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 September 30, 2023

OR

☐ 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: 001-39662

SQZ BIOTECHNOLOGIES COMPANY

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-2431115
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Arsenal Yards Blvd, Suite 210 Watertown, MA	02472
(Address of principal executive offices)	(Zip Code)

(617) 758-8672

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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, $0.001 par value per share	SQZB	OTC Markets

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, a 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 October 31, 2023, the registrant had 29,491,125 shares of common stock, $0.001 par value per share, outstanding.

SQZ BIOTECHNOLOGIES COMPANY

Table of Contents

		Page
	Forward-Looking Statements		1
PART I.	FINANCIAL INFORMATION		2
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets		2
	Condensed Consolidated Statements of Operations and Comprehensive Loss		3
	Condensed Consolidated Statements of Stockholders’ Equity		4
	Condensed Consolidated Statements of Cash Flows		5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
Item 4.	Controls and Procedures		23
PART II.	OTHER INFORMATION		25
Item 1.	Legal Proceedings		25
Item 1A.	Risk Factors		25
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities		27
Item 3.	Defaults Upon Senior Securities		27
Item 4.	Mine Safety Disclosures		27
Item 5.	Other Information		27
Item 6.	Exhibits		28
Signatures			30

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans to develop, manufacture and commercialize our product candidates, our plans to cease remaining research and clinical activities, our plans to pursue a strategic transaction to raise additional capital, the anticipated impact of overall economic conditions on our business and operations, including manufacturing, research and development, clinical trials and employees, our cash needs and availability, the sufficiency of our cash and cash equivalents and our ability to raise additional capital to fund our operations, the impact of our delisting from the New York Stock Exchange (the “NYSE”), the timing of, our execution of, and the expected benefits from our restructuring initiatives and cost-saving measures, our plans to mitigate the risk that we are unable to continue as a going concern, and the plans and objectives of management for future operations, are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, risks and uncertainties related to our ability to continue as a going concern; risks related to the delisting of our common stock from the NYSE; our limited operating history; our significant losses incurred since inception and expectation to incur significant additional losses for the foreseeable future; the development of our initial product candidates, upon which our business is highly dependent; the impact of overall economic conditions on our operations and clinical activities; our need for additional funding and our cash runway; restructuring activities; the lengthy, expensive, and uncertain process of clinical drug development, including uncertain outcomes of clinical trials and potential delays in regulatory approval; our ability to maintain our relationships with our third party vendors and strategic collaborators; protection of our proprietary technology, intellectual property portfolio and the confidentiality of our trade secrets; our ability to identify and execute one or more strategic alternative transactions; risks associated with a potential bankruptcy or dissolution; general economic conditions and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, this Quarterly Report on Form 10-Q and our other filings with the U.S. Securities and Exchange Commission.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

1

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SQZ BIOTECHNOLOGIES COMPANY

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	SEPTEMBER 30,			DECEMBER 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	10,193		$	63,709
Prepaid expenses and other current assets		1,894			4,495
Total current assets		12,087			68,204
Property and equipment, net		978			1,959
Restricted cash		2,305			2,305
Operating lease right-of-use assets		14,418			27,432
Total assets	$	29,788		$	99,900
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,913		$	2,511
Accrued expenses		4,352			8,893
Accrued restructuring expenses		170			3,162
Deferred revenue		—			715
Current portion of operating lease liabilities		2,397			6,562
Total current liabilities		8,832			21,843
Operating lease liabilities, net of current portion		19,075			20,909
Total liabilities		27,907			42,752
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022; No shares issued or outstanding.		—			—
Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2023 and December 31, 2022; 29,491,125 shares issued and outstanding at September 30, 2023 and December 31, 2022.		29			29
Additional paid-in capital		334,922			332,093
Accumulated deficit		(333,070	)		(274,974	)
Total stockholders’ equity		1,881			57,148
Total liabilities and stockholders’ equity	$	29,788		$	99,900

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

SQZ BIOTECHNOLOGIES COMPANY

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2023			2022			2023			2022
Revenue:
Collaboration revenue	$	—		$	3,130		$	178		$	9,011
Grant revenue		—			322			—		$	524
Total revenue		—			3,452			178			9,535
Operating expenses:
Research and development		10,504			19,631			36,209			55,401
General and administrative		5,614			6,919			15,566			20,789
Restructuring charges		7,683			—			7,567			—
Total operating expenses		23,801			26,550			59,342			76,190
Loss from operations		(23,801	)		(23,098	)		(59,164	)		(66,655	)
Other income (expense):
Interest income		164			436			1,009			608
Other income (expense), net		(2	)		19			59			130
Total other income, net		162			455			1,068			738
Net loss and comprehensive loss		(23,639	)		(22,643	)		(58,096	)		(65,917	)
Net loss per share, basic and diluted	$	(0.80	)	$	(0.77	)	$	(1.97	)	$	(2.30	)
Weighted-average common shares outstanding, basic and diluted		29,491,125			29,284,151			29,491,125			28,603,020

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

SQZ BIOTECHNOLOGIES COMPANY

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

	COMMON STOCK
	SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ EQUITY
Balances at June 30, 2023		29,491,125	$	29	$	333,939	$	(309,431	)	$	24,537
Stock-based compensation expense		—		—		983		—			983
Net loss		—		—		—		(23,639	)		(23,639	)
Balances at September 30, 2023		29,491,125	$	29	$	334,922	$	(333,070	)	$	1,881

	COMMON STOCK				ADDITIONAL					TOTAL
	SHARES		AMOUNT		PAID-IN CAPITAL		ACCUMULATED DEFICIT			STOCKHOLDERS’ EQUITY
Balances at June 30, 2022		29,148,053	$	29	$	326,943	$	(238,784	)	$	88,188
Issuance of common stock under at-the-market offering, net of issuance costs of $3		202,105		—		653					653
Stock-based compensation expense		—		—		2,376		—			2,376
Net loss		—		—		—		(22,643	)		(22,643	)
Balances at September 30, 2022		29,350,158	$	29	$	329,972	$	(261,427	)	$	68,574

	COMMON STOCK
	SHARES		AMOUNT		ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ EQUITY
Balances at December 31, 2022		29,491,125	$	29	$	332,093	$	(274,974	)	$	57,148
Stock-based compensation expense		—		—		2,829		—			2,829
Net loss		—		—		—		(58,096	)		(58,096	)
Balances at September 30, 2023		29,491,125	$	29	$	334,922	$	(333,070	)	$	1,881

	COMMON STOCK				ADDITIONAL					TOTAL
	SHARES		AMOUNT		PAID-IN CAPITAL		ACCUMULATED DEFICIT			STOCKHOLDERS’ EQUITY
Balances at December 31, 2021		28,133,368	$	28	$	319,458	$	(195,510	)	$	123,976
Issuance of common stock upon exercise of stock options		14,757		—		29		—			29
Issuance of common stock under employee stock purchase plan		41,265		—		111		—			111
Issuance of common stock under at-the-market offering, net of issuance costs of $195		1,160,768		1		3,744		—			3,745
Stock-based compensation expense		—		—		6,630		—			6,630
Net loss		—		—		—		(65,917	)		(65,917	)
Balances at September 30, 2022		29,350,158	$	29	$	329,972	$	(261,427	)	$	68,574

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

SQZ BIOTECHNOLOGIES COMPANY

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	NINE MONTHS ENDED SEPTEMBER 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(58,096	)	$	(65,917	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		1,035			833
Amortization of operating lease right-of-use assets		7,024			7,458
Impairment of right-of-use asset		5,991			—
Stock-based compensation expense		2,829			6,630
(Gain) Loss on disposal of equipment		(113	)		43
Changes in operating assets and liabilities:
Accounts receivable		—			3,000
Prepaid expenses and other current assets		2,601			1,024
Accounts payable		(598	)		(624	)
Accrued expenses		(4,541	)		1,013
Accrued restructuring expenses		(2,992	)		—
Deferred revenue		(715	)		(9,007	)
Operating lease liabilities		(5,999	)		(7,242	)
Net cash used in operating activities		(53,574	)		(62,789	)
Cash flows from investing activities:
Purchases of property and equipment		(112	)		(421	)
Proceeds from disposals of property and equipment		170			34
Net cash provided by (used in) investing activities		58			(387	)
Cash flows from financing activities:
Proceeds from issuance of common stock under at-the market offering		—			3,762
Proceeds from issuance of common stock under employee stock purchase plan		—			111
Proceeds from exercise of stock options		—			29
Net cash provided by financing activities		—			3,902
Net decrease in cash, cash equivalents and restricted cash		(53,516	)		(59,274	)
Cash, cash equivalents and restricted cash at beginning of period		66,014			145,818
Cash, cash equivalents and restricted cash at end of period	$	12,498		$	86,544

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

SQZ BIOTECHNOLOGIES COMPANY

Notes to Unaudited Condensed Consolidated Financial Statements

1. Nature of the Business and Basis of Presentation

SQZ Biotechnologies Company (the “Company”) is a clinical-stage biotechnology company developing cell therapies for patients with cancer and other serious medical conditions. The Company uses its proprietary technology, Cell Squeeze, to physically squeeze cells through a microfluidic chip, temporarily opening the cell membrane and enabling biologic material of interest, or cargo, to diffuse into the cell. The Company is using Cell Squeeze technology to create multiple cell therapy platforms focused on directing specific immune responses. As part of the 2023 Restructuring Plan (see Note 12 for further discussion), the Company determined to cease research and clinical activities in the fourth quarter of 2023. The Company was incorporated in March 2013 under the laws of the State of Delaware.

The Company is subject to a number of risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, the ability to obtain additional financing, protection of proprietary technology, dependence on key personnel, the ability to attract and retain qualified employees, compliance with government regulations, the impact of overall economic conditions, and the clinical and commercial success of its product candidates. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Since inception, the Company has funded its operations primarily with payments received in connection with collaboration agreements, proceeds from equity and debt financing, and most recently, with proceeds from its 2020 initial public offering (“IPO”) and its 2021 follow-on offering (the "Follow-On Offering"), and an Open Market Sales Agreement (the "Sales Agreement"). On November 10, 2021, the Company entered into the Sales Agreement with Jefferies LLC (“Jefferies”) to issue and sell up to $75,000,000 in shares of the Company’s common stock from time to time during the term of the Sales Agreement through an “at-the-market” equity offering program under which Jefferies acts as the Company’s sales agent (the “ATM Facility”). The Company did not sell any shares under the ATM Facility during both the three and nine months ended September 30, 2023. During the three and nine months ended September 30, 2022, the Company sold 1,160,768 shares of common stock under the ATM Facility for net proceeds of approximately $3.7 million.

Going Concern Assessment

Management has assessed the Company’s ability to continue as a going concern in accordance with the requirements of ASC 205-40, taking into consideration its recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future and the need to raise additional capital to finance future operations. Through September 30, 2023, the Company has funded its operations primarily with proceeds from sales of convertible preferred stock, payments received in connection with collaboration agreements, proceeds from borrowings under a convertible promissory note, which converted into shares of convertible preferred stock, and more recently the proceeds from its IPO, the Follow-On Offering and the ATM Facility. The Company has incurred recurring losses since inception, including a net loss of $58.1 million for the nine months ended September 30, 2023. As of September 30, 2023, the Company had an accumulated deficit of $333.1 million. Based on its current cash expenditure forecast, the Company expects that its existing cash and cash equivalents will fund its operations into the first quarter of 2024.

The Company expects to continue to generate operating losses in the foreseeable future. As of November 8, 2023, the issuance date of the interim condensed consolidated financial statements for the three and nine months ended September 30, 2023, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these interim condensed consolidated financial statements are issued. The Company will require additional funding through private or public equity financings, debt financings, collaborations, strategic transactions or licensing arrangements to remain in operation. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other strategic transactions. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. If the Company is unable to obtain funding, the Company will be forced and has already begun to incur additional restructuring costs, or the Company may be unable to continue operations. Although management continues to pursue capital raising activities or strategic transactions there is no assurance that the Company will be successful in obtaining sufficient funding or strategic transactions on terms acceptable to the Company to fund continuing operations, or at all.

The Company has announced that it has determined to pursue potential strategic alternatives to support the advancement of its oncology and other programs, including HPV 16 positive tumors, in an effort to allow the Company to partner its clinical and preclinical assets across all disease areas and indications. Potential strategic partnerships may include, but are not limited to, a partnership, acquisition, merger, business combination, or other transaction. There can be no assurance that this process will result in the Company pursuing a

6

transaction or that any transaction, if pursued, will be completed on attractive terms. The Company has not set a timetable for completion of this process and does not intend to comment further unless or until the Board of Directors has approved a definitive course of action, the process is concluded, or it is determined that other disclosure is appropriate. Should a strategic alternative be implemented, the Company anticipates using available net proceeds to discharge its liabilities and outstanding obligations, distribute the remainder, if any, to stockholders and wind down its operations. Should the Company be unable to identify and implement a meaningful strategic alternative in a timely manner, the Company’s Board of Directors is likely to consider bankruptcy or other dissolution proceedings. In connection with the 2023 Restructuring Plan (see Note 12), the Company determined to continue to dose existing patients in its clinical programs through November 2023 and to discontinue enrollment of new patients in its clinical trials and cease remaining research activities.

The accompanying interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the interim condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Impact of Macroeconomic Conditions

The global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including, for example, severely diminished liquidity and credit availability, rising interest and inflation rates, crises involving banking and financial institutions, declines in consumer confidence, declines in economic growth, increases in unemployment rates, uncertainty about economic stability and uncertainty created by geopolitical conflict, war and terrorism. The Company is monitoring the potential impact of general economic conditions on its business and financial statements.

On September 29, 2023, the Board of Directors of the Company approved a reduction in the Company’s workforce by approximately 80% (see Note 12). The decision was based on cost-reduction initiatives intended to reduce the Company’s ongoing operating expenses while it pursues strategic alternatives. In addition the Company completed an evaluation of the impact of the reduction in the workforce on the carrying value of its long-lived assets, including the headquarters facility operating lease asset. This process includes evaluating the estimated remaining lives, significant changes in the use, and potential impairment charges related to its long-lived assets. Based on its evaluation,using market participant assumptions to determine the fair value of the operating lease asset, the Company determined that the facility operating lease asset was impaired and recorded a $6.5 million charge as of September 30, 2023.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, SQZ Biotechnologies Security Corporation and SQZ Biotech HK Limited. All intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The accompanying condensed consolidated balance sheet as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 22, 2023. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of September 30, 2023, the consolidated results of operations for the three and nine months ended September 30, 2023 and 2022, and the consolidated cash flows for the nine months ended September 30, 2023 and 2022 have been made. The Company’s consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for the full year or any other subsequent interim period.

7

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, the accrual of research and development expenses, and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, judgments and methodologies as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company is developing methods of engineering cell function and therapies for the treatment of patients across a range of indications. The Company has determined that its chief operating decision maker is its interim Chief Executive Officer. The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance.

Recently Issued Accounting Pronouncements

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies.

3. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	FAIR VALUE MEASUREMENTS AT SEPTEMBER 30, 2023 USING:
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Cash equivalents:
Money market funds	$	4,360	$	—	$	—	$	4,360
	$	4,360	$	—	$	—	$	4,360

	FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2022 USING:
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Assets:
Cash equivalents:
Money market funds	$	62,598	$	—	$	—	$	62,598
	$	62,598	$	—	$	—	$	62,598

Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no changes to the valuation methods during the nine months ended September 30, 2023.The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between levels during the nine months ended September 30, 2023.

8

4. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	SEPTEMBER 30,			DECEMBER 31,
	2023			2022
Machinery and equipment	$	6,467		$	6,840
Leasehold improvements		579			579
Furniture and fixtures		319			319
	$	7,365		$	7,738
Less: Accumulated depreciation and amortization		(6,387	)		(5,779	)
	$	978		$	1,959

Depreciation and amortization expense for the three months ended September 30, 2023 and 2022 was $0.1 million and $0.3 million respectively. Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022 was $0.5 million and $0.8 million, respectively. In addition to the depreciation and amortization expense recorded during the nine months ended September 30, 2023, the Company recorded restructuring charges of $0.5 million (see Note 12).

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	SEPTEMBER 30,		DECEMBER 31,
	2023		2022
Accrued external research, development and manufacturing costs	$	3,432	$	5,264
Accrued employee compensation and benefits		68		2,578
Other		852		1,051
	$	4,352	$	8,893

6. Stock-Based Compensation

The following table summarizes the Company’s stock option activity since December 31, 2022:

	NUMBER OF SHARES			WEIGHTED- AVERAGE EXERCISE PRICE		WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM		INTRINSIC VALUE
						(in years)		(in thousands)
Outstanding at December 31, 2022		5,358,310		$	8.09		5.26	$	—
Granted		3,156,275			0.71
Forfeited or canceled		(1,103,948	)		7.62
Outstanding at September 30, 2023		7,410,637		$	5.02		5.13	$	—
Vested and expected to vest at September 30, 2023		7,410,637		$	5.02		5.13	$	—
Options exercisable at September 30, 2023		3,642,551		$	7.52		3.28	$	—

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options was classified in the consolidated statements of operations as follows (in thousands):

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2023		2022		2023		2022
Research and development expenses	$	294	$	1,034	$	1,223	$	2,563
General and administrative expenses		689		1,342		1,606		4,067
	$	983	$	2,376	$	2,829	$	6,630

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As of September 30, 2023, total unrecognized stock-based compensation expense related to unvested stock-based awards was $7.5 million, which is expected to be recognized over a weighted-average period of 2.6 years.

7. Income Taxes

For the three and nine months ended September 30, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items. Substantially all of the Company’s operating losses since inception have been generated in the United States.

8. Commitments and Contingencies

Leases

The Company’s commitments under its leases are described in Note 9.

License and Supply Agreements

License Agreement with Massachusetts Institute of Technology

In December 2015, the Company entered into an exclusive patent license agreement with the Massachusetts Institute of Technology (“MIT”) (the “MIT Agreement”). The MIT Agreement replaced a May 2013 exclusive agreement with MIT. Under the MIT Agreement, the Company received an exclusive license under the licensed patent rights to develop, manufacture and commercialize any products related to certain intracellular delivery methods that were developed at MIT.

As of September 30, 2023 and December 31, 2022, the Company had no outstanding liabilities related to the MIT Agreement. During each of the three and nine months ended September 30, 2023 and 2022, the Company recognized less than $0.1 million in research and development expense under the sublicense terms of the MIT Agreement.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its executive officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnification agreements and is not currently aware of any indemnification claims.

Legal Proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.

9. Leases

As of September 30, 2023, the Company leases its office and laboratory facilities under a non-cancelable operating lease entered into in December 2018, which included lease incentives, payment escalations and rent holidays. The Company had not entered into any financing leases or any short-term operating leases as of September 30, 2023 and December 31, 2022.

The components of lease cost were as follows (in thousands):

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2023		2022		2023		2022
Lease cost:
Operating lease cost	$	2,641	$	3,347	$	9,390	$	10,867
Variable lease cost		298		454		1,118		1,424
	$	2,939	$	3,801	$	10,508	$	12,291

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Based on an evaluation, using market participant assumptions to determine the fair value of the operating lease asset, of the remaining useful life of its office and laboratory facilities (see Note 12), the Company determined that the facility operating lease asset was impaired and recorded a $6.5 million charge as of September 30, 2023.

10. License and Collaboration Agreements

2018 License and Collaboration Agreement with Roche

In October 2018, the Company entered into a license and collaboration agreement (the “2018 Roche Agreement”) with F. Hoffmann-La Roche Ltd (“Roche Basel”) and Hoffmann-La Roche Inc. (“Roche US”, and together with Roche Basel, “Roche”) to jointly develop certain products based on mononuclear antigen presenting cells (“APCs”), including human papillomavirus (“HPV”), using the SQZ APC platform for the treatment of oncology indications. The Company granted Roche a non-exclusive license to its intellectual property, and Roche granted the Company a non-exclusive license to its and its affiliates’ intellectual property for the purpose of performing research activities. In connection with this agreement, the parties terminated an earlier agreement. The 2018 Roche Agreement had a term that extended until all royalty, profit-share and other payment obligations expired or had been satisfied. Roche had the right to terminate the 2018 Roche Agreement, in whole or on a product-by-product basis, upon a specified amount of notice to the Company. The Company or Roche could terminate the agreement if the other party fails to cure its material breach within a specified period after receiving notice of such breach. Under the 2018 Roche Agreement, Roche was granted option rights to obtain an exclusive license to develop APC products or products derived from the collaboration programs on a product-by-product basis and to develop a Tumor Cell Lysate (“TCL”) product. For each of the APC products and TCL product, if Roche exercised its option and paid a specified incremental amount, Roche would have received worldwide, exclusive commercialization rights for the licensed products.

On July 25, 2023, the Company announced that Roche determined that it would not exercise its option under the 2018 Roche Agreement to obtain an exclusive license to develop and commercialize the Company’s candidate targeting HPV 16 positive solid tumors under the Company’s SQZ-APC-HPV program. On September 13, 2023, the Company and Roche agreed to terminate the 2018 Roche Agreement, effective immediately. No early termination penalty was incurred by either party. On the effective date, the Company regained full clinical development and future commercialization rights for all its oncology programs, including HPV 16 positive tumors.

During the nine months ended September 30, 2023, as a result of the determination by Roche that it would not exercise its option in relation to the first performance obligation the Company concluded that it would incur no further costs to satisfy its performance obligations under the 2018 Roche Agreement and as a result fully recognized the remaining deferred revenue. The Company recognized no revenue and $3.5 million during the three months ended September 30, 2023 and 2022, respectively, under this agreement. The Company recognized $0.2 million and $9.5 million during the nine months ended September 30, 2023 and 2022, respectively, under this agreement. As of September 30, 2023, the Company had fully recognized all deferred revenue related to the 2018 Roche Agreement.

11. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2023			2022			2023			2022
Numerator:
Net loss	$	(23,639	)	$	(22,643	)	$	(58,096	)	$	(65,917	)
Denominator:
Weighted-average common shares outstanding, basic and diluted		29,491,125			29,284,151			29,491,125			28,603,020
Net loss per share attributable to common stockholders, basic and diluted	$	(0.80	)	$	(0.77	)	$	(1.97	)	$	(2.30	)

The Company’s potential dilutive securities, which consist of common stock options have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of

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diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	SEPTEMBER 30,
	2023		2022
Stock options to purchase common stock		7,410,637		6,606,500
		7,410,637		6,606,500

12. Restructuring

On November 30, 2022, the Company’s Board of Directors approved a restructuring plan and strategic prioritization (the “2022 Restructuring Plan”) of its clinical portfolio to concentrate on the development of its second-generation enhanced Antigen Presenting Cells (eAPC) cell therapy program. In connection with the 2022 Restructuring, the Company reprioritized its clinical and development programs, determined to terminate operations in its Hong Kong and China subsidiaries and the Board of Directors approved a workforce reduction of approximately 60%, including research and development and general and administrative support functions in the United States and China. In the first quarter of 2023, the Company decided to continue to enroll patients in its SQZ-AAC-HPV (AAC) clinical trial.

On September 29, 2023, the Company’s Board of Directors approved an additional workforce reduction of approximately 80% of the remaining employees (the “2023 Restructuring Plan”) and ceased substantially all research and development activities to reduce the Company’s ongoing operating expenses while it pursues strategic alternatives which may include a sale of the Company or some or all of its assets by the end of 2023. In connection with the 2023 Restructuring Plan, the Company determined to continue to dose existing patients in its clinical programs through November 2023 and to discontinue enrollment of new patients in its clinical trials.

Also in connection with 2023 Restructuring Plan, each of Howard Bernstein, Ph.D., Interim Chief Executive Officer of the Company, Richard Capasso, Chief Accounting Officer of the Company, Marshelle Smith Warren, M.D., Chief Medical Officer of the Company, and Lawrence Knopf, General Counsel of the Company (collectively, the “Executive Officers”) each entered into transition agreements amending the terms of each of their employment agreements with the Company. The transition agreements provide for an agreed employment termination date for the Executive Officers of November 15, 2023, subject to certain early termination events, and a reduction in their current annual base salaries and expected working time commitments.‌ Following their respective employment termination dates, the Executive Officers are expected to enter into consulting agreements with the Company under which they will perform consulting services on an as-needed basis in return for hourly consulting fees.‌

The following table summarizes the activity for accrued restructuring costs for the nine months ended September 30, 2023 (in thousands):

	Employee Related Costs			Facility Related Costs			Total
Balance as of December 31, 2022	$	3,162		$	—		$	3,162
Expenses incurred		1,071			6,496			7,567
Payments		(2,897	)		(69	)		(2,966	)
Non-cash charges		(1,097	)		(6,496	)		(7,593	)
Balance as of September 30, 2023	$	239		$	(69	)	$	170

During the nine months ended September 30, 2023, the Company recorded $7.6 million of restructuring charges. Employee-related costs of $1.1 million were related to the elimination of the requirement for affected employees to provide continued service to retain certain retention payments received in 2023 which were subject to claw back in the event of voluntary termination prior to December 31, 2023, and salary and one-time termination benefits to the affected employees, including healthcare benefits to be paid in the fourth quarter of 2023.

The Company completed an evaluation of the impact of the 2023 Restructuring on the carrying value of its long-lived assets, including the headquarters facility operating lease asset. This process includes evaluating the estimated remaining lives, significant changes in the use, and potential impairment charges related to its long-lived assets. The Company used market participant assumptions to determine the fair value of the operating lease asset. Based on its evaluation, the Company determined that the facility operating lease asset was impaired and recorded a $6.5 million charge as of September 30, 2023, to reflect the estimated remaining life and reduced anticipated use of the facility. The remaining $0.5 million in facility-related charges represent accelerated depreciation on office and laboratory equipment that is no longer in use or recoverable and will be disposed of.

The accrued restructuring liability of $0.2 million is payable within the next twelve months and has been included as accrued restructuring costs in current liabilities in the consolidated balance sheet. The remaining accrued restructuring charges are subject to assumptions, and actual amounts may differ. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with restructuring activities.‌

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13. Subsequent Event

On November 6, 2023, as a result of the impact of the 2023 Restructuring including the reduction in force and anticipated cessation of remaining research and clinical activities in the fourth quarter of 2023, the Company executed an agreement with the landlord of the Company’s headquarters facility. In exchange for a commitment for the Company to vacate the facility by mid-November, payment of one-quarter of the November 2023 Base Rent, as defined, and certain common area maintenance and utility fees, release of a $2.3 million letter of credit securing the Company’s performance under the lease and a lump sum payment of $1.0 million, by a certain date, following the closing of a strategic transaction, the landlord has agreed to discharge the lease and release the Company from any remaining payment obligations under the lease. In the event the lump sum is not paid when due, outstanding obligations under the lease will remain in full force.

Upon vacating the headquarters facility in mid-November, the Company will record an impairment charge of approximately $14.4 million, the remaining carrying value of the facility lease right of use asset.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our 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, 2022, filed with the Securities and Exchange Commission, or SEC, on March 22, 2023 (the “2022 Form 10-K”). 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 and related financing, 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 our 2022 Form 10-K and 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 biotechnology company focused on unlocking the full potential of cell therapies to benefit patients with cancer and other serious medical conditions. The company was founded on the therapeutic potential of Cell Squeeze®, our proprietary technology which allows for rapid delivery of a variety of cargo into different cell types. We aim to create multiple cell therapies that drive the immune system to combat diseases.

On November 30, 2022, our Board of Directors approved a restructuring plan and strategic prioritization of our clinical portfolio (the Restructuring Plan) to concentrate on the development of our second-generation enhanced Antigen Presenting Cells (eAPC) cell therapy program, focused on HPV16 positive recurrent, locally advanced, or metastatic solid tumors and reduce our workforce by approximately 60 percent. On November 30, 2022, the Board appointed Howard Bernstein, MD, PhD, our director and former Chief Scientific Officer, as Interim Chief Executive Officer.

On July 3, 2023, we received a written notice from the New York Stock Exchange (“NYSE”) notifying us that the NYSE commenced proceedings to delist our common stock (“Common Stock”) from the NYSE. The NYSE reached this determination pursuant to Section 802.01B of the NYSE’s Listed Company Manual because the Company had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization of at least $15 million over a consecutive 30-trading day period. The NYSE suspended trading in the Common Stock immediately after market close on July 3, 2023. Our Common Stock began trading in the over-the-counter markets, under the symbol SQZB, commencing on July 5, 2023.The over-the-counter markets are significantly more limited than the NYSE, and quotation on the over-the-counter markets may result in a less liquid market available for existing and potential securityholders to trade the Common Stock and could further depress the trading price of the Common Stock. We can provide no assurance that the Common Stock will continue to trade on the over-the-counter markets, whether broker-dealers will continue to provide public quotes of the Common Stock or whether the trading volume of the Common Stock will be sufficient to provide for an efficient trading market. See Part I, Item 1A. “Risk Factors—An active, liquid trading market for our common stock may not be sustained” in the 2022 Form 10-K.

On July 25, 2023, we announced that F. Hoffmann-La Roche Ltd (“Roche Basel”) and Hoffmann-La Roche Inc. (“Roche US”, and together with Roche Basel, “Roche”) determined that Roche will not exercise its option under the License and Collaboration Agreement, dated October 5, 2018, by and between us and Roche, to obtain an exclusive license to develop and commercialize the Company’s candidate targeting HPV 16 positive solid tumors under our SQZ-APC-HPV program. On September 13, 2023, we and Roche agreed to terminate the 2018 Roche Agreement, effective immediately. No early termination penalty was incurred by either party. As of September 13, 2023, we regained full clinical development and future commercialization rights for our programs targeting HPV 16 positive tumors. We also announced that we intend to explore potential strategic alternatives to support the advancement of our oncology programs including HPV 16 positive tumors, in an effort to allow us to partner all our clinical and preclinical assets across all disease areas and indications. Potential strategic partnerships may include, but are not limited to, a partnership, acquisition, merger, business combination, asset sales or other transactions. There can be no assurance that this process will result in us pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms. We have not yet set a timetable for completion of this process and do not intend to comment further unless or until the Board of Directors has approved a definitive course of action, the process is concluded, or it is determined that other disclosure is appropriate.

On September 29, 2023, our Board of Directors approved an additional workforce reduction of approximately 80% of
the remaining employees (the “2023 Restructuring Plan”) and ceased substantially all research and development activities to reduce
our ongoing operating expenses while we pursue strategic alternatives which may include a sale of the Company or
some or all of its assets by the end of 2023. Should a strategic alternative be implemented, we anticipate using
available net proceeds to discharge our liabilities and outstanding obligations, distribute the remainder, if any, to stockholders and
wind down our operations. Should we be unable to identify and implement a meaningful strategic alternative in a timely
manner, our Board of Directors are likely to consider bankruptcy or other dissolution proceedings. In connection with the 2023 Restructuring Plan, we determined to continue to dose existing patients in our clinical programs through November 2023 and to discontinue enrollment of new patients in our clinical trials.

Other Developments

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Since our inception, we have focused substantially all of our resources on building our Cell Squeeze technology, establishing and protecting our intellectual property portfolio, conducting research and development activities, developing our manufacturing process and manufacturing product candidate materials, preparing for and initiating clinical trials of our product candidates, 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. Through September 30, 2023, we have funded our operations primarily with upfront and milestone payments received under our collaboration agreements with Hoffman La Roche Inc. and F. Hoffman La Roche Ltd. (together, "Roche") and with proceeds from equity and debt offerings, most recently from our initial public offering, or IPO, follow-on public offering of common stock, or the Follow-on Offering, and our at-the market offering facility with Jefferies LLC ("ATM Facility").

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 a net loss of $58.1 million for the nine months ended September 30, 2023. As of September 30, 2023, we had an accumulated deficit of $333.1 million. Although we anticipate reduced expenses for the remainder of 2023, we expect to continue to incur significant expenses. Currently, market conditions in the biotechnology sector are challenging due to ongoing global and economic uncertainties. Should we be unable to identify and implement a meaningful strategic alternative in a timely manner, our Board of Directors are likely to consider bankruptcy or other dissolution proceedings. In connection with the 2023 Restructuring Plan, we determined to continue to dose existing patients in our clinical programs through November 2023 and to discontinue enrollment of new patients in our clinical trials.

As of November 8, 2023, the issuance date of the interim condensed consolidated financial statements for the three and nine months ended September 30, 2023, included elsewhere in this Quarterly Report on Form 10-Q, based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future and the need to raise additional capital to finance future operations, our management has concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the condensed consolidated financial statements are issued. See “—Liquidity and Capital Resources.”

Impact of Macroeconomic Conditions

The global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including, for example, severely diminished liquidity and credit availability, rising interest and inflation rates, crises involving banking and financial institutions, declines in consumer confidence, declines in economic growth, increases in unemployment rates, uncertainty about economic stability and uncertainty created by geopolitical conflict, war and terrorism. We are monitoring the potential impact of general economic conditions on our business and financial statements. Unstable market and economic conditions or pandemics may have serious adverse consequences on our business, financial condition and results of operations.

On September 29, 2023, as noted above, our the Board of Directors approved a reduction in our workforce by approximately 80% (see Note 12). In addition, we completed an evaluation of the impact of the reduction in the workforce on the carrying value of our long-lived assets, including our headquarters facility operating lease asset. This process included evaluating the estimated remaining lives, significant changes in the use, and potential impairment charges related to its long-lived assets. Based on our evaluation, we determined that the facility operating lease asset was impaired and recorded a $6.0 million charge as of September 30, 2023.

As a result of the impact of the 2023 Restructuring, including the reduction in force and the anticipated cessation of remaining research and clinical activities in the fourth quarter of 2023, we determined that we would no longer require the use of our headquarters facility. As noted in Note 13 “Subsequent Event”, in the interim condensed consolidated financial statements for the three and nine months ended September 30, 2023 included elsewhere in this Quarterly Report on Form 10-Q, on November 6, 2023, in exchange for a commitment that we vacate the facility by mid-November 2023, payment of one quarter of the November 2023 Base Rent, as defined, and certain common area maintenance and utility fees, release of a $2.3 million letter of credit securing our performance under the lease and a lump sum payment of $1.0 million by a certain date following the closing of a strategic transaction, the landlord has agreed to discharge the lease and release us from remaining payment obligations under the lease.. In the event the lump sum is not paid when due, outstanding obligations under the lease will remain in full force.

Components of Our Results of Operations

Revenue

To date, we have not generated any revenue from product sales and do not expect to do so for the next several years. All of our revenue to date has been derived from three collaboration agreements with Roche, and, to a lesser extent, from government grants.

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Collaboration Revenue

2018 License and Collaboration Agreement with Roche

In October 2018, we entered into a license and collaboration agreement with Roche, or the 2018 Roche Agreement, to jointly develop certain products based on mononuclear antigen presenting cells, or APCs, including human papillomavirus, or HPV, using our SQZ APC platform for the treatment of oncology indications. We granted Roche a non-exclusive license to our intellectual property, and Roche granted us a non-exclusive license to its and its affiliates’ intellectual property for the purpose of performing research activities. In connection with this agreement, the parties terminated an earlier agreement.

Under the 2018 Roche Agreement, Roche was granted option rights to obtain an exclusive license to develop APC products or products derived from the collaboration programs on a product-by-product basis and to develop a Tumor Cell Lysate, or TCL, product. In July 2023, Roche determined that it would not exercise its option under the 2018 Roche Agreement, to obtain an exclusive license to develop and commercialize the Company’s candidate targeting HPV 16 positive solid tumors under the Company’s SQZ-APC-HPV program. On September 13, 2023, we and Roche agreed to terminate the 2018 Roche Agreement, effective immediately. No early termination penalty was incurred by either party.

During the nine months ended September 30, 2023, as a result of the determination by Roche that it would not exercise its option in relation to the first performance obligation, we concluded that we would incur no further costs to satisfy our performance obligations and as a result we fully recognized the remaining deferred revenue under this agreement. We recognized $0 and $3.5 million during the three months ended September 30, 2023 and 2022, respectively, under this agreement. As of September 30, 2023, we had fully recognized all deferred revenue related to the 2018 Roche Agreement.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including development of our product candidates and costs incurred under our collaboration arrangements with Roche, which include:

•employee-related expenses, including salaries, retention incentives, 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 costs of developing and scaling our manufacturing process and of manufacturing our product candidates for use in our preclinical studies and clinical trials, including the costs under agreements with third parties, such as consultants, contractors and contract manufacturing organizations, or CMOs;

•laboratory and consumable materials and research materials;

•facilities, depreciation and other expenses, which include direct and allocated expenses for rent and utilities; and

•payments made under third-party licensing agreements.

We expense research and development costs as incurred. Nonrefundable 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, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Our direct research and development expenses are tracked on a program-by-program basis and consist of external costs and fees paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development and manufacturing activities. Such program costs also include the external costs of laboratory and consumable materials and costs of raw materials that are directly attributable to and incurred for any single program. We do not allocate employee costs, costs associated with our platform development and discovery efforts, payments made under third-party licensing agreements, costs of laboratory supplies and consumable materials that are not directly attributable to any single program, and facilities expenses, including rent, depreciation and other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot 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 of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:

•the impact of the 2023 Restructuring Plan on our ongoing activities

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

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

•our ability to raise the additional funds necessary to complete preclinical and clinical development of our product candidates;

•the progress of the development efforts of parties with whom we have entered, or 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 FDA or any comparable foreign regulatory authority;

•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 establish and 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; and

•our ability to protect our rights in our intellectual property portfolio.

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. In addition, we may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including retention incentives and 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 we will continue to incur general and administrative expenses as we manage our headcount to support development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Restructuring Charges

Restructuring charges consist primarily of an impairment charge to the Company’s headquarters facility right of use asset, depreciation expense, employee-related charges including forgiveness of the obligation to repay certain retention payments, and salary and one-time termination benefits to the affected employees, and other costs, as a result of the 2023 Restructuring Plan approved by our Board of Directors on September 29, 2023. The 2023 Restructuring Plan included a workforce reduction of approximately 80%. The workforce reduction affected both research and development and general and administrative functions. We may incur additional costs not currently contemplated due to events that may occur because of, or that are associated with, the Restructuring Plan.

Other Income (Expense)

Interest Income

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

Other Income (Expense), Net

Other income (expense), net consists of miscellaneous income and expense unrelated to our core operations.

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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 earned research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.

Results of Operations

Comparison of the Three Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022:

	THREE MONTHS ENDED SEPTEMBER 30,
	2023	2022	CHANGE
	(in thousands)
Revenue:
Collaboration revenue	$—	$3,130	$(3,130)
Grant revenue	—	$322	(322)
Total revenue	—	3,452	(3,452)
Operating expenses:
Research and development	10,504	19,631	(9,127)
General and administrative	5,614	6,919	(1,305)
Restructuring charges	7,683	—	7,683
Total operating expenses	23,801	26,550	(2,749)
Loss from operations	(23,801)	(23,098)	(703)
Other income (expense):
Interest income	164	436	(272)
Other income (expense), net	(2)	19	(21)
Total other income, net	162	455	(293)
Net loss	$(23,639)	$(22,643)	$(996)

Revenue

Collaboration revenue decreased by $3.1 million to $0 for the three months ended September 30, 2023, compared to $3.1 million for the three months ended September 30, 2022. The decrease in collaboration revenue was primarily because we had substantially satisfied the majority of the performance obligations related to the 2018 Roche Agreement as of December 31, 2022. Grant revenue decreased by $0.2 million to $0 for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The decrease in grant revenue was because we did not perform any government grant related services during the three months ended September 30, 2023.

Research and Development Expenses

	THREE MONTHS ENDED SEPTEMBER 30,
	2023	2022	CHANGE
	(in thousands)
Direct research and development expenses by program:
SQZ-PBMC-HPV	$591	$2,975	$(2,384)
SQZ-AAC-HPV	2,459	2,003	456
SQZ-eAPC-HPV	2,925	3,567	(642)
Other programs	88	2,211	(2,123)
Unallocated research and development expenses:
Personnel related (including stock-based compensation)	3,884	6,336	(2,452)
Facility related	795	1,430	(635)
Laboratory and consumable materials	18	395	(377)
Platform-related external services and other	(256)	714	(970)
Total research and development expenses	$10,504	$19,631	$(9,127)

Research and development expenses decreased by $9.1 million to $10.5 million for the three months ended September 30, 2023, from $19.6 million for the three months ended September 30, 2022. The net decrease was primarily due to the following:

•SQZ-PBMC-HPV and other program costs decreased by $2.4 million and $2.1 million, respectively, primarily due to the conclusion of patient enrollment in the SQZ-PBMC-HPV clinical trial.

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•SQZ-eAPC-HPV program costs decreased by $0.6 million due to the start of the winding down of the clinical trial in the third quarter of 2023.

•Personnel-related costs decreased by $2.5 million primarily as a result of the headcount reductions included in the implementation of the 2022 Restructuring Plan in the fourth quarter of 2022.

The decreases in facilities, laboratory and consumable materials and platform-related external services and other costs were due to cost reductions as a result of the implementation of the 2022 Restructuring Plan.

Partially offsetting the above decreases were:

•SQZ-AAC-HPV program costs increased by $0.5 million primarily as a result of an increase in clinical trial-related costs related to patient enrollment.

General and Administrative Expenses

	THREE MONTHS ENDED SEPTEMBER 30,
	2023	2022	CHANGE
	(in thousands)
Personnel related (including stock-based compensation)	$2,957	$3,780	$(823)
Professional, consultant and patent related costs	1,331	1,282	49
Facility related and other costs	1,326	1,857	(531)
Total general and administrative expenses	$5,614	$6,919	$(1,305)

General and administrative expenses decreased by $1.3 million during the three months ended September 30, 2023 to $5.6 million, compared to $6.9 million for the three months ended September 30, 2022. The decrease was primarily due to cost and headcount reductions as a result of the implementation of the 2022 Restructuring Plan.

Restructuring Charges

Restructuring charges for the three months ended September 30, 2023 were $7.6 million, compared to $0 for the three months ended September 30, 2022. The increase in restructuring charges was primarily due to the following:‌

•An impairment charge of $6.5 million in connection with the impairment of the right-of-use asset related to our office facilities based on an assessment using market participant data and the remaining estimated useful life and anticipated use.

•Personnel-related costs increased by $1.1 million primarily due to $1.1 million related to the elimination of the requirement for affected employees to provide continued service to keep certain retention payments received in 2023 which were subject to claw back in the event of voluntary termination prior to December 31, 2023, and $0.1 million in salary and one-time termination benefits to the affected employees, including healthcare benefits to be paid in the fourth quarter of 2023.

•Depreciation expense increased by $0.5 million due to accelerated depreciation expense as a result of reducing the estimated useful lives and accelerating the depreciation expense for certain equipment that will no longer be required and will be disposed of.

Interest Income

Interest income for the three months ended September 30, 2023 and 2022 was $0.2 million and $0.4 million, respectively. The decrease in interest income was due to our lower average cash and equivalents balances during 2023 as compared to 2022.

Other Income (Expense), Net

Other income (expense), net for both the three months ended September 30, 2023 and 2022 was not significant.

Comparison of the Nine Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022:

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	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2023			2022			CHANGE
	(in thousands)
Revenue:
Collaboration revenue	$	178		$	9,011		$	(8,833	)
Grant revenue		—			524			(524	)
Total revenue	$	178		$	9,535		$	(9,357	)
Operating expenses:
Research and development		36,209			55,401			(19,192	)
General and administrative		15,566			20,789			(5,223	)
Restructuring charges		7,567			—			7,567
Total operating expenses		59,342			76,190			(16,848	)
Loss from operations		(59,164	)		(66,655	)		7,491
Other income (expense):
Interest income		1,009			608			401
Other income (expense), net		59			130			(71	)
Total other income, net		1,068			738			330
Net loss	$	(58,096	)	$	(65,917	)	$	7,821

Revenue

Collaboration revenue decreased by $8.8 million to $0.2 million for the nine months ended September 30, 2023, compared to $9.0 million for the nine months ended September 30, 2022 The decrease in revenue was primarily because we had substantially satisfied the majority of the performance obligations related to the 2018 Roche Agreement as of December 31, 2022. Grant revenue decreased by $0.5 million to $0 for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The decrease in grant revenue was because we did not perform any government grant related services during the nine months ended September 30, 2023.

Research and Development Expenses

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2023		2022		CHANGE
	(in thousands)
Direct research and development expenses by program:
SQZ-PBMC-HPV	$	2,502	$	7,193	$	(4,691	)
SQZ-AAC-HPV		7,506		4,889		2,617
SQZ-eAPC-HPV		11,157		9,622		1,535
Other programs		1,461		8,557		(7,096	)
Unallocated research and development expenses:
Personnel related (including stock-based compensation)		9,732		17,604		(7,872	)
Facility related		3,092		4,149		(1,057	)
Laboratory and consumable materials		52		1,041		(989	)
Platform-related external services and other		707		2,346		(1,639	)
Total research and development expenses	$	36,209	$	55,401	$	(19,192	)

Research and development expenses decreased by $19.2 million to $36.2 million for nine months ended September 30, 2023, from $55.4 million for the nine months ended September 30, 2022. The net decrease was primarily due to the following:

•SQZ-PBMC-HPV and other program costs decreased by $4.7 million and $7.1 million, respectively, primarily due to the conclusion of patient enrollment in the SQZ-PBMC-HPV clinical trial and the reprioritization of our clinical portfolio in order to focus on the SQZ-eAPC-HPV and SQZ-AAC-HPV programs.

•Personnel-related costs decreased by $7.9 million primarily as a result of the headcount reductions included in the implementation of the 2022 Restructuring Plan in the fourth quarter of 2022.

The decreases in facilities, laboratory and consumable materials and platform-related external services and other costs were due to cost reductions as a result of the implementation of the 2022 Restructuring Plan.

Partially offsetting the above decreases were:

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•SQZ-AAC-HPV program costs increased by $2.6 million primarily as a result of an increase in allocated manufacturing costs and clinical trial-related costs related to patient enrollment.

•SQZ-eAPC-HPV program costs increased by $1.5.million due to an increase in clinical trial-related costs related to patient enrollment.

General and Administrative Expenses

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2023		2022		CHANGE
	(in thousands)
Personnel related (including stock-based compensation)	$	7,773	$	10,887	$	(3,114	)
Professional, consultant and patent related costs		3,522		4,384		(862	)
Facility related and other costs		4,271		5,518		(1,247	)
Total general and administrative expenses	$	15,566	$	20,789	$	(5,223	)

General and administrative expenses decreased by $5.2 million during the nine months ended September 30, 2023 to $15.6 million, compared to $20.8 million for the nine months ended September 30, 2022. The decrease was primarily due to cost and headcount reductions as a result of the implementation of the 2022 Restructuring Plan.

Restructuring Charges

Restructuring charges for the nine months ended September 30, 2023 were $7.7 million, compared to $0 for the nine months ended September 30, 2023. The increase in restructuring charges was primarily due to the following:‌

•An impairment charge of $6.5 million in connection with the impairment of the right-of-use asset related to our office facilities based on an assessment using market participant data and the remaining estimated useful life and anticipated use.

•Personnel-related costs increased by $1.1 million primarily due to the elimination of the requirement for affected employees to provide continued service to keep certain retention payments received in 2023 which were subject to claw back in the event of voluntary termination prior to December 31, 2023, and $0.1 million in salary and one-time termination benefits to the affected employees, including healthcare benefits to be paid in the fourth quarter of 2023.

•Depreciation expense increased by $0.5 million due to accelerated depreciation expense as a result of reducing the estimated useful lives and accelerating the depreciation expense for certain equipment that will no longer be required and will be disposed of.

Interest Income

Interest income for the nine months ended September 30, 2023 and 2022 was $1.0 million and $0.6 million, respectively. The increase in interest income was due to the increase in average interest rates in 2023 despite lower average cash and equivalents available for investment.

Other Income (Expense), Net

Other income (expense), net for both the nine months ended September 30, 2023 and 2022 was not significant.

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 the next several years, if at all. Through September 30, 2023, we have funded our operations primarily with payments received in connection with collaboration agreements, proceeds from equity and debt financing, most recently, with proceeds from our IPO, Follow-On Offering and our at-the market offering facility with Jefferies LLC ("ATM Facility"). As of September 30, 2023, we had cash and cash equivalents of $10.2 million. We maintain the majority of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

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Cash Flows

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

	NINE MONTHS ENDED SEPTEMBER 30,
	2023			2022
	(in thousands)
Net cash used in operating activities	$	(53,574	)	$	(62,789	)
Net cash provided by (used in) investing activities		58			(387	)
Net cash provided by financing activities		—			3,902
Net decrease in cash, cash equivalents and restricted cash	$	(53,516	)	$	(59,274	)

Operating Activities

During the nine months ended September 30, 2023, operating activities used $53.6 million of cash, primarily resulting from our net loss of $58.1 million and changes in our operating assets and liabilities of $12.2 million, partially offset by net non-cash charges of $16.8 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2023 consisted of a $6.0 million decrease in operating lease liabilities, a $2.6 million decrease in prepaid expenses and other current assets, a $4.5 million decrease in accrued expenses, including the payment of approximately $2.8 million of restructuring costs.

During the nine months ended September 30, 2022, operating activities used $62.8 million of cash, primarily resulting from our net loss of $65.9 million and changes in our operating assets and liabilities of $11.8 million, partially offset by net non-cash charges of $15.0 million. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2022 consisted primarily of a $9.0 million decrease in deferred revenue, a $7.2 million decrease in operating lease liabilities, a $1.0 million decrease in prepaid expenses and other current assets, a $1.0 million increase in accrued expenses, all of which were partially offset by a $3.0 million decrease in accounts receivable. The decrease in deferred revenue during the nine months ended September 30, 2022 was due to the revenue we recognized in that same period under the 2018 Roche Agreement.

In all periods presented, other changes in prepaid expenses and other current assets, accounts receivable, accounts payable, accrued expenses and other liabilities not described above were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments. In all periods presented, decreases in operating lease liabilities were primarily due to our recurring payments made under recorded operating lease liabilities, including those arising from embedded leases.

Investing Activities

During the nine months ended September 30, 2023, net cash provided by investing activities was $58 thousand consisting of proceeds from disposal of equipment, offset by purchases of property and equipment. During the nine months ended September 30, 2022, net cash used by investing activities was $0.4 million consisting of purchases of property and equipment.

Financing Activities

During the nine months ended September 30, 2023, net cash provided by financing activities was $0.

During the nine months ended September 30, 2022, net cash provided by financing activities was $3.9 million consisting of proceeds from the ATM Facility, employee stock purchase plan issuances, and stock option exercises during the period.

Funding Requirements

On September 29, 2023,our Board of Directors approved the 2023 Restructuring Plan, which included (i) an additional workforce reduction of approximately 80% of the remaining employees and (ii) ceased substantially all research and development activities to reduce our ongoing operating expenses while we pursue strategic alternatives which may include a sale of the Company or some or all of its assets by the end of 2023. Should a strategic alternative be implemented, we anticipate using available net proceeds to discharge our liabilities and outstanding obligations, distribute the remainder, if any, to stockholders and wind down our operations. Should we be unable to identify and implement a meaningful strategic alternative in a timely manner, our Board of Directors are likely to consider bankruptcy or other dissolution proceedings. In connection with the 2023 Restructuring Plan, we determined to continue to dose existing patients in our clinical programs through November 2023 and to discontinue enrollment of new patients in our clinical trials.

As of September 30, 2023, we had an accumulated deficit of $333.1 million. During the nine months ended September 30, 2023, we recorded a net loss of $58.1 million. In addition, during the nine months ended September 30, 2023 we used $53.5 million in operating and investing activities resulting in a cash and cash equivalents balance of $10.2 million as of September 30, 2023. We expect that our operating losses and negative cash flows will continue for the foreseeable future. Based on our currently forecasted operating plan, which reflects reduced quarterly spending for the remainder of 2023 as compared to the corresponding quarters in 2022, we believe that our

22

existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2024. Therefore, based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future and the need to raise additional capital to finance future operations, as of November 8, 2023, the issuance date of the interim condensed consolidated financial statements for the three and nine months ended September 30, 2023, included elsewhere in this Quarterly Report on Form 10-Q, management has concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the condensed consolidated financial statements are issued. We are working to mitigate this risk, which primarily by reducing cash expenditures and exploring opportunities to raise additional capital through some combination of strategic transactions and reducing cash expenditures. Should the Company be unable to identify and implement a meaningful strategic alternative or raise additional capital in a timely manner, the Company’s Board of Directors is likely to consider bankruptcy or other dissolution proceedings.

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations from those described in our 2022 Form 10-K. For additional information, see Note 8 and 9 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount 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 2022 Form 10-K. 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 the 2022 Form 10-K.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows 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. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of September 30, 2023, we had cash and cash equivalents of $10.2 million, which consisted of cash and money market funds. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of these balances, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and cash equivalents.

We are not currently exposed to significant market risk related to changes in interest rates or foreign currency exchange rates. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. Our operations may be subject to inflation in the future.

Item 4. Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

23

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934). Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not subject to any material legal proceedings.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. In addition to the other information in this Quarterly Report on Form 10-Q, including our interim condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Results of Operations and Financial Condition”, you should carefully consider the factors described in the section titled “Risk Factors” in our 2022 Form 10-K. There have been no material changes to our risk factors as previously disclosed in our 2022 Form 10-K, except for as set forth below.

We may be unable to realize expected benefits from our restructuring plan and we may need to pursue bankruptcy or dissolution if we are not able to identify and implement a meaningful strategic alternative in a timely manner.

On September 29, 2023, our Board of Directors approved the 2023 Restructuring Plan, which includes a workforce reduction of approximately 80% of our employees, ceasing substantially all research and development activities to reduce our ongoing operating expenses, and other cost saving measures, such as the discharge of our headquarters facilities lease, while we pursue strategic alternatives, which may include a sale of the Company or some or all of our assets.

We may undertake further restructuring actions or workforce reductions in the future. These types of restructuring and cost reduction activities are complex and may result in unintended consequences and costs, including decreased employee morale, loss of institutional knowledge and expertise, and potential impacts on financial reporting. They could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel. Should a strategic alternative be implemented, we anticipate using
available net proceeds to discharge our liabilities and outstanding obligations, distribute the remainder, if any, to stockholders and wind down our operations. Should we be unable to identify and implement a meaningful strategic alternative in a timely manner, our Board of Directors is likely to consider bankruptcy or other dissolution proceedings. If we do not successfully manage our current restructuring plan or other similar activities that we may undertake in the future, or if we fail to identify and implement a meaningful strategic alternative in a timely manner, our business, financial condition, and results of operations may be materially adversely affected and we may need to pursue bankruptcy or dissolution.

An active, liquid trading market for our common stock may not be sustained.

On July 3, 2023, we received a written notice from the NYSE notifying us that the NYSE commenced proceedings to delist our common stock from the NYSE. The NYSE reached this determination pursuant to Section 802.01B of the NYSE’s Listed Company Manual because the Company had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization of at least $15 million over a consecutive 30-trading day period.

The NYSE suspended trading in our common stock immediately after market close on July 3, 2023. On July 5, 2023, our common stock began trading in the over-the-counter markets, under the symbol SQZB. The over-the-counter markets are significantly more limited than the NYSE, and quotation on the over-the-counter markets may result in a less liquid market available for existing and potential securityholders to trade our common stock and has depressed and could further depress the trading price of our common stock. We can provide no assurance that our common stock will continue to trade on the over-the-counter markets, whether broker-dealers will continue to provide public quotes of our common stock or whether the trading volume of our common stock will be sufficient to provide for an efficient trading market.

Further, an inactive trading market may also impair our ability to raise capital by selling our securities, to attract and motivate employees through equity incentive awards, or to acquire other companies, products, or technologies by using our securities as consideration.

The Roche Agreement was important to our business. As a result of the termination of the Roche Agreement, the development and commercialization of certain of our product candidates could be materially delayed and our business will be adversely affected.

In July 2023, Roche determined that it will not exercise its option under the Roche Agreement to obtain an exclusive license to develop and commercialize the Company’s candidate targeting HPV 16 positive solid tumors under our SQZ-APC-HPV program. On September 13, 2023, the Company and Roche agreed to terminate the 2018 Roche Agreement, effective immediately. No early termination penalty was incurred by either party. As of September 13, 2023, we regained full clinical development and future commercialization rights for our programs targeting HPV 16 positive tumors. In connection with this determination, we intend to explore potential strategic alternatives to support the advancement of our oncology programs including HPV 16 positive tumors, in an effort to allow us to partner all our clinical and

25

preclinical assets across all disease areas and indications. Potential strategic partnerships may include, but are not limited to, a partnership, acquisition, merger, business combination, or other transaction. There can be no assurance that this process will result in us pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms or at all. Should a strategic alternative be implemented, we anticipate using available net proceeds to discharge our liabilities and outstanding obligations, distribute the remainder, if any, to stockholders and wind down our operations. Should we be unable to identify and implement a meaningful strategic alternative in a timely manner, our Board of Directors is likely to consider bankruptcy or other dissolution proceedings.

Termination of the Roche Agreement has caused significant delays in any development and commercialization efforts we undertake for our SQZ APC platform in oncology as we would need to expand our internal capabilities or enter into another collaboration agreement to compensate for the loss in funding and clinical development support from Roche. Any suitable alternative agreement may take considerable time to negotiate and may also be on less favorable terms to us. Whether or not we identify another suitable collaborator, we would need to seek additional financing to continue development in oncology, or we may be forced to discontinue development of our product candidates in oncology either of which could have a material adverse effect on our business. Further, On September 29, 2023, our Board of Directors approved the 2023 Restructuring Plan and ceased substantially all research and development activities to reduce our ongoing operating expenses while we pursue strategic alternatives. See “—We may be unable to realize expected benefits from our restructuring plan and we may need to pursue bankruptcy or dissolution if we are not able to pursue one or more strategic alternatives.”

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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

(a) We are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 1.01 - Entry into a Material Definitive Agreement and Item 1.02 - Termination of a Material Definitive Agreement.

On November 6, 2023, as a result of the impact of the 2023 Restructuring, including the reduction in force and anticipated cessation of remaining research and clinical activities in the fourth quarter of 2023, the Company entered into an agreement (the “Agreement”) with Arsenal Yards Core Holding LLC, successor in interest under the lease to Arsenal Yards Holding LLC (the “Landlord”), the landlord of the Company’s headquarters facility (the “Premises”).

Under the Agreement, Landlord has agreed to terminate the lease for the Premises (the “Lease”), subject to certain terms and conditions, including that the Company will (i) vacate the Premises on or before November 15, 2023, (ii) pay to the Landlord at least 25% of the November 2023 Base Rent (as defined in the Lease) and certain common area maintenance and utility fees, (iii) release a letter of credit for $2.3 million securing the Company’s performance under the Lease, and (iv) pay to the Landlord a lump sum payment of $1.0 million (the “Payment”) following the closing of a strategic transaction by February 1, 2024 subject to extension upon request to April 1, 2024. Following the making of the Payment, Landlord has agreed to discharge the Lease and release the Company from remaining payment obligations under the Lease.

In the event the Payment is not made by April 1, 2024, outstanding obligations under the Lease will remain in full force and effect and Landlord’s agreement to terminate the Lease will be null and void.

The foregoing descriptions of the Lease and the Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the Lease and the Agreement. A copy of the Lease was filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on October 26, 2020 and is incorporated herein by reference. A copy of the Agreement is attached hereto as Exhibit 10.6 to this Quarterly Report on Form 10-Qand is incorporated herein by reference..

(b) None.

(c) Not applicable.

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Item 6. Exhibits.

Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1	Restated Certificate of Incorporation of SQZ Biotechnologies Company.	8-K	001-39662	3.1	11/04/2020
3.2	Amended and Restated Bylaws of SQZ Biotechnologies Company.	S-1/A	333-249422	3.4	10/26/2020
4.1	Amended and Restated Investors’ Rights Agreement, dated as of December 19, 2019, as amended.	S-1	333-252889	4.1	02/09/2021
4.2	Specimen Stock Certificate.	S-1/A	333-249422	4.2	10/26/2020
10.1	Amended Non-Employee Director Compensation Program					*
10.2	Transition Agreement between the Registrant and Howard Bernstein, dated October 3, 2023					*
10.3	Transition Agreement between the Registrant and Richard Capasso, dated October 3, 2023					*
10.4	Transition Agreement between the Registrant and Lawrence Knopf, dated October 3, 2023					*
10.5	Transition Agreement between the Registrant and Marshelle Smith Warren, dated October 3, 2023					*
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					**
101.INS	Instance Document – the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document					*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					*

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101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	*
104	Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101)	*

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SQZ Biotechnologies Company
Date:  November 8, 2023	By:	/s/ Howard Bernstein, MD, Ph.D.
		Howard Bernstein, MD, Ph.D.
		Interim Chief Executive Officer
		(principal executive officer)

Date:  November 8, 2023	By:	/s/ Richard Capasso
		Richard Capasso
		Chief Accounting Officer
		(principal financial officer)

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