced for potency and target engagement.

Coagulation programs

MarzAA

MarzAA is a potent, subcutaneously administered, next-generation Factor VIIa
variant. We commenced enrollment of a Phase 3 registrational trial of MarzAA for
episodic treatment of spontaneous or traumatic bleeding episodes in adolescents
and adults with congenital hemophilia A or hemophilia B with inhibitors in May
2021. We have discontinued this trial based on a number of factors, including
challenges in enrollment resulting from the limited number of potential patients
eligible to enroll in this trial, competition from competing approved therapies,
delays in enrollment resulting from COVID-19, the capital requirements to
complete the trial, and other factors. Patients enrolled in the study returned
to their standard of care and completed all required safety assessments. In the
patients enrolled to date, we have successfully treated bleeds with SQ MarzAA
and have not observed any adverse events. We plan to report these data at an
appropriate medical conference in the future. We had also begun enrollment of a
Phase 1/2 trial of MarzAA for treatment of bleeding in individuals with Factor
VII Deficiency, Glanzmann Thrombasthenia, and hemophilia A with inhibitors on
emicizumab prophylaxis. We have discontinued this trial as well, in light of the
difficulties in identifying and enrolling eligible patients,

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the capital requirements to complete the trial and other factors. We believe
that a SQ recombinant Factor VIIa therapy, like MarzAA, has the potential to be
an important treatment option for patients with various bleeding disorders and
are exploring opportunities to license or sell MarzAA to another party for
further development.

DalcA

DalcA is a next-generation SQ Factor IX product candidate for the prophylactic
treatment of individuals with hemophilia B. An open-label, Phase 2b study was
completed in 2020, demonstrating that FIX plasma activity levels were raised
from severe to mild hemophilia B levels and maintained throughout the course of
the study. We have received guidance from the FDA on the design of the
registrational Phase 3 clinical trial, have the necessary data to support its
initiation, and are exploring opportunities to license or sell DalcA to another
party for further development.

Recent funding

We have no drug products approved for commercial sale and have not generated any
revenue from drug product sales. From inception to March 31, 2022, we have
raised net proceeds of approximately $510.1 million, primarily from private
placements of convertible preferred stock since converted to common stock,
proceeds from our merger with Targacept, issuances of shares of common stock and
warrants, including $84.3 million in total cash receipts from our license and
collaboration agreements.

We have never been profitable and have incurred significant operating losses in
each year since inception. Our net losses were $14.5 million and $22.4 million
for the three months ended March 31, 2022 and 2021, respectively. As of March
31, 2022, we had an accumulated deficit of $417.2 million. As of March 31, 2022,
our cash and cash equivalents balance was $34.8 million. Substantially all our
operating losses were incurred in our research and development programs and in
our general and administrative operations.

Overview of financial operations

Licensing and Collaboration Revenue

License and collaboration revenue consists of revenue earned for performance
obligations satisfied pursuant to our license and collaboration agreement with
Biogen which was entered into in December 2019. In consideration for the grant
of an exclusive license and related know-how, we received an up-front license
payment of $15.0 million in January 2020, which was recorded in license revenue
during the year ended December 31, 2020. We recognized collaboration revenue for
reimbursable third-party vendor, out-of-pocket and personnel costs pertaining to
the Biogen Agreement of $0.8 million and $1.5 million for the three months ended
March 31, 2022 and 2021, respectively. In March 2022, we received notice that
Biogen is terminating the license and collaboration agreement. Under the terms
of the Biogen Agreement, termination will be effective in May 2022.

We have not generated any revenue from the sale of pharmaceuticals and we do not expect to generate revenue from the sale of pharmaceuticals until we obtain regulatory approval and commercialize our product candidates.

Licensing cost and collaboration revenue

Cost of license and collaboration revenue consists of fees for research and
development services payable to third-party vendors, and personnel costs,
corresponding to the recognition of license and collaboration revenue from
Biogen. Cost of license and collaboration revenue does not include any allocated
overhead costs. In connection with the license revenue recognized from Biogen as
discussed above in 2020, we paid Mosaic a $3.0 million sublicense fee and
recorded such payment as cost of license. We recognized third-party vendor,
out-of-pocket and personnel costs, most of which were reimbursable, pertaining
to the Biogen Agreement of $0.8 million and $1.5 million for the three months
ended March 31, 2022 and 2021, respectively, and recorded such costs as cost of
collaboration revenue.

Research and development costs

Research and development expenses represent costs incurred to conduct research,
such as the discovery and development of our product candidates. We recognize
all research and development costs as they are incurred. Nonrefundable advance
payments for goods or services used in research and development are deferred and
capitalized. The capitalized amounts are then expensed as the related goods are
delivered or services are performed, or until it is no longer expected that the
goods or services will be delivered.

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Research and development expenses mainly consist of the following items:

• personnel expenses, which include salaries, benefits and shares

compensation;

• laboratory and supplier fees, including payments to consultants and third parties

       parties, related to the execution of preclinical, non-clinical, and
       clinical studies;

• the cost of acquisition and manufacture of preclinical and clinical equipment

and develop manufacturing processes;

• clinical trial costs, including third party clinical research costs

       organizations;


  • performing toxicity and other preclinical studies; and

• facilities and other allocated expenses, which include direct and allocated expenses

rental and maintenance costs for premises, depreciation and

depreciation charges and other supplies.


The table below details our internal and external costs for research and
development for the period presented (in thousands). See Overview and Program
Status for further discussion of the current research and development programs.

                                             Three Months Ended March 31,
                                              2022                 2021
Personnel and other                       $       4,140       $         4,624
Complement                                        3,383                 4,650
Hemophilia                                        2,052                 7,370
Stock-based compensation                            128                   369

Total research and development expenditure $9,703 $17,013




The largest component of our total operating expenses has historically been our
investment in research and development activities, including the clinical and
manufacturing development of our product candidates. Costs listed for our
hemophilia and complement programs above consist of clinical trial,
manufacturing and research costs. Our internal resources, employees and
infrastructure, identified above as personnel and other, are generally not
directly tied to individual product candidates or development programs. As such,
we do not maintain information regarding these costs incurred for these research
and development programs on a project-specific basis.

Since we have ceased our research and development activities, we expect our overall research and development expenses to be minimal over the next year as we continue to explore strategic opportunities for the clinical development and manufacturing of our programs.

On May 20, 2016, we signed a development and manufacturing services agreement
with AGC, pursuant to which AGC will conduct manufacturing development of agreed
upon product candidates. We will own all intellectual property developed in such
manufacturing development activities that are specifically related to our
product candidates and will have a royalty-free and perpetual license to use
AGC's intellectual property to the extent reasonably necessary to make these
product candidates, including commercial manufacturing. As of March 31, 2022,
six GMP batches have been manufactured at AGC in addition to an engineering
batch.

The initial term of the agreement is ten years or, if later, until all stages
under outstanding statements of work have been completed. Either party may
terminate the agreement in its entirety upon written notice of a material
uncured breach or upon the other party's bankruptcy, and we may terminate the
agreement upon prior notice for any reason. In addition, each party may
terminate the agreement in the event that the manufacturing development
activities cannot be completed for technical or scientific reasons. We had firm
work orders with AGC to manufacture MarzAA and DalcA to support clinical trials
totaling $15.8 million. The payment obligations were fully paid off as of
December 31, 2021. We also have firm work orders with AGC to perform certain
manufacturing services related to our collaboration agreement with Biogen
totaling $0.7 million and the payment obligations were fully paid off as of
March 31, 2022.

In July 2021, we entered into two separate agreements, one for additional
clinical trial services for MarzAA, and another for our screening and natural
history of disease clinical studies related to CFI deficiency, with total
payments of up to $3.2 million and $6.5 million, respectively. In November 2021,
we provided notice of intent to terminate our MarzAA manufacturing agreements
and incurred charges of $3.8 million to write-off prepaid manufacturing costs
that will no longer be used for the clinical development of MarzAA. We can
terminate the CFI agreement at our discretion and upon termination will be
responsible to pay for those services incurred prior to termination plus
reasonable wind-down expenses.

On September 16, 2021, we signed a Manufacturing and Research and Development
Studies Agreement to support the lyophilized drug product, CB 4332. The
agreement covers analytical method qualification to support GMP manufacturing.
We have firm work orders related to this agreement totaling $0.3 million and the
payment obligations remaining as of March 31, 2022 were $0.1 million.

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We also have a long-term clinical supply services agreement with Catalent
Indiana, LLC ("Catalent"). Catalent has facilities in the U.S. and Europe and
conducts drug product development and manufacturing for MarzAA and DalcA. We
successfully completed development work for a variety of vial sizes which
supports flexible dosing.

General and administrative expenses

General and administrative expenses consist of personnel costs, allocated
expenses and other expenses for outside professional services, including legal,
human resources, audit and accounting services. Personnel costs consist of
salaries, bonus, benefits and stock-based compensation. We incur expenses
associated with operating as a public company, including expenses related to
compliance with the rules and regulations of the Securities and Exchange
Commission ("SEC") and Nasdaq Stock Market LLC ("Nasdaq"), insurance expenses,
audit expenses, investor relations activities, Sarbanes-Oxley compliance
expenses and other administrative expenses and professional services. We expect
such expenses to fluctuate as we continue to explore strategic opportunities for
our programs.

Results of Operations

The following table set forth our results of operations data for the periods
presented (in thousands):

                                         Three Months Ended March 31,
                                           2022                 2021           Change ($)       Change (%)
Revenue:
License                               $            -       $            -     $          -                 *
Collaboration                                    794                1,467             (673 )              46 %
License and collaboration revenue                794                1,467             (673 )              46 %
Operating expenses:
Cost of license                                    -                    -                -                 *
Cost of collaboration                            798                1,480             (682 )              46 %
Research and development                       9,703               17,013           (7,310 )              43 %
General and administrative                     4,994                5,412             (418 )               8 %
Total operating expenses                      15,495               23,905           (8,410 )              35 %
Loss from operations                         (14,701 )            (22,438 )          7,737                34 %
Interest and other income, net                   165                    -              165                 *

Net loss and comprehensive loss ($14,536) ($22,438)

  $      7,902                35 %



*Not meaningful

Licensing and Collaboration Revenue

License and collaboration revenue was $0.8 million and $1.5 million during the
three months ended March 31, 2022 and 2021, respectively. In the three months
ended March 31, 2022 and 2021, revenue consisted primarily of reimbursable
collaboration expenses from our Biogen Agreement.

Cost of license and collaboration

Cost of license and collaboration revenue was $0.8 million and $1.5 million
during the three months ended March 31, 2022 and 2021, respectively. Cost of
collaboration for the three months ended March 31, 2022 and 2021 was primarily
reimbursable third-party vendor and personnel costs we incurred pertaining to
the Biogen Agreement.

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Research and development costs

Research and development expenses were $9.7 million and $17.0 million during the
three months ended March 31, 2022 and 2021, respectively, a decrease of $7.3
million, or 43%. The decrease was due primarily to a decrease of $5.3 million in
hemophilia-related costs, a decrease of $1.3 million in complement-related
costs, a decrease of $0.5 million in personnel-related costs, and a decrease of
$0.2 million in stock-based compensation expense. Research and development
expenses for the three months ended March 31, 2022 include approximately $0.6
million of severance and other costs related to our reduction-in-force.

General and administrative expenses

General and administrative expenses were $5.0 million and $5.4 million during
the three months ended March 31, 2022 and 2021, respectively, a decrease of $0.4
million, or 8%. The decrease was due primarily to a decrease of $0.6 million in
professional services, partially offset by an increase of $0.2 million related
to our allowance for doubtful accounts. General and administrative expenses for
the three months ended March 31, 2022 include approximately $0.4 million of
severance and other costs related to our reduction-in-force.

Interest and other income, net

The $0.2 million increase in interest and other income, net for the three months
ended March 31, 2022 compared to the three months ended March 31, 2021 was
primarily due to a $0.2 million gain recognized upon the extinguishment of a
liability.

Recent accounting pronouncements

See “Recently Adopted Accounting Pronouncements” included in Note 2, Summary of Significant Accounting Policies, in the “Notes to the Condensed Consolidated Financial Statements” of this Form 10-Q.

Cash and capital resources

As of March 31, 2022, we had $34.8 million of cash and cash equivalents. For the
three months ended March 31, 2022, we had a $14.5 million net loss and $12.1
million cash used in operating activities. We have an accumulated deficit of
$417.2 million as of March 31, 2022. Our primary uses of cash are to fund
operating and business development expenses and general and administrative
expenditures. Cash used to fund operating expenses is impacted by the timing of
when we pay these expenses, as reflected in the change in our outstanding
accounts payable and accrued expenses.

We believe that our existing capital resources, including cash and cash
equivalents will be sufficient to meet our projected operating requirements for
at least the next 12 months from the date of this filing. We have based this
estimate on assumptions that may prove to be wrong, and we could utilize our
available capital resources sooner than we currently expect. We plan to continue
to fund losses from operations and capital funding needs through future equity
and/or debt financings, as well as potential additional asset sales, licensing
transactions, collaborations or strategic partnerships with other companies. At
the year ended March 31, 2022, we had effective registration statements on Form
S-3 that enable us to sell up to $150.0 million in securities subject to
limitations under SEC rules. The sale of additional equity or convertible debt
could result in additional dilution to our stockholders. The incurrence of
indebtedness would result in debt service obligations and could result in
operating and financing covenants that would restrict our operations. Licensing
transactions, collaborations or strategic partnerships may result in us
relinquishing valuable rights. We can provide no assurance that financing will
be available in the amounts we need or on terms acceptable to us, if at all. If
we are not able to secure adequate additional funding we may be forced to delay,
make reductions in spending, extend payment terms with suppliers, liquidate
assets where possible, and/or suspend or curtail planned programs. Any of these
actions could materially harm our business.

The following table summarizes our cash flows for the periods presented (in
thousands):

                                                           Three Months Ended March 31,
                                                             2022                 2021
Cash used in operating activities                       $      (12,050 )     $      (24,356 )
Cash provided by investing activities                            2,504      

27,581

Cash provided by financing activities                               16      

49,459

(Decrease) net increase in cash and cash equivalents ($9,530)

$52,684

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Cash flow from operating activities

Cash used in operating activities for the three months ended March 31, 2022 was
$12.1 million. The most significant component of our cash used was a net loss of
$14.5 million. This included non-cash expense related to stock-based
compensation of $0.5 million, bad debt expense of $0.2 million and depreciation
and amortization of $0.1 million. In addition, cash inflow of $1.7 million was
attributable to the change in our net operating assets and liabilities primarily
as a result of a $1.5 million decrease in prepaid and other current assets, a
$1.1 million decrease in accounts receivable, and a $1.0 million increase in
accrued compensation and other accrued liabilities, partially offset by a $1.7
million decrease in accounts payable and a $0.2 million decrease in deferred
revenue related to the Biogen Agreement.

Cash used in operating activities for the three months ended March 31, 2021 was
$24.4 million, due primarily to a net loss of $22.4 million, and the change in
our net operating assets and liabilities of $3.0 million. The change in our net
operating assets and liabilities is due primarily to a $1.7 million increase in
prepaid and other assets, a $3.0 million decrease in accounts payable, and a
$0.7 million decrease in deferred revenue related to the Biogen Agreement,
offset by a $2.3 million decrease in accounts receivable. Non-cash charges of
$1.0 million were recorded for stock-based compensation.

Cash flow from investing activities

Cash flows generated by investing activities for the three months ended March 31, 2022
been $2.5 millionmainly due to the proceeds of maturities of investments.

Cash flows generated by investing activities for the three months ended March 31, 2021
been $27.6 millionmainly due to the proceeds of maturities of investments.

Cash flow from financing activities

Cash flow from financing activities for the three months ended March 31, 2022
was due to the issue of free shares.

Cash provided by financing activities for the three months ended March 31, 2021
was $49.5 million, due to $49.3 million in net proceeds from the issuance of
common stock related to our public offering in the first quarter of 2021 and
$0.2 million in stock grants.

Critical accounting policies and estimates

There have been no significant changes to our critical accounting policies since
December 31, 2021. For a description of critical accounting policies that affect
our significant judgments and estimates used in the preparation of our unaudited
condensed consolidated financial statements, refer to Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in our Annual Report on Form 10-K.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk


Not applicable.

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