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sana-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39941

Sana Biotechnology, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	83-1381173
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
188 East Blaine Street, Suite 400 Seattle, Washington 98102
(Address of principal executive offices)

Registrant’s telephone number, including area code: (206) 701-7914

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		SANA		Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 4, 2021, the registrant had 187,675,648 shares of common stock, $0.0001 par value per share, outstanding.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income (Loss)	7
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
	Signatures	89

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including those statements highlighted below. In some cases, you can identify these statements by forward-looking words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” “would,” or “will,” the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, include, but are not limited to, statements about:

•

our expectations regarding the potential market size and size of the potential patient populations for our product candidates and any future product candidates, if approved for commercial use;

•

our clinical and regulatory development plans;

•

our expectations with regard to the results of our clinical studies, preclinical studies and research and development programs, including the timing and availability of data from such studies;

•

the timing of commencement of future nonclinical studies and clinical trials and research and development programs;

•

our ability to acquire, discover, develop and advance product candidates into, and successfully complete, clinical trials;

•

our intentions and our ability to establish collaborations and/or partnerships;

•

the timing or likelihood of regulatory filings and approvals for our product candidates;

•

our commercialization, marketing and manufacturing, including the buildout of our own manufacturing facility, capabilities and expectations;

•

impact from future regulatory, judicial, and legislative changes or developments in the United States and foreign countries;

•

our intentions with respect to the commercialization of our product candidates;

•

the pricing and reimbursement of our product candidates, if approved;

•

the potential effects of public health crises, such as the COVID-19 pandemic, on our preclinical and clinical programs and business;

•

our expectations regarding the impact of the COVID-19 pandemic on our business;

•

the implementation of our business model and strategic plans for our business and product candidates, including additional indications for which we may pursue;

•

our ability to effectively manage our growth, including our ability to retain and recruit personnel, and maintain our culture;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;

•

our expected use of proceeds from our initial public offering and our existing cash, cash equivalents, and marketable securities;

•

the performance of our third-party suppliers and manufacturers;

•

our future financial performance;

•

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; and

•

developments and projections relating to our competitors and our industry, including competing products.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Other

sections of this report may include additional factors that could harm our business and financial performance. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Sana Biotechnology, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	March 31, 2021			December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	750,687		$	124,806
Marketable securities		209,550			253,458
Prepaid expenses and other current assets		7,237			6,203
Total current assets		967,474			384,467
Property and equipment, net		50,986			46,775
Operating lease right-of-use assets		61,770			63,168
Restricted cash		2,143			2,143
Long-term marketable securities		21,627			33,731
Intangible asset		59,195			59,195
Goodwill		140,627			140,627
Other non-current assets		644			190
TOTAL ASSETS	$	1,304,466		$	730,296
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	4,258		$	2,253
Accrued compensation		10,811			16,020
Accrued expenses and other current liabilities		11,171			9,466
Operating lease liabilities		3,910			3,712
Success payment liabilities		5,000			-
Total current liabilities		35,150			31,451
Operating lease liabilities, net of current portion		66,349			68,197
Contingent consideration		133,294			121,901
Success payment liabilities, net of current portion		187,151			76,494
Other non-current liabilities		539			540
Total liabilities		422,483			298,583
Commitments and contingencies (Note 10)
Convertible preferred stock, $0.0001 par value; zero and 537,786 shares authorized as of March 31, 2021 and December 31, 2020, respectively; zero and 134,113 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively; aggregate liquidation preference of zero and $926,666 as of March 31, 2021 and December 31, 2020, respectively		-			852,897
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value; 50,000 and zero shares authorized as of March 31, 2021 and December 31, 2020, respectively; zero shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		-			-
Common stock, $0.0001 par value; 750,000 and 707,000 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 178,941 and 16,170 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		18			2
Additional paid-in capital		1,491,958			8,216
Accumulated other comprehensive income		56			30
Accumulated deficit		(610,049	)		(429,432	)
Total stockholders' equity (deficit)		881,983			(421,184	)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)	$	1,304,466		$	730,296

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2021			2020
Operating expenses:
Research and development	$	168,930		$	27,320
General and administrative		11,821			5,955
Total operating expenses		180,751			33,275
Loss from operations		(180,751	)		(33,275	)
Interest income, net		121			395
Other income, net		13			5
Net loss	$	(180,617	)	$	(32,875	)
Net loss per share, basic and diluted	$	(1.52	)	$	(3.04	)
Weighted-average shares outstanding, basic and diluted		119,131			10,820

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2021			2020
Net loss	$	(180,617	)	$	(32,875	)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on marketable securities, net		26			(10	)
Total comprehensive loss	$	(180,591	)	$	(32,885	)

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)

(in thousands)

	Convertible Preferred Stock						Common Stock				Additional Paid-In		Accumulated Other Comprehensive		Accumulated			Total Stockholders' Equity
	Shares			Amount			Shares		Amount		Capital		Income		Deficit			(Deficit)
Balance as of December 31, 2020		134,113		$	852,897			16,170	$	2	$	8,216	$	30	$	(429,432	)	$	(421,184	)
Conversion of convertible preferred stock into common stock, upon initial public offering		(134,113	)		(852,897	)		134,113		13		852,884		-		-			852,897
Issuance of common stock in initial public offering, net of $49,220 in offering costs		-			-			27,025		3		626,402		-		-			626,405
Vesting of restricted stock		-			-			1,428		-		-		-		-
Exercise of stock options		-			-			205		-		298		-		-			298
Stock-based compensation expense		-			-			-		-		4,158		-		-			4,158
Unrealized gain on marketable securities, net		-			-			-		-		-		26		-			26
Net loss		-			-			-		-		-		-		(180,617	)		(180,617	)
Balance as of March 31, 2021		-		$	-			178,941	$	18	$	1,491,958	$	56	$	(610,049	)	$	881,983

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Income			Deficit			Deficit
Balance as of December 31, 2019		106,890	$	417,359		10,003	$	1	$	1,558	$	26		$	(144,127	)	$	(142,542	)
Vesting of restricted stock		-		-		1,427		-		-		-			-			-
Exercise of stock options		-		-		2		-		2		-			-			2
Stock-based compensation expense		-		-		-		-		755		-			-			755
Unrealized loss on marketable securities, net		-		-		-		-		-		(10	)		-			(10	)
Net loss		-		-		-		-		-		-			(32,875	)		(32,875	)
Balance as of March 31, 2020		106,890	$	417,359		11,432	$	1	$	2,315	$	16		$	(177,002	)	$	(174,670	)

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2021			2020
OPERATING ACTIVITIES:
Net loss	$	(180,617	)	$	(32,875	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,247			1,265
Stock-based compensation expense		4,158			755
Change in fair value of contingent consideration		11,393			362
Change in fair value of success payment liabilities		115,657			552
Non-cash expense in connection with license agreement		-			373
Non-cash expense for operating lease right-of-use assets		1,398			784
Other non-cash items, net		(1,013	)		350
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(1,614	)		(501	)
Accounts payable		1,599			2,370
Accrued expenses and other liabilities		(3,121	)		(2,982	)
Net cash used in operating activities		(49,913	)		(29,547	)
INVESTING ACTIVITIES:
Purchases of marketable securities		(44,811	)		-
Proceeds from sales and maturities of marketable securities		100,342			44,781
Purchases of property and equipment		(6,440	)		(5,600	)
Net cash provided by investing activities		49,091			39,181
FINANCING ACTIVITIES:
Proceeds from initial public offering of common stock, net of offering costs		626,405			-
Proceeds from exercise of stock options		298			2
Net cash provided by financing activities		626,703			2
Net increase in cash, cash equivalents, and restricted cash		625,881			9,636
Cash, cash equivalents, and restricted cash at beginning of period		126,949			81,807
Cash, cash equivalents, and restricted cash at end of period	$	752,830		$	91,443
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Tenant improvement allowance included in operating lease liabilities	$	8,515		$	3,837
Purchases of property and equipment included in accounts payable and accrued liabilities	$	3,157		$	644
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	14,271

See accompanying notes.

Sana Biotechnology, Inc.

Notes to Condensed Consolidated Financial Statements

1. Organization

Sana Biotechnology, Inc. (the Company or Sana) was incorporated in Delaware on July 13, 2018 (inception) as FD Therapeutics, Inc., and changed its name to Sana Biotechnology, Inc. on September 17, 2018. Sana is a biotechnology company, focusing on utilizing engineered cells as medicines. The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, acquiring technology, organizing and staffing the Company, business planning, establishing the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

Reverse stock split

In January 2021, the Company’s board of directors approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 1-for-4 reverse stock split of shares of the Company’s common and convertible preferred stock, which was effected on January 27, 2021. The par value per share and authorized shares of common and convertible preferred stock were not adjusted as a result of the reverse stock split. All share and per share information included in the accompanying condensed consolidated financial statements have been adjusted to reflect the reverse stock split.

Initial public offering

In February 2021, the Company successfully completed its initial public offering (IPO) of its common stock. In connection with its IPO, the Company issued 27.0 million shares of its common stock, including 3.5 million shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a price of $25.00 per share, and received $626.4 million in net proceeds, after deducting underwriting discounts and commissions of $45.2 million and offering expenses of $4.0 million. At the closing of the IPO, 134.1 million shares of convertible preferred stock then outstanding were automatically converted into shares of common stock. The related carrying value of the converted preferred stock of $852.9 million was reclassified to common stock and additional paid in-capital.

Need for additional capital

The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, protect the Company’s intellectual property and proprietary technology, and the need to attract and retain key scientific and management personnel. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations from the sale of additional equity or debt financings, or other capital which come in the form of strategic collaborations, licensing, or other arrangements. In the event that additional financing is required, the Company may not be able to raise it on terms acceptable to it, or at all.

The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future. As of March 31, 2021, the Company had cash, cash equivalents, and marketable securities of $981.9 million, and an accumulated deficit of $610.0 million, which includes non-cash charges of $189.7 million and $82.0 million related to the revaluation of the success payment liabilities and contingent consideration, respectively.

2. Summary of significant accounting policies

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 24, 2021 (2020 Form 10-K). The significant accounting policies used in preparation of these condensed consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 are consistent with those discussed in Note 2 in the 2020 Form 10-K.

Basis of presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company’s condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP).

Use of estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates in the Company’s condensed consolidated financial statements relate to success payment liabilities, contingent consideration, business combinations, accrued expenses, and the valuation of stock options.

Recent accounting pronouncements

Recently adopted

Accounting Standards Updates (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements, ASU No. 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief, ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements (ASU 2016-13). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which the carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows companies an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. The Company adopted ASU 2016-13 effective January 1, 2021. The adoption of the guidance did not have a material impact on the condensed consolidated financial statements and related disclosures, and there was no allowance for losses on available-for-sale debt securities attributable to credit risk for the three months ended March 31, 2021.

Not yet adopted

ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). To address concerns over the cost and complexity of the two-step goodwill impairment test, the amendments in this ASU remove the second step of the test. An entity will instead apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The new standard will be effective beginning January 1, 2023. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisitions

Oscine Corp.

In September 2020, the Company entered into a stock purchase agreement to acquire 100% of the outstanding equity in Oscine for a purchase price of $8.5 million, of which $7.6 million was an upfront cash payment, and $0.9 million was set aside to satisfy certain general representations and warranties as set forth in the stock purchase agreement (Oscine Holdback Amount).

The primary asset acquired in the acquisition was IPR&D technology related to Oscine’s glial progenitor ex vivo cell engineering programs focused on brain disorders. The Company evaluated the acquisition and determined the screen test, as permitted under ASC 805, Business Combinations, was met as the $8.5 million purchase price represented consideration for a single identifiable asset related to the technology. The Company concluded the asset acquired did not meet the definition of a business, and the asset had no alternative future use. The transaction was accounted for as an asset acquisition and the purchase price of $8.5 million was recorded in research and development expense for the three months ended September 30, 2020.

The Oscine Holdback Amount will be held for 15 months, until December 2021, at which time the remainder of the balance, after payment of any claims, will be released. In addition, the Company is required to make up to an aggregate of $225.8 million in future milestone payments upon the achievement of certain development and commercial milestones.

Cobalt Biomedicine, Inc.

In February 2019, the Company acquired 100% of the outstanding equity in Cobalt, a privately-held early-stage biotechnology company developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells.

Pursuant to the terms and conditions in the Cobalt acquisition agreement, the Company agreed to pay contingent consideration of up to an aggregate of $500.0 million upon the achievement of certain pre-specified development milestones (Cobalt Contingent Consideration), and a Cobalt Success Payment of up to $500.0 million, payable in cash or stock, at the Company’s discretion. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, which are an IPO and periodically thereafter, the Company’s market capitalization equals or exceeds $8.1 billion, and the Company has an active program based on the fusogen technology in a clinical trial pursuant to an investigational new drug application (IND), or has filed for, or received approval for, a biologics license application (BLA) or new drug application (NDA). The Cobalt Success Payment can be achieved over a maximum of 20 years but could be shorter upon the occurrence of certain events. The IPO in February 2021 did not trigger a success payment to Cobalt.

In addition to an IPO, a valuation measurement date is triggered upon a change of control when at least one company product utilizing technology acquired from Cobalt is the subject of an active research program. If there is a change of control and Company’s market capitalization falls below certain thresholds on the change of control date, the amount of the potential Cobalt Success Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase.

The following table sets forth the different market capitalizations and resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration if there is a change of control subsequent to the IPO:

Sana market capitalization upon a change of control and resulting impact to Cobalt Success Payment and additional potential Cobalt Contingent Consideration	Cobalt Success Payment		Additional potential Cobalt Contingent Consideration
	(in millions)
Equal to or exceeds $8.1 billion	$	500	$	-
Equal to or exceeds $7.4 billion, but less than $8.1 billion		150		350
Equal to or exceeds $6.8 billion, but less than $7.4 billion		100		400
Less than $6.8 billion		-		500

The Cobalt Success Payment and Cobalt Contingent Consideration liabilities are carried at fair value with changes in fair value recognized in research and development expense. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Cobalt Success Payment liability was $156.5 million and $64.7 million, respectively, and the estimated fair value of the Cobalt Contingent Consideration was $133.3 million and $121.9 million, respectively. For the three months ended March 31, 2021 and 2020, the Company recognized $91.8 million and $0.3 million in research and development expense in connection with the change in fair value of the Cobalt Success Payment, respectively, and $11.4 million and $0.4 million in research and development expense in connection with the change in fair value of the Cobalt Contingent Consideration, respectively.

4. Intangible asset and goodwill

As of March 31, 2021, the Company had an intangible asset of $59.2 million, which consists of in-process research and development (IPR&D) acquired in 2019 from the Cobalt acquisition. The IPR&D is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset that will be amortized over its estimated useful life. As of March 31, 2021, there was no amortization of the intangible asset. As of March 31, 2021, the Company had goodwill of $140.6 million. The goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired from the Cobalt acquisition in 2019. There were no impairments of the intangible asset or goodwill since the acquisition.

5. License and collaboration agreements

President and Fellows of Harvard College

In March 2019, the Company entered into an exclusive license agreement with the President and Fellows of Harvard College (Harvard) to access certain intellectual property for the development of hypo-immune cells.

Under the terms of the agreement, the Company may be required to make Harvard Success Payments up to an aggregate of $175.0 million, payable in cash, based on increases in the fair value of the Company’s common stock. The potential success payments are based on multiples of increased value ranging from 5x to 40x, based on a comparison of the fair market value of the Company’s common stock relative to the original issuance price of $4.00 per share at pre-determined valuation measurement dates which include: the one year anniversary of the IPO and periodically thereafter, a merger, an asset sale, the sale of the majority of the shares held by the Company’s Series A convertible preferred stockholders, and the last day of the term of the success payments. The first Harvard valuation measurement date is expected to occur in February 2022, one year from the IPO. The aggregate amount of the Harvard Success Payments does not exceed an aggregate of $175.0 million, which would only occur upon a 40x increase in value. If a higher success payment tier is first met at the same time a lower tier is first met, both tiers will be owed. Any previous success payments made to Harvard are credited against the success payment owed as of any valuation measurement date so that Harvard does not receive multiple success payments in connection with the same threshold. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. The following table summarizes the potential success payments and common stock price required for payment:

Multiple of Equity Value at Issuance	5x		10x		20x		30x		40x
Per share common stock price required for payment	$	20.00	$	40.00	$	80.00	$	120.00	$	160.00
Success payment(s) (in millions)	$	5.0	$	15.0	$	30.0	$	50.0	$	75.0

As of March 31, 2021 and December 31, 2020, the estimated fair value of the Harvard Success Payment liability was $35.7 million and $11.8 million, respectively. As of March 31, 2021 and December 31, 2020, $5.0 million and zero was recorded in short-term liabilities, and $30.7 million and $11.8 million were recorded in long-term liabilities in the condensed consolidated balance sheet, respectively. For the three months ended March 31, 2021 and 2020, the Company recognized $23.9 million and $0.2 million, respectively, in research and development expense of in connection with the change in the estimated fair value of the Harvard Success Payment liability.

In connection with this agreement, the Company also paid Harvard a license payment of $6.0 million in June 2020 that was contingent upon the closing of the Company’s Series B convertible preferred stock financing.

6. Restricted cash

As of March 31, 2021 and December 31, 2020, the Company maintained standby letters of credit of $2.1 million, which are collateralized with a bank account at a financial institution in accordance with the lease agreements.

7. Fair value measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:

		March 31, 2021
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Estimated Fair Value
		(in thousands)
Financial assets:
Cash equivalents:
Money market funds	Level 1	$	708,413	$	-	$	-	$	708,413
U.S. government and agency securities	Level 2		2,400		-		-		2,400
Corporate debt securities	Level 2		552		-		-		552
Total cash equivalents			711,365		-		-		711,365