Jounce Therapeutics, Inc. (Form: 10-Q, Received: 11/07/2019 12:08:15)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________________________________________________________

FORM 10-Q

________________________________________________________________________________________________________

(Mark One)

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

For the quarterly period ended September 30, 2019

¨ 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 001-37998

________________________________________________________________________________________________________

JOUNCE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________



Delaware (State or other jurisdiction of incorporation or organization)		45‑4870634 (I.R.S. Employer Identification No.)

780 Memorial Drive Cambridge, Massachusetts (Address of principal executive offices)		02139 (Zip Code)

Registrant’s telephone number, including area code: (857) 259‑3840

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	JNCE	The Nasdaq Stock Market LLC

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 x 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 x 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 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	x

Non‑accelerated filer	¨	Smaller reporting company	x

		Emerging growth company	x

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. x

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

As of November 1, 2019, there were 33,228,512 shares of common stock, $0.001 par value per share, outstanding.

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 6.	Exhibits	64

SIGNATURES

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References to Jounce

Throughout this Quarterly Report on Form 10-Q, the “Company,” “Jounce,” “Jounce Therapeutics,” “we,” “us,” and “our,” except where the context requires otherwise, refers to Jounce Therapeutics, Inc. and its consolidated subsidiary, and “board of directors” refers to the board of directors of Jounce Therapeutics, Inc.

Cautionary Note Regarding Forward-Looking Statements and Industry Data

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “target,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:


•	the timing, progress, and results of preclinical studies and clinical trials for our current and future product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;


•	the timing, scope, or likelihood of regulatory filings and approvals, including, as applicable, timing of our investigational new drug application for, biologics license application filing for, and final Food and Drug Administration approval of our current and future product candidates;


•	our ability to use our Translational Science Platform to identify targets for future product candidates and to match immunotherapies to select patient subsets;


•	our ability to identify, develop and advance future product candidates into, and successfully complete, clinical studies;


•	our ability to develop combination therapies, whether on our own or in collaboration with third parties, for our current and future product candidates;


•	our expectations regarding the size of the patient populations for our product candidates, if approved for commercial use, and any product candidates we may develop;


•	our commercialization and marketing capabilities and strategy;


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


•	the implementation of our business model and our strategic plans for our business, our current and future product candidates, and our technology;


•	our ability to develop and commercialize a companion diagnostic or complementary diagnostic for our current and future product candidates;


•	the rate and degree of market acceptance and clinical utility of our current and future product candidates;


•	the potential benefits of our exclusive license of JTX-8064 to Celgene;


•	our ability to establish or maintain future collaborations or strategic relationships or obtain additional funding;


•	our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;


•	our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current and future product candidates, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;


•	our competitive position, and developments and projections relating to our competitors and our industry;

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•	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and


•	the impact of laws and regulations.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the section entitled “Risk Factors” in Part II, Item 1A that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

This Quarterly Report on Form 10-Q may include industry and market data, which we may obtain from our own internal estimates and research, as well as from industry and general publications and research, surveys, and studies conducted by third parties. Industry publications, studies, and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third‑party sources.

Website and Social Media Disclosure

From time to time, we may use our website (www.jouncetx.com), investor and media relations website (http://ir.jouncetx.com), Facebook page (https://www.facebook.com/jouncetx), LinkedIn page (https://www.linkedin.com/company/3494537/) and Twitter feed (https://twitter.com/JounceTx) as channels for the distribution of information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this report.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Jounce Therapeutics, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(amounts in thousands, except par value amounts)



	September 30,			December 31,
	2019			2018
Assets:
Current assets:
Cash and cash equivalents	$	66,402		$	47,906
Short-term investments	109,398			141,968
Prepaid expenses and other current assets	5,253			2,335
Total current assets	181,053			192,209
Property and equipment, net	11,588			13,540
Long-term investments	9,297			5,990
Operating lease right-of-use asset	18,269			—
Other non-current assets	2,151			2,713
Total assets	$	222,358		$	214,452
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	3,408		$	3,272
Accrued expenses	7,032			6,952
Deferred revenue, current—related party	—			55,157
Operating lease liability, current	2,814			—
Other current liabilities	54			165
Total current liabilities	13,308			65,546
Deferred revenue, net of current portion—related party	—			42,715
Operating lease liability, net of current portion	17,641			—
Other non-current liabilities	—			2,062
Total liabilities	30,949			110,323
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value: 5,000 shares authorized at September 30, 2019 and December 31, 2018; no shares issued or outstanding at September 30, 2019 or December 31, 2018	—			—
Common stock, $0.001 par value: 160,000 shares authorized at September 30, 2019 and December 31, 2018; 33,226 and 32,948 shares issued at September 30, 2019 and December 31, 2018, respectively; 33,224 and 32,941 shares outstanding at September 30, 2019 and December 31, 2018, respectively	33			33
Additional paid-in capital	275,790			268,081
Accumulated other comprehensive income (loss)	78			(78		)
Accumulated deficit	(84,492		)	(163,907		)
Total stockholders’ equity	191,409			104,129
Total liabilities and stockholders’ equity	$	222,358		$	214,452

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

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Jounce Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)

(amounts in thousands, except per share amounts)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Revenue:
License and collaboration revenue—related party	$	119,445		$	14,528		$	147,872	$	45,101
Operating expenses:
Research and development	15,115			16,751			50,525		53,408
General and administrative	6,483			6,517			20,998		19,842
Total operating expenses	21,598			23,268			71,523		73,250
Operating income (loss)	97,847			(8,740		)	76,349		(28,149		)
Other income, net	1,025			1,103			3,177		2,810
Income (loss) before provision for income taxes	98,872			(7,637		)	79,526		(25,339		)
Provision for income taxes	12			—			36		—
Net income (loss)	$	98,860		$	(7,637	)	$	79,490	$	(25,339	)
Net income (loss) per share, basic	$	2.99		$	(0.23	)	$	2.41	$	(0.78	)
Net income (loss) per share, diluted	$	2.90		$	(0.23	)	$	2.33	$	(0.78	)
Weighted-average common shares outstanding, basic	33,112			32,641			33,015		32,462
Weighted-average common shares outstanding, diluted	34,141			32,641			34,160		32,462
Comprehensive income (loss):
Net income (loss)	$	98,860		$	(7,637	)	$	79,490	$	(25,339	)
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale securities	(57		)	76			156		269
Comprehensive income (loss)	$	98,803		$	(7,561	)	$	79,646	$	(25,070	)

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

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Jounce Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(amounts in thousands)



	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2018	32,941	$	33	$	268,081	$	(78	)	$	(163,907	)	$	104,129
Exercises of common stock options	24	—		69		—			—			69
Vesting of restricted stock awards	2	—		7		—			—			7
Stock-based compensation expense	—	—		2,542		—			—			2,542
Other comprehensive income	—	—		—		129			—			129
Cumulative effect adjustment upon adoption of ASC 842	—	—		—		—			(75		)	(75		)
Net loss	—	—		—		—			(12,377		)	(12,377		)
Balance at March 31, 2019	32,967	33		270,699		51			(176,359		)	94,424
Exercises of common stock options	9	—		29		—			—			29
Vesting of restricted stock awards	2	—		7		—			—			7
Stock-based compensation expense	—	—		2,513		—			—			2,513
Other comprehensive income	—	—		—		84			—			84
Net loss	—	—		—		—			(6,993		)	(6,993		)
Balance at June 30, 2019	32,978	33		273,248		135			(183,352		)	90,064
Exercises of common stock options	88	—		247		—			—			247
Vesting of restricted stock awards and restricted stock units	158	—		6		—			—			6
Stock-based compensation expense	—	—		2,289		—			—			2,289
Other comprehensive loss	—	—		—		(57		)	—			(57		)
Net income	—	—		—		—			98,860			98,860
Balance at September 30, 2019	33,224	$	33	$	275,790	$	78		$	(84,492	)	$	191,409

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2017	32,249	$	32	$	257,101	$	(409	)	$	(89,615	)	$	167,109
Exercise of common stock options	198	—		784		—			—			784
Vesting of restricted stock awards	4	—		8		—			—			8
Stock-based compensation expense	—	—		2,268		—			—			2,268
Other comprehensive income	—	—		—		58			—			58
Cumulative effect adjustment upon adoption of ASC 606	—	—		—		—			(46,913		)	(46,913		)
Net loss	—	—		—		—			(13,028		)	(13,028		)
Balance at March 31, 2018	32,451	32		260,161		(351		)	(149,556		)	110,286
Exercises of common stock options	143	1		380		—			—			381
Vesting of restricted stock awards	2	—		7		—			—			7
Stock-based compensation expense	—	—		2,360		—			—			2,360
Other comprehensive income	—	—		—		135			—			135
Net loss	—	—		—		—			(4,674		)	(4,674		)
Balance at June 30, 2018	32,596	33		262,908		(216		)	(154,230		)	108,495
Exercises of common stock options	94	—		134		—			—			134
Vesting of restricted stock awards	2	—		7		—			—			7
Stock-based compensation expense	—	—		2,335		—			—			2,335
Other comprehensive income	—	—		—		76			—			76
Net loss	—	—		—		—			(7,637		)	(7,637		)
Balance at September 30, 2018	32,692	$	33	$	265,384	$	(140	)	$	(161,867	)	$	103,410

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

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Jounce Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(amounts in thousands)



	Nine Months Ended September 30,
	2019			2018
Operating activities:
Net income (loss)	$	79,490		$	(25,339	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	7,344			6,963
Depreciation expense	2,906			2,867
Net amortization of premiums and discounts on investments	(1,247		)	(609		)
Changes in operating assets and liabilities:
Taxes receivable	—			16,737
Prepaid expenses and other current assets	(1,774		)	602
Other non-current assets	(582		)	50
Accounts payable	167			231
Accrued expenses and other current liabilities	30			(661		)
Deferred revenue—related party	(97,872		)	(45,101		)
Other liabilities	8			85
Net cash used in operating activities	(11,530		)	(44,175		)
Investing activities:
Purchases of investments	(147,995		)	(194,699		)
Proceeds from maturities of investments	178,661			264,427
Proceeds from sales of investments	—			3,997
Purchases of property and equipment	(985		)	(1,125		)
Net cash provided by investing activities	29,681			72,600
Financing activities:
Proceeds from exercise of stock options	345			1,299
Net cash provided by financing activities	345			1,299
Net increase in cash, cash equivalents and restricted cash	18,496			29,724
Cash, cash equivalents and restricted cash, beginning of period	49,176			24,829
Cash, cash equivalents and restricted cash, end of period	$	67,672		$	54,553
Supplemental cash flow information:
Cash paid for lease liabilities	$	3,200		$	—
Cash paid for income taxes	$	101		$	—

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

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Jounce Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Nature of Business

Jounce Therapeutics, Inc. (the “Company”) is a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients. The Company is subject to a number of risks similar to those of other clinical-stage immunotherapy companies, including dependence on key individuals; the need to develop commercially viable products; competition from other companies, many of which are larger and better capitalized; and the need to obtain adequate additional financing to fund the development of its products.

As of September 30, 2019, the Company had cash, cash equivalents and investments of $185.1 million. The Company expects that its existing cash, cash equivalents and investments will enable it to fund its expected operating expenses and capital expenditure requirements for at least 12 months from November 7, 2019, the filing date of this Quarterly Report on Form 10-Q. The Company expects to finance its future cash needs through a combination of equity or debt financings, collaborations, licensing arrangements and strategic alliances.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements as of September 30, 2019 and December 31, 2018, and for the three and nine months ended September 30, 2019 and 2018, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments which are necessary for a fair presentation of the Company’s financial position and results of its operations, as of and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 6, 2019 (the “Annual Report on Form 10-K”).

The information presented in the condensed consolidated financial statements and related notes as of September 30, 2019, and for the three and nine months ended September 30, 2019 and 2018, is unaudited. The December 31, 2018 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Interim results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019, or any future period.

The accompanying condensed consolidated financial statements include the accounts of Jounce Therapeutics, Inc. and its wholly-owned subsidiary, Jounce Mass Securities, Inc. All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2018, and the notes thereto, which are included in the Annual Report on Form 10-K. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2019, except as discussed below with respect to the adoption of ASC Topic 842, Leases (“ASC 842”).

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates which include, but are not limited to, estimates related to revenue recognized under the Master Research and Collaboration Agreement (the “Celgene Collaboration Agreement”) with Celgene Corporation (“Celgene”) (including estimates of internal and external costs expected to be incurred to satisfy performance obligations), the determination of the discount rate utilized in the initial application of ASC 842, accrued expenses, stock-based compensation expense and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires a lessee to recognize assets and liabilities on the balance sheet for operating leases and changes many key definitions, including the definition of a lease. The new standard includes a short-term lease exception for leases with a term of 12 months or less, as part of which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria that are substantially similar to the previous guidance. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which permits entities to continue applying legacy guidance in ASC Topic 840, Leases (“ASC 840”), including its disclosure requirements, in the comparative periods presented in the year that the entity adopts the new leasing standard. Under this transition method, the cumulative effect of initially applying ASC 842 is recognized as an adjustment to the opening balance of retained earnings or accumulated deficit at the beginning of the annual reporting period that includes the date of initial application. The new standard became effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods.

Accordingly, the Company adopted ASC 842 on January 1, 2019 using the transition method permitted by ASU 2018-11. In adopting ASC 842, the Company elected to utilize a package of practical expedients under which an entity need not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases or initial direct costs for any existing leases. The Company also elected a practical expedient whereby an entity can utilize hindsight in determining the lease term, including options to extend or terminate the lease. Finally, the Company elected a practical expedient related to not separating lease and nonlease components. In addition, as discussed above, an entity may elect an accounting policy whereby it does not apply the recognition requirements of ASC 842 to short-term leases with a term of 12 months or less. Under this accounting policy, an entity does not recognize a right-of-use asset or lease liability on its balance sheet and instead recognizes lease payments as an expense on a straight-line basis over the lease term. The Company has elected this short-term lease accounting policy.

Upon the adoption of ASC 842, the Company removed its legacy deferred rent balances that were previously recorded under ASC 840 and established an operating lease right-of-use asset of $20.2 million, an operating lease liability, current of $2.6 million and an operating lease liability, net of current portion of $19.8 million, all relating to the Company’s existing operating lease for its current corporate headquarters. The Company also recorded an increase to the opening balance of accumulated deficit of less than $0.1 million as a result of the adoption of ASC 842. The following table presents a summary of the amount by which each financial statement line item was affected by the adoption of ASC 842 (in thousands):



	January 1, 2019
	Prior to the Adoption of ASC 842			Effect of Adoption			Subsequent to the Adoption of ASC 842
Operating lease right of use asset	$	—		$	20,156		$	20,156
Operating lease liability, current	$	—		$	2,563		$	2,563
Other current liabilities	$	165		$	(61	)	$	104
Operating lease liability, net of current portion	$	—		$	19,790		$	19,790
Other non-current liabilities	$	2,062		$	(2,062	)	$	—
Accumulated deficit	$	(163,907	)	$	(75	)	$	(163,982	)

The adoption of ASC 842 did not have a material impact on the condensed consolidated statement of operations and comprehensive income for the three and nine months ended September 30, 2019 or the condensed consolidated statement of cash flows for the nine months ended September 30, 2019.

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The Company subsequently measures its lease liability at the present value of remaining lease payments, discounted using the discount rate for the lease. The right-of-use asset is subsequently measured at the amount of the lease liability, adjusted for prepaid or accrued lease payments and the remaining balance of lease incentives received. The Company recognizes operating lease expense on a straight-line basis over the lease term. See Note 11, “Corporate Headquarters Lease”, for further information on the application of ASC 842 to the Company’s operating lease for its current corporate headquarters.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and it establishes additional disclosure requirements related to credit risks. For available-for-sale debt securities with expected credit losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the condensed consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This guidance is intended to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. This guidance became effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods. Accordingly, the Company adopted ASU 2018-07 effective January 1, 2019, and there was no impact to the condensed consolidated financial statements as a result of the adoption of this guidance.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. This guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. More specifically, an entity is permitted to early adopt any removed or modified disclosure requirements immediately and delay adoption of additional disclosure requirements until the effective date of this guidance. The Company does not anticipate a material impact to the condensed consolidated financial statements as a result of the adoption of this guidance.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) when the counterparty is a customer. In addition, ASU 2018-18 adds unit-of-account guidance to ASC Topic 808, Collaborative Arrangements, in order to align this guidance with ASC 606 and also precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The Company does not anticipate a material impact to the condensed consolidated financial statements as a result of the adoption of this guidance.

3. Celgene Agreements

Celgene License Agreement

On July 22, 2019, the Company entered into a License Agreement (the “Celgene License Agreement”) with Celgene. Pursuant to the Celgene License Agreement, the Company granted to Celgene a worldwide and exclusive license to develop, manufacture and commercialize JTX-8064 and certain derivatives thereof (an “Initial Licensed Compound”), as well as any antibody (other than the Initial Licensed Compound) or other biologic controlled by the Company as of July 22, 2019 that is specifically directed to the LILRB2 receptor (“LILRB2”) (the “Licensed Compounds”).

The Celgene License Agreement provides Celgene with the sole right, at its sole cost and expense, to develop, seek regulatory approval for, manufacture and commercialize the Licensed Compounds and any product that comprises a Licensed Compound (each a “Licensed Product”) for all uses and purposes. Celgene is obligated to use commercially reasonable efforts to develop, seek regulatory approval for and commercialize at least one Licensed Product comprising or incorporating the Initial Licensed Compound (any such Licensed Product, an “Initial Licensed Product”). During the term of the license, the Company is prohibited from developing, manufacturing or commercializing any product that contains an antibody or other biologic that is specifically directed to LILRB2 or any related antibody or related biologic.

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Milestone and Royalties

Under the terms of the Celgene License Agreement, Celgene paid the Company a one-time, non-refundable upfront payment of $50.0 million in July 2019. The Company is also entitled to receive payments from Celgene upon the achievement of specified clinical, regulatory and sales milestones for the first Initial Licensed Product to achieve such milestones, including potential clinical and regulatory milestone payments up to an aggregate total of $180.0 million and potential sales milestone payments up to an aggregate total of $300.0 million.

The Company is also eligible to receive royalties at percentage rates ranging from mid-single-digits to low-double-digits, based on future annual net sales of the Initial Licensed Products, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis until the later of (i) the date on which there are no longer any valid composition of matter or method of use claims within the Company’s patents or patents jointly owned by the Company and Celgene related to the Initial Licensed Product in such country and (ii) the twelve-year anniversary of the date of the first commercial sale of the first Initial Licensed Product in such country (the “Royalty Term”). Royalty payments may be reduced in specified circumstances, including payments required to be made by Celgene to third parties to acquire patent rights, up to an aggregate minimum floor, or may be reduced upon the occurrence of certain specified events, including certain compulsory licenses, or if associated with a Licensed Product that is not an Initial Licensed Product.

Termination

Unless terminated earlier in accordance with its terms, the Celgene License Agreement provides that it will expire (i) on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis on the date of the expiration of the Royalty Term with respect to such Initial Licensed Product in such country and (ii) in its entirety upon the expiration of all applicable Royalty Terms with respect to the Initial Licensed Products in all countries, following which the applicable licenses under the License Agreement will become fully paid-up, perpetual, irrevocable and royalty-free.

Celgene may terminate the License Agreement for convenience, in its sole discretion, in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis, at any time with prior written notice to the Company. The License Agreement may be terminated in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis by either the Company or Celgene upon the uncured material breach of the other party. If the material breach relates solely to a particular Licensed Product, the non-breaching party may only terminate the License Agreement with respect to such Licensed Product. Either the Company or Celgene may terminate the License Agreement in the event of the bankruptcy or insolvency of the other party. The License Agreement provides that upon termination by Celgene for material breach with respect for a Licensed Product, Celgene will be released from its development, manufacturing and commercialization obligations with respect to such Licensed Product. Upon termination by the Company due to Celgene’s material breach or by Celgene for convenience, the licenses granted by the Company under the License Agreement will terminate and Celgene will grant to the Company, subject to negotiation regarding economic terms, a non-exclusive, worldwide license to develop, manufacture and commercialize the terminated Licensed Products.

Accounting Analysis

Identification of the Contract(s)

The Company assessed the Celgene License Agreement and concluded that it represents a contract with a customer within the scope of ASC 606.

Identification of Promises and Performance Obligations

The Company determined that the Celgene License Agreement contains the following promises: (i) delivery of a worldwide and exclusive license to develop, manufacture and commercialize an Initial Licensed Compound and the Licensed Compounds (the “JTX-8064 License”) and (ii) provision of certain transition activities, specifically outlined within the Celgene License Agreement, related to the delivery of the JTX-8064 License (the “Transition Activities”).

The Company also evaluated certain other optional activities outlined within the Celgene License Agreement and concluded that none convey a material right to Celgene. Accordingly, these options are not considered to be promises within the Celgene License Agreement.

The Company assessed the above promises and concluded that the JTX-8064 License is both capable of being distinct and distinct within the context of the Celgene License Agreement. The Company also assessed its promise to perform the Transition Activities and concluded that it was both quantitatively and qualitatively immaterial in the context of the Celgene License Agreement. Accordingly, the Company did not assess the Transition Activities as a performance

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obligation. Based upon this evaluation, the Company concluded that its promise to deliver the JTX-8064 License represents the sole performance obligation in the Celgene License Agreement.

Determination of Transaction Price

As noted above, the Company received a non-refundable upfront payment of $50.0 million upon the execution of the Celgene License Agreement. This upfront payment represents an element of fixed consideration under the Celgene License Agreement.

The Company also evaluated as possible variable consideration the milestones and royalties discussed above. With respect to clinical and regulatory milestones, based upon the high degree of uncertainty and risk associated with these potential payments, the Company concluded that all such amounts should be fully constrained as it is not probable that a significant reversal in the amount of cumulative revenue recognized will not occur. As for royalties and sales milestones, the Company determined that the royalties and milestones relate solely to the JTX-8064 License, which is a license of intellectual property (“IP”). Accordingly, the Company did not include any potential royalty or sales milestone amounts in the initial transaction price, and the Company will not recognize revenue related to these royalties and sales milestones until the associated sales occur and relevant thresholds are met.

Based upon the above considerations, the Company concluded that the initial transaction price associated with the Celgene License Agreement consists solely of the upfront payment of $50.0 million.

Allocation of Transaction Price to Performance Obligations

As the Company’s promise to deliver the JTX-8064 License represents the sole performance obligation in the Celgene License Agreement, the entirety of the $50.0 million transaction price has been allocated to this performance obligation.

Recognition of Revenue

The Company determined that the JTX-8064 License is a functional license as the underlying IP has significant standalone functionality. In addition, the Company determined that the JTX-8064 License represents a right to use certain of the Company’s IP as it exists at a point in time. Finally, the Company determined that July 22, 2019 represents (i) the date at which the Company made available the IP to Celgene and (ii) the beginning of the period during which Celgene is able to use and benefit from its right to use the IP. Based upon these considerations, the Company recognized $50.0 million of license revenue during the three and nine months ended September 30, 2019 under the Celgene License Agreement.

Celgene Collaboration Agreement

In July 2016, the Company entered into the Celgene Collaboration Agreement. The primary goal of the collaboration was to co-develop and co-commercialize innovative biologic immunotherapies that either activate or suppress the immune system by binding to targets identified by leveraging the Company’s Translational Science Platform. Under the Celgene Collaboration Agreement, the Company granted Celgene exclusive options to develop and commercialize the Company’s lead product candidate, vopratelimab, and up to four early-stage programs, consisting of targets to be selected from a pool of certain B cell, T regulatory cell and tumor-associated macrophage targets. Additionally, the Company granted Celgene an exclusive option to develop and commercialize the Company’s product candidate JTX-4014, an anti-PD-1 antibody, which, upon exercise of such option, would have been a shared program to be used by both parties in and outside of the collaboration. The Company and Celgene terminated the Celgene Collaboration Agreement effective July 22, 2019.

The Company received a non-refundable upfront cash payment of $225.0 million in July 2016 upon the execution of the Celgene Collaboration Agreement. The Company also received $36.1 million from the sale of 10,448,100 shares of Series B-1 convertible preferred stock upon the execution of a Series B-1 Preferred Stock Purchase Agreement with Celgene, which shares converted into 2,831,463 shares of common stock upon the completion of the Company’s initial public offering (“IPO”). If Celgene had elected to exercise any of the program options, Celgene would have been required to pay the Company an option-exercise fee that varied by program. The initial research term of the collaboration was four years, which could have been extended, at Celgene’s option, annually for up to three additional years.

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Worldwide Development Cost and U.S. Operating Profit and Loss Sharing

Prior to Celgene exercising any of its options, the Company was responsible for all research and development activities under the Celgene Collaboration Agreement. Upon the exercise of each program option, the parties would have entered into a co-development and co-commercialization agreement (the “Co-Co Agreements”) or, in the case of JTX-4014, a license agreement (the “JTX-4014 License Agreement”) to govern the development and commercialization of the applicable program. As part of the Celgene Collaboration Agreement, the parties agreed to the terms of the Co-Co Agreements and the JTX-4014 License Agreement that would have been executed upon Celgene’s exercise of any option.

Milestones and Royalties

Under the Co-Co Agreements and the JTX-4014 License Agreement, Celgene would have been required to pay the Company for specified development, regulatory and commercial milestones, if achieved, across all collaboration programs. Development milestones were payable on the initiation of certain clinical trials, regulatory approval milestones were payable upon regulatory approval in the United States and outside the United States and commercial milestones were payable upon achievement of specified aggregate product sales outside the United States for each program. The Company was also eligible to receive royalties on product sales outside the United States.

Accounting Analysis

Identification of the Contract(s)

The Company assessed the Celgene Collaboration Agreement and concluded that it represented a contract with a customer within the scope of ASC 606. The Company also concluded that each of the Co-Co Agreements and the JTX-4014 License Agreement, if any had been executed, would have represented separate contracts apart from the Celgene Collaboration Agreement.

Identification of Promises and Performance Obligations

The Company determined that the Celgene Collaboration Agreement contained the following promises: (i) research and development services for vopratelimab (“Vopratelimab Research Services”), (ii) research and development services for JTX-4014 (“JTX-4014 Research Services”), (iii) research and development services associated with the Lead Program and Other Programs (“Lead and Other Programs Research Services”), (iv) research services associated with target screening (“Target Screening Services”), (v) non-transferable, limited sub-licensable and non-exclusive licenses to use the Company’s intellectual property and the Company’s rights in the collaboration intellectual property to conduct certain activities, on a program-by-program basis (the “Research Licenses”), (vi) various record-keeping and reporting requirements on a program-by-program basis, (vii) exclusivity provisions with respect to each Collaboration Exclusive Target and biologics binding to such Collaboration Exclusive Targets and (viii) establishment of and participation in a joint steering committee (the “JSC”) and a joint patent committee (the “JPC”). The Company also evaluated the six program options as well as the research term extension options and concluded that none conveyed a material right to Celgene. Accordingly, neither the program options nor the research term extension options were considered to be promises within the Celgene Collaboration Agreement.

The Company assessed the above promises and concluded that each of the Vopratelimab Research Services, JTX-4014 Research Services, Lead and Other Programs Research Services and Target Screening Services were both capable of being distinct and distinct within the context of the Celgene Collaboration Agreement. Therefore, the Company concluded that each of the Vopratelimab Research Services, JTX-4014 Research Services, Lead and Other Programs Research Services and Target Screening Services represented separate performance obligations.

The Company determined that the Research Licenses were not distinct within the context of the Celgene Collaboration Agreement as the Research Licenses allowed Celgene to evaluate the results of the research and development services performed by the Company and the right to perform its duties under the Celgene Collaboration Agreement, but did not provide Celgene with any commercialization rights. Celgene could only benefit from the Research Licenses in conjunction with the related research and development services. Accordingly, the Research Licenses related to vopratelimab, JTX-4014 and the Lead and Other Programs were combined with their respective research and development services performance obligations.

Similarly, the Company also determined that the various record-keeping and reporting requirements related to each program and the exclusivity provisions with respect to each Collaboration Exclusive Target and biologics binding to such Collaboration Exclusive Targets were not distinct within the context of the Celgene Collaboration Agreement. Accordingly, the various record-keeping and reporting requirements on a program-by-program basis and the exclusivity

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provisions with respect to each Collaboration Exclusive Target and biologics binding to such Collaboration Exclusive Targets were combined with their respective research and development services performance obligations.

Finally, the Company assessed its participation in the JSC and the JPC and concluded that it was both quantitatively and qualitatively immaterial in the context of the Celgene Collaboration Agreement. Accordingly, the Company did not assess its participation in the JSC and the JPC as a performance obligation.

Determination of Transaction Price

As noted above, the Company received a non-refundable upfront payment of $225.0 million upon the execution of the Celgene Collaboration Agreement. This upfront payment represented an element of fixed consideration under the Celgene Collaboration Agreement. Celgene also purchased 10,448,100 shares of Series B-1 convertible preferred stock (“Series B-1 Preferred Stock”) for gross proceeds of $36.1 million, which shares converted into 2,831,463 shares of common stock upon the completion of the IPO. The Company determined the shares of Series B-1 Preferred Stock were sold at fair value. Therefore, the proceeds from the issuance of Series B-1 Preferred Stock did not impact the transaction price to be allocated to the performance obligations.

The Company evaluated as possible variable consideration the milestones, royalties, development cost sharing and profit sharing provisions discussed above. The Company concluded that none of these items represented variable consideration under the Celgene Collaboration Agreement as all such amounts were dependent upon the execution of a related Co-Co Agreement or the JTX-4014 License Agreement. The Co-Co Agreements and the JTX-4014 License Agreement, if any had been executed, would have represented separate contracts apart from the Celgene Collaboration Agreement.

The Company also considered the existence of any significant financing component within the Celgene Collaboration Agreement given its upfront payment structure. Based upon this assessment, the Company concluded that any difference between the promised consideration and the cash selling price of the services under the Celgene Collaboration Agreement arose for reasons other than the provision of financing, and the difference between those amounts was proportional to the reason for the difference. Accordingly, the Company concluded that the upfront payment structure of the Celgene Collaboration Agreement did not result in the existence of a significant financing component.

Based upon the above considerations, the Company concluded that the transaction price associated with the Celgene Collaboration Agreement consisted solely of the upfront payment of $225.0 million.

Allocation of Transaction Price to Performance Obligations

The Company allocated the transaction price to each performance obligation on a relative standalone selling price basis. For all performance obligations, the Company determined the standalone selling price using estimates of the costs to perform the research and development services, including expected internal and external costs for services and supplies, adjusted to reflect a reasonable profit margin. The total estimated cost of the research and development services reflected the nature of the services to be performed and the Company’s best estimate of the length of time required to perform the services.

Recognition of Revenue

Prior to the termination of the Celgene Collaboration Agreement, the Company was recognizing revenue over time as the services related to each performance obligation were rendered. The Company concluded that an input method under ASC 606 was a representative depiction of the transfer of services under the Celgene Collaboration Agreement. The method of measuring progress towards delivery of the services incorporated actual internal and external costs incurred, relative to total internal and external costs expected to be incurred to satisfy the performance obligations. The period over which total costs were estimated reflected the Company’s estimate of the period over which it would perform the research and development services to deliver a pre-defined data package to Celgene for each program subject to an option. The Company was recognizing revenue for each performance obligation over periods ranging from twelve months to four years. Changes in estimates of total internal and external costs expected to be incurred were recognized in the period of change as a cumulative catch-up adjustment. Following the termination of the Celgene Collaboration Agreement, which was effective July 22, 2019, the Company has no further performance obligations. Accordingly, all remaining deferred revenue related to the Celgene Collaboration Agreement was recognized during the three months ended September 30, 2019.

For the three months ended September 30, 2019 and 2018, the Company recognized collaboration revenue of $69.4 million and $14.5 million, respectively, under the Celgene Collaboration Agreement related to the $225.0 million upfront

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payment received in 2016. For the nine months ended September 30, 2019 and 2018, the Company recognized collaboration revenue of $97.9 million and $45.1 million, respectively, under the Celgene Collaboration Agreement.

The following table presents changes in the Company’s contract liabilities related to the Celgene Collaboration Agreement during the nine months ended September 30, 2019 (in thousands):



	Balance as of							Balance as of
	January 1, 2019		Additions		Reductions			September 30, 2019
Contract liabilities:
Deferred revenue—related party	$	97,872	$	—	$	(97,872	)	$	—
Totals	$	97,872	$	—	$	(97,872	)	$	—

The reductions to the deferred revenue contract liability during the nine months ended September 30, 2019 were comprised of revenue recognized for research and development services performed during the period, including the recognition of the remaining transaction price upon the termination of the Celgene Collaboration Agreement. All revenue recognized during the nine months ended September 30, 2019 related to the Celgene Collaboration Agreement was included within the beginning balance of the deferred revenue contract liability.

Up through the termination of the Celgene Collaboration Agreement, the Company did not receive any option exercise, research term extension, milestone or royalty payments.

4. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is determined based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. As a basis for considering such assumptions, GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used to develop the assumptions and for measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company measures the fair value of money market funds, U.S. Treasuries and government agency securities based on quoted prices in active markets for identical securities. Investments also include corporate debt securities which are valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.

Assets measured at fair value on a recurring basis as of September 30, 2019 were as follows (in thousands):



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds, included in cash equivalents	$	57,411	$	57,411	$	—	$	—
Investments:
Corporate debt securities	46,121		—		46,121		—
U.S. Treasuries	65,340		65,340		—		—
Government agency securities	16,225		16,225		—		—
Totals	$	185,097	$	138,976	$	46,121	$	—

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Assets measured at fair value on a recurring basis as of December 31, 2018 were as follows (in thousands):



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds, included in cash equivalents	$	41,434	$	41,434	$	—	$	—
Investments:
Corporate debt securities	67,843		—		67,843		—
U.S. Treasuries	53,758		53,758		—		—
Government agency securities	32,829		32,829		—		—
Totals	$	195,864	$	128,021	$	67,843	$	—

There were no changes in valuation techniques or transfers between the fair value measurement levels during the three and nine months ended September 30, 2019 or during the year ended December 31, 2018. There were no liabilities measured at fair value on a recurring basis as of September 30, 2019 or December 31, 2018.

5. Investments

Short-term investments consist of investments with maturities greater than ninety days and less than one year from the balance sheet date. Long-term investments consist of investments with maturities of greater than one year that are not expected to be used to fund current operations. The Company classifies all of its investments as available-for-sale securities. Accordingly, these investments are recorded at fair value. Realized gains and losses, amortization and accretion of discounts and premiums are included in other income, net. Unrealized gains and losses on available-for-sale securities are included in other comprehensive income as a component of stockholders’ equity until realized.

Cash equivalents, short-term investments and long-term investments as of September 30, 2019 were comprised as follows (in thousands):



	September 30, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents and short-term investments:
Money market funds, included in cash equivalents	$	57,411	$	—	$	—		$	57,411
Corporate debt securities	40,018		8		(3		)	40,023
U.S. Treasuries	65,298		42		—			65,340
Government agency securities	12,993		33		—			13,026
Total cash equivalents and short-term investments	175,720		83		(3		)	175,800
Long-term investments:
Corporate debt securities	6,099		4		(5		)	6,098
Government agency securities	3,200		—		(1		)	3,199
Total long-term investments	9,299		4		(6		)	9,297
Total cash equivalents and investments	$	185,019	$	87	$	(9	)	$	185,097

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Cash equivalents, short-term investments and long-term investments as of December 31, 2018 were comprised as follows (in thousands):



	December 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents and short-term investments:
Money market funds, included in cash equivalents	$	41,434	$	—	$	—		$	41,434
Corporate debt securities	65,887		2		(39		)	65,850
U.S. Treasuries	53,765		1		(8		)	53,758
Government agency securities	28,866		—		(34		)	28,832
Total cash equivalents and short-term investments	189,952		3		(81		)	189,874
Long-term investments:
Corporate debt securities	2,001		—		(8		)	1,993
Government agency securities	3,989		8		—			3,997
Total long-term investments	5,990		8		(8		)	5,990
Total cash equivalents and investments	$	195,942	$	11	$	(89	)	$	195,864

As of September 30, 2019 and December 31, 2018, the aggregate fair value of securities that were in an unrealized loss position for less than twelve months was $10.1 million and $81.4 million, respectively. As of September 30, 2019, no securities were in an unrealized loss position for more than twelve months. As of December 31, 2018, the aggregate fair value of securities that were in an unrealized loss position for more than twelve months was $22.3 million. As of September 30, 2019, the Company did not intend to sell, and would not be more likely than not required to sell, the securities in an unrealized loss position before recovery of their amortized cost bases. Furthermore, the Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any securities with any other-than-temporary impairment as of September 30, 2019.

There were no realized gains and losses on available-for-sale securities during the three and nine months ended September 30, 2019. There were immaterial realized gains and losses on available-for-sale securities during the three and nine months ended September 30, 2018.

6. Restricted Cash

As of both September 30, 2019 and December 31, 2018, the Company maintained non-current restricted cash of $1.3 million. This amount is included within “Other non-current assets” in the accompanying condensed consolidated balance sheets and is comprised solely of a letter of credit required pursuant to the lease for the Company’s corporate headquarters.

The following table provides a reconciliation of cash, cash equivalents and restricted cash that sums to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):



	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
	Beginning of Period		End of Period		Beginning of Period		End of Period
Cash and cash equivalents	$	47,906	$	66,402	$	23,559	$	53,283
Restricted cash	1,270		1,270		1,270		1,270
Cash, cash equivalents and restricted cash	$	49,176	$	67,672	$	24,829	$	54,553

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7. Accrued Expenses

Accrued expenses as of September 30, 2019 and December 31, 2018 were comprised as follows (in thousands):



	September 30,		December 31,
	2019		2018
Employee compensation and benefits	$	3,782	$	4,063
External research and professional services	3,019		2,796
Lab consumables and other	231		93
Total accrued expenses	$	7,032	$	6,952

8. Common Stock and Preferred Stock

Common Stock

The Company is authorized to issue 160,000,000 shares of common stock. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by the board of directors.

Preferred Stock

The Company is authorized to issue 5,000,000 shares of undesignated preferred stock in one or more series. As of September 30, 2019, no shares of preferred stock were issued or outstanding.

Shares Reserved for Future Issuance

As of September 30, 2019 and December 31, 2018, the Company had reserved for future issuance the following number of shares of common stock (in thousands):



	September 30,	December 31,
	2019	2018
Shares reserved for vesting of restricted stock awards	2	7
Shares reserved for vesting of restricted stock units	461	371
Shares reserved for exercises of outstanding stock options	5,711	5,023
Shares reserved for future issuance under the 2017 Stock Option and Incentive Plan	1,375	1,114
Total shares reserved for future issuance	7,549	6,515

9. Stock-based Compensation

2013 Stock Option and Grant Plan

In February 2013, the board of directors adopted and the Company’s stockholders approved the 2013 Stock Option and Grant Plan (the “2013 Plan”), as amended and restated, under which it could grant incentive stock options (“ISOs”), non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to eligible employees, officers, directors, and consultants. The 2013 Plan was subsequently amended in January 2015, April 2015, July 2015, March 2016 and October 2016 to allow for the issuance of additional shares of common stock.

2017 Stock Option and Incentive Plan

In January 2017, the board of directors adopted and the Company’s stockholders approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which became effective immediately prior to the effectiveness of the IPO. Upon the adoption of the 2017 Plan, no further awards will be granted under the 2013 Plan.

The 2017 Plan provides for the grant of ISOs, non-qualified stock options, RSAs, RSUs, stock appreciation rights and other stock-based awards. The Company’s employees, officers, directors and consultants and advisors are eligible to receive awards under the 2017 Plan. The terms of awards, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2017 Plan.

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The Company initially registered on Form S-8 1,753,758 shares of common stock under the 2017 Plan, which was comprised of (i) 1,510,000 shares of common stock reserved for issuance under the 2017 Plan, plus (ii) 243,758 shares of common stock originally reserved for issuance under the 2013 Plan that became available for issuance under the 2017 Plan upon the completion of the Company’s IPO. The 2017 Plan also provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2017 Plan on January 1, 2018 and each January 1^st thereafter. The number of shares added each year will be equal to the lesser of (i) 4% of the outstanding shares on the immediately preceding December 31^st or (ii) such amount as determined by the compensation committee of the board of directors. Effective January 1, 2018 and 2019, 1,290,609 and 1,317,935 additional shares, respectively, were automatically added to the shares authorized for issuance under the 2017 Plan.

As of September 30, 2019, there were 1,375,375 shares available for future issuance under the 2017 Plan.

2017 Employee Stock Purchase Plan

In January 2017, the board of directors adopted and the Company’s stockholders approved the 2017 Employee Stock Purchase Plan (the “2017 ESPP”), which became effective upon the closing of the IPO. The Company initially reserved 302,000 shares of common stock for future issuance under the 2017 ESPP. The 2017 ESPP also provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2017 ESPP on January 1, 2018 and each January 1^st thereafter through January 1, 2027. The number of shares added each year will be equal to the lesser of (i) 1% of the outstanding shares on the immediately preceding December 31^st,(ii) 603,000 shares or (iii) such amount as determined by the compensation committee of the board of directors. Effective January 1, 2018 and 2019, 322,652 and 329,483 additional shares, respectively, were automatically added to the shares authorized for issuance under the 2017 ESPP. No offering periods under the 2017 ESPP had been initiated as of September 30, 2019.

Stock-based Compensation Expense

Total stock-based compensation expense recognized in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Research and development	$	1,096	$	1,055	$	3,290	$	3,417
General and administrative	1,193		1,280		4,054		3,546
Total stock-based compensation expense	$	2,289	$	2,335	$	7,344	$	6,963

RSA Activity

Pursuant to RSA agreements issued under the terms of the 2013 Plan, the Company, at its discretion, has the option to repurchase unvested shares underlying RSAs at the initial purchase price if the employees or non-employees terminate their service relationships with the Company. The shares underlying RSAs are recorded in stockholders’ equity as they vest.

The following table summarizes RSA activity for the nine months ended September 30, 2019 (in thousands, except per share amounts):



	RSAs		Weighted-Average Grant Date Fair Value per Share
Unvested as of December 31, 2018	7		$	—
Issued	—		$	—
Vested	(5	)	$	—
Repurchased	—		$	—
Unvested as of September 30, 2019	2		$	—

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The aggregate fair value of RSAs that vested during each of the three months ended September 30, 2019 and 2018, based upon the fair values of the stock underlying the RSAs on the day of vesting, was less than $0.1 million. The aggregate fair value of RSAs that vested during each of the nine months ended September 30, 2019 and 2018, based upon the fair values of the stock underlying the RSAs on the day of vesting, was less than $0.1 million and $0.1 million, respectively.

RSU Activity

The Company has also granted RSUs to its employees under the 2017 Plan. The following table summarizes RSU activity for the nine months ended September 30, 2019 (in thousands, except per share amounts):



	RSUs		Weighted-Average Grant Date Fair Value per Share
Unvested as of December 31, 2018	371		$	8.02
Issued	354		$	4.40
Vested	(157	)	$	8.02
Cancelled	(107	)	$	6.41
Unvested as of September 30, 2019	461		$	5.62

The aggregate fair value of RSUs that vested during each of the three and nine months ended September 30, 2019, based upon the fair values of the stock underlying the RSUs on the day of vesting, was $0.7 million. No RSUs vested during the three or nine months ended September 30, 2018.

As of September 30, 2019, there was unrecognized stock-based compensation expense related to unvested RSUs of $2.1 million, which the Company expects to recognize over a weighted-average period of approximately 1.8 years.

Stock Option Activity

The fair value of stock options granted during the three and nine months ended September 30, 2019 and 2018 was calculated on the date of grant using the following weighted-average assumptions:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Risk-free interest rate	1.7	%	2.9	%	2.4	%	2.7	%
Expected dividend yield	—	%	—	%	—	%	—	%
Expected term (in years)	6.1		6.1		6.0		6.0
Expected volatility	70.3	%	66.2	%	69.3	%	65.1	%

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended September 30, 2019 and 2018 was $2.90 per share and $4.59 per share, respectively. The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2019 and 2018 was $2.88 per share and $13.12 per share, respectively.

The following table summarizes stock option activity during the nine months ended September 30, 2019 (in thousands, except per share amounts):



	Options		Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2018	5,023		$	10.23	7.6	$	3,133
Granted	1,195		$	4.56
Exercised	(121	)	$	2.84
Cancelled	(386	)	$	14.20
Outstanding at September 30, 2019	5,711		$	8.93	7.2	$	2,976
Exercisable at September 30, 2019	3,447		$	7.16	6.3	$	2,976

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The aggregate intrinsic value of stock options exercised during the three months ended September 30, 2019 and 2018 was $0.1 million and $0.6 million, respectively. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2019 and 2018 was $0.2 million and $5.0 million, respectively.

As of September 30, 2019, there was unrecognized stock-based compensation expense related to unvested stock options of $14.6 million, which the Company expects to recognize over a weighted-average period of approximately 2.3 years.

10. Related-party Transactions

In July 2019, the Company entered into the Celgene License Agreement under which it received a non-refundable upfront payment of $50.0 million from Celgene. In July 2016, the Company entered into the Celgene Collaboration Agreement and a Series B-1 Preferred Stock Purchase Agreement with Celgene. Under the Celgene Collaboration Agreement, the Company received a non-refundable upfront payment of $225.0 million. Under the Series B-1 Preferred Stock Purchase Agreement, Celgene purchased 10,448,100 shares of Series B-1 convertible preferred stock for $36.1 million. These shares of Series B-1 convertible preferred stock converted into 2,831,463 shares of common stock upon the completion of the IPO. In addition, an affiliate of Celgene purchased 625,000 shares of the Company’s common stock in the IPO at the public offering price of $16.00 per share for a total of $10.0 million.

11. Corporate Headquarters Lease

In November 2016, the Company entered into an operating lease agreement (the “Corporate Headquarters Lease”) to occupy 51,000 square feet of laboratory and office space in Cambridge, Massachusetts. This facility serves as the Company’s corporate headquarters. The lease term began on November 1, 2016 and extends to March 31, 2025. The Company has the option to extend the lease term for one consecutive five-year period, at the market rate, by giving the landlord written notice of its election to exercise the extension at least twelve months prior to the original expiration of the lease term. The Company provided the landlord with a security deposit in the form of a letter of credit in the amount of $1.3 million, which is recorded as restricted cash in other non-current assets in the condensed consolidated balance sheets. The Corporate Headquarters Lease also provided the Company with a tenant improvement allowance of $0.5 million. Leasehold improvements related to this facility are being amortized over the shorter of their useful life or the lease term.

Accounting under ASC 842

As a result of the adoption of ASC 842 on January 1, 2019, the Company has recorded a right-of-use asset and a corresponding lease liability on the condensed consolidated balance sheets as of September 30, 2019. As there is no rate implicit in the Corporate Headquarters Lease, the Company estimated its incremental borrowing rate based upon a synthetic credit rating and yield curve analysis. Based upon this analysis, the Company calculated a discount rate of 8.0% for the Corporate Headquarters Lease.

As of September 30, 2019, the remaining minimum rental payments due under the Corporate Headquarters Lease were as follows (in thousands):



	Amount
Remainder of 2019	$	1,069
2020	4,380
2021	4,505
2022	4,633
2023	4,764
2024 and thereafter	6,143
Total remaining minimum rental payments	25,494
Less: effect of discounting	(5,039		)
Total lease liability	$	20,455

The Company recorded operating lease expense for the Corporate Headquarters Lease of $1.1 million and $3.2 million for the three and nine months ended September 30, 2019, respectively, pursuant to ASC 842. As of September 30, 2019, the remaining lease term of the Corporate Headquarters Lease was 5.5 years.

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Accounting under ASC 840

Prior to the adoption of ASC 842, and pursuant to the legacy guidance within ASC 840, the Company recorded rent expense on a straight-line basis through the end of the lease term and also recorded deferred rent on the condensed consolidated balance sheets. The Company recorded the tenant improvement allowance as a deferred lease incentive and was amortizing the deferred lease incentive through a reduction of rent expense ratably over the lease term.

As of December 31, 2018, the future minimum lease payments due under the Corporate Headquarters Lease were as follows (in thousands):



	Minimum Lease Payments
2019	$	4,260
2020	4,380
2021	4,505
2022	4,633
2023	4,764
2024 and thereafter	6,142
Total future minimum lease payments	$	28,684

The Company recorded total rent expense for the Corporate Headquarters Lease of $1.0 million and $3.0 million for the three and nine months ended September 30, 2018, respectively, pursuant to ASC 840.

12. Net Income (Loss) per Share

Basic net income (loss) per share is calculated based upon the weighted-average number of common shares outstanding during the period, excluding outstanding stock options and RSAs and RSUs that have been issued but are not yet vested. Diluted net income (loss) per share is calculated based upon the weighted-average number of common shares outstanding during the period plus the dilutive impact of weighted-average common equivalent shares outstanding during the period. The potentially dilutive shares of common stock resulting from the assumed exercise of outstanding stock options and the assumed vesting of RSAs and RSUs were determined under the treasury stock method.

The following table summarizes the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019		2018
Net income (loss)	$	98,860	$	(7,637	)	$	79,490	$	(25,339	)

Weighted-average common shares outstanding, basic	33,112		32,641			33,015		32,462
Dilutive effect of outstanding stock options	991		—			1,093		—
Dilutive effect of unvested RSAs	—		—			1		—
Dilutive effect of unvested RSUs	38		—			51		—
Weighted-average common shares outstanding, diluted	34,141		32,641			34,160		32,462

Net income (loss) per share, basic	$	2.99	$	(0.23	)	$	2.41	$	(0.78	)
Net income (loss) per share, diluted	$	2.90	$	(0.23	)	$	2.33	$	(0.78	)

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The following weighted-average amounts were excluded from the calculation of diluted net income (loss) per share because their effect would be anti-dilutive (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Outstanding stock options	4,350	5,648	3,772	5,668
Unvested RSAs	2	9	—	11
Unvested RSUs	11	206	314	70
Total	4,363	5,863	4,086	5,749

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

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2018 that was filed with the United States Securities and Exchange Commission, or the SEC, on March 6, 2019. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled “Cautionary Note Regarding Forward-Looking Statements and Industry Data” and in the section entitled “Risk Factors” in Part II, Item 1A.

Overview

We are a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients. We have developed a suite of integrated technologies that comprise our Translational Science Platform, enabling us to comprehensively interrogate the cellular and molecular composition of tumors. By focusing on specific cell types, both immune and non-immune, within tumors, we can prioritize targets and then identify related biomarkers designed to match the right therapy to the right patient.

Our most advanced product candidate, vopratelimab, is a clinical-stage monoclonal antibody that binds to and activates the Inducible T cell CO-Stimulator, or ICOS, a protein on the surface of certain T cells commonly found in many solid tumors.

We are currently conducting a Phase 2 clinical trial, which we refer to as EMERGE, of vopratelimab in combination with ipilimumab, an anti-CTLA-4 antibody, in PD-1/PD-L1 inhibitor experienced patients in two tumor types, non-small cell lung cancer and urothelial cancer. Enrollment in EMERGE commenced in June 2019. EMERGE is the first of the additional Phase 2 clinical studies of vopratelimab we plan to conduct based on the foundational relationship between the ICOS hi CD4 T cells and potential clinical benefit. EMERGE also includes new dosing schedules and a novel combination sequence informed by our understanding of the kinetics of induction of ICOS hi CD4 T cells by ipilimumab and their sustained activation by vopratelimab. The primary endpoint is overall response rate and secondary endpoints include safety, duration of response, progression free survival and overall survival. Additional assessments will include close monitoring of ICOS hi CD4 T cell emergence and a range of other biomarkers, including exploratory assessments of potential predictive biomarkers. We expect to report EMERGE data including preliminary efficacy and biomarker relationships to clinical outcomes for up to 80 patients in 2020. Beyond EMERGE, we are in the planning stages of additional Phase 2 clinical studies of vopratelimab. This includes a patient selection study using a predictive biomarker, identified through our reverse translational efforts, that is intended to identify patients who are more likely to benefit from the combination of vopratelimab and a PD-1 inhibitor.

Prior to our EMERGE clinical trial, vopratelimab was assessed in a Phase 1/2 clinical trial that we refer to as ICONIC. In the ICONIC clinical trial, vopratelimab was observed to be safe and well-tolerated, both alone and in combination with nivolumab, an anti-PD-1 antibody. At the June 2018 annual meeting of the American Society of Clinical Oncology, we reported Response Evaluation Criteria in Solid Tumors, or RECIST, responses and other tumor reductions as determined by investigator assessment that were associated with an ICOS pharmacodynamic biomarker. We subsequently reported that these responses were durable, lasting six or more months and that all responders, as determined by investigator assessments, remained on study for more than one year. In addition, three of four responders now have target lesion complete responses, as determined by investigator assessments. ICONIC also included a dose-escalation portion to assess vopratelimab in combination with pembrolizumab, an anti-PD-1 antibody, and in combination with ipilimumab. In this dose-escalation portion of ICONIC, vopratelimab was observed to be safe and well-tolerated in combination with each of ipilimumab and pembrolizumab.

Our second product candidate, JTX-4014, is a clinical-stage anti-PD-1 antibody that we are developing primarily for potential use in combination with future product candidates, as we believe that combination therapy has the potential to be a mainstay of cancer immunotherapy. We have completed enrollment in a Phase 1 clinical trial of JTX-4014 monotherapy that was designed to assess safety, and we have determined the recommended Phase 2 dose. We plan to present safety and efficacy data from this Phase 1 clinical trial at the November 2019 annual meeting of the Society for Immunotherapy of Cancer. Based on the results of this clinical trial, we plan to use JTX-4014 in combination with our other product candidates, including in combination with vopratelimab in our upcoming predictive biomarker clinical study.

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Our third product candidate, JTX-8064, was exclusively licensed to Celgene Corporation, or Celgene, in July 2019. JTX-8064 is an antibody that binds to LILRB2, which is a cell surface receptor expressed on macrophages. JTX-8064 is the first tumor-associated macrophage candidate to emerge from our Translational Science Platform. We believe therapies targeting these innate immune cells may have the potential to benefit patients with tumors that are less likely to respond to existing T cell-focused approaches.

Beyond our product candidates, we continue to advance and build our discovery pipeline. We are discovering and developing next-generation immunotherapies by leveraging our Translational Science Platform to systematically and comprehensively interrogate cell types within the tumor microenvironment. Our broad discovery pipeline includes multiple programs targeting T-regulatory cells, macrophages and stromal cells. We believe that the use of our Translational Science Platform to efficiently identify novel immuno-oncology targets and advance them from discovery to investigational new drug application, or IND, stage is a sustainable approach that we plan to continually apply across our broad discovery pipeline and target selection process. We expect to select a new development candidate and commence IND-enabling studies later in 2019.

On July 22, 2019, we entered into a License Agreement, or the Celgene License Agreement, with Celgene. Pursuant to the Celgene License Agreement, we granted to Celgene a worldwide and exclusive license to develop, manufacture and commercialize JTX-8064 and certain derivatives thereof (an Initial Licensed Compound), as well as any antibody, other than the Initial Licensed Compound, or other biologic controlled by us as of July 22, 2019 that is specifically directed to the LILRB2 receptor (a Licensed Compound).

Under the terms of the Celgene License Agreement, Celgene paid us a one-time, non-refundable upfront payment of $50.0 million in July 2019. We are entitled to receive payments from Celgene upon the achievement of specified clinical, regulatory and sales milestones with respect to the first Initial Licensed Product to achieve such milestones, including potential clinical and regulatory milestone payments up to an aggregate total of $180.0 million and potential sales milestone payments up to an aggregate total of $300.0 million. We are eligible to receive royalties at percentage rates ranging from mid-single-digits to low-double-digits, based on future annual net sales of the Initial Licensed Products, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis.

In July 2016, we entered into a Master Research and Collaboration Agreement, or the Celgene Collaboration Agreement, and a Series B-1 Preferred Stock Purchase Agreement with Celgene. Under the terms of these agreements, we received a $225.0 million upfront cash payment and $36.1 million from the sale of 10,448,100 shares of our Series B-1 convertible preferred stock, which shares converted into 2,831,463 shares of common stock upon the completion of our initial public offering, or IPO, in 2017. We terminated the Celgene Collaboration Agreement effective July 22, 2019.

Since inception, our operations have focused on organizing and staffing our company, business planning, raising capital, developing our Translational Science Platform and conducting research, preclinical studies and clinical trials. We do not have any products approved for sale. We are subject to a number of risks comparable to those of other similar companies, including dependence on key individuals; the need to develop commercially viable products; competition from other companies, many of which are larger and better capitalized; and the need to obtain adequate additional financing to fund the development of our products. We have funded our operations primarily through proceeds received from private placements of our convertible preferred stock, proceeds received from our IPO, the upfront payment of $225.0 million received in connection with the Celgene Collaboration Agreement and the upfront payment of $50.0 million received in connection with the Celgene License Agreement.

Due to our significant research and development expenditures, we have accumulated substantial losses since our inception. As of September 30, 2019, we had an accumulated deficit of $84.5 million. We expect to recognize net income for the year ended December 31, 2019 as a result of revenue recognized under the Celgene License Agreement and the recognition of the remaining deferred revenue under the Celgene Collaboration Agreement. However, we expect to incur substantial losses in the future as we continue to advance our programs.

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Financial Operations Overview

Revenue

For the nine months ended September 30, 2019, we recognized $147.9 million of license and collaboration revenue. This was comprised of $50.0 million of license revenue recognized under the Celgene License Agreement and $97.9 million of collaboration revenue recognized under the Celgene Collaboration Agreement related to the $225.0 million upfront payment received in 2016. The Celgene Collaboration Agreement was terminated effective July 22, 2019, and all remaining deferred revenue was recognized as we have no further performance obligations.

In the future, we may generate revenue from product sales or collaboration agreements, strategic alliances and licensing arrangements, including the Celgene License Agreement. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of license fees, milestones, reimbursement of costs incurred and other payments, if any, and product sales, to the extent any products are successfully commercialized. If we or third parties fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

Operating Expenses

Research and Development Expenses

Research and development expenses represent costs incurred by us for the discovery, development and manufacture of our current and future product candidates and include: external research and development expenses incurred under arrangements with third parties, including academic and non-profit institutions, contract research organizations, contract manufacturing organizations and consultants; salaries and personnel-related costs, including non-cash stock-based compensation expense; license fees to acquire in-process technology and other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.

We use our employee and infrastructure resources across multiple research and development programs directed toward developing our Translational Science Platform and for identifying, testing and developing product candidates. We manage certain activities such as contract research and manufacture of our product candidates and discovery programs through our third-party vendors.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales of our product candidates. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of:


•	addition and retention of key research and development personnel;


•	establishing an appropriate safety profile with IND-enabling toxicology studies;


•	the cost to acquire or make therapies to study in combination with our immunotherapies;


•	successful enrollment in and completion of clinical trials;


•	establishing agreements with third-party contract manufacturing organizations for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved;


•	receipt of marketing approvals from applicable regulatory authorities;


•	commercializing products, if and when approved, whether alone or in collaboration with others;


•	the cost to develop complementary diagnostics and/or companion diagnostics as needed for each of our development programs;


•	the costs associated with the development of any additional product candidates we acquire through third-party collaborations or identify through our Translational Science Platform;


•	the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;


•	obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our products if and when approved; and


•	continued acceptable safety profiles of the products following approval.

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A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We plan to increase our research and development expenses for the foreseeable future as we advance our product candidates through clinical trials and continue the enhancement of our Translational Science Platform and the progression of our pipeline.

Due to the inherently unpredictable nature of preclinical and clinical development, we do not allocate all of our internal research and development expenses on a program-by-program basis as they primarily relate to personnel and lab consumables costs that are deployed across multiple programs under development. Our research and development expenses also include external costs, which we do track on a program-by-program basis following the program’s nomination as a development candidate. We began incurring such external costs for vopratelimab in 2015, JTX-4014 in 2016 and JTX-8064 in 2017.

Included below are external research and development and external clinical and regulatory costs for vopratelimab, JTX-4014, JTX-8064 and our pre-development candidates:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Vopratelimab	$	3,757	$	5,013	$	11,286	$	15,777
JTX-4014	329		814		2,242		5,491
JTX-8064	517		1,047		5,225		1,604
Pre-development candidates	292		548		546		1,131
Total external research and development and clinical and regulatory costs	$	4,895	$	7,422	$	19,299	$	24,003

Research and development activities account for a significant portion of our operating expenses. As we continue to implement our business strategy, we expect our research and development expenses to increase over the next several years. We expect that these expenses will increase as we:


•	complete our Phase 1/2 ICONIC clinical trial of vopratelimab;


•	continue our Phase 2 EMERGE clinical trial of vopratelimab;


•	complete our Phase 1 clinical trial of JTX-4014;


•	initiate additional clinical trials of vopratelimab and JTX-4014;


•	continue to identify and develop potential predictive biomarkers and complementary diagnostics and/or companion diagnostics for our product candidates; and


•	continue to develop and enhance our Translational Science Platform and advance our pipeline of immunotherapy programs and our early research activities into later stages of development.

Product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

General and Administrative Expenses

General and administrative expenses consist of salaries and personnel-related costs, including non-cash stock-based compensation expense, for our personnel in executive, business development, legal, finance and accounting, human resources and other administrative functions, consulting fees, facility costs not otherwise included in research and development expenses, fees paid for accounting and tax services, insurance expenses and non-litigation legal costs. Non-litigation legal costs include general corporate legal fees, patent legal fees and related costs. We anticipate that our general and administrative expenses will increase in the future to support our continued operations.

Other Income, Net

Other income, net, consists primarily of interest and investment income on our cash, cash equivalents and investments.

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Results of Operations

Comparison of the Three Months Ended September 30, 2019 and 2018

The following table summarizes our results of operations for the three months ended September 30, 2019 and 2018:



	Three Months Ended September 30,
(in thousands)	2019		2018			$ Change
Revenue:
License and collaboration revenue—related party	$	119,445	$	14,528		$	104,917
Operating expenses:
Research and development	15,115		16,751			(1,636		)
General and administrative	6,483		6,517			(34		)
Total operating expenses	21,598		23,268			(1,670		)
Operating income (loss)	97,847		(8,740		)	106,587
Other income, net	1,025		1,103			(78		)
Income (loss) before provision for income taxes	98,872		(7,637		)	106,509
Provision for income taxes	12		—			12
Net income (loss)	$	98,860	$	(7,637	)	$	106,497

License and Collaboration Revenue

License and collaboration revenue for the three months ended September 30, 2019 was comprised of $50.0 million of license revenue recognized under the Celgene License Agreement and $69.4 million of collaboration revenue related to the remaining recognition of the upfront payment we received in July 2016 under the Celgene Collaboration Agreement. The Celgene Collaboration Agreement was terminated effective July 22, 2019, at which time all remaining deferred revenue was recognized. License and collaboration revenue for the three months ended September 30, 2018 was solely related to the recognition of the upfront payment we received under the Celgene Collaboration Agreement. Prior to the termination of the Celgene Collaboration Agreement, we were recognizing revenue over time as the services related to each performance obligation were rendered.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended September 30, 2019 and 2018:



	Three Months Ended September 30,
(in thousands)	2019		2018		$ Change
Employee compensation	$	6,021	$	5,113	$	908
External research and development	1,052		3,284		(2,232		)
External clinical and regulatory	3,843		4,138		(295		)
Lab consumables	1,838		1,826		12
Consulting research	214		465		(251		)
Facility costs	1,488		1,457		31
Other research	659		468		191
Total research and development expenses	$	15,115	$	16,751	$	(1,636	)

Research and development expenses decreased by $1.6 million from $16.8 million for the three months ended September 30, 2018 to $15.1 million for the three months ended September 30, 2019. The decrease in research and development expenses was primarily due to $2.2 million of decreased external research and development costs attributable to vopratelimab manufacturing expenses and JTX-4014 IND-enabling expenses incurred during the three months ended September 30, 2018. This decrease was partially offset by $0.9 million of increased employee compensation costs primarily arising from increased personnel.

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General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended September 30, 2019 and 2018:



	Three Months Ended September 30,
(in thousands)	2019		2018		$ Change
Employee compensation	$	2,950	$	3,166	$	(216	)
Professional services	1,278		1,298		(20		)
Facility costs	1,157		1,137		20
Other	1,098		916		182
Total general and administrative expenses	$	6,483	$	6,517	$	(34	)

General and administrative expenses were consistent for the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.

Other Income, net

Other income, net, decreased by $0.1 million from the three months ended September 30, 2018 to the three months ended September 30, 2019.

Comparison of the Nine Months Ended September 30, 2019 and 2018

The following table summarizes our results of operations for the nine months ended September 30, 2019 and 2018:



	Nine Months Ended September 30,
(in thousands)	2019		2018			$ Change
Revenue:
License and collaboration revenue—related party	$	147,872	$	45,101		$	102,771
Operating expenses:
Research and development	50,525		53,408			(2,883		)
General and administrative	20,998		19,842			1,156
Total operating expenses	71,523		73,250			(1,727		)
Operating income (loss)	76,349		(28,149		)	104,498
Other income, net	3,177		2,810			367
Income (loss) before provision for income taxes	79,526		(25,339		)	104,865
Provision for income taxes	36		—			36
Net income (loss)	$	79,490	$	(25,339	)	$	104,829

License and Collaboration Revenue

License and collaboration revenue for the nine months ended September 30, 2019 was comprised of $50.0 million of license revenue recognized under the Celgene License Agreement and $97.9 million of collaboration revenue related to the remaining recognition of the upfront payment we received in July 2016 under the Celgene Collaboration Agreement. The Celgene Collaboration Agreement was terminated effective July 22, 2019, at which time all remaining deferred revenue was recognized. License and collaboration revenue for the nine months ended September 30, 2018 was solely related to the recognition of the upfront payment we received under the Celgene Collaboration Agreement. Prior to the termination of the Celgene Collaboration Agreement, we were recognizing revenue over time as the services related to each performance obligation were rendered.

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Research and Development Expenses

The following table summarizes our research and development expenses for the nine months ended September 30, 2019 and 2018:



	Nine Months Ended September 30,
(in thousands)	2019		2018		$ Change
Employee compensation	$	18,720	$	16,600	$	2,120
External research and development	7,423		11,616		(4,193		)
External clinical and regulatory	11,876		12,387		(511		)
Lab consumables	5,324		5,844		(520		)
Consulting research	778		1,212		(434		)
Facility costs	4,368		4,270		98
Other research	2,036		1,479		557
Total research and development expenses	$	50,525	$	53,408	$	(2,883	)

Research and development expenses decreased by $2.9 million from $53.4 million for the nine months ended September 30, 2018 to $50.5 million for the nine months ended September 30, 2019. The decrease in research and development expenses was primarily due to $4.2 million of decreased external research and development costs attributable to vopratelimab manufacturing expenses and JTX-4014 IND-enabling expenses incurred during the nine months ended September 30, 2018, offset by increased JTX-8064 IND-enabling expenses incurred during the nine months ended September 30, 2019. This decrease in external research and development costs was partially offset by $2.1 million of increased employee compensation costs primarily attributable to increased personnel.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2019 and 2018:



	Nine Months Ended September 30,
(in thousands)	2019		2018		$ Change
Employee compensation	$	10,271	$	9,275	$	996
Professional services	3,721		4,327		(606		)
Facility costs	3,437		3,362		75
Other	3,569		2,878		691
Total general and administrative expenses	$	20,998	$	19,842	$	1,156

General and administrative expenses increased by $1.2 million from $19.8 million for the nine months ended September 30, 2018 to $21.0 million for the nine months ended September 30, 2019. The increase in general and administrative expenses was attributable to $1.0 million of increased employee compensation costs arising from increased personnel, including $0.5 million of increased stock-based compensation expense, and $0.7 million of increased other general and administrative costs to support our operations. These increases were partially offset by $0.6 million of decreased professional services costs.

Other Income, net

Other income, net, increased by $0.4 million from $2.8 million for the nine months ended September 30, 2018 to $3.2 million for the nine months ended September 30, 2019. The increase in other income, net is attributable to increased interest and investment income on our cash, cash equivalents and investments as a result of an overall increased rate of return.

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Liquidity and Capital Resources

Sources of Liquidity

We have funded our operations primarily through gross proceeds from private placements of our convertible preferred stock of $139.1 million, net proceeds from our IPO of $106.4 million, a non-refundable upfront payment of $225.0 million received in connection with the Celgene Collaboration Agreement and a non-refundable upfront payment of $50.0 million received in connection with the Celgene License Agreement. As of September 30, 2019, we had cash, cash equivalents and investments of $185.1 million.

Funding Requirements

Our plan of operation is to continue implementing our business strategy, the research and development of our current product candidates, our preclinical development activities, the expansion of our research pipeline and the enhancement of our internal research and development capabilities. Due to the inherently unpredictable nature of preclinical and clinical development and given the early stage of our programs and product candidates, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our products, if and when approved. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast which products, if and when approved, may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Due to our significant research and development expenditures, we have accumulated substantial losses since inception. As of September 30, 2019, we had an accumulated deficit of $84.5 million. We expect to recognize net income for the year ended December 31, 2019 as a result of revenue recognized under the Celgene License Agreement and the recognition of the remaining deferred revenue under the Celgene Collaboration Agreement. However, we expect to incur substantial losses in the future as we continue to advance our programs. Based on our research and development plans, we expect that our existing cash, cash equivalents and investments of $185.1 million as of September 30, 2019 will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2021. However, we have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our capital resources sooner than we expect. The timing and amount of our operating expenditures will depend largely on:


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


•	the cost to access, acquire or develop therapies to study in combination with our immunotherapies;


•	successful enrollment in and completion of clinical trials;


•	the cost to develop complementary diagnostics and/or companion diagnostics as needed for each of our development programs;


•	our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and, if our product candidate is approved, commercial manufacturing;


•	the costs associated with the development of any additional product candidates we acquire through acquisition, third-party collaborations or identify through our Translational Science Platform;


•	our ability to maintain our current research and development programs and enhancement of our Translational Science Platform;


•	addition and retention of key research and development personnel;


•	our efforts to enhance operational, financial and information management systems, and hire additional personnel, including personnel to support development of our product candidates;


•	the legal patent costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;


•	the costs and ongoing investments to in-license or acquire additional technologies, including the in-license of intellectual property related to our potential product candidates, the effectiveness of which is subject to certain conditions; and

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•	the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any option and milestone payments thereunder.

A change in the outcome of any of these or other 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. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

In addition to the variables described above, if and when any of our product candidates successfully complete development, we expect to incur substantial additional costs associated with regulatory filings, marketing approval, post-marketing requirements, maintaining our intellectual property rights, and regulatory protection, in addition to other costs. We cannot reasonably estimate these costs at this time.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings, collaborations, licensing arrangements and strategic alliances. We currently do not have a credit facility or committed sources of capital. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interests of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, or at all. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2019 and 2018:



	Nine Months Ended September 30,
(in thousands)	2019			2018
Net cash (used in) provided by:
Operating activities	$	(11,530	)	$	(44,175	)
Investing activities	29,681			72,600
Financing activities	345			1,299
Net increase in cash, cash equivalents and restricted cash	$	18,496		$	29,724

Cash Used in Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2019 was $11.5 million, compared to net cash used in operating activities of $44.2 million for the nine months ended September 30, 2018. Cash used in operating activities decreased by $32.6 million primarily due to the $50.0 million non-refundable upfront payment received under the Celgene License Agreement during the nine months ended September 30, 2019. We received $16.8 million of state and federal income tax refunds during the nine months ended September 30, 2018.

Cash Provided by Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2019 was $29.7 million, compared to net cash provided by investing activities of $72.6 million for the nine months ended September 30, 2018. Cash provided by investing activities decreased by $42.9 million primarily due to decreased proceeds from sales and maturities of investments, partially offset by decreased purchases of investments, during the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. Proceeds received from sales and maturities of investments were either re-invested or used to fund operations.

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Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2019 was $0.3 million, compared to net cash provided by financing activities of $1.3 million for the nine months ended September 30, 2018. Cash provided by financing activities decreased by $1.0 million due to a decrease in proceeds received from the exercise of stock options during the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates which include, but are not limited to, estimates related to revenue recognized under the Celgene Collaboration Agreement (including estimates of internal and external costs expected to be incurred to satisfy performance obligations), the determination of the discount rate utilized in the initial application of ASC Topic 842, Leases, accrued expenses, stock-based compensation expense and income taxes. We base our estimates on historical experience and other market specific or other relevant assumptions we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

There were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 6, 2019.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, or the Exchange Act, and are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2019, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q 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 currently a party to any material legal proceedings.

Item 1A. Risk Factors

Our business is subject to numerous risks. The following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in this Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission, or the SEC, press releases, communications with investors, and oral statements. Actual future results may differ materially from those anticipated in our forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Risks Related to Product Development and Regulatory Process

We are early in our development efforts. Our product candidates vopratelimab and JTX-4014 are clinical-stage programs and other future product candidates are in preclinical or earlier stages of development. If we are unable to advance our product candidates through clinical development, advance other future product candidates to clinical development or obtain marketing approval and ultimately commercialize any product candidates or experience significant delays in doing so, our business will be materially harmed.

We are early in our development efforts: vopratelimab and JTX-4014 are our only clinical-stage product candidates, and other future product candidates are in preclinical or earlier stages of development. We have invested substantially all of our efforts and financial resources in the identification of targets and early stage, preclinical and clinical development of monoclonal antibodies, including the development of vopratelimab, JTX-4014 and JTX-8064.

Our other efforts have been invested in early stage, preclinical and earlier development programs. Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our current and/or future product candidates, which may never occur. We currently generate no revenues from sales of any products, and we may never be able to develop or commercialize a marketable product. In July 2019, we granted an exclusive license for the development, manufacture and commercialization of JTX-8064 to Celgene Corporation, or Celgene, and we may never receive any payments from Celgene for the achievement of research and development or commercial milestones, or royalties from potential future sales of JTX-8064. Vopratelimab, JTX-4014 and future product candidates will require additional preclinical and clinical development, management of clinical, preclinical and manufacturing activities, marketing approval in the United States and other markets, demonstrating effectiveness to pricing and reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales. In addition, our product development programs contemplate the development of complementary diagnostics and/or companion diagnostics, which are assays or tests to identify an appropriate patient population. Complementary diagnostics and companion diagnostics are subject to regulation as medical devices and, if there are no adequate complementary diagnostics and/or companion diagnostics currently on the market for our product candidates, we may elect to advance a diagnostic and that diagnostic would have to be approved or cleared for marketing by the Food and Drug Administration, or FDA, or comparable foreign regulatory agencies before we could commercialize it. The success of our current and future product candidates will depend on several factors, including the following:


•	successful completion of preclinical studies and advancement to clinical development of our future product candidates;


•	acceptance of investigational new drug applications, or INDs, for our planned clinical trials or future clinical trials;


•	successful enrollment and completion of clinical trials;


•	demonstration of a benefit/risk profile for our current and future product candidates that is sufficient to support a successful biologics license application, or BLA;


•	successful development and marketing approval and clearance of complementary diagnostics and/or companion diagnostics for use with our current and future product candidates, if applicable;


•	receipt and maintenance of marketing approvals from applicable regulatory authorities;

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•	approval by national pricing and reimbursement agencies (such as NICE, National Institute for Health Care and Excellence in the United Kingdom);


•	establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved;


•	obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates;


•	launching commercial sales of our current and future product candidates, if and when approved;


•	acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors;


•	effectively competing with other therapies;


•	obtaining and maintaining healthcare coverage and adequate reimbursement;


•	enforcing and defending intellectual property rights and claims;


•	successful completion of clinical confirmatory trials to verify clinical benefit, if applicable; and


•	maintaining a continued acceptable safety profile of the product candidates following approval.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our current and future product candidates, which would materially harm our business. If we do not receive marketing approvals for our current and future product candidates, we may not be able to continue our operations.

We rely on our Translational Science Platform to identify and develop product candidates. Our competitive position could be materially harmed if our competitors develop a platform similar to our Translational Science Platform and develop rival product candidates.

We rely on unpatented know-how, inventions and other proprietary information, to maintain our competitive position. We consider know-how to be our primary intellectual property with respect to our Translational Science Platform. Know-how can be difficult to protect. In particular, we anticipate that with respect to this platform, this know-how may over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of skilled personnel.

We cannot rule out that our competitors may have or obtain the knowledge necessary to analyze and characterize tumors for the purpose of identifying and developing products that could compete with the product candidates we develop. Our competitors may also have significantly greater financial, product development, technical, and human resources and access to other human tumors than we do and may have significantly greater experience in using translational science methodology to identify and develop product candidates.

We may not be able to prohibit our competitors from using translational science methods to develop product candidates, including such methods that are the same as or similar to our own. If our competitors use translational science methods to identify and develop products that compete with our current and future product candidates, our ability to develop and market a promising product or product candidate may diminish substantially, which could have a material adverse effect on our business prospects, financial condition, and results of operations.

Clinical product development involves a lengthy and expensive process, with an uncertain outcome. We will incur additional costs in connection with, and may experience delays, in completing, or ultimately be unable to complete, the development and commercialization of our current and future product candidates, and any complementary diagnostics and/or companion diagnostics.

Our product candidates vopratelimab and JTX-4014 are clinical-stage programs and future product candidates are in preclinical or earlier stages of development. The risk of failure at any stage of clinical or preclinical development is high. It is impossible to predict when or if vopratelimab, JTX-4014 and future product candidates will prove effective and safe in humans and will receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must complete preclinical studies and then conduct extensive clinical trials to demonstrate the safety and efficacy of our current and future product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete or may be delayed and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical development testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying

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interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product candidates. Our preclinical studies and clinical trials may not be successful.

The FDA or comparable foreign regulatory authorities could change their position on the acceptability of our trial designs or the clinical endpoints selected, which may require us to complete more preclinical studies or provide additional data before continuing clinical trials. In the event we are required to satisfy additional FDA requests, the completion of our clinical trials for vopratelimab and JTX-4014 may be delayed. Successful completion of our clinical trials is a prerequisite to submitting a BLA to the FDA and a Marketing Authorization Application, or MAA, in Europe for our current and future product candidates and, consequently, the ultimate approval and commercial marketing of our current and future product candidates. We do not know whether any of our clinical trials will be completed on schedule, if at all.

We may experience delays in completing our preclinical studies and initiating or completing clinical trials, and we may experience numerous unforeseen events during, or as a result of, any potential future clinical trials that could delay or prevent our ability to receive marketing approval of our current and future product candidates, including:


•	regulators, institutional review boards, or IRBs, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;


•	we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective contract research organizations, or CROs;


•	clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or abandon product development programs;


•	the number of patients required for clinical trials may be larger than we anticipate;


•	it may be difficult to enroll a sufficient number of patients with a predictive biomarker or enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;


•	our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;


•	we may elect to, or regulators or IRBs or ethics committees may require that we or our investigators, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unreasonable and significant health risks;


•	the cost of clinical trials may be greater than we anticipate;


•	the supply or quality of materials or other materials necessary to conduct clinical trials may be insufficient or inadequate;


•	the size of the patient population required to validate our biomarker-driven strategy may be larger than we anticipate;


•	competitors may obtain regulatory approval ahead of us for compounds similar to ours, preventing us from obtaining regulatory approval despite positive clinical data;


•	our product candidates may have undesirable side effects or other unexpected characteristics, causing us to suspend or terminate the trials, or reports may arise from preclinical or clinical testing of other similar cancer therapies that raise safety or efficacy concerns about our product candidates; and


•	the FDA or other regulatory authorities may require us to submit additional data or impose other requirements before permitting us to initiate or continue a clinical trial.

We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted or ethics committees, or by the FDA or other regulatory authorities, or recommended for suspension or termination by the Data Safety Monitoring Board, or DSMB, for such trial. Such authorities or we may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, including those issues or effects seen in other drugs or drug candidates in the class to which our drug candidates belong, failure to demonstrate a benefit from using a product, changes in governmental regulations or lack of adequate funding to continue the clinical trial. Many of the factors that result in a delay in the commencement

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or completion of clinical trials may also ultimately lead to the denial of marketing approval of our product candidates. Further, regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials or may change the requirements for approval even after such authorities have reviewed and commented on the design for our clinical trials.

If we are required to conduct additional clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, or if we are unable to successfully complete clinical trials or other testing of our current and future product candidates, we may:


•	be delayed in obtaining marketing approval for our product candidates;


•	not obtain marketing approval at all;


•	obtain approval for indications or patient populations that are not as broad as intended or desired;


•	be subject to post-marketing testing requirements; or


•	have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether any of our clinical trials will need to be restructured, will be completed on schedule, or will begin as planned, if at all. Any delays in our preclinical or future clinical development programs may harm our business, financial condition and prospects significantly.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise be adversely affected.

The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The enrollment of patients depends on many factors, including:


•	the patient eligibility criteria defined in the protocol;


•	our ability to identify and enroll sufficient number of patients with a predictive biomarker;


•	the size of the patient population required for analysis of the trial’s primary endpoints;


•	the proximity of patients to study sites;


•	the design of the trial;


•	our ability to recruit clinical trial investigators with the appropriate competencies and experience;


•	clinicians’ and patients’ perceptions of the potential advantages of the product candidate being studied in relation to other available therapies;


•	our ability to obtain and maintain patient consents for participation in our clinical trials and, where appropriate, biopsies for future patient enrichment efforts; and


•	the risk that patients enrolled in clinical trials will drop out of the trials before completion or, because they are late-stage cancer patients, will not survive the full terms of the clinical trials.

In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our current and future product candidates. This competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials at such sites. Moreover, because our current and future product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy, rather than enroll patients in our ongoing or any future clinical trial.

Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our current and future product candidates.

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Our current and future product candidates we develop may cause undesirable side effects or have other properties when used alone or in combination with other approved pharmaceutical products or investigational new drugs that could halt their clinical development, prevent their marketing approval, limit their commercial potential or result in significant negative consequences.

Although our current and future product candidates will undergo safety testing to the extent possible and, where applicable, under such conditions discussed with regulatory authorities, not all adverse effects of drugs can be predicted or anticipated. In order to obtain marketing approval of a product candidate, we must demonstrate safety in various non-clinical and clinical tests. At the time of initiating human clinical trials, we may not have conducted or may not conduct the types of non-clinical testing ultimately required by regulatory authorities, or future non-clinical tests may indicate that our product candidates are not safe for use. Non-clinical testing and clinical testing are both expensive and time-consuming and have uncertain outcomes.

Immunotherapy, and its method of action of harnessing the body’s immune system, is powerful and could lead to serious side effects that we only discover in clinical trials. Undesirable or clinically unmanageable side effects could occur and cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or comparable foreign regulatory authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Unforeseen side effects from our current and future product candidates could arise either during clinical development or, if such side effects are more rare, after our current and future product candidates have been approved by regulatory authorities and the approved product has been marketed, resulting in the exposure of additional patients. Although we have established that vopratelimab is safe in humans in studies to date, we cannot predict if future clinical trials of our product candidates, either alone or in combination with other therapies, will demonstrate safety in humans. If any of our current or future product candidates fail to demonstrate safety and efficacy in clinical trials or do not gain marketing approval, we will not be able to generate revenue and our business will be harmed.

We cannot predict whether future safety and toxicology studies may cause undesirable effects. In addition, success in initial tests does not ensure that later testing will be successful. Our product candidates could cause undesirable side effects similar to those toxicities observed in other immunotherapies. It remains possible that new or more severe toxicities could be seen if any product candidate is used in combination with other agents. Such toxicities, if observed, could result in development delays, a determination by the FDA or other regulatory authorities that additional safety testing is required, delay or denial of approval, or limit the labeling and thus overall market scope for such product candidate.

If unacceptable toxicities arise in the development of our current and future product candidates, we or an existing or future collaborator or licensee could suspend or terminate clinical trials, or the FDA or comparable foreign regulatory authorities could order us, a collaborator or licensee to cease clinical trials or deny approval of our current and future product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff, particularly outside of our collaborators or licensees as toxicities resulting from cancer immunotherapies are not normally encountered in the general patient population and by medical personnel. We expect to have to train medical personnel using any of our product candidates to understand the side effect profile of such product candidates for both our ongoing and planned clinical trials and upon commercialization of such product candidates. The inability to recognize and manage the potential side effects of our product candidates could result in patient deaths. Any of these occurrences may prevent us from achieving or maintaining market acceptance of the affected product candidate and may harm our business, financial condition and prospects significantly.

We may seek a Breakthrough Therapy Designation or Fast Track Designation by the FDA for our current and future product candidates, and we may be unsuccessful. If we are successful, the designation may not actually lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our current and future product candidates will receive marketing approval.

We may seek a Breakthrough Therapy Designation or Fast Track Designation for our current and future product candidates. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Fast Track Designation may be available if a product is intended for the treatment of a serious or life-threatening condition and preclinical or clinical data demonstrate the potential to address an unmet medical need for this condition. Drugs that receive Breakthrough Therapy Designation or Fast Track Designation by the FDA are eligible for accelerated approval and priority review.

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The FDA has broad discretion whether or not to grant Breakthrough Therapy Designation or Fast Track Designation. Even if we receive Breakthrough Therapy Designation or Fast Track Designation for a product candidate, such designation may not result in a faster development process, review or approval compared to conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one of our current or future product candidates receives Breakthrough Therapy Designation or Fast Track Designation, the FDA may later decide that the drugs no longer meet the conditions for qualification and rescind the designation.

We may seek Orphan Drug Designation for our current and future product candidates, and we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity.

As part of our business strategy, we may seek Orphan Drug Designation for our current and future product candidates, and we may be unsuccessful. In the United States, Orphan Drug Designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

In Europe, Orphan Drug Designation entitles a party to a number of incentives, such as protocol assistance and scientific advice specifically for designated orphan medicines, and potential fee reductions depending on the status of the sponsor.

Generally, if a drug with an Orphan Drug Designation subsequently receives the first marketing approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the European Medicines Agency or the FDA from approving another marketing application for the same drug and indication for a set time period, except in limited circumstances.

Even if we obtain orphan drug exclusivity for a drug, that exclusivity may not effectively protect the drug from competition because different drugs can be approved for the same condition, or the drug may be used off-label. Even after an orphan drug is approved, the FDA can subsequently approve another drug for the same condition if the FDA concludes that the other drug is clinically superior. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. While we may seek Orphan Drug Designation for applicable indications for our current and future product candidates, we may never receive such designations. Even if we do receive such designations, there is no guarantee that we will enjoy the benefits of those designations.

The marketing approval process is expensive, time consuming and uncertain and may prevent us or any of our existing or future collaborators or licensees from obtaining approvals for the commercialization of our current and future product candidates.

Among other things, the research, testing, manufacturing, labeling, approval and license maintenance, selling, import and export, marketing and distribution of biologic products are subject to extensive regulation by the FDA and comparable foreign regulatory authorities. Neither we nor any existing or future collaborator or licensee is permitted to market any future product in the United States until we receive approval of a BLA from the FDA. We have never submitted an application for, or received, marketing approval. Obtaining approval of a BLA can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable domestic and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including the following:


•	untitled and warning letters;


•	civil or criminal penalties and fines;


•	injunctions;


•	suspension or withdrawal of marketing approval;


•	suspension of any ongoing clinical trials;


•	product recalls;


•	refusal to accept or approve BLAs or supplements thereto filed by us;


•	restrictions on operations, including costly new manufacturing requirements; or


•	seizure or detention of our products or import bans.

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Prior to receiving approval to commercialize our product candidates in the United States or abroad, we and any of our existing or future collaborators or licensees must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA and comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses. Even if we and any of our existing or future collaborators or licensees believe the preclinical or clinical data for our current and future product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities. Administering our product candidates to humans may produce undesirable side effects, which could interrupt, delay or cause suspension of clinical trials of our product candidates and result in the FDA or other regulatory authorities denying approval of our current and future product candidates for any or all targeted indications.

Marketing approval of a BLA is not guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical trials or perform additional preclinical studies and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address and the regulations applicable to any particular product candidate. The FDA can delay, limit or deny approval of a product candidate for many reasons, including, but not limited to, the following:


•	a product candidate may not be deemed safe or effective;


•	FDA officials may not find the data from preclinical studies and clinical trials sufficient;


•	the FDA might not deem our or our third-party manufacturers’ processes or facilities adequate for approval of our marketing applications; or


•	the FDA may change its approval policies or adopt new regulations.

If our current and future product candidates fail to demonstrate safety and efficacy in clinical trials or do not gain marketing approval, our business will be harmed.

We may choose not to develop a potential product candidate, or we may suspend or terminate one or more discovery or preclinical programs related to our product candidates.

At any time and for any reason, we may determine that one or more of our discovery programs, preclinical programs or product candidates does not have sufficient potential to warrant the allocation of resources toward such program or product candidate. Furthermore, because we have limited financial and personnel resources, we are placing significant focus on the development of our product candidates vopratelimab and JTX-4014. Accordingly, we may choose not to develop a product candidate or elect to suspend or terminate one or more of our discovery or preclinical programs. If we suspend or terminate a program or product candidate in which we have invested significant resources, we will have expended resources on a program or product candidate that will not provide a full return on our investment and we may have missed an opportunity to have allocated those resources to potentially more productive uses, including existing or future programs or product candidates. If we do not accurately evaluate the commercial potential or target market for a particular future product candidate, we may relinquish valuable rights to future product candidates through collaboration, licensing or other royalty arrangements.

Even if we complete the necessary clinical trials, we cannot predict when or if we will obtain marketing approval to commercialize a product or the approval may be for a narrower indication than we expect.

We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if our product candidates demonstrate safety and efficacy in clinical trials, the regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain marketing approval. In addition, we may experience delays or rejections based upon government regulation or changes in regulatory agency policy during the period of product development. Regulatory agencies also may impose significant limitations in the form of narrow indications, warnings, precautions or contraindications with respect to conditions of use or may grant approval subject to the performance of costly post-marketing clinical trials or may not approve the price we intend to charge for our product candidates. Any of the foregoing scenarios could materially harm the commercial prospects for our current and future product candidates.

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Obtaining and maintaining marketing approval of our current or future product candidates in one jurisdiction does not mean that we will be successful in obtaining marketing approval of that product candidate in other jurisdictions.

Obtaining and maintaining marketing approval of our current and future product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain marketing approval in any other jurisdiction. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials.

Obtaining foreign marketing approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our current and future product candidates will be harmed. Even if we obtain approval for our product candidates and ultimately commercialize them in foreign markets, we would be subject to separate risks and uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and the reduced protection of intellectual property rights in some foreign countries.

Our failure to successfully identify, discover, acquire, develop or commercialize additional products or product candidates could impair our ability to grow.

Although a substantial amount of our efforts will focus on the clinical testing and potential approval of our most advanced product candidates, vopratelimab and JTX-4014, an element of our long-term growth strategy is to in-license products or product candidates for development and commercialization. We may never be able to identify, discover, acquire, develop or commercialize any products or product candidates, which would have a material adverse effect on our business.

Because our internal research capabilities are limited, we may be dependent upon pharmaceutical and biotechnology companies, academic scientists, and other researchers to sell or license products or technology to us. The success of this strategy depends partly upon our ability to identify, select, and acquire promising pharmaceutical product candidates and products. The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing and sales resources, may compete with us for the license or acquisition of product candidates and approved products. Acquisitions and in-licenses include numerous risks, including potential failure to achieve the expected benefits of the acquisition or license and potential unknown liabilities associated with the product or technology. We have limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses, and technologies, integrate them into our current infrastructure and manage our development efforts.

Even if we receive marketing approval of our current or future product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review.

Any marketing approvals that we receive for our current and future product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or the conditions of approval or contain requirements for potentially costly post-market testing and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA or a comparable foreign regulatory authority approves any of our current or future product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import and export and record keeping for our current and future product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practice, or cGMP, and good clinical practice, or GCP, for any clinical trials that we conduct post-approval. Failure to comply with regulatory requirements, may result in, among other things:


•	restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product from the market, or product recalls;


•	fines, untitled and warning letters, or holds on clinical trials;


•	refusal by the FDA to approve pending applications or supplements to approved applications we filed or suspension or revocation of license approvals;


•	product seizure or detention, or refusal to permit the import or export of our product candidates; and

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•	injunctions or the imposition of civil or criminal penalties.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.

Even if our current and future product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

If our current and future product candidates receive marketing approval, whether as a single agent or in combination with other therapies, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors, and others in the medical community. If our current and future product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues or receive significant milestone or royalty payments, and we may not become profitable.

Risks Related to Manufacturing, Commercialization and Reliance on Third Parties

We depend on Celgene to develop, manufacture and commercialize JTX-8064 and may depend on additional third parties for the development and commercialization of our other product candidate programs. If these programs are not successful, we may not receive significant payments from such third parties or we may not be able to capitalize on the market potential of these product candidates.

In July 2019, we entered into a License Agreement, or the Celgene License Agreement, with Celgene. Pursuant to the Celgene License Agreement, we granted Celgene an exclusive, worldwide license to develop, manufacture and commercialize JTX-8064. The license provides for potential payment to us from Celgene upon the achievement of specified clinical, regulatory and sales milestones, and potential royalty-based revenue if JTX-8064 is successfully commercialized. As a result of this license, we will not control the nature, timing or cost of bringing JTX-8064 to market. We cannot provide any assurance with respect to the success of the license. Moreover, in January 2019, Celgene and Bristol-Myers Squibb Company, or BMS, announced that they entered into an agreement under which Celgene will be acquired by BMS, subject to the satisfaction of customary closing conditions and regulatory approvals. Celgene and BMS have announced that the transaction is currently expected to close at the end of 2019 or the beginning of 2020. The acquisition of Celgene by BMS may result in a change in Celgene’s business priorities, and as such, may lead to changes in its future operations, contracts and strategic plans, including those involving JTX-8064, and may have a material adverse effect on Celgene’s development, manufacture or commercialization of JTX-8064. Any such change could affect Celgene’s ability to retain and motivate key personnel who are important to the development of JTX-8064, reduce or terminate its efforts to develop, manufacture or launch JTX-8064, and/or cause the Celgene License Agreement to be terminated. If the transaction is completed as planned, there is no guarantee that BMS will place the same emphasis on the development of JTX-8064 as Celgene, and our business may be harmed. If the acquisition is consummated, BMS may elect to terminate the Celgene License Agreement and, any such termination may adversely affect our business and our stock price and make it more difficult for us to enter into a collaboration agreement or license with another party.

We may form or seek other strategic alliances, joint ventures, or collaborations, or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to our current and future product candidates that we may develop.

Collaborations and other strategic transactions, including licensing arrangements, involving our product candidates pose the following risks to us:


•	Collaborators, including licensors, have significant discretion in determining the efforts and resources that they will apply to these collaborations. For example, under the Celgene License Agreement, development and commercialization plans and strategies for JTX-8064 will be conducted by Celgene.

•

Collaborators may not pursue development and commercialization of any of our current or future product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors such as a business combination that diverts resources or creates competing priorities.

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•	Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing.


•	Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates.


•	A collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution.


•	Collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop, commercialize, enforce, maintain or defend such intellectual property.

•

Collaborators may not properly enforce, maintain or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation, or other intellectual property proceedings. For example, Celgene has the exclusive right to enforce, maintain or defend our intellectual property rights for JTX-8064 under the Celgene License Agreement.


•	Disputes may arise between a collaborator and us that cause the delay or termination of the research, development or commercialization of our current and future product candidates, or that result in costly litigation or arbitration that diverts management attention and resources.


•	Collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.


•	Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.


•	Collaboration or licensing agreements may restrict our right to independently pursue new product candidates. For example, until termination or expiration of the Celgene License Agreement, we may not directly or indirectly research, develop, manufacture or commercialize any antibody or biologic that is specifically directed to the LILRB2 receptor.

As a result, if we enter into additional collaboration agreements and strategic partnerships or license our intellectual property, products or businesses, we may not be able to realize the benefit of, or generate revenues from, such arrangements.

If we establish one or more licenses or collaborations, all of the risks relating to product development, regulatory approval and commercialization described in this Quarterly Report on Form 10-Q would also apply to the activities of any such future licensees or collaborators.

We may seek to establish additional collaborations, and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional resources. For some of our product candidates, we may decide to collaborate with additional pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders, or disrupt our management and business.

We face significant competition in seeking appropriate strategic partners and the negotiation process is time consuming and complex. Whether we reach a definitive agreement for other collaborations will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of our business. We may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for future product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view them as having the requisite potential to demonstrate safety and efficacy. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

We may also be restricted under existing agreements from entering into future agreements on certain terms with potential collaborators. For example, under the Celgene License Agreement, we have granted worldwide exclusive rights to Celgene for any antibody or biologic that is specifically directed to the LILRB2 receptor, and during the term

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of the agreement we will be restricted from granting similar rights to other parties. This exclusivity could limit our ability to enter into strategic collaborations with future collaborators.

We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program, delay or reduce the scope of potential commercialization activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

The market opportunities for our current and future products, if and when approved, may be limited to those patients who are ineligible for established therapies or for whom prior therapies have failed, and may be small.

Cancer therapies are sometimes characterized as first-line, second-line, or third-line, and the FDA often approves new therapies initially only for third-line use. When cancer is detected early enough, first-line therapy, usually chemotherapy, hormone therapy, surgery, radiation therapy, and, increasingly, immunotherapies or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second and third-line therapies are administered to patients when prior therapy is not effective. We expect to initially seek approval of our current and future product candidates as a therapy for patients who have received one or more prior treatments. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval potentially as a first-line therapy, but there is no guarantee that any of our product candidates, even if approved, would be approved for first-line therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.

Our projections of both the number of people who have the cancers we are targeting, as well as the subset of people with these cancers who have received one or more prior treatments, and who have the potential to benefit from treatment with our current and future product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, and market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our current and future product candidates may be limited or may not be amenable to treatment with any of our products, if and when approved. Even if we obtain significant market share for any of our products, if and when approved, because the potential target populations may be small, we may never achieve profitability without obtaining marketing approval for additional indications, including to be used as first- or second-line therapy.

We rely and expect to continue to rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our product candidates and our business could be substantially harmed.

We do not have the ability to independently conduct clinical trials. We rely and will rely on medical institutions, clinical investigators, contract laboratories, and other third parties, such as CROs, to conduct or otherwise support our ongoing clinical trials, including processing of human blood and tumor samples and analysis of biomarkers from the clinical trials. We rely and will rely heavily on these parties for execution of clinical trials for our current and future product candidates and we control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on these third parties including CROs will not relieve us of our regulatory responsibilities. For any violations of laws and regulations during the conduct of our clinical trials, we could be subject to untitled and warning letters or enforcement action that may include civil penalties up to and including criminal prosecution.

We and our clinical investigators and CROs are required to comply with regulations and requirements, including GCP, for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate, and that the trial patients are adequately informed of the potential risks of participating in clinical trials and their rights are protected. If we or our clinical investigators or CROs fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure stockholders that, upon inspection, the FDA will determine that any of our future clinical trials will comply with GCP. In addition, our clinical trials must be conducted with product candidates produced under cGMP regulations. Our failure or the failure of our clinical investigators or CROs to comply with these regulations may require us to repeat clinical trials, which would delay the marketing approval process and could also subject us to

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enforcement action. We also are required to register certain ongoing clinical trials and provide certain information, including information relating to the trial’s protocol, on a government-sponsored database, ClinicalTrials.gov, within specific time frames. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Although we designed the clinical trials for vopratelimab and JTX-4014 and intend to design the clinical trials for future product candidates, clinical investigators or CROs will conduct all of the clinical trials. As a result, many important aspects of our development programs, including their conduct and timing, will be outside of our direct control. Our reliance on third parties to conduct future clinical trials will also result in less direct control over the management of data developed through clinical trials than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may also face internal challenges that may materially adversely affect the willingness or ability of such parties to conduct our clinical trials and may subject us to unexpected cost increases that are beyond our control. If the clinical investigators or CROs do not perform clinical trials in a satisfactory manner, breach their obligations to us or fail to comply with regulatory requirements, the development, marketing approval and commercialization of our current and future product candidates may be delayed, or our development program may be materially and irreversibly harmed. If we are unable to rely on clinical data collected by our clinical investigators and CROs, we could be required to repeat, extend the duration of, or increase the size of any clinical trials we conduct, and this could significantly delay commercialization and require significantly greater expenditures.

If clinical investigators or CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain are compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical trials such clinical investigators or CROs are associated with may be extended, delayed or terminated. As a result, we believe that our financial results and the commercial prospects for our current and future product candidates in the subject indication would be harmed, our costs could increase and our ability to generate revenue could be delayed.

We face significant competition and if our competitors develop and market products that are more effective, safer or less expensive than any of our current or future product candidates, our commercial opportunities will be negatively impacted.

The life sciences industry is highly competitive and subject to rapid and significant technological change. We are currently developing therapeutics that will compete with other products and therapies that currently exist or are being developed, such as approved immunotherapy antibodies, the anti-ICOS antibodies of BMS, GlaxoSmithKline plc, or Kymab Group Ltd. or Xenor, Inc.’s anti-PD-1 and anti-ICOS bispecific antibody. Products we may develop in the future are also likely to face competition from other products and therapies, some of which we may not currently be aware. Technological advances or products developed by our competitors may render our technologies or product candidates obsolete, less competitive or not economical.

We have both domestic and international competitors, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities and other research institutions and small and other early-stage companies. Many of our competitors have significantly greater financial, manufacturing, marketing, product development, technical and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining marketing approvals, establishing clinical trial sites, recruiting patients and in manufacturing pharmaceutical products and may succeed in discovering, developing and commercializing products in our field before we do. We also face competition in recruiting and retaining qualified scientific and management personnel, as well as in acquiring technologies complementary to, or necessary for, our programs.

There are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies. These treatments consist both of small molecule drug products, as well as biologics approaches to address cancer. These treatments are often combined with one another in an attempt to maximize the response rate.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, have a broader label, are marketed more effectively, are reimbursed or are less expensive than any products that we may develop. Our competitors also may obtain FDA, European Commission or other marketing approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Even if our current and future product candidates achieve marketing approval, they may be priced at a significant premium over competitive products, resulting in reduced competitiveness. In addition,

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if any of our current or future product candidates are approved by the FDA, the approval of a biosimilar product to one of our products could have a material impact on our business.

Because we rely on third-party manufacturing and supply partners, including a single supplier for some of our materials, our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality.

We rely on third-party contract manufacturers to manufacture our preclinical and clinical trial product supplies. We do not own manufacturing facilities for producing such supplies. There can be no assurance that our preclinical and clinical development product supplies will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable prices. Our or a third party’s failure to execute on our manufacturing requirements, or to do so on commercially reasonable terms and comply with cGMP could adversely affect our business in a number of ways, including:


•	an inability to initiate or continue clinical trials of our current or future product candidates under development;


•	delay in submitting regulatory applications, or receiving marketing approvals, for our current or future product candidates;


•	loss of cooperation of an existing or future collaborator;


•	subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities; and


•	requirements to cease distribution or to recall batches of our current or future product candidates.

In the event that any of our manufacturers fails to comply with applicable regulatory requirements and facility and process validation tests or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture our future product candidates may be unique or proprietary to the original manufacturer, which would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture such future product candidates. In particular, any replacement of our manufacturer could require significant effort and expertise because there may be a limited number of qualified replacements. If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines, which could negatively affect our ability to develop product candidates in a timely manner or within budget.

Certain raw materials necessary for the manufacture of our product candidates under our current manufacturing process, such as growth media, resins and filters, are available from a single supplier. We do not have agreements in place that guarantee our supply or the price of these raw materials. Any significant delay in the acquisition or decrease in the availability of these raw materials could considerably delay the manufacture of our current and future product candidates, which could adversely impact the timing of any planned trials or the marketing approval of that product candidate.

We expect to continue to rely on third-party manufacturers if we receive marketing approval for any product candidate. If we are unable to maintain third-party manufacturing for vopratelimab or JTX-4014 or obtain or maintain third-party manufacturing for other future product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our current or future product candidates successfully. We do not yet have sufficient information to reliably estimate the cost of the commercial manufacture of any future product candidate.

In addition, in order to conduct clinical trials of our current and future product candidates, we will need to work with third-party manufacturers to manufacture them in large quantities. Our manufacturing partners or our third-party collaborators may be unable to successfully increase the manufacturing capacity of our current and future product candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-up activities. If our manufacturing partners or collaborators are unable to successfully scale up the manufacture of our current or future product candidates in sufficient quality and quantity, the development, testing, and clinical trials of that product candidate may be delayed or infeasible, and marketing approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

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We are subject to manufacturing risks that could substantially increase our costs and limit the supply of our products.

The process of manufacturing our current or future product candidates is complex, highly regulated and subject to several risks, including:

•

We do not have the capability internally to manufacture drug products or drug substances for clinical use. We use third-party manufacturers for manufacturing vopratelimab and JTX-4014 for our on-going and anticipated clinical trials. Any changes in our manufacturing processes as a result of scaling-up may require additional approvals or may delay the development and marketing approval of our current and future product candidates and ultimately affect our success.


•	The manufacturing facilities in which our current and future product candidates are made could be adversely affected by equipment failures, contamination, vendor error, labor shortages, natural disasters, power failures and numerous other factors.

•

Any adverse developments affecting manufacturing operations for our current or future product candidates, if any are approved, may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives.

•

Biologics, such as vopratelimab and JTX-4014, that have been produced and are stored for later use may degrade, become contaminated, suffer other quality defects or may not be used within their shelf life, which may cause the affected product candidates to no longer be suitable for their intended use in clinical trials or other development activities. If the defective product candidates cannot be replaced in a timely fashion, we may incur significant delays in our development programs that could adversely affect the value of such product candidates.

We expect to develop our current and future product candidates in combination with other drugs. If we are unable to enter into a strategic collaboration for, or if we are unable to purchase on commercially reasonable terms, an approved cancer drug to use in combination with our product candidates, we may be unable to develop or obtain approval for our current and future product candidates in combination with other drugs.

We intend to develop our current and future product candidates in combination with one or more other cancer drugs. If the FDA or similar regulatory authorities outside of the United States revoke or do not grant approval of any drugs we use in combination with our current or future product candidates, we will not be able to market any products in combination with such drugs.

If safety or efficacy issues arise with any of these drugs, we could experience significant regulatory delays, and the FDA or similar regulatory authorities outside of the United States may require us to redesign or terminate the applicable clinical trials. If the drugs we use are replaced as the standard of care for the indications we choose for our current or future product candidates, the FDA or similar regulatory authorities outside of the United States may require us to conduct additional clinical trials. In addition, if manufacturing or other issues result in a shortage of supply of the drugs with which we determine to combine with our current or future product candidates, we may not be able to complete clinical development of vopratelimab, JTX-4014 or future product candidates on our current timeline or at all.

Even if our current or future product candidates were to receive marketing approval or be commercialized for use in combination with other existing drugs, we would continue to be subject to the risks that the FDA or similar regulatory authorities outside of the United States could revoke approval of such existing drugs or that safety, efficacy, manufacturing or supply issues could arise with such drugs.

We may form or seek strategic collaborations to evaluate and, if approved, market vopratelimab and JTX-4014 in combination with another approved cancer drug. If we are unable to enter into a strategic collaboration on commercially reasonable terms or fail to realize the benefits of any such collaboration, we may be required to purchase an approved cancer drug to use in combination with vopratelimab and JTX-4014. The failure to enter into a successful collaboration or the expense of purchasing an approved cancer drug may delay our development timelines, increase our costs and jeopardize our ability to develop vopratelimab and JTX-4014.

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We may develop complementary diagnostics and/or companion diagnostics for our current and future product candidates. If we are unable to successfully develop such companion diagnostics or complementary diagnostics, or experience significant delays in doing so, we may not realize the full commercial potential of our current or future product candidates.

Because we are focused on patient enrichment strategies, in which predictive biomarkers may be used to identify the right patients for our product candidates, we believe that our success may depend, in part, on our ability to develop complementary diagnostics and/or companion diagnostics, which are assays or tests to identify an appropriate patient population for our product candidates. There has been limited success to date industry-wide in developing these types of complementary diagnostics and/or companion diagnostics. To be successful, we need to address a number of scientific, technical and logistical challenges. We have not yet initiated development of complementary diagnostics and/or companion diagnostics, and the process of obtaining or creating such a diagnostic is time consuming and costly. We have little experience in the development of diagnostics and may not be successful in developing appropriate diagnostics to pair with any of our product candidates that receive marketing approval. Complementary diagnostics and/or companion diagnostics are subject to regulation by the FDA and similar regulatory authorities outside the United States as medical devices and require separate regulatory approval or clearance prior to commercialization. Given our limited experience in developing diagnostics, we expect to rely in part or in whole on third parties for their design and manufacture. If we are unable to engage a third party to assist us, or if we, or any third parties that we engage, are unable to successfully develop complementary diagnostics and/or companion diagnostics for our current and future product candidates, or experience delays in doing so:


•	the development of our current and future product candidates may be adversely affected if we are unable to appropriately select patients for enrollment in our clinical trials;


•	our current and future product candidates may not receive marketing approval if safe and effective use of a product candidate depends on complementary diagnostics and/or companion diagnostics and such a diagnostic is not commercially available or otherwise approved or cleared by the appropriate regulatory authority; and


•	we may not realize the full commercial potential of our current and future product candidates that receive marketing approval if, among other reasons, we are unable to appropriately identify, or it takes us longer to identify, patients who are likely to benefit from therapy with our products, if approved.

If any of these events were to occur, our business would be harmed, possibly materially.

If product liability lawsuits are brought against us, we may incur substantial liabilities.

We face an inherent risk of product liability as a result of the clinical testing of our current and future product candidates. For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:


•	decreased demand for our product candidates;


•	injury to our reputation;


•	withdrawal of clinical trial participants;


•	initiation of investigations by regulators;


•	costs to defend the related litigation;


•	a diversion of management’s time and our resources;


•	substantial monetary awards to trial participants or patients;


•	product recalls, withdrawals or labeling, marketing or promotional restrictions;


•	loss of revenue;


•	exhaustion of any available insurance and our capital resources;


•	the inability to commercialize any product candidate; and

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•	a decline in our share price.

Insurance coverage is increasingly expensive. We may not be able to maintain insurance at a reasonable cost or in an amount adequate to satisfy any liability that may arise, if at all. Our insurance policy contains various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

Adverse events in the field of immuno-oncology could damage public perception of our product candidates and negatively affect our business.

The commercial success of our products will depend in part on public acceptance of the use of cancer immunotherapies. Adverse events in clinical trials of any of our current or future product candidates or other similar products and the resulting publicity, as well as any other adverse events in the field of immuno-oncology that may occur, including in connection with competitor therapies such as approved immunotherapy antibodies, the anti-ICOS antibodies of BMS, GlaxoSmithKline plc or Kymab Group Ltd. or Xenor, Inc.’s anti-PD-1 and anti-ICOS bispecific antibody, could result in a decrease in demand for vopratelimab, JTX-4014 or other products that we may develop. If public perception is influenced by claims that the use of cancer immunotherapies is unsafe, whether related to our or our competitors’ therapies, our products may not be accepted by the general public or the medical community.

Future adverse events in immuno-oncology or the biopharmaceutical industry could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approvals of our products. Any increased scrutiny could delay or increase the costs of obtaining marketing approval for our current and future product candidates.

Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Affordable Care Act was passed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or complementary diagnostics or companion diagnostics or additional pricing pressures.

For example, with enactment of the Tax Cuts and Jobs Act of 2017, which was signed by the President on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. According to the Congressional Budget Office, the repeal of the individual mandate will cause 8.67 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise. Further, each chamber of the Congress has put forth multiple bills designed to repeal or repeal and replace portions of the Affordable Care Act, or ACA. Although none of these measures has been enacted by Congress to date, Congress may consider other legislation to repeal and replace elements of the ACA.

Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. The Trump administration and CMS have both stated that the ruling will have no immediate effect, and on December 30, 2018 the same judge issued an order staying the judgment pending appeal. The Trump administration has represented to the US Court of Appeals for the Fifth Circuit considering this judgment that it does not oppose the lower court’s ruling. To that end, on May 1, 2019, the Justice Department filed a brief asking the Court to strike down the entirety of the ACA. Thereafter, on July 10, 2019, the Court of Appeals for the Fifth Circuit heard oral argument in this case. In those arguments, the Trump administration argued in support of upholding the lower court decision. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

The current administration has also taken executive actions to undermine or delay implementation of the ACA. In January 2017, the President signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers

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of pharmaceuticals or medical devices. In October 2017, the President signed a second Executive Order allowing for the use of association health plans and short-term health insurance, which may provide fewer health benefits than the plans sold through the ACA exchanges. At the same time, the Administration announced that it will discontinue the payment of cost-sharing reduction, or CSR, payments to insurance companies until Congress approves the appropriation of funds for such CSR payments. The loss of the CSR payments is expected to increase premiums on certain policies issued by qualified health plans under the ACA.

Our future relationships with customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. In addition, we may be subject to transparency laws and patient privacy regulation by the U.S. federal and state governments and by governments in foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include the federal Anti-Kickback Statute, the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, the federal legislation commonly referred to as the Physician Payments Sunshine Act, and analogous state and foreign laws and regulations, any of which may constrain the business or financial arrangements and relationships through which we sell, market and distribute any products for which we obtain marketing approval.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that some of our business activities could be subject to challenge under one or more of such laws. The scope and enforcement of each of these laws is also uncertain and any investigation or settlement could be time- and resource-consuming, divert management’s attention, increase our costs or otherwise have an adverse effect on our business.

If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to various significant penalties, any of which could harm our ability to operate our business and our financial results. In addition, the approval and commercialization of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

Risks Related to our Financial Position and Need for Additional Capital

We have accumulated significant losses since our inception and anticipate that we will continue to incur substantial net losses in the foreseeable future.

We are a clinical-stage biopharmaceutical company with a limited operating history, and we are early on in our development efforts. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain marketing approval and become commercially viable. We have financed our operations primarily through the sale of equity securities and through our license and collaboration arrangements with Celgene. Since our inception, most of our resources have been dedicated to the preclinical and clinical development of vopratelimab, JTX-4014 and JTX-8064 and the preclinical and planned clinical development of other future product candidates and discovery programs. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations.

We incurred net losses of $27.4 million and $16.4 million for the years ended December 31, 2018 and 2017, respectively. As of September 30, 2019, we had an accumulated deficit of $84.5 million. We expect to recognize net income for the year ended December 31, 2019 as a result of revenue recognized under the Celgene License Agreement and the recognition of the remaining deferred revenue under our Master Research and Collaboration Agreement with Celgene. However, we expect to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek marketing approvals for, our current and future product candidates.

Even if we succeed in receiving marketing approval for and commercialize our product candidates, we will continue to incur substantial research and development and other expenditures to develop and market additional potential

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products. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

We have never generated any revenue from product sales and our ability to generate revenue from product sales and become profitable depends on our success on a number of factors.

We have no products approved for commercial sale, have not generated any revenue from product sales, and do not anticipate generating any revenue from product sales until some time after we have received marketing approval for the commercial sale of a product candidate, if ever. Our ability to generate revenue and achieve profitability depends significantly on our success in many factors, including:


•	completing clinical development of vopratelimab and JTX-4014, and research, discovery, preclinical and clinical development of future product candidates;


•	obtaining marketing approvals for our current and future product candidates for which we complete clinical trials;


•	developing a sustainable and scalable manufacturing process for our product candidates, including establishing and maintaining commercially viable supply and manufacturing relationships with third parties;


•	launching and commercializing our product candidates for which we obtain marketing approvals, either directly or with a collaborator or distributor;


•	obtaining market acceptance of our current and future product candidates as viable treatment options;


•	addressing any competing technological and market developments;


•	identifying, assessing, acquiring and developing new product candidates;


•	negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter;


•	obtaining, maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and


•	attracting, hiring and retaining qualified personnel.

Even if our product candidates or other future product candidates that we develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. These costs may fluctuate or exceed our expectations and our revenues will depend on many factors that we cannot control or estimate. If we are not able to generate revenue from the sale of any approved products, we may never become profitable.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

Our operations have consumed substantial amounts of cash since inception. As of September 30, 2019, our cash, cash equivalents and investments were $185.1 million. We expect to continue to spend substantial amounts to continue the clinical development of vopratelimab and JTX-4014 and preclinical and clinical development of future product candidates. If we are able to gain marketing approval for any of our product candidates, we will require significant additional amounts of cash in order to launch and commercialize those product candidates to the extent that such launch and commercialization are not the responsibility of a collaborator or a licensee. In addition, other unanticipated costs may arise. Because the design and outcome of our planned and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our current and future product candidates. Our future capital requirements depend on many factors, including:


•	the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;


•	the timing of, and the costs involved in, obtaining marketing approvals for our product candidates if clinical trials are successful;

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•	the cost of commercialization activities for our product candidates, that are approved for sale, including marketing, sales and distribution costs;


•	the cost of manufacturing our product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization;


•	our ability to establish and maintain strategic licensing or other arrangements and the financial terms of such agreements;


•	the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;


•	the timing, receipt, and amount of sales of, or royalties on, our future products, if any;


•	the emergence of competing cancer therapies and other adverse market developments; and


•	the requirement for and cost of developing complementary diagnostics and/or companion diagnostics.

Until we can generate sufficient product and royalty revenue to finance our cash requirements, which we may never do, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. Based on our research and development plans, we expect that our existing cash, cash equivalents and investments of $185.1 million as of September 30, 2019 will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2021.

If we are unable to obtain adequate financing on favorable terms when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical trials or research and development programs or our commercialization efforts.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or our current and future product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we are unable to raise additional funds through equity or debt financings when needed, and instead raise additional capital through marketing and distribution agreements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our current and future product candidates, technologies, future revenue streams or discovery programs or grant licenses on terms that may not be favorable to us.

Risks Related to Intellectual Property

If we are unable to obtain, maintain and protect our intellectual property rights for our product candidates or if our intellectual property rights are inadequate, our competitive position could be harmed.

Our commercial success will depend in part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries with respect to our product candidates. We rely on trade secret, patent, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. We currently, or will in the future, seek to protect our proprietary position by filing and prosecuting patent applications in the United States and abroad related to our current and future product candidates, and any future novel technologies that are important to our business.

The steps we, our licensees or our licensors have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, both inside and outside of the United States.

If we, our licensees or our licensors are unable to obtain and maintain patent protection for our current and future product candidates, or if the scope of the patent protection obtained is not sufficient, our competitors could develop

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and commercialize products similar or superior to ours, and our ability to successfully commercialize our current and future product candidates and future technologies may be adversely affected.

Our pending applications cannot be enforced against third parties unless and until a patent issues from such applications and, even after issuance, such patents may be challenged in the courts or patent offices in the United States and abroad. Such proceedings may result in the loss of patent protection, the narrowing of claims in such patents or the invalidity or unenforceability of such patents, which could limit our ability to stop others from using or commercializing similar or identical products or limit the duration of the patent protection for our current and future product candidates. In addition, we cannot predict whether any of our future patent applications will result in the issuance of patents that effectively protect our current and future product candidates, or if any of our issued patents or if any of our licensor’s issued patents will effectively prevent others from commercializing competitive products. In some cases, it may be difficult or impossible to detect third-party infringement or misappropriation of our intellectual property rights, even in relation to issued patent claims, and proving any such infringement may be even more difficult. If we are unable to obtain, maintain, and protect our intellectual property our competitive advantage could be harmed, and it could result in a material adverse effect on our business, financial condition, and the results of operations and prospects.

Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time, and our current and future product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek patent term extensions of patent terms in the United States for our issued patents, licensed patents and any patents we own in the future and, if available, in other countries where that may be available when we are prosecuting patents. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the normal expiration of the patent, which is limited to the approved indication. However, the applicable authorities, including the FDA and the United States Patent and Trademark Office, or USPTO, in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. We may not be granted an extension because of, for example, failure to exercise due diligence during the testing phase or regulatory review process, failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. If we are unable to obtain patent term extension or the term of any such extension is less than we request, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case, which could result in a material adverse effect on our business, financial condition, results of operation and prospects.

The Biologics Price Competition and Innovation Act of 2009, or BPCIA, established legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

We intend to seek market exclusivity for our biological product candidates that is subject to its own BLA for 12 years in the United States, 10 years in Europe and other durations in other markets. However, the term of the patents that cover such product candidates may not extend beyond the applicable market exclusivity awarded by a particular country. For example, in the United States, if all of the patents that cover our particular biologic product expire before the 12-year market exclusivity expires, a third party could submit a marketing application for a biosimilar product four years after approval of our biologic product, and the FDA could immediately review the application and approve the biosimilar product for marketing 12 years after approval of our biologic. Alternatively, a third party could submit a BLA for a similar or identical product any time after approval of our biologic product, and the FDA could immediately review and approve the similar or identical product for marketing and the third party could begin marketing the similar or identical product upon expiry of all of the patents that cover our particular biologic product.

Additionally, there is a risk that this exclusivity could be shortened due to congressional action, potentially creating the opportunity for biosimilar competition sooner than anticipated. The extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-

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biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.

In addition to seeking patent protection, we also rely on other proprietary rights, including protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of our trade secrets and proprietary information, we enter into confidentiality agreements with our employees, consultants, collaborators and other third parties who have access to our trade secrets. These agreements require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees also provide that any inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. In addition, in the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable. In addition, some courts are less willing or unwilling to protect trade secrets. The disclosure of our trade secrets or the independent development of our trade secrets by a competitor or other third party would impair our competitive position and may materially harm our business, financial condition, results of operations and prospects.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could harm our business.

Our commercial success depends on our ability and the ability of our current or future licensees or collaborators to develop, manufacture, market and sell our product candidates, and to use our related proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. We may become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our current and future product candidates. For example, we are aware of third-party patents generally directed to methods of treating certain indications with an anti-PD-1 monoclonal antibody and/or an anti‑ICOS monoclonal antibody that may be construed to cover one or more of our current and future product candidates. If we are found to infringe a third-party’s intellectual property rights, and we are unsuccessful in demonstrating that such intellectual property rights are invalid or unenforceable, we could be required to obtain a license from such third party to continue developing, manufacturing and commercializing our product candidates. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We also could be forced, including by court order, to cease developing, manufacturing, and commercializing our product candidates. In addition, in any such proceeding or litigation, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Additionally, under the Celgene License Agreement, if Celgene is required to obtain a right or a license for intellectual property from a third party for the development, manufacturing or commercialization of JTX-8064, Celgene may deduct payments for such right or license from any royalties payable to us, up to an aggregate minimum floor. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Furthermore, we are testing vopratelimab and JTX-4014 and expect to test our future product candidates with other products that are covered by patents held by other companies or institutions. In the event that a labeling instruction is required in product packaging recommending that combination, we could be accused of, or held liable for, infringement of the third-party patents covering the product candidate or product recommended for administration with our product candidates. In such a case, we could be required to obtain a license from the other company or institution to use the required or desired package labeling, which may not be available on commercially reasonable terms, or at all.

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If we breach any of our license agreements or collaboration agreements, it could have a material adverse effect on our commercialization efforts for our product candidates.

Our commercial success depends on our ability, and at times, the ability of our licensors and current or future licensees and collaborators to develop, manufacture, market, and sell our product candidates, and use our licensors proprietary technologies without infringing the property rights of third parties. For example, we have entered into an exclusive license agreement with Sloan Kettering Institute for Cancer Research, Memorial Sloan Kettering Cancer Center and Memorial Hospital for Cancer and The University of Texas MD Anderson Cancer Center related to certain uses of our vopratelimab, and we may enter into additional licenses in the future. These and other licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our products in the future. As a result, we may not be able to prevent competitors from developing and commercializing competitive products in territories included in all our licenses.

In addition, we may not have the right to control the preparation, filing, prosecution, maintenance, enforcement and defense of patents and patent applications covering the technology that we license to or from third parties. For example, under our Celgene License Agreement, Celgene has the exclusive right to enforce, maintain or defend our intellectual property rights with respect to JTX-8064. Therefore, we cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained, enforced, and defended in a manner consistent with the best interests of our business. If Celgene or any other of our licensors fail to prosecute, maintain, enforce and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated and our right to develop and commercialize our product candidates that are the subject of such licensed rights could be adversely affected. Furthermore, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties.

Certain of our license agreements also require us to meet development thresholds to maintain the license, including establishing a set timeline for developing and commercializing products. If we fail to comply with the obligations under our license agreements, including payment and diligence terms, our licensors may have the right to terminate our agreements. Such an occurrence could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of our license agreements or reduction or elimination of our rights under them may result in our having to negotiate a new or reinstated agreement, which may not be available to us on equally favorable terms, or at all.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations and prospects.

Further, the resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may not be successful in obtaining necessary rights to our product candidates we may develop or obtain through acquisitions and in-licenses.

We currently have rights to intellectual property, through licenses from third parties, for certain uses of vopratelimab. Because our current and future product candidates may require the use of proprietary rights held by third parties, the growth of our business likely will depend, in part, on our ability to acquire, in-license or use these proprietary rights. We may be unable to acquire or in-license any compositions, methods of use, processes or other intellectual property rights from third parties that we identify as necessary for our current and future product candidates. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities.

If we are unable to successfully obtain required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon or alter our plans for the development or commercialization of the relevant program or product candidate, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

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We may not be able to protect our intellectual property and proprietary rights throughout the world.

Filing, prosecuting and defending patents on our current and future product candidates throughout the world would be prohibitively expensive, and intellectual property rights in some countries outside the United States can be less extensive than those in the United States.

Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. Any efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property we develop or license.

Moreover, many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business and results of operations may be adversely affected.

Generic or biosimilar product manufacturers may develop, seek approval for, and launch biosimilar versions or generic versions, respectively, of our products. The FDA has published draft guidance documents on biosimilar product development. For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biosimilar and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. If any of our current or future product candidates are approved by the FDA, the approval of a biosimilar product to one of our products could have a material impact on our business. In particular, a biosimilar product could be significantly less costly to bring to market and priced significantly lower than our products, if approved by the FDA.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payments and other similar provisions during the patent application process and to maintain patents after they are issued. In certain circumstances, we rely on our licensing partners to take the necessary action to comply with these requirements with respect to our licensed intellectual property. While an unintentional lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we fail to obtain and maintain the patents and patent applications covering our products or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our current and future product candidates, which would have a material adverse effect on our business.

Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs.

The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. Changes in patent law could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

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We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of our business.

Competitors may infringe our licensed patents or any patent we own in the future or misappropriate or otherwise violate our intellectual property rights. We may also be required to defend against claims of infringement and our licensed patents and any patents we own in the future may become involved in priority or other intellectual property related disputes. To counter infringement or unauthorized use, litigation may be necessary to enforce or defend our intellectual property rights or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Also, third parties may initiate legal proceedings against us or our licensors to assert that we are infringing their intellectual property rights or to challenge the validity or scope of our owned or licensed intellectual property rights. Litigation and other intellectual property related proceedings could result in substantial costs and diversion of management resources, which could harm our business and financial results. Despite our best efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. In addition, an adverse result in any litigation or other intellectual property related proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be disclosed during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments in any such proceedings. If securities analysts or investors perceive these results to be negative, it also could have a material adverse effect on the price of shares of our common stock. Any of the foregoing may have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be subject to claims by third parties asserting that our collaborators, licensors, employees or we have misappropriated their intellectual property, have wrongfully used or disclosed confidential information of third parties or are in breach of non-competition or non-solicitation agreements with our competitors.

Many of our employees, our collaborators’ employees and our licensors’ employees, including our senior management, are currently or previously were employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, including each member of our senior management, executed proprietary rights, non-disclosure and non-competition agreements, or similar agreements, in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property of any such individual’s current or former employer. In addition, we could be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors, that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor. Litigation may be necessary to defend against such claims. If we fail in defending any such claims, we may lose valuable intellectual property rights or personnel or sustain monetary damages. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. Any of the foregoing may have a material adverse effect on our business, financial condition, results of operations and prospects.

Issued patents covering our current and future product candidates could be found invalid or unenforceable if challenged in court or before the USPTO or comparable foreign authority.

If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering one of our current or future product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid or unenforceable. The outcome following legal assertions of invalidity and unenforceability is unpredictable. If a third party were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our current and future product candidates. Such a loss of patent protection could have a material adverse impact on our business.

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Risks Related to Employee Matters, Managing our Growth and Other Risks Related to our Business

We currently have no marketing and sales organization and have no experience in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenue.

We currently have no sales, marketing, or distribution capabilities and have no experience in marketing products. If any of our product candidates receives appropriate regulatory approval, we intend to develop an in-house marketing organization and sales force, which will require significant capital expenditures, management resources and time. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we will pursue collaborative arrangements regarding the sales and marketing of our products; however, we cannot assure stockholders that we will be able to establish or maintain such collaborative arrangements, on favorable terms if at all. We cannot assure stockholders that we will be able to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any current or future product candidates.

We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of September 30, 2019, we had 128 full-time employees, including 101 employees engaged in research and development. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:


•	identifying, recruiting, integrating, maintaining and motivating additional employees;


•	managing our internal development efforts effectively, including the clinical and FDA review process for our current and future product candidates, while complying with our contractual obligations to contractors and other third parties; and


•	improving our operational, financial and management controls, reporting systems and procedures.

Our future financial performance and our ability to commercialize our current and future product candidates will depend, in part, on our ability to effectively expand our organization by hiring new employees and expand our groups of consultants and contractors and manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including substantially all aspects of marketing approval, clinical management, and manufacturing. We cannot assure stockholders that we can effectively manage our outsourced activities.

We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract, motivate and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on our management, particularly our chief executive officer, Richard Murray, and our scientific and medical personnel. The loss of the services of any of our executive officers, key employees, and scientific and medical advisors, and our inability to find suitable replacements, could result in delays in product development and harm our business.

We conduct our operations at our facility in Cambridge, Massachusetts, in a region that is home to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel is intense and the turnover rate can be high, which may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. We expect that we will need to recruit talent from outside of our region and doing so may be costly and difficult.

To induce valuable employees to remain at our Company, in addition to salary and cash incentives, we have provided equity awards that vest over time. The value to employees of these equity grants that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies. Although we have employment agreements with our key employees, these employment agreements provide for at-will employment, meaning that such employees could leave our employment

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at any time, with or without notice. We do not maintain “key man” insurance policies on the lives of all of these individuals or the lives of any of our other employees.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

Our internal computer systems, or those used by our CROs, licensees or other collaborators, may fail or suffer security breaches and cyber-attacks, which could compromise our intellectual property or other sensitive information and could result in a material disruption of our business.

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses and unauthorized access. While we have not to our knowledge experienced any such material system failure or security breach to date, if such an event were to occur, it could result in a material disruption of our business operations. Likewise, we rely on third parties for many aspects of our business, including manufacturing product candidates and conducting clinical trials. The secure maintenance of this information is critical to our business and reputation. We believe that companies have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access. These threats can come from a variety of sources, ranging in sophistication from an individual hacker to a state-sponsored attack. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the past few years, cyber-attacks have become more prevalent and much harder to detect and defend against.

Our network and storage applications and those of our CROs, licensees, collaborators and vendors may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system disruptions. It is often difficult to anticipate or immediately detect such incidents and the damage caused by them. These data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose sensitive business information. A data security breach could also lead to public exposure of personal information of our employees. Cyber-attacks could cause us to incur significant remediation costs, disrupt key business operations and divert attention of management and key information technology resources. Our network security and data recovery measures and those of our CROs, licensees, collaborators and vendors may not be adequate to protect against such security breaches and disruptions. To the extent that any disruption, security breach or cyber-attack were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.

We, or the third parties upon whom we depend, may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Natural disasters could severely disrupt our operations and have a material adverse effect on our business. If a natural disaster, power outage or other event occurred that damaged critical infrastructure, such as our headquarters or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, could have a material adverse effect on our business.

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Our employees, independent contractors, vendors, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

We are exposed to the risk that our employees, independent contractors, vendors, principal investigators, CROs and consultants may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate the regulations of the FDA and comparable foreign regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities; healthcare fraud and abuse laws and regulations in the United States and abroad; or laws that require the reporting of financial information or data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could result in significant penalties and could have a material adverse effect on our ability to operate our business and our results of operations.

If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

We may evaluate various acquisitions and additional strategic partnerships, including licensing or acquiring complementary products, intellectual property rights, technologies, or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:


•	increased operating expenses and cash requirements;


•	the assumption of additional indebtedness or contingent liabilities;


•	the issuance of our equity securities;


•	assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;


•	the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition;


•	retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships;


•	risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and marketing approvals; and


•	our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

Our general business strategy may be adversely affected by any economic downturn, volatile business environment or unpredictable and unstable conditions in global credit and financial markets. We cannot assure stockholders that deterioration of the global credit and financial markets would not negatively impact our stock price, our current portfolio of cash equivalents or investments, or our ability to meet our financing objectives. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans.

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Risks Related to our Common Stock

Our ability to utilize our net operating loss carryforwards and certain other tax attributes has been limited by “ownership changes” and may be further limited.

Under Section 382 of the Internal Revenue Code of 1986, as amended, or the IRC, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percent change (by value) in the ownership of its equity over a three-year period), the corporation’s ability to use its pre-change net operating loss, or NOL, carryforwards and certain other pre-change tax attributes to offset its post-change income may be limited. An IRC Section 382 study, completed in August 2016, identified three previous ownership changes for purposes of IRC Section 382. As a result of these ownership changes, our net operating loss and tax credit carryforwards allocable to the periods preceding each such ownership change are subject to limitations under IRC Section 382. We may experience ownership changes in the future as a result subsequent shifts in our stock ownership, some of which are outside our control, which may also be subject to limitations by “ownership changes” in the future, which could result in increased tax liability to us.

The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.

Our stock price is likely to be volatile. The stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our common stock may be influenced by many factors, including:


•	the success of competitive products or technologies;


•	results of our clinical trials or those of our competitors;


•	regulatory or legal developments in the United States and other countries;


•	developments or disputes concerning patent applications, issued patents or other proprietary rights;


•	the recruitment or departure of key personnel;


•	the level of expenses related to our product candidates or clinical development programs;


•	continued efforts by BMS to develop and commercialize JTX-8064 following the closing of the transaction with Celgene;


•	the results of our efforts to discover, develop, acquire or in-license additional product candidates or drugs;


•	actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;


•	variations in our financial results or those of companies that are perceived to be similar to us;


•	changes in the structure of healthcare payment systems;


•	market conditions in the pharmaceutical and biotechnology sectors;


•	general economic, industry and market conditions; and


•	the other factors described in this “Risk Factors” section.

We do not intend to pay dividends on our common stock, so any returns will be limited to the value of our stock.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.

Our executive officers, directors, principal stockholders and their affiliates will continue to exercise control over our Company, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.

As of September 30, 2019, our executive officers and directors, combined with our stockholders who owned more than five percent of our outstanding common stock, and their affiliates, beneficially owned approximately 54 percent of our outstanding common stock. As a result, these stockholders, if they act together, could be able to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger,

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consolidation, or sale of all or substantially all of our assets. In addition, this concentration of ownership might adversely affect the market price of our common stock by:


•	delaying, deferring or preventing a change of control;


•	impeding a merger, consolidation, takeover or other business combination; or


•	discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control.

We are incurring and will continue to incur significantly increased costs as a result of operating as a public company, and our management is now required to devote substantial time to new compliance initiatives.

As a public company, we are incurring and will continue to incur significant legal, accounting and other expenses, particularly after we are no longer an emerging growth company. We are subject to the reporting requirements of the Exchange Act, as well as various requirements imposed by the Sarbanes-Oxley Act, rules subsequently adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

We expect the rules and regulations applicable to public companies to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and more costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We also expect that we will need to hire additional accounting, finance and other personnel in connection with our efforts to comply with the requirements of being a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

We are considered a “smaller reporting company” under Rule 12b-2 of the Exchange Act. We are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from providing selected financial data and executive compensation information. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company also mean our auditors are not required to review our internal control over financial reporting and may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our common stock prices may be more volatile. We will remain a smaller reporting company until our public float exceeds $250 million or our annual revenues exceed $100 million with a public float greater than $700 million.

Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

Certain stockholders hold a substantial number of shares of our common stock. If such stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline.

In addition, shares of common stock that are either subject to outstanding options or reserved for future issuance under our stock incentive plans will become eligible for sale in the public market extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act of 1933, as amended, or the Securities Act, and, in any event, we have filed a registration statement permitting shares of common stock issued on exercise of options to be freely sold in the public market. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Certain holders of our common stock are entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates. Any sales of securities by these

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stockholders who have exercised registration rights could have a material adverse effect on the trading price of our common stock.

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. From time to time, we may enter into license or collaboration agreements with other companies that include development funding and significant upfront and milestone payments and/or royalties, which may become an important source of our revenue. Accordingly, our revenue may depend on development funding and the achievement of development and clinical milestones under current and any potential future license and collaboration agreements and sales of our products, if approved. These upfront and milestone payments may vary significantly from period to period and any such variance could cause a significant fluctuation in our operating results from one period to the next.

Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:


•	the timing and cost of, and level of investment in, research and development activities relating to our current and other future product candidates, which will change from time to time;


•	our ability to enroll patients in clinical trials and the timing of enrollment;


•	the cost of manufacturing our current and other future product candidates, which may vary depending on FDA guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers;


•	expenditures that we will or may incur to acquire or develop additional product candidates and technologies;


•	the timing and outcomes of clinical trials for our current and future product candidates or competing product candidates;


•	competition from existing and future products that may compete with our current and future product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners;


•	any delays in regulatory review or approval of any of our current or future product candidates;


•	the level of demand for our current and future product candidates, if approved, which may fluctuate significantly and be difficult to predict;


•	our ability to commercialize our current and future product candidates, if approved;


•	the success of our exclusive license to Celgene and our ability to establish and maintain other collaborations, licensing or other arrangements;


•	our ability to adequately support future growth;


•	potential unforeseen business disruptions that increase our costs or expenses;


•	future accounting pronouncements or changes in our accounting policies; and


•	the changing and volatile global economic environment.

The cumulative effect of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue and/or earnings guidance we may provide.

Moreover, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us as pharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources.

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If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline.

The trading market for our common stock will rely, in part, on the research and reports that industry or financial analysts publish about us or our business. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which, in turn, could cause our stock price to decline.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders and the ability of our board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15 percent of our outstanding voting stock to merge or combine with us. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirors to negotiate with our board of directors, they would apply even if an offer rejected by our board were considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our bylaws, provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this provision of our bylaws. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near the State of Delaware. The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively, if a court were to find this provision of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs, which could have a material adverse effect on our business, financial condition or results of operations.

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Item 6. Exhibits



Exhibit No.		Description of Exhibit
10.1*#		License Agreement by and among the Registrant, Celgene Corporation, and Celgene RIVOT LLC, dated July 22, 2019
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+		Certifications of Principal Executive Officer and 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*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements

*		Filed herewith
+		Furnished herewith
#		Portions of this Exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K

Table of Contents

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.



		JOUNCE THERAPEUTICS, INC.

Date: November 7, 2019	By:	/s/ Kim C. Drapkin
		Kim C. Drapkin
		Treasurer and Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 10.1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.

LICENSE AGREEMENT

by and among

JOUNCE THERAPEUTICS, INC.,

CELGENE CORPORATION,

and

CELGENE RIVOT LLC

dated as of July 22, 2019

TABLE OF CONTENTS

Page


ARTICLE 1 DEFINITIONS	1


ARTICLE 2 DEVELOPMENT	15


2.1	General 15


2.2	Development Diligence 16


2.3	Development Updates 16


ARTICLE 3 REGULATORY	16


3.1	Regulatory Matters 16


3.2	Regulatory Materials 16


3.3	Right of Reference; Access to Data 17


ARTICLE 4 COMMERCIALIZATION	17


4.1	General 17


4.2	Diligence 17


ARTICLE 5 MANUFACTURING	17


5.1	General 17


ARTICLE 6 TRANSITION	17


6.1	Assistance 17


6.2	Materials Transfer 18


6.3	Manufacturing Technology Transfer 18


6.4	Jounce Development and Manufacturing Agreements 19


6.5	Transition Plan 20


ARTICLE 7 FINANCIAL TERMS	20


7.1	Upfront Payment 20


7.2	Milestones 20


7.3	Sales Milestones 21


7.4	Royalties 21

TABLE OF CONTENTS

(continued)

Page


7.5	Payments on Licensed Products other than the Initial Licensed Product 24


7.6	Additional Payment Terms 24


7.7	Records; Audit Rights 24


7.8	Jounce Upstream License Agreements and Jounce Development and Manufacturing Agreements 25


7.9	Additional Provisions 25


ARTICLE 8 LICENSE; NON-COMPETE	26


8.1	License to Celgene 26


8.2	Sublicensing; Subcontracting 26


8.3	Rights Retained by the Parties 26


8.4	No Implied Licenses 26


8.5	Jounce Upstream License Agreements 26


8.6	Non-Compete 27


ARTICLE 9 INTELLECTUAL PROPERTY	28


9.1	Ownership of Inventions 28


9.2	Prosecution and Maintenance 28


9.3	Enforcement 28


9.4	Defense 29


9.5	Recovery 29


9.6	Trademarks 29


9.7	Patent Extensions 29


9.8	Purple Book Listings 29


ARTICLE 10 [INTENTIONALLY OMITTED]	30


ARTICLE 11 CONFIDENTIALITY	30


11.1	Nondisclosure 30


11.2	Exceptions 30

TABLE OF CONTENTS

(continued)

Page


11.3	Authorized Disclosure and Use 31


11.4	Terms of this Agreement 32


11.5	Securities Filings; Disclosure under Applicable Law 32


11.6	Press Releases; Publications; Public Statements 32


11.7	Use of Names 33


11.8	Clinical Trials Registry 33


ARTICLE 12 REPRESENTATIONS AND WARRANTIES; COVENANTS	33


12.1	Representations and Warranties of Each Party 33


12.2	Representations and Warranties of Jounce 34


12.3	Covenants 37


12.4	Disclaimer 38


ARTICLE 13 INDEMNIFICATION; INSURANCE	38


13.1	Indemnification by Celgene 38


13.2	Indemnification by Jounce 39


13.3	Procedure 39


13.4	Insurance 40


13.5	LIMITATION OF LIABILITY 40


ARTICLE 14 TERM AND TERMINATION	40


14.1	Term; Expiration 40


14.2	Termination for Material Breach 41


14.3	Termination at Will 42


14.4	Termination for Bankruptcy 42


14.5	Effects of Termination 42


14.6	Certain Additional Remedies of Celgene in Lieu of Termination 44


14.7	Surviving Provisions 44

iii

TABLE OF CONTENTS

(continued)

Page


14.8	Milestone Payments 45


ARTICLE 15 MISCELLANEOUS	45


15.1	Severability 45


15.2	Notices 45


15.3	Force Majeure 46


15.4	Assignment 46


15.5	Waivers and Modifications 47


15.6	WAIVER OF JURY TRIAL 48


15.7	Choice of Law; Dispute Resolution; Jurisdiction 48


15.8	Relationship of the Parties 49


15.9	Fees and Expenses 49


15.10	Third Party Beneficiaries 49


15.11	Entire Agreement 49


15.12	Counterparts 49


15.13	Equitable Relief; Cumulative Remedies 50


15.14	Interpretation 50


15.15	Further Assurances 51


15.16	Extension to Affiliates 51


15.17	Celgene Parties 51

SCHEDULES

Schedule 1.71(a): Jounce JTX-8064-Only Development and Manufacturing Agreements

Schedule 1.71(b): Jounce General Development and Manufacturing Agreements

Schedule 1.77: Jounce Patents

Schedule 1.78: Jounce Upstream License Agreements

Schedule 1.80: Knowledge

Schedule [***]: [***]

Schedule 1.130: Transition Plan

Schedule 6.4.2: Pre-Approved Third Party Transition Activities

TABLE OF CONTENTS

(continued)

Page

Schedule 11.6.1: Form of Press Release

Schedule 12.2: Exceptions to Representations and Warranties of Jounce

LICENSE AGREEMENT

This LICENSE AGREEMENT (this “Agreement”) is entered into as of July 22, 2019 (the “Effective Date”) by and among Jounce Therapeutics, Inc., a Delaware corporation (“Jounce”), Celgene Corporation, a Delaware corporation (“Celgene Corp.”), with respect to all rights and obligations under this Agreement in the United States, and Celgene RIVOT LLC, a Delaware limited liability company (“Celgene RIVOT”), with respect to all rights and obligations under this Agreement outside of the United States (Celgene Corp. and Celgene RIVOT, collectively, “Celgene”). Jounce and Celgene are each referred to herein by name or as a “Party” or, collectively, as the “Parties.”

RECITALS

WHEREAS, Jounce and Celgene are parties to that certain Master Research and Collaboration Agreement, entered into and effective as of July 18, 2016 (the “MRCA”);

WHEREAS, the Parties desire to terminate the MRCA pursuant to the Termination Agreement (as defined below); and

WHEREAS, the Parties desire to enter into this Agreement, pursuant to which Celgene wishes to obtain, and Jounce wishes to grant, a license under the Jounce IP with respect to Licensed Compounds and Licensed Products in the Field in Territory (each, as defined below) on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms shall have the respective meanings set forth below.

1.1 “Accounting Standards” means: (a) United States Generally Accepted Accounting Principles (“GAAP”); or (b) to the extent that a Party adopts International Financial Reporting Standards (“IFRS”), IFRS, in either case, consistently applied.

1.2 “Acquiring Person” means, collectively, the Person referenced in the definition of Change of Control and such Person’s Affiliates, other than the applicable Party in the definition of Change of Control and such Party’s Affiliates, determined immediately prior to the closing of such Change of Control.

1.3 “Affiliate” means any Person which, directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with a Party. For purposes of this Section 1.3 only, the term “control” (including, with correlative meanings, the terms “controlled by” and

“under common control with”) as used with respect to a Person means: (a) direct or indirect ownership of fifty percent (50%) or more of the voting securities or other voting interest of any Person (including attribution from related parties); or (b) the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of such Person, whether through ownership of voting securities, by contract, as a general partner, as a manager, or otherwise.

1.4 “Agreement” has the meaning set forth in the Preamble.

1.5 “Annual Net Sales” means, on an Initial Licensed Product-by-Initial Licensed Product basis, total Net Sales by Selling Parties in the Territory of such Initial Licensed Product in a particular Calendar Year, calculated in accordance with Accounting Standards.

1.6 “Applicable Law” means all applicable laws, statutes, rules, regulations, orders, judgments, or ordinances having the effect of law of any national, multinational, federal, state, provincial, county, city, or other political subdivision, including, to the extent applicable, GCP, GLP, and GMP, as well as all applicable data protection and privacy laws, rules, and regulations, including, to the extent applicable, the United States Department of Health and Human Services privacy rules under the Health Insurance Portability and Accountability Act and the Health Information Technology for Economic and Clinical Health Act and the EU Data Protection Directive (Council Directive 95/46/EC) and applicable laws implementing the EU Data Protection Directive and the General Data Protection Regulation (2016/679).

1.7 “Auditor” has the meaning set forth in Section 7.7.2.

1.8 “Biologic” means, with respect to LILRB2: (a) a [***], or [***] in any form, including [***] or [***], including a [***] (provided, that the amino acid sequence of the portion of LILRB2 [***] that is included in such variant is equal or greater than [***] percent ([***]%) identical to the amino acid sequence of LILRB2 [***]), that [***] or sequence variant thereof; or (b) a [***] comprising a nucleotide sequence (RNA or DNA) that encodes any [***], or [***] described in sub-clause (a) which, in the case of any such [***], or [***] described in sub-clause (a) or sub-clause (b), may or may not be fused or otherwise linked to one (1) or more [***] that are not LILRB2 in order to increase the half-life of such [***] [***], or [***], including an [***] or a fragment thereof, [***] or a fragment thereof, or [***]. The Parties agree that a [***] shall not be a Biologic.

1.9 “Biomarker” means a parameter or characteristic in a patient or Patient Sample, the measurement of which is useful for: (a) purposes of selecting appropriate therapies or patient populations or monitoring therapies for such patient; or (b) predicting the outcome of a particular treatment of such patient.

1.10 “Biosimilar Product” means, with respect to an Initial Licensed Product, a biological product: (a) that contains (i) an identical active ingredient(s) as the Licensed Compound in such Licensed Product, or (ii) a “highly similar” active ingredient(s) to the Licensed Compound in such Initial Licensed Product, as the phrase “highly similar” is used in 42 U.S.C. § 262(i)(2), and subject to the factors set forth in FDA’s Guidance for Industry, “Quality Considerations in Demonstrating Biosimilarity to a Reference Protein Product,” (February 2012), at Section VI, or any successor FDA guidance thereto; (b) for which Regulatory Approval is obtained by referencing Regulatory Materials of such Initial Licensed Product; (c)

is approved for use in such country (or region) pursuant to a Regulatory Approval process governing approval of interchangeable or biosimilar biologics as described in 42 U.S.C. § 262, or a similar process for Regulatory Approval in any country (or region) outside the United States, or any other similar provision that comes into force, or is the subject of a notice with respect to such Initial Licensed Product under 42 U.S.C. § 262(l)(2) or any other similar provision that comes into force in such country (or region); and (d) is sold in the same country as such Initial Licensed Product by any Third Party that is not a Sublicensee of Celgene or its Affiliates with respect to the Jounce IP and Joint IP and did not purchase such product in a chain of distribution that included any Selling Party.

1.11 “BLA” means a Biologics License Application filed with the FDA in the United States, as defined in Title 21 of the U.S. Code of Federal Regulations, Section 601.2 et seq., or any non-U.S. counterpart of the foregoing.

1.12 “BPCIA” means Biologics Price Competition and Innovation Act of 2009.

1.13 “Business Day” means a day on which banking institutions in New York City, New York, are open for business, excluding any Saturday or Sunday.

1.14 “Calendar Quarter” means each of the three (3) month periods ending March 31, June 30, September 30, and December 31; provided, that: (a) the first Calendar Quarter of the Term shall extend from the Effective Date to the end of the first complete such three (3)-month period thereafter; and (b) the final Calendar Quarter of the Term shall end on the last day of the Term.

1.15 “Calendar Year” means the period beginning on the Effective Date and ending on December 31 of the calendar year in which the Effective Date falls, and thereafter each successive period of twelve (12) consecutive calendar months beginning on January 1 and ending on December 31; provided, that the final Calendar Year of the Term shall end on the last day of the Term.

1.16 “Celgene” has the meaning set forth in the Preamble.

1.17 “Celgene Corp.” has the meaning set forth in the Preamble.

1.18 “Celgene Indemnitees” has the meaning set forth in Section 13.2.

1.19 “Celgene RIVOT” has the meaning set forth in the Preamble.

1.20 “Change of Control” means, with respect to a Party, the occurrence of any of the following events from and after the Effective Date: (a) any Person or group of Persons becomes the beneficial owner (directly or indirectly) of more than fifty percent (50%) of the voting shares of such Party; (b) such Party consolidates with or merges into or with another Person pursuant to a transaction in which more than fifty percent (50%) of the voting shares of the acquiring or resulting entity outstanding immediately after such consolidation or merger is not held by the holders of the outstanding voting shares of Jounce immediately preceding such consolidation or merger; or (c) such Party sells or transfers to another Person all or substantially all of its assets.

1.21 “Clinical Trial” means any human clinical trial of a Licensed Product.

1.22 “Code” has the meaning set forth in Section 14.4.2.

1.23 “Combination Product” has the meaning set forth in Section 1.95.

1.24 “Commercialization” means any and all activities directed to the commercialization of a product, including marketing, detailing, promotion, market research, distributing, order processing, handling returns and recalls, booking sales, customer service, administering, and commercially selling such product, importing, exporting, and transporting such product for commercial sale, and seeking Pricing Approval of a product (if applicable), whether before or after Regulatory Approval has been obtained, as well all regulatory compliance with respect to the foregoing. For clarity, “Commercialization” does not include: (a) Manufacturing; or (b) any Clinical Trials and other trials commenced after Regulatory Approval. When used as a verb, “Commercialize” means to engage in Commercialization.

1.25 “Commercially Reasonable Efforts” means, with respect to Celgene in relation to an obligation under this Agreement with respect to an Initial Licensed Product, such efforts that are consistent with the efforts and resources normally used by Celgene and its Affiliates in the performance of such an obligation for a similar pharmaceutical or biological product (including the [***], and [***] of a [***] or [***]), as applicable, at a similar stage in its research, development, or commercial life as such Licensed Product, and that has commercial and market potential similar to such Licensed Product, taking into account issues of [***] and [***] of [***] of the [***] or [***] and [***] and [***] the [***] of [***] of [***] (including [***] and [***] or [***]), [***] to [***] or other [***] and [***], and [***].

1.26 “Competing Infringement” has the meaning set forth in Section 9.3.1.

1.27 “Competing Product” means any product, other than a Licensed Product, which constitutes, incorporates, comprises, or contains: (a) an antibody (including the Initial Licensed Compound) or other Biologic that is Specifically Directed to LILRB2; or (b) any Related Antibody or Related Biologic, as applicable, with respect to any antibody or other Biologic described in sub-clause (a), in each case ((a) and (b)), whether or not as the sole active ingredient, in any form, presentation, or formulation (including [***] and [***]).

1.28 “Confidential Information” means, with respect to a Party, all confidential and proprietary information, including chemical or biological materials, chemical structures, commercialization plans, correspondence, customer lists, data, development plans, formulae, improvements, Inventions, Know-How, processes, regulatory filings, Regulatory Materials, reports, strategies, techniques, or other information, in each case, that are disclosed by or on behalf of such Party or any of its Affiliates to the other Party or any of its Affiliates pursuant to this Agreement, regardless of whether any of the foregoing are marked “confidential” or “proprietary” or communicated to the other Party by or on behalf of the disclosing Party in oral, written, visual, graphic, or electronic form. Any Jounce IP which is specifically related to any Licensed Compound or any Licensed Product shall be deemed the Confidential Information of Celgene.

1.29 “Control,” “Controls,” or “Controlled” means, with respect to any Patent, Know-How, other intellectual property right, or Confidential Information, the ability of a Party or its Affiliates, as applicable (whether through ownership, license, or sublicense (other than a license granted pursuant to this Agreement)) to grant to the other Party the licenses, sublicenses, or other rights as provided herein, or to

otherwise disclose such intellectual property right, or Confidential Information to the other Party, without violating the terms of any then-existing agreement with any Third Party at the time such Party or its Affiliates, as applicable, would be required hereunder to grant the other Party such licenses, sublicenses, or other rights as provided herein or to otherwise disclose such intellectual property right, or Confidential Information to the other Party.

1.30 “Cover” means, with reference to a Patent claim, that the making, using, offering to sell, selling, importing, or exporting of a Licensed Product would infringe such Patent claim in the country in which such activity occurs without a license thereto (or ownership thereof).

1.31 “Cure Period” has the meaning set forth in Section 14.2.1.

1.32 “Damages” means all losses, costs, claims, damages, judgments, liabilities, and expenses (including reasonable attorneys’ fees and other reasonable out-of-pocket costs in connection therewith).

1.33 “Default” means: (a) any breach, violation, or default; (b) the existence of circumstances or the occurrence of an event that with the passage of time or the giving of notice or both would constitute a breach, violation, or default; or (c) the existence of circumstances or the occurrence of an event that, with or without the passage of time or the giving of notice or both, would give rise to a right of termination, renegotiation, acceleration, or material change of terms.

1.34 “Development” means: (a) research activities (including drug discovery, identification, or synthesis) with respect to a product; or (b) preclinical and clinical drug development activities and other development activities with respect to a product, including test method development and stability testing, toxicology, formulation, process development, qualification and validation, quality assurance, quality control, Clinical Trials (including the conduct of Clinical Trials and other trials commenced after Regulatory Approval), statistical analysis and report writing, the preparation and submission of INDs and MAAs, regulatory affairs with respect to the foregoing, and all other activities necessary or useful or otherwise requested or required by a Regulatory Authority or as a condition or in support of obtaining or maintaining a Regulatory Approval. For clarity, “Development” does not include Manufacturing. When used as a verb, “Develop” means to engage in Development.

1.35 “Diagnostic Product” means, on a Licensed Compound-by-Licensed Compound basis, any product used to identify, diagnose, screen, or monitor patients with a predisposition to a human condition, disease, or disorder, or to predict prognosis, safety, or efficacy of therapeutic treatment of a human condition, disease, or disorder in a patient, and in each case which product: (a) contains such Licensed Compound, a functional fragment of such Licensed Compound, any variant of the foregoing (including splice variants), any nucleic acid sequence encoding any of the foregoing, or a complementary nucleic acid sequence to such nucleic acid sequence; or (b) primarily functions by determining the absence or presence (or quantity) of any Biomarker for each that is present in a Patient Sample, in each case ((a) and (b)), developed for use in connection with the applicable Licensed Compound or pharmaceutical or biological product comprising such Licensed Compound.

1.36 “Disclosing Party” has the meaning set forth in Section 11.1.

1.37 “Dispute” has the meaning set forth in Section 15.7.2.

1.38 “[***]” means, with respect to a [***]: (a) the [***] of such [***] through: (i) an [***] in such [***] to a [***]; (ii) an [***] to a [***] of all [***] with respect to such [***], with no further [***], or [***] of [***], directly or indirectly, with respect to such [***]; or (iii) a combination of the [***] contemplated by the foregoing clauses (i) and (ii); or (b) the [***] of all [***] activities with respect to such [***] (subject, if applicable, to applicable [***] activities). When used as a verb, “[***]” and “[***]” means to cause or have caused a [***].

1.39 “Dollars” or “$” means the legal tender of the United States.

1.40 “Effective Date” has the meaning set forth in the Preamble.

1.41 “Electronic Delivery” has the meaning set forth in Section 15.12.

1.42 “EMA” has the meaning set forth in Section 1.109.

1.43 “EU” means all countries that are officially recognized as member states of the European Union at any particular time.

1.44 “Executive Officers” means: (a) with respect to Jounce, Jounce’s Chief Executive Officer or his/her designee; and (b) with respect to Celgene, Celgene’s President of Research and Early Development (or an officer with equivalent seniority or role) or his/her designee.

1.45 “FDA” has the meaning set forth in Section 1.109.

1.46 “Field” means any and all uses or purposes, including the treatment, prophylaxis, palliation, diagnosis, or prevention of any human or animal disease, disorder, or condition.

1.47 “First Commercial Sale” means, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis, the first sale of such Initial Licensed Product in such country for use or consumption by the general public (following receipt of all Regulatory Approvals that are required in order to sell such Initial Licensed Product in such country) and for which a Selling Party has invoiced sales of Initial Licensed Products in the Territory; provided, however, that the following shall not constitute a First Commercial Sale: (a) any sale to an Affiliate or Sublicensee, unless such Affiliate or Sublicensee is the last Person in the distribution chain of such Initial Licensed Product; or (b) any [***] of such Initial Licensed Product [***] with respect to such Initial Licensed Product by or on behalf of a Selling Party, or [***] of such Initial Licensed Product for [***], or [***].

1.48 “FPFD” means the administration of the first dose of an Initial Licensed Product to the first patient (or volunteer, as relevant) participating in a Clinical Trial.

1.49 “FTE” has the meaning set forth in Section 1.50.

1.50 “FTE Rate” means the equivalent of the work of one (1) full-time person engaged by Jounce to perform the Jounce Additional Activities, if any, carried out by an appropriately qualified employee or consultant of Jounce or its Affiliates, based on [***] ([***]) working hours or greater per year (such

person, an “FTE”), at a rate of [***] Dollars ($[***]) per year. Any Jounce employee or consultant who devotes fewer than [***] ([***]) hours per year on Jounce Additional Activities shall be treated as an FTE on a pro-rata basis, calculated by dividing the actual number of hours worked by such employee or consultant on such activities by [***] ([***]). Any employee or consultant who devotes more than [***] ([***]) hours per year on Jounce Additional Activities shall be treated as one (1) FTE. For the avoidance of doubt, FTE shall not include the work of general corporate or administrative personnel, except for the portion of such personnel’s work time actually spent on conducting scientific, technical, or commercial activities directly related to any Jounce Additional Activities.

1.51 “GAAP” has the meaning set forth in Section 1.1.

1.52 “GCP” means the applicable then-current ethical and scientific quality standards for designing, conducting, recording, and reporting Clinical Trials as are required by applicable Regulatory Authorities or Applicable Law in the relevant jurisdiction, including in the United States, Good Clinical Practices established through FDA guidances, and, outside the United States, Guidelines for Good Clinical Practice – ICH Harmonized Tripartite Guideline (ICH E6).

1.53 “GLP” means the applicable then-current good laboratory practice standards as are required by applicable Regulatory Authorities or Applicable Law in the relevant jurisdiction, including in the United States, those promulgated or endorsed by the FDA in U.S. 21 C.F.R. Part 58, or the equivalent thereof as promulgated or endorsed by the applicable Regulatory Authorities outside of the United States.

1.54 “GMP” means the applicable then-current good manufacturing practice standards relating for fine chemicals, intermediates, bulk products, or finished pharmaceutical, biological, or diagnostic products, as are required by applicable Regulatory Authorities or Applicable Law in the relevant jurisdiction, including, as applicable: (a) all applicable requirements detailed in the FDA’s current Good Manufacturing Practices regulations, U.S. 21 C.F.R. Parts 210 and 211; (b) all applicable requirements detailed in the EMA’s “The Rules Governing Medicinal Products in the European Community, Volume IV, Good Manufacturing Practice for Medicinal Products;” and (c) all Applicable Law promulgated by any Governmental Authority having jurisdiction over the manufacture of the applicable, antibody or other Biologic (or a functional fragment thereof), molecule, agent, compound, or pharmaceutical, biological, or diagnostic product, as applicable.

1.55 “Governmental Authority” means any: (a) federal, state, local, municipal, foreign, or other government; (b) governmental or quasi-governmental authority of any nature (including any agency, board, body, branch, bureau, commission, council, department, entity, governmental division, instrumentality, office, officer, official, organization, representative, subdivision, unit, and any court or other tribunal); (c) multinational governmental organization or body; or (d) entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military, or taxing authority or power of any nature.

1.56 “IFRS” has the meaning set forth in Section 1.1.

1.57 “IND” means an investigational new drug application (including any amendment or supplement thereto) submitted to the FDA pursuant to U.S. 21 C.F.R. Part 312, including any amendments

thereto. References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. for the investigation of any product in any other country or group of countries (such as a Clinical Trial Application in the EU).

1.58 “Indemnification Claim Notice” has the meaning set forth in Section 13.3.1.

1.59 “Indemnitee” has the meaning set forth in Section 13.3.1.

1.60 “Indemnitor” has the meaning set forth in Section 13.3.1.

1.61 “Indication” means an entirely separate and distinct disease or medical condition in humans for which a pharmaceutical or biological product: (a) that is in Clinical Trials is intended to treat in such Clinical Trials; or (b) has received a separate and distinct Regulatory Approval with an approved label claim to treat such disease or condition, as applicable. For clarity: (i) moving from one line of therapy to another within an Indication (e.g., moving from second-line therapy to first-line therapy) shall not be considered to be a new Indication; (ii) a single Indication would include the primary disease and all variants or sub-divisions or sub-classifications within such primary disease, and regardless of prophylactic or therapeutic use, pediatric or adult use and irrespective of different formulation(s), dosage forms, dosage strengths, or delivery system(s) used; (iii) obtaining a label expansion within an Indication for use of the pharmaceutical, biological, or diagnostic product in combination with another pharmaceutical, biological, or diagnostic product or for use in a specific patient population within an Indication shall not be considered to be a new Indication, and (iv) any cancer with a particular organ of origin is a distinct Indication from any other cancer with a different organ of origin.

1.62 “Initial Licensed Compound” has the meaning set forth in Section 1.82.

1.63 “Initial Licensed Product” means any product (other than a Diagnostic Product) that constitutes, incorporates, comprises, or contains the Initial Licensed Compound, whether or not as the sole active ingredient, in all forms, presentations, and formulations (including manner of delivery and dosage).

1.64 “Insolvency Event” has the meaning set forth in Section 14.4.

1.65 “Invention” means any process, method, composition of matter, article of manufacture, discovery, or finding that is conceived or reduced to practice.

1.66 “Joint Inventions” has the meaning set forth in Section 9.1.

1.67 “Joint IP” means Joint Inventions and Joint Patents.

1.68 “Joint Patents” has the meaning set forth in Section 9.1.

1.69 “Jounce” has the meaning set forth in the Preamble.

1.70 “Jounce Additional Activities” has the meaning set forth in Section 6.1.3.

1.71 “Jounce Development and Manufacturing Agreements” means any contract or agreement, other than any Jounce Upstream License Agreement (unless such Jounce Upstream License

Agreement is also listed on Schedule 1.71(a) or Schedule 1.71(b)), between Jounce (or any of its Affiliates, as applicable) and any Third Party that is related to the Development or Manufacture of any Licensed Compound or Licensed Product in effect as of, or at any time prior to, the Effective Date, including: (a) such agreements related solely to any Licensed Compound or Licensed Product as set forth on Schedule 1.71(a) including master services agreements for which all statements of work are related solely to Licensed Compounds or Licensed Products (the “Jounce JTX-8064-Only Development and Manufacturing Agreements”); and (b) agreements related to a Licensed Compound or Licensed Product but also related to other Jounce compounds, programs, or activities as set forth on Schedule 1.71(b) including master services agreements for which one (1) or more statements of work relate to compounds, programs, or products other than Licensed Compounds and Licensed Products (the “Jounce General Development and Manufacturing Agreements”).

1.72 “Jounce General Development and Manufacturing Agreements” has the meaning set forth in Section 1.71.

1.73 “Jounce Indemnitees” has the meaning set forth in Section 13.1.

1.74 “Jounce IP” means the Jounce Patents and the Jounce Know-How.

1.75 “Jounce JTX-8064-Only Development and Manufacturing Agreements” has the meaning set forth in Section 1.71.

1.76 “Jounce Know-How” means any Know-How Controlled by Jounce or any of its Affiliates (subject to Section 15.4.5) as of the Effective Date or at any time during the Term, excluding Jounce’s interest in any Joint Inventions, which is necessary or useful for the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product in the Field in the Territory.

1.77 “Jounce Patents” means any and all Patents Controlled by Jounce or any of its Affiliates (subject to Section 15.4.5) as of the Effective Date or at any time during the Term, excluding Jounce’s interest in any Joint Inventions or Joint Patents, which are [***] for the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product in the Field in the Territory. Without limiting the foregoing, Schedule 1.77 sets forth a complete and accurate list of all Jounce Patents as of the Effective Date. Jounce shall update Schedule 1.77 as necessary from time to time to reflect the then-current Jounce Patents.

1.78 “Jounce Upstream License Agreements” means any contract or agreement between Jounce (or any of its Affiliates, as applicable) and any Third Party(ies) pursuant to which Jounce in-licenses or otherwise acquires Control of any Patent, Know-How, or other intellectual property right that constitutes Jounce IP, including any contract or agreement which becomes a Jounce Upstream License Agreement pursuant to Section 8.5. Without limiting the foregoing, Schedule 1.78 sets forth a complete and accurate list of all Jounce Upstream License Agreements in effect (or with surviving provisions) as of the Effective Date. Jounce shall update Schedule 1.78 as necessary from time to time to reflect the then-current Jounce Upstream License Agreements.

1.79 “Know-How” means algorithms, data, information, Inventions, knowledge, methods (including methods of use or administration or dosing), practices, results, software, techniques, technology, and trade secrets, including analytical and quality control data, analytical methods (including applicable reference standards), assays batch records, chemical structures and formulations, compositions of matter, formulae, manufacturing data, pharmacological, toxicological, and clinical test data and results, processes, reports, research data, research tools, sequences, standard operating procedures, and techniques, in each case, whether patentable or not, and, in each case, tangible manifestations thereof.

1.80 “Knowledge” means, with respect to Jounce, the actual knowledge of those persons listed on Schedule 1.80 after due inquiry.

1.81 “Licensed Compound” means: (a) the antibody referred to as “JTX-8064” with [***] and any derivative of JTX-8064 [***] with a [***] (the “Initial Licensed Compound”); (b) any antibody (other than the Initial Licensed Compound) or other Biologic that is Controlled by Jounce or any of its Affiliates as of the Effective Date and is Specifically Directed to LILRB2, including [***]; and (c) any [***], as applicable, with respect to [***] or [***].

1.82 “Licensed Product” means any product (including any Initial Licensed Product or Diagnostic Product) that constitutes, incorporates, comprises, or contains a Licensed Compound, whether or not as the sole active ingredient, in all forms, presentations, and formulations (including manner of delivery and dosage).

1.83 “Licensed Product Marks” has the meaning set forth in Section 9.6.

1.84 “LILRB2” means the target identified by sequence identity “UniProtKB – Q8N423 (LIRB2_Human),” including any isoform thereof.

1.85 “MAA” means a Marketing Authorization Application, BLA, NDA, or similar application, as applicable, and all amendments and supplements thereto, submitted to the FDA, EMA, or any equivalent filing in a country or regulatory jurisdiction other than the U.S. or EU with the applicable Regulatory Authority, to obtain marketing approval for a pharmaceutical, biological, or diagnostic product, in a country or in a group of countries.

1.86 “Major Market Country” means [***] or any Major [***] Market Country.

1.87 “Major [***] Market Country” means [***].

1.88 “Major Sales Country” shall mean, with respect to any Calendar Quarter, any country in which Net Sales constituting at least [***] during such Calendar Quarter occurred.

1.89 “Manufacture” means all activities related to the manufacturing of a product or any component or ingredient thereof, including the production, manufacture, processing, filling, finishing, packaging, labeling, shipping, and holding of product or any intermediate thereof, including process development, process qualification and validation, scale-up, commercial manufacture and analytic development, product characterization, stability testing, quality assurance, and quality control.

1.90 “MHLW” has the meaning set forth in Section 1.109.

1.91 “Milestone Event” has the meaning set forth in Section 7.2.1.

1.92 “Milestone Payment” has the meaning set forth in Section 7.2.1.

1.93 “MRCA” has the meaning set forth in the Recitals.

1.94 “NDA” means a New Drug Application submitted to the FDA, or any successor application or procedure, as more fully defined in 21 C.F.R. § 314.50 et. seq.

1.95 “Net Sales” means, with respect to an Initial Licensed Product, the total gross amounts invoiced by or on behalf of Celgene, its Affiliates, or its Sublicensees (each, a “Selling Party”) to non-Sublicensee Third Parties during a net sales measurement period for sale of such Initial Licensed Product, less the following deductions actually incurred, allowed, paid, accrued, or specifically allocated in its financial statements and calculated in accordance with the Accounting Standards as consistently applied for:

1.95.1 [***] (including [***]) [***], and [***] and [***] (including to [***], and [***] (and other [***]));

1.95.2 [***], if any, on account of [***], or [***] (including [***] in connection with [***]) and [***]; provided, that if the [***] the Net Sales of the period during which [***];

1.95.3 [***] (or [***]), [***] and [***], and [***] (including to [***] and [***] (and other [***])) which [***] of the [***], as well as [***];

1.95.4 [***], and other [***] in [***] to a Third Party;

1.95.5 [***] (including [***] and other comparable [***]), [***] (excluding [***]); and

1.95.6 [***] due to [***] that are [***] with its other [***] of [***] in a [***].

There shall be no double counting in determining the foregoing deductions from gross amounts invoiced to calculate Net Sales hereunder. The calculations set forth in this definition of Net Sales shall be determined in accordance with Accounting Standards consistently applied.

If non-monetary consideration is received by a Selling Party for any Initial Licensed Product in a country, Net Sales will be calculated based on the [***], or in the absence of [***], the [***]. Notwithstanding the foregoing, Net Sales shall not [***], or [***] with respect to Initial Licensed Products by or on behalf of any Selling Party, for [***].

Net Sales shall be determined on, and only on, the first sale by a Selling Party to a non-Sublicensee Third Party.

If any Initial Licensed Product is, or is sold as part of, a Combination Product, Net Sales shall be calculated assuming that the gross sale price of each unit is equal to [***]: (i) [***] calculated as above (i.e., calculated as for [***]); and (ii) the [***], where:

“A” is the [***] in such country; and

“B” is the [***] containing such other [***] (and [***]), if [***] in such country.

If “A” or “B” cannot be determined by reference to non-Combination Product sales as described above, then Net Sales shall be calculated as above, but the [***] prior to the end of the [***] based on [***], in the applicable country, [***] and the [***] or [***] in the Combination Product.

For purposes of this definition, “Combination Product” means any pharmaceutical or biological product that contains two (2) or more active ingredients, including both: (A) the Initial Licensed Compound; and (B) one (1) or more active pharmaceutical or biological ingredients that are not the Initial Licensed Compound, either as a fixed dose product, co-formulated product, or co-packaged product, and sold for a single price. Any vehicles, adjuvants and excipients used in conjunction with the Initial Licensed Compound shall not be treated as active ingredients for the purposes of this definition.

1.96 “Party” or “Parties” has the meaning set forth in the Preamble.

1.97 “Patent Extensions” has the meaning set forth in Section 9.7.

1.98 “Patents” means: (a) all patents and patent applications in any country or supranational jurisdiction worldwide; and (b) any substitutions, divisionals, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates, and the like of any such patents or patent applications.

1.99 “Patient Sample” means tissue, fluid, or cells collected from a patient, or components of the foregoing.

1.100 “Per Initial Licensed Product Annual Net Sales” has the meaning set forth in Section 7.4.1.

1.101 “Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein.

1.102 “Phase 3 Clinical Trial” means a human clinical trial of a product in any country that would satisfy the requirements of U.S. 21 C.F.R. Part 312.21(c) and is intended to: (a) establish that the product is safe and efficacious for its intended use; (b) define contraindications, warnings, precautions, and adverse reactions that are associated with the product in the dosage range to be prescribed; and (c) support Regulatory Approval for such product, or a similar clinical study prescribed by the relevant Regulatory Authorities in a country other than the United States.

1.103 “Pivotal Clinical Trial” means a human clinical trial of a product on a sufficient number of subjects that, prior to commencement of such clinical trial: (a) is designed to establish that such product has an acceptable safety and efficacy profile for its intended use, and to determine warnings, precautions, and adverse reactions that are associated with such product in the dosage range to be prescribed, which trial is intended to support Regulatory Approval of such product, or a similar clinical study prescribed by the

applicable Regulatory Authority; and (b) is a registration trial sufficient for filing an application for a Regulatory Approval for such product in a Major Market Country, as evidenced by: (i) an agreement with or statement from the applicable Regulatory Authority on a Special Protocol Assessment or its equivalent, or (ii) other guidance or minutes issued by the applicable Regulatory Authority for such registration trial.

1.104 “Pricing Approval” means any approval, agreement, determination, or decision establishing prices that can be charged to consumers for a pharmaceutical or biological product or that will be reimbursed by Governmental Authorities for a pharmaceutical or biological product, in each case, in a country where Governmental Authorities approve or determine pricing for pharmaceutical or biological products for reimbursement or otherwise.

1.105 “Proposed Economic Terms” shall have the meaning set forth in Section 14.5.1(g).

1.106 “Prosecution and Maintenance” or “Prosecute and Maintain” means, with respect to a Patent, the preparation, filing, prosecution, and maintenance of such Patent, as well as re-examinations, reissues, appeals, and requests for patent term adjustments and patent term extensions with respect to such Patent, together with the initiation or defense of interferences, oppositions, post grant review, inter partes review, derivations, re-examinations, post-grant proceedings, and other similar proceedings (or other defense proceedings with respect to such Patent, but excluding the defense of challenges to such Patent as a counterclaim in an infringement proceeding) with respect to the particular Patent, and any appeals therefrom. For clarification, “Prosecution and Maintenance” or “Prosecute and Maintain” shall not include any other enforcement actions taken with respect to a Patent.

1.107 “Receiving Party” shall have the meaning set forth in Section 11.1.

1.108 “Regulatory Approval” means all approvals, licenses, and authorizations of the applicable Regulatory Authority necessary for the marketing and sale of a pharmaceutical, biological, or diagnostic product for a particular Indication in a country or region (including separate Pricing Approvals, as necessary), and including the approvals by the applicable Regulatory Authority of any expansion or modification of the label for such Indication.

1.109 “Regulatory Authority” means any national or supranational Governmental Authority, including the U.S. Food and Drug Administration (and any successor entity thereto) (the “FDA”) in the U.S., the European Medicines Agency (and any successor entity thereto) (the “EMA”) in the EU, and the Ministry of Health, Labour, and Welfare of Japan, or the Pharmaceuticals and Medical Devices Agency of Japan (or any successor to either of them), as the case may be (the “MHLW”) in Japan, or any health regulatory authority in any country or region that is a counterpart to the foregoing agencies, in each case, that holds responsibility for development and commercialization of, and the granting of Regulatory Approval for, a pharmaceutical, biological, or diagnostic product in such country or region.

1.110 “Regulatory Materials” means the regulatory registrations, applications, authorizations, and approvals (including approvals of MAAs, supplements and amendments, pre- and post-approvals, Pricing Approvals, and labeling approvals), Regulatory Approvals, and other submissions made to or with any Regulatory Authority for research, development (including the conduct of Clinical Trials), manufacture, or commercialization of a pharmaceutical, biological, or diagnostic product in a regulatory jurisdiction, together

with all related correspondence to or from any Regulatory Authority and all documents referenced in the complete regulatory chronology for each MAA, including all drug master files (if any), INDs, BLAs, and NDAs, and foreign equivalents of any of the foregoing.

1.111 “Related Antibody” means, with respect to an antibody, any variants, modifications, fragments, or derivatives thereof, whether human, humanized, chimeric, murine, synthetic, or in other form or from other origin (including bispecific antibodies, multi-specific antibodies, single chain antibodies, domain antibodies, and conjugated antibodies).

1.112 “Related Biologic” means, with respect to a Biologic other than an antibody, any improved or modified version of such Biologic.

1.113 “Royalty Floor” has the meaning set forth in Section 7.4.3(d).

1.114 “Royalty Term” means, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis, the period of time commencing on the First Commercial Sale of such Initial Licensed Product in such country and expiring upon the later of: (a) the date on which there is no Valid Claim of a Jounce Patent or Joint Patent that claims the composition of matter or method of use of the Initial Licensed Compound in such country; and (b) the twelve (12)-year anniversary of the date of First Commercial Sale of the first Initial Licensed Product in such country.

1.115 “Sales Milestone Event” has the meaning set forth in Section 7.3.1.

1.116 “Sales Milestone Payment” has the meaning set forth in Section 7.3.1.

1.117 “Securities Regulators” has the meaning set forth in Section 11.3.1(a).

1.118 “[***]” means, with respect to [***], to [***] the [***] relating to such [***] from the [***] with respect to [***] under this Agreement, including ensuring that: (a) [***] (including the [***]) involved in performing the [***], as applicable, of such [***] or [***] to the [***] of any [***] or any other relevant [***] or, to the extent relating to the [***] of any [***], the [***]; and (b) [***] involved in performing the [***] of any [***] relating to the [***]; provided, that the requirements described in (a) and (b) above shall not apply to [***] and [***] (provided, further, that such [***] are not [***] in [***] with respect to such [***]).

1.119 “Selling Party” has the meaning set forth in Section 1.95.

1.120 “Specifically Directed” means, with respect to LILRB2, the ability of an antibody or other Biologic (or a functional fragment thereof) to [***] or [***] LILRB2.

1.121 “Subcontractor” has the meaning set forth in Section 8.2.1.

1.122 “Sublicensee” means, with respect to Celgene, a Third Party to whom Celgene has granted a sublicense, either directly or indirectly, under the Jounce IP and Joint IP licensed to Celgene by Jounce in accordance with this Agreement, but excluding: (a) any Third Party acting as a distributor; and (b) Jounce and any of its Affiliates.

1.123 “Term” has the meaning set forth in Section 14.1.1.

1.124 “Terminated Licensed Product” means: (a) with respect to the termination of this Agreement with respect to a Licensed Product pursuant to Section 14.2 or Section 14.3, the Licensed Product subject to such termination; (b) with respect to the termination of this Agreement with respect to a country pursuant to Section 14.2 or Section 14.3, all Licensed Products in the country subject to such termination; and (c) with respect to termination of this Agreement in its entirety, all Licensed Products in all countries in the Territory.

1.125 “Termination Agreement” means that certain Termination Agreement, dated and effective as of the Effective Date, by and among Jounce, Celgene Corp., and Celgene RIVOT.

1.126 “Territory” means worldwide.

1.127 “Third Party” means any Person other than Jounce or Celgene that is not an Affiliate of Jounce or of Celgene.

1.128 “Third Party Claim” means any and all suits, claims, actions, proceedings, or demands brought by a Third Party.

1.129 “Third Party Infringement” has the meaning set forth in Section 9.4.1.

1.130 “Transition Plan” means that certain transition plan attached hereto as Schedule 1.130 which details the activities and timelines contemplated by Article 6.

1.131 “United States” or “U.S.” means the United States of America and all of its territories and possessions.

1.132 “Valid Claim” means a claim of a Jounce Patent or a Joint Patent that: (a) has issued and has not expired, lapsed, been cancelled, or abandoned, or been dedicated to the public, disclaimed, or held unenforceable, invalid, unpatentable, revoked, or cancelled by a court or administrative agency of competent jurisdiction in an order or decision from which no appeal has been or can be taken (with respect to U.S. Patents, other than by a petition to the United States Supreme Court for a writ of certiorari), including through opposition, reexamination, reissue, disclaimer, inter partes review, post grant review, post grant procedures, or similar proceedings; or (b) is in a pending patent application that has not been finally abandoned or finally rejected or expired and which has been pending for no more than [***] years (or, in the case of any such pending patent application in [***], [***] years) from the date of that the prosecuting Party first receives a substantive office action for such application for a Patent (excluding restriction requirements, notices to file missing parts, and the like) provided, that (i) no claim of a pending patent application shall be considered a Valid Claim from and after [***] the earliest effective filing date for such patent application, and (ii) the time limitations described in this Section 1.132(b) shall not apply to any patent application in [***]. For clarity, subject to the foregoing proviso, a claim of a Jounce Patent or a Joint Patent which is in a pending patent application that issues after being pending for more than [***] years (or, in the case of any such pending patent application in [***], [***] years) from [***] as described [***] shall be considered a Valid Claim as of the date of issuance.

ARTICLE 2

DEVELOPMENT

2.1 General. Subject to the terms and conditions of this Agreement: (a) Celgene shall have the sole right (and shall solely control, at its discretion), itself or with or through its Affiliates, Sublicensees, or other Third Parties, to Develop the Licensed Compounds and Licensed Products in the Field in the Territory; and (b) Jounce and its Affiliates shall not have any right to, and shall not, conduct any Development of the Licensed Compounds or Licensed Products in the Field in the Territory. All such Development shall be at Celgene’s sole cost and expense.

2.2 Development Diligence. Subject to the terms and conditions of this Agreement, Celgene, itself or with or through its Affiliates, Sublicensees, or other Third Parties, shall use Commercially Reasonable Efforts to Develop and seek Regulatory Approval for at least one (1) Initial Licensed Product in [***].

2.3 Development Updates. Beginning [***] following the Effective Date, continuing until [***], and thereafter during the period that: (a) a [***] is [***] Initial Licensed Product; and (b) there are [***], Celgene shall submit to Jounce, [***] with respect to [***] pursuant to this Agreement since the [***], and, with respect to [***], since [***].

ARTICLE 3

REGULATORY

3.1 Regulatory Matters.

3.1.1 Responsibility. Subject to the terms and conditions of this Agreement, Celgene shall have the sole right (and shall solely control, at its discretion), itself or with or through its Affiliates, Sublicensees, or other Third Parties, to: (a) prepare and submit to applicable Regulatory Authorities all Regulatory Materials, including INDs, for Licensed Compounds or Licensed Products; and (b) obtain and maintain all Regulatory Approvals for Licensed Compounds or Licensed Products. All such activities shall be at Celgene’s sole cost and expense.

3.1.2 Communications with Regulatory Authorities. For clarity and without limiting Section 3.1.1, Celgene shall have the exclusive right to correspond or communicate with Regulatory Authorities regarding the Licensed Compounds or Licensed Products. Unless required by Applicable Law, Jounce, any of its Affiliates, and any of its permitted subcontractors shall not correspond or communicate with Regulatory Authorities regarding any Licensed Compound or Licensed Product without first obtaining Celgene’s prior written consent. If Jounce, any of its Affiliates, or any of its permitted subcontractors receives any correspondence or other communication from a Regulatory Authority regarding a Licensed Compound or Licensed Product, Jounce shall promptly provide Celgene with access to or copies of all such material written or electronic correspondence promptly after its receipt.

3.1.3 Jounce Support. Jounce shall provide support to Celgene as may be reasonably requested by Celgene from time to time in connection with Celgene’s preparation, submission to Regulatory Authorities, and maintenance of Regulatory Materials for Licensed Compounds or Licensed Products, including, upon Celgene’s reasonable request, attending meetings with Regulatory Authorities regarding any Licensed Compound or Licensed Product.

3.2 Regulatory Materials. All Regulatory Materials related to any Licensed Compound or Licensed Product shall be owned by and held in the name of Celgene or its designee. Unless directed otherwise by Celgene in writing, Jounce shall assign and transfer (and hereby does assign and transfer), or cause to be assigned and transferred to the extent not owned by Jounce, to Celgene (or its designee), promptly following the Effective Date (but in no event later than [***] days after the Effective Date) any and all such Regulatory Materials held or generated by or on behalf of Jounce or its Affiliates prior to the Effective Date, including providing true, accurate, and complete hard and electronic copies thereof to Celgene or its designee.

3.3 Right of Reference; Access to Data. Prior to the time at which the Regulatory Materials related to Licensed Compound(s) or Licensed Product(s) are transferred and assigned to Celgene or its designee, or in the event of failure to transfer and assign any such Regulatory Materials to Celgene or its designee, as required by Section 3.2, Celgene and its designees shall have, and Jounce (on behalf of itself and its Affiliates) hereby grants to Celgene and its designees, access and a right of reference (without any further action required on the part of Jounce or its Affiliates, whose authorization to file this consent with any Regulatory Authority is hereby granted) to all such Regulatory Materials and all data contained or referenced in any such Regulatory Materials for Celgene and its designees to exercise its rights and satisfy its obligations under this Agreement. In all cases, Celgene and its designees shall have access to all data contained or referenced in any such Regulatory Materials, and Jounce shall ensure that Celgene and its designees are afforded such access.

ARTICLE 4

COMMERCIALIZATION

4.1 General. Subject to the terms and conditions of this Agreement: (a) Celgene shall have the sole right (and shall solely control, at its discretion), itself or with or through its Affiliates, Sublicensees, or other Third Parties, to Commercialize the Licensed Products in the Field in the Territory; and (b) Jounce and its Affiliates shall not have any right to, and shall not, conduct any Commercialization of any Licensed Products in the Field in the Territory.

4.2 Diligence. Subject to the terms and conditions of this Agreement, Celgene, itself or with or through its Affiliates, Sublicensees, or other Third Parties, shall use Commercially Reasonable Efforts to Commercialize at least one (1) Initial Licensed Product in [***]. All such Commercialization shall be at Celgene’s sole cost and expense.

ARTICLE 5

MANUFACTURING

5.1 General. Subject to the terms and conditions of this Agreement, Celgene shall have the sole right (and shall solely control, at its discretion), itself or with or through its Affiliates, Sublicensees, or other Third Parties, to Manufacture or have Manufactured the Licensed Products in the Field in the Territory. All such Manufacturing shall be at Celgene’s sole cost and expense.

ARTICLE 6

TRANSITION

6.1 Assistance.

6.1.1 Generally. Jounce shall, and shall cause its Affiliates to, reasonably cooperate with Celgene and its designees and provide reasonable assistance to Celgene and its designees to enable Celgene and its designees to Develop, Manufacture, and Commercialize the Licensed Compounds and Licensed Products, as and to the extent reasonably requested by Celgene, including by providing Celgene and its designees [***] from Jounce to Celgene or its designees of Development, regulatory, and Manufacturing activities related to the Licensed Compounds and Licensed Products. In connection with the foregoing, Jounce shall provide Celgene and its designees with [***] to [***] (and shall [***] of its Affiliates and Third Party contractors) involved in the Development or Manufacture of the Licensed Compounds and Licensed Products to assist with such transition and answer questions related to the Licensed Compounds and Licensed Products.

6.1.2 Additional Specific Transition Assistance. Without limiting the provisions of Section 6.1, but subject to Section 6.3, as soon as reasonably practicable following the Effective Date (but in no event later than [***] days after the Effective Date), and thereafter during the Term as may be reasonably requested by Celgene from time to time, Jounce shall disclose to Celgene and its designees in English, including by providing hard and electronic copies thereof, all Jounce Know-How, including any materials and documentation (including data and protocols) included therein and any other physical embodiments thereof.

6.1.3 Cost of Assistance. Jounce shall complete the activities assigned to, or otherwise contemplated to be completed by, Jounce under the Transition Plan for [***] pursuant to Section 6.4.2. To the extent that Celgene requests that Jounce complete additional activities beyond those assigned to, or otherwise contemplated to be completed by, Jounce under the Transition Plan (any such additional activities, “Jounce Additional Activities”), then Celgene shall reimburse Jounce for: (a) the direct out-of-pocket expenses paid by Jounce; and (b) costs of employees and consultants calculated in accordance with the applicable FTE Rate, in each case ((a) and (b)), directly arising from such Jounce Additional Activities.

6.2 Materials Transfer. Within [***] days of the Effective Date, Jounce shall assign and transfer to Celgene or its designee and deliver to Celgene or its designee, at a location to be specified by Celgene,

any or all (as and to the extent requested by Celgene) inventory of the Licensed Compounds and Licensed Products, together with all intermediates and other materials (including starting materials and research materials, including reagents, antibodies, proteins, cell lines, and tissue samples, in each case, used or contemplated to be used in the Development or Manufacture of any Licensed Compound or Licensed Product) and manufacturing, GMP, and shelf-life information relating thereto, held at such time by or on behalf of Jounce or its Affiliates (including any such inventory held at any contract manufacturer or any other location).

6.3 Manufacturing Technology Transfer. Without limiting the other provisions of Article 6, as soon as reasonably practicable following the Effective Date (but in no event later than [***] days after the Effective Date), Jounce shall transfer, and thereafter continue, during the Term as may be reasonably requested by Celgene from time to time, the transfer (from Jounce, its Affiliates, or its Third Party contract manufacturers) to Celgene and its designees copies in English (in writing and in an electronic format) of all data, information, and other Know-How Controlled by Jounce or its Affiliates (or any of its Third Party contract manufacturers, to the extent Jounce has the right to do so under its agreements with such Third Party contract manufacturers; provided, that Jounce has used [***] efforts to obtain such right) that is related to the Manufacture of the Licensed Products, in order to enable Celgene and its designees to Manufacture the Licensed Products, including, if desired by Celgene, to replicate the process employed by or on behalf of Jounce prior to the Effective Date to Manufacture the Licensed Products. Such transfers shall include all [***], and all [***] to the extent Controlled by Jounce. In addition, at the reasonable request of Celgene from time to time, Jounce shall [***] and shall [***] to make its [***] (including [***]) [***] to Celgene and its designees to provide [***] regarding the Manufacture of any Licensed Compound or Licensed Product in order to ensure an orderly transition of the manufacturing technology and operations to Celgene and its designees and to assist Celgene and its designees in its Manufacture of the Licensed Products.

6.4 Jounce Development and Manufacturing Agreements.

6.4.1 Assignment or Assistance. Jounce shall, or shall cause its Affiliates to, as applicable, to the extent legally permissible (provided, that, to the extent consent is required from the relevant counterparty, Jounce shall, or shall cause its Affiliates to, as applicable, use reasonable efforts to obtain such consent): (a) assign to Celgene or its designee any or all (as designated by Celgene) Jounce JTX-8064-Only Development and Manufacturing Agreements; and (b) reasonably assist Celgene or its Affiliate in entering into new agreements directly with the counterparties to any or all Jounce General Development and Manufacturing Agreements to cover the subject matter related to Licensed Compounds or Licensed Products of such Jounce General Development and Manufacturing Agreements, as applicable, in each case ((a) and (b)), to the extent requested by Celgene in writing. Except as set forth in Section 6.4.2, if any Jounce JTX-8064-Only Development and Manufacturing Agreement is assigned to Celgene, Jounce shall be solely responsible for, and shall indemnify and hold harmless Celgene and all other Celgene Indemnitees from and against any costs and other Damages arising from, or relating to, any such Jounce Development and Manufacturing Agreement as a result of, or in connection with, events or occurrences prior to the date of such assignment (including any payments that accrued prior to the date of such assignment but which do not become payable until after the date of such assignment) in accordance with Section 13.2(a).

6.4.2 Coordination and Costs. Promptly after the Effective Date, the Parties shall in good faith coordinate activities under the Jounce Development and Manufacturing Agreements that are not assigned to Celgene, or until assigned to Celgene, with the goal of maintaining continuity of operations. For a period not to exceed [***] months after the Effective Date (unless mutually agreed in writing otherwise, including as may be described in Schedule 6.4.2) and at Celgene’s written request, Jounce shall exercise its rights under such Jounce Development and Manufacturing Agreements to conduct activities reasonably required for the continued Development and Manufacture of Licensed Compounds or Licensed Products, including, as applicable, entering into new statements of work under master services agreements; provided, however, that Celgene: (a) approves in writing in advance any such actions, including the costs thereof; (b) reimburses Jounce for all (i) out-of-pocket costs that Jounce incurs under such Jounce Development and Manufacturing Agreements as a direct result of conducting such activities and (ii) payments that Jounce is required to make under such Jounce Development and Manufacturing Agreements that are also Jounce Upstream License Agreements as a result of the Development or Commercialization of any Licensed Product by Celgene, its Affiliates, or its Sublicensees; and (c) for purposes of Section 13.1(a) (but, for clarity, subject to the other provisions of Article 13, including the proviso to Section 13.1), such activities shall be deemed as activities by or on behalf of Celgene. As of the Effective Date and in accordance with this Section 6.4.2, Celgene hereby approves the exercise by Jounce of its rights under the Jounce Development and Manufacturing Agreements listed on Schedule 6.4.2 to conduct the activities described therein and to incur the expenses described therein, which Celgene shall pay for directly or for which Celgene shall reimburse Jounce in accordance with this Section 6.4.2, as specified on Schedule 6.4.2. For clarity, Jounce shall have no obligation to incur or accrue any such costs after the Effective Date under any Jounce Development and Manufacturing Agreement except in accordance with this Section 6.4.2 and, as applicable, Schedule 6.4.2.

6.4.3 Termination. In the event that a given Jounce JTX-8064-Only Development and Manufacturing Agreement is not assigned to Celgene pursuant to Section 6.4.1, then, upon the written request of Celgene and solely to the extent permitted under the terms of such Jounce JTX-8064-Only Development and Manufacturing Agreement, Jounce shall, or shall cause its Affiliates to, terminate the applicable Jounce JTX-8064-Only Development and Manufacturing Agreement; provided, that Jounce shall have the right to terminate any non-assigned Jounce JTX-8064-Only Development and Manufacturing Agreement for which Celgene has not exercised its termination right under this Section 6.4.3 at any time after [***] months after the Effective Date.

6.5 Transition Plan. Notwithstanding the foregoing, Jounce shall complete the activities assigned to, or otherwise contemplated to be completed by, Jounce under the Transition Plan on or before the deadline for completing such activities as set forth therein.

ARTICLE 7

FINANCIAL TERMS

7.1 Upfront Payment. No later than ten (10) Business Days after the Effective Date, Celgene shall pay to Jounce a one (1)-time non-refundable, non-creditable payment of Fifty Million Dollars

($50,000,000) in immediately available funds by wire transfer, in accordance with wire instructions to be provided in writing by Jounce to Celgene no later than five (5) days following the Effective Date, as follows:

7.1.1 Celgene Corp. shall pay to Jounce a one (1)-time non-refundable, non-creditable payment of Twenty-Two Million Five Hundred Thousand U.S. Dollars ($22,500,000); and

7.1.2 Celgene RIVOT shall pay to Jounce a one (1)-time non-refundable, non-creditable payment of Twenty-Seven Million Five Hundred Thousand U.S. Dollars ($27,500,000).

7.2 Milestones.

7.2.1 Milestones. Subject to the terms of this Section 7.2 and Section 7.5, following the achievement by a Selling Party under this Agreement of each milestone event described in the table below in this Section 7.2.1 (each, a “Milestone Event”) with respect to the first (and [***]) Initial Licensed Product to achieve such Milestone Event under this Agreement, Celgene shall pay the applicable amounts set forth below associated with the applicable Milestone Event in accordance with Section 7.2.2 (each, a “Milestone Payment”):



Milestone Event	Milestone Payment
(a) [***]	[*] Dollars ($[*])
(b) [***]	[*] Dollars ($[*])
(a) [***]	[*] Dollars ($[*])
(b) [***]	[*] Dollars ($[*])
(c) [***]	[*] Dollars ($[*])
(d) [***]	[*] Dollars ($[*])
(e) [***]	[*] Dollars ($[*])

Each Milestone Payment shall be payable [***] as set forth in the table above, [***] which achieve the applicable Milestone Event (i.e., [***] Milestone Payments may be made pursuant to this Section 7.2.1), and no Milestone Payment shall be due hereunder for subsequent or repeated achievement of any such Milestone Event. For the avoidance of doubt, the maximum amount payable by Celgene pursuant to this Section 7.2.1 is One Hundred Eighty Million Dollars ($180,000,000), assuming that [***] in this Section 7.2.1 [***].

7.2.2 Skipped Milestone Event. If Milestone Event (a) is skipped (i.e., Milestone Event (b) or (e) is achieved prior to the achievement of Milestone Event (a)), then Milestone Event (a) will be deemed to have been achieved upon the achievement of the first to occur of Milestone Event (b) or (e).

7.2.3 Invoice and Payment of Milestone Payments. Celgene shall notify Jounce that a Selling Party has achieved a Milestone Event within [***] days following such achievement. Following Jounce’s receipt of such notice, Jounce shall invoice Celgene for the applicable Milestone Payment, and Celgene shall pay such Milestone Payment within [***] days after receipt of such invoice.

7.3 Sales Milestones.

7.3.1 Sales Milestones. Subject to the terms of this Section 7.3 and Section 7.5, following the achievement by Selling Parties under this Agreement of each milestone event described in the table below in this Section 7.3.1 (each, a “Sales Milestone Event”), Celgene shall pay the applicable amounts set forth below associated with the applicable Sales Milestone Event in accordance with Section 7.3.2 (each, a “Sales Milestone Payment”):



Sales Milestone Event	Sales Milestone Payment
(a) [*] Dollars ($[*])	[*] Dollars ($[*])
(b) [*] Dollars ($[*])	[*] Dollars ($[*])

Each Sales Milestone Payment shall be payable [***] as set forth in the table above, regardless of the number of times the applicable Sales Milestone Event was achieved (i.e., [***] Sales Milestone Payments may be made pursuant to this Section 7.3.1), and [***] Sales Milestone Payment shall be due hereunder for [***] Sales Milestone Event. For the avoidance of doubt, the maximum amount payable by Celgene pursuant to this Section 7.3.1 is Three Hundred Million Dollars ($300,000,000), assuming that [***] in this Section 7.3.1 [***].

7.3.2 Invoice and Payment of Sales Milestone Payments. Celgene shall notify Jounce that Selling Parties have achieved a Sales Milestone Event within [***] days after the end of the Calendar Quarter during which such achievement occurred. Following Jounce’s receipt of such notice, Jounce shall invoice Celgene for the applicable Sales Milestone Payment, and Celgene shall pay such Sales Milestone Payment within [***] days after receipt of such invoice.

7.4 Royalties.

7.4.1 Royalty Rates. Subject to the terms of this Section 7.4 and Section 7.5, Celgene shall pay Jounce royalties on Annual Net Sales, on an Initial Licensed Product-by-Initial Licensed Product basis during the applicable Royalty Term, equal to the following portions of Annual Net Sales of the applicable Initial Licensed Product multiplied by the applicable royalty rate set forth below for such portion of Annual Net Sales during the applicable Royalty Term for each such Initial Licensed Product, which royalties shall be paid in accordance with Section 7.4.5 (the “Per Initial Licensed Product Annual Net Sales”). For clarity, the royalties (and royalty tiers) shall be calculated separately on an Initial Licensed Product-by-Initial Licensed Product basis.



Per Initial Licensed Product Annual Net Sales in the Territory for a given Initial Licensed Product in a given Calendar Year	Royalty Rate
(a) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year up to and including [*] Dollars ($[*])	[*] Percent ([*]%)
(b) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[]), up to and including [] Dollars ($[*])	[*] Percent ([*]%)
(c) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[]), up to and including [] Dollars ($[*])	[*] Percent ([*]%)
(d) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[*])	[*] Percent ([*]%)

The applicable royalty rate set forth in the tables above shall apply only to that portion of the Per Initial Licensed Product Annual Net Sales of a given Initial Licensed Product during a given Calendar Year that falls within the indicated range. For clarity: (i) if no royalty is payable on a given unit of Initial Licensed Product (e.g., following the Royalty Term for such Initial Licensed Product in a given country), then the Net Sales of such unit of Initial Licensed Product shall not be included for purposes of determining the royalties or royalty tiers; (ii) Net Sales of a given Initial Licensed Product shall not be combined with Net Sales of any other Initial Licensed Product for purposes of determining the foregoing royalties or royalty tiers; and (iii) [***] shall be payable by Celgene to Jounce for [***].

7.4.2 Royalty Term. Celgene’s royalty obligations to Jounce under Section 7.4.1 shall apply, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis, only during the applicable Royalty Term for such Initial Licensed Product in such country. Following the expiration of the applicable Royalty Term for a given Initial Licensed Product in a given country: (a) no further royalties shall be payable with respect to sales of such Initial Licensed Product in such country; and (b) Section 14.1.2(a) shall apply with respect to such Initial Licensed Product in such country.

7.4.3 Royalty Reductions.

(a) No Valid Claim. The royalties payable with respect to Per Initial Licensed Product Annual Net Sales shall be reduced, on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis, to [***] percent ([***]%) of the royalties otherwise payable pursuant to Section 7.4.1, as may be adjusted by Section 7.4.3(b), during any portion of the applicable Royalty Term in which there is not at least one (1) Valid Claim that Covers the sale of such Initial Licensed Product in such country.

(b) Biosimilar Product(s). If, on an Initial Licensed Product-by-Initial Licensed Product, country-by-country, and Calendar Quarter-by-Calendar Quarter basis, Biosimilar Product(s) (in the aggregate) have a market share of: (i) [***] percent ([***]%) [***] percent ([***]%); or (ii) [***] percent ([***]%), then the royalties payable with respect to Per Initial Licensed Product Annual Net Sales of such Initial Licensed Product pursuant to Section 7.4.1, as may be adjusted by Section 7.4.3(a), in such country during such Calendar Quarter shall be reduced, in the case of clause (i), by [***] percent ([***]%) or, in the case of clause (ii), by [***] percent ([***]%), in each case, of the royalties otherwise payable pursuant to Section 7.4.1, as may be adjusted by Section 7.4.3(a). The “market share” shall be based on [***] (based on [***] of such Initial Licensed Product and such Biosimilar Product(s) [***]).

(c) Royalty Offset for Third Party Payments. If a Selling Party obtains a right or license under any Patent, Know-How, or other intellectual property right of a Third Party after the Effective Date, where the Development, Manufacturing, or Commercialization of any Initial Licensed Product by or on behalf of a Selling Party would result in a payment to such Third Party, then Celgene may deduct from the royalty payments that would otherwise have been due under Section 7.4.1 with respect to Per Initial Licensed Product Annual Net Sales in a particular Calendar Quarter, an amount equal to [***] percent ([***]%) of the amount of any payments (including payments for obtaining such right or license, royalties, milestones, amounts paid in settlement, and any other amounts) paid or accrued by a Selling Party to such Third Party for such right or license or the exercise thereof during such Calendar Quarter.

(d) Royalty Floor. In no event shall the royalty reductions described in Section 7.4.3(a) through Section 7.4.3(c), alone or together, reduce the royalties payable by Celgene for a given Calendar Quarter during the Royalty Term for an Initial Licensed Product in a particular country in the Territory to less than [***] percent ([***]%) of the amounts payable by Celgene for such Calendar Quarter pursuant to Section 7.4.1 (without the application of Section 7.4.3(a) through Section 7.4.3(c)) (the “Royalty Floor”). Subject to the previous sentence, Celgene may [***] any such royalty reductions, which are incurred or accrued in a Calendar Quarter [***] in such Calendar Quarter as a result of the application of the Royalty Floor, [***] such reduction to such royalties as soon as practicable and continue applying such reduction on a Calendar Quarter basis thereafter.

7.4.4 Compulsory Licenses. If a compulsory license is granted to a Third Party with respect to any Initial Licensed Product in any country in the Territory with a royalty rate lower than the royalty rate provided by Section 7.4.1 (as adjusted pursuant to Section 7.4.3), then the royalty rate to be paid by Celgene on Per Initial Licensed Product Annual Net Sales in such country under Section 7.4.1 shall be reduced to the rate payable by the compulsory licensee.

7.4.5 Payment of Royalties; Report. Celgene shall: (a) within [***] days following the end of each Calendar Quarter in which a royalty payment pursuant to Section 7.4.1 accrues, provide to Jounce a report specifying, for such Calendar Quarter: (i) the number of Initial Licensed Products sold that are subject to such royalty, both in the aggregate and for each Major Sales Country; (ii) the Per Initial Licensed Product Annual Net Sales that are subject to such royalty, both in the aggregate and for each Major Sales Country; (iii) the applicable royalty rate under Section 7.4.1; (iv) the royalty calculation and royalties payable in Dollars; and (v) any reduction(s) to the royalty applied by Celgene pursuant to any one (1) or more of

Sections 7.4.3 or 7.4.4; and (b) make the royalty payments owed to Jounce under this Agreement in accordance with such royalty report in arrears, within [***] days from the end of the Calendar Quarter in which such payment accrues.

7.5 Payments on Licensed Products other than the Initial Licensed Product. If FPFD occurs for any Licensed Product other than an Initial Licensed Product at any time prior to the [***] the Effective Date, then, notwithstanding Sections 7.2, 7.3, and 7.4, the payment obligations under Sections 7.2, 7.3, and 7.4, with each applicable amount or percentage reduced by [***] percent ([***]%), shall apply to such Licensed Product, and such Licensed Product shall be deemed an Initial Licensed Product for such purposes, including for purposes of the “Net Sales” definition.

7.6 Additional Payment Terms.

7.6.1 Currency. All payments hereunder shall be made in Dollars by wire transfer to a bank designated in writing by Jounce no later than [***] days prior to the date by which the applicable payment must be made. Conversion of sales recorded in local currencies to Dollars shall be performed in a manner consistent with Accounting Standards and Celgene’s normal practices used to prepare its audited financial statements for internal and external reporting purposes.

7.6.2 Taxes; Withholding.

(a) Generally. Each Party shall pay any and all income taxes levied on account of all payments it receives under this Agreement, except as otherwise provided in this Section 7.6.2.

(b) Tax Withholding. Each Party shall be entitled to deduct and withhold from any amounts payable under this Agreement such taxes as are required to be deducted or withheld therefrom under any provision of Applicable Law. The Party that is required to make such withholding shall: (i) deduct those taxes from such payment; (ii) timely remit the taxes to the proper taxing authority; and (iii) send evidence of the obligation, together with proof of tax payment, to the other Party on a timely basis following such tax payment. Each Party shall reasonably cooperate with the other Party in claiming refunds or exemptions from such deductions or withholdings under any relevant agreement or treaty which is in effect to ensure that any amounts required to be withheld pursuant to this Section 7.6.2(b) are reduced in amount to the fullest extent permitted by Applicable Law. In addition, the Parties shall cooperate in accordance with Applicable Law to minimize indirect taxes (such as value added tax, sales tax, consumption tax, and other similar taxes) in connection with this Agreement.

7.6.3 Late Payments. If Jounce does not receive payment of any sum due to it under this Agreement on or before the due date therefor, simple interest shall thereafter accrue on the sum due to Jounce from the due date until the date of payment at a per-annum rate of [***] percent ([***]%) above the prime rate as reported in The Wall Street Journal, Eastern Edition or the maximum rate allowable by Applicable Law, whichever is less.

7.7 Records; Audit Rights.

7.7.1 Records. Celgene shall keep, and shall cause each Selling Party to keep, complete, true, and accurate books and records in accordance with its Accounting Standards in relation to this Agreement, including, with respect to Selling Parties, in relation to Net Sales, royalties, Milestone Payments, and Sales Milestone Payments. Celgene shall keep, and shall cause each Selling Party to keep, such books and records for at least [***] years following the Calendar Year to which they pertain or for such longer period of time as required under any Applicable Law.

7.7.2 Audit Rights. Subject to the other terms of this Section 7.7.2, during the Term and for a period of [***] years thereafter, at the request of Jounce, which shall not be made more frequently than [***] per Calendar Year other than for cause, upon at least [***] days’ prior written notice from Jounce, and at the expense of Jounce, Celgene shall permit an independent, nationally-recognized certified public accountant selected by Jounce and reasonably acceptable to Celgene (each, an “Auditor”) to inspect, during regular business hours, the relevant records required to be maintained by Celgene under Section 7.7.1; provided, that such audit right shall not apply to records beyond [***] years from the end of the Calendar Year to which they pertain. Prior to its inspection, the Auditor shall enter into a confidentiality agreement with both Parties having obligations of confidentiality and non-use no less restrictive than those set forth in Article 11 and limiting the disclosure and use of such information by the Auditor to authorized representatives of the Parties and the purposes germane to Section 7.7.1. Results of any such review shall be binding on both Parties absent manifest error. The Auditor shall report to Jounce only whether the particular amount being audited was accurate and, if not, the amount of and reason for any discrepancy, and the Auditor shall not report any other information to Jounce. Jounce shall treat the results of any Auditor’s review of Celgene’s records as Confidential Information of Celgene subject to the terms of Article 11. In the event such audit leads to the discovery of a discrepancy to Jounce’s detriment, Celgene shall, within forty-five (45) days after receipt of such report from the Auditor, pay any undisputed amount of the discrepancy. Jounce shall pay the full cost of the audit unless the underpayment of amounts due by Celgene is greater than [***] percent ([***]%) of the amount due for the entire period being examined, in which case Celgene shall pay the reasonable cost charged by the Auditor for such review. Any undisputed overpayments by Celgene revealed by an examination shall be paid by Jounce within [***] days of Jounce’s receipt of the applicable report. This Section 7.7.2 shall survive any expiration or termination of this Agreement for a period of [***] years.

7.7.3 Records Final. Upon the expiration of [***] years following the end of a given Calendar Year, subject and without prejudice to the determination of any review commenced prior to such [***] anniversary pursuant to Section 7.7.2, the calculation of any amounts payable by Celgene to Jounce with respect to such Calendar Year shall be binding and conclusive upon the Parties, and the Selling Parties shall be released from any liability or accountability with respect to determination of underpayment or overpayment of such payments to Jounce for such Calendar Year.

7.8 Jounce Upstream License Agreements and Jounce Development and Manufacturing Agreements. Notwithstanding anything to the contrary under this Agreement, but subject to Sections 6.4 and 8.5, Jounce shall be solely responsible for all costs and payments of any kind (including all upfront fees, annual payments, milestone payments, and royalty payments) arising under any agreements between Jounce

(or any of its Affiliates) and any Third Party, including any Jounce Upstream License Agreements, unless and until such agreements have been accepted by Celgene pursuant to Section 8.5 and any Jounce Development and Manufacturing Agreements, unless and until such agreements have been assigned to Celgene pursuant to Section 6.4 and except for (a) activities undertaken at Celgene’s request in accordance with, and subject to, Section 6.4.2, as applicable, and (b) other payments required in accordance with Section 6.4.2 under Jounce Development and Manufacturing Agreements that are also Jounce Upstream License Agreements as a result of the Development or Commercialization of any Licensed Product by Celgene, its Affiliates, or its Sublicensees.

7.9 Additional Provisions. Notwithstanding anything to the contrary in this Agreement, the terms and provisions of this Article 7 are subject to Section 14.8.

ARTICLE 8

LICENSE; NON-COMPETE

8.1 License to Celgene. Subject to the terms and conditions of this Agreement, Jounce hereby grants to Celgene an exclusive, transferrable (pursuant to Section 15.4), and sublicenseable (through multiple tiers) license, under the Jounce IP and Jounce’s interest in Joint IP, to Develop, Manufacture, and Commercialize the Licensed Compounds and the Licensed Products in the Field in the Territory.

8.2 Sublicensing; Subcontracting.

8.2.1 Celgene shall provide written notice to Jounce of any sublicense of its rights under Section 8.1 (other than any such sublicense to any of its Affiliates or to any Subcontractor) no later than [***] days after entering into such sublicense. Celgene shall remain responsible for the acts of any such Sublicensee as if such acts were Celgene’s, and shall cause any such Sublicensee to comply with all applicable terms and conditions of this Agreement. For clarity, the foregoing sentence is not intended to create a contractual right for Jounce to seek any remedy directly from any such Sublicensee, and Celgene shall be solely responsible for reporting all Net Sales (including by such Sublicensee) and for making any payments to Jounce resulting therefrom. Celgene may subcontract to Affiliates or Third Parties the performance of tasks and obligations related to Celgene’s Development, Manufacture, and Commercialization of the Licensed Compounds and the Licensed Products (each, a “Subcontractor”) under this Agreement as Celgene deems appropriate, which subcontract may include a sublicense of rights necessary for the performance of the subcontract as reasonably required; provided, that Celgene shall remain responsible for the performance of this Agreement and shall cause any such Subcontractor to comply with all applicable terms and conditions of this Agreement.

8.2.2 Jounce may not subcontract to Third Parties the performance of Jounce’s tasks and obligations under this Agreement without first obtaining Celgene’s prior written consent. Any subcontract contemplated by this Section 8.2.2 may include a sublicense of rights necessary for the performance of the subcontract as reasonably required; provided, that Jounce shall remain responsible for the performance of

this Agreement and shall cause any such subcontractor to comply with all applicable terms and conditions of this Agreement.

8.3 Rights Retained by the Parties. Each Party retains all rights under Patents, Know-How, or other intellectual property rights Controlled by such Party which are not expressly granted to the other Party pursuant to this Agreement.

8.4 No Implied Licenses. Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party or any of its Affiliates, as a result of this Agreement, obtain any ownership interest, license, or other right in or to any Patents, Know-How, or other intellectual property rights of the other Party, including tangible or intangible items owned, controlled, or developed by the other Party, or provided by the other Party to the receiving Party at any time, in each case, pursuant to this Agreement.

8.5 Jounce Upstream License Agreements. In the event that, after the Effective Date, Jounce enters into a contract or agreement with a Third Party pursuant to which Jounce in-licenses or otherwise acquires Control of any Patent, Know-How, or other intellectual property right that would constitute Jounce IP, then Jounce shall promptly provide Celgene with notice and a copy of the applicable contract or agreement with such Third Party. Within [***] days following receipt of such notice, Celgene shall decide, in its sole discretion, whether or not to accept such Patent(s), Know-How, or other intellectual property right(s) as Jounce IP licensed under this Agreement and provide Jounce written notice of such decision. In the event that Celgene provides Jounce written notice of such decision to accept: (a) such Patent(s), Know-How, or other intellectual property right(s) shall constitute Jounce IP licensed to Celgene under this Agreement; (b) such contract or agreement shall thereafter be included within the definition of Jounce Upstream License Agreements; and (c) Celgene shall be responsible for any payments arising thereunder solely as a result of its activities under this Agreement. In the event that Celgene does not accept such contract or agreement as a Jounce Upstream License Agreement (including by failing to respond within such [***]-day period), Celgene and its Affiliates shall have no obligations with respect thereto and such Patent(s), Know-How, or other intellectual property right(s) shall not be Jounce IP.

8.6 Non-Compete.

8.6.1 Generally. Subject to Section 8.6.2, during the Term, Jounce shall not, and shall cause its Affiliates not to, directly or indirectly: (a) alone or with any Third Party, Develop, Manufacture, or Commercialize any Competing Product; (b) grant a license, sublicense, or other rights to any Third Party to Develop, Manufacture, or Commercialize any Competing Product; or (c) sell, convey, or otherwise assign or transfer any Competing Product to any Third Party.

8.6.2 Exceptions for Change of Control.

(a) Notwithstanding Section 8.6.1 if: (i) on the date of the closing of a Change of Control, the Acquiring Person is Developing, Manufacturing, or Commercializing a Competing Product, then Jounce shall not be in breach of Section 8.6.1 as a result of such Change of Control, provided, that such Acquiring Person [***]; and (ii) Jounce acquires a Third Party that, on the date of the closing of such

acquisition, is Developing, Manufacturing, or Commercializing a Competing Product, then Jounce shall not be in breach of Section 8.6.1 as a result of such acquisition, provided, that Jounce provides written notice to Celgene no later than [***] days following the closing of such acquisition that it elects to either: (A) [***]; or (B) [***] and, provided further, that in the event that Jounce fails to provide such written notice within such [***]-day period, then Jounce shall be deemed to have elected to [***] in accordance with clause (B) in the immediately-preceding sentence.

(b) In the event Jounce elects to [***] such Competing Product in accordance with clause (B) of Section 8.6.2(a), then Jounce shall: (i) [***]; and (ii) [***] such Competing Product within [***] after the closing of such Change of Control; provided, that: (A) Jounce may continue to [***] during such [***] period (provided, that such [***]); and (B) if Jounce has [***] within such [***] period, then, as of the expiration of the [***] period, then Jounce shall cease [***].

8.6.3 Restrictions on Celgene. If Celgene or any of its Affiliates is, at any time during the Term, Developing, Manufacturing, or Commercializing a Competing Product, then Celgene shall take reasonable steps to ensure that the Jounce Know-How and Jounce’s Confidential Information is not disclosed or used in connection with the Development, Manufacture, and Commercialization activities relating to such Competing Product.

ARTICLE 9

INTELLECTUAL PROPERTY

9.1 Ownership of Inventions. Ownership of all Inventions arising from the Parties’ activities under this Agreement, including any Patents covering such Inventions, will be determined by inventorship. Without limiting the preceding sentence, all such Inventions conceived or reduced to practice jointly by or on behalf of the Parties shall be jointly owned (all such Inventions, “Joint Inventions” and all Patents that claim such Joint Inventions, “Joint Patents”). All determinations of inventorship under this Agreement will be made in accordance with U.S. patent law.

9.2 Prosecution and Maintenance. Celgene shall have the first right, but not the obligation, for the Prosecution and Maintenance of the Jounce Patents and the Joint Patents at its own cost and expense with counsel of its choice. Jounce shall fully cooperate with Celgene in connection with the Prosecution and Maintenance of the Jounce Patents, including by providing access to relevant persons and executing all documentation reasonably requested by Celgene and at Celgene’s election, to transfer the Patent Prosecution and Maintenance files to Celgene or a law firm of Celgene’s choice. Celgene shall keep Jounce reasonably informed of the status of the Jounce Patents. If Celgene decides to allow a Jounce Patent or a Joint Patent to lapse or become abandoned without having first filed a substitute, then it shall notify Jounce of, and consult with Jounce with respect to, such decision or intention at least [***] days prior to the date upon which such Patent shall lapse or become abandoned, and Jounce shall thereupon have the right (but not the obligation) to assume the Prosecution and Maintenance thereof at Jounce’s own cost and expense with counsel of its choice.

9.3 Enforcement.

9.3.1 Each Party shall promptly notify the other Party if it becomes aware of infringement or Patent challenge by a Third Party of any Jounce Patent or any Joint Patent in the Territory, including any declaratory judgment, opposition, post grant review, inter partes review, or similar action alleging the invalidity, unenforceability, unpatentability, or non-infringement with respect to such Jounce Patent, including under the BPCIA or the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) or their successor provisions, any regulatory filing based on Section 351(k) of the Public Health Service Act (42 U.S.C. § 262), or Article 10(4) of the Directive 2001/83/EC, or any other similar regulation promulgated by the FDA, EMA, MHLW, or by other applicable similar Governmental Authority or other actual or potential infringement or Patent challenge by a generic or biosimilar or potential generic or biosimilar competitor (including any Biosimilar Product) anywhere in the Territory (collectively, “Competing Infringement”).

9.3.2 Celgene shall have the sole and exclusive right, but not the obligation, to bring and control any legal action or take such other actions as it deems appropriate (including responding to Third Party notice letters and controlling settlements), which may include the granting of licenses and authorizing the launch of Biosimilar Product(s) in connection with any Competing Infringement of any Jounce Patent as it reasonably determines appropriate, at its cost and expense. At the request and expense of Celgene, Jounce shall provide reasonable assistance in connection with Celgene’s legal or other actions in connection with any such Competing Infringement, including by executing reasonably appropriate documents, cooperating in discovery, and joining as a party to the action if required. If, following a request from Celgene to join such an action, Jounce does not join or later withdraws from such action, then from and after such failure to join or withdrawal, as applicable, the royalties payable pursuant to Section 7.4.1, as may be adjusted by Section 7.4.3, in the country where such action is brought shall be reduced to [***] percent ([***]%) of the royalties otherwise payable pursuant to Section 7.4.1, as may be adjusted by Section 7.4.3.

9.4 Defense.

9.4.1 Each Party shall promptly notify the other Party of any claim alleging that the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product in the Territory infringes, misappropriates, or otherwise violates any Patents, Know-How, or other intellectual property rights of any Third Party (“Third Party Infringement”). In any such instance, the Parties shall as soon as practicable thereafter discuss in good faith the best response to such notice of Third Party Infringement.

9.4.2 Celgene shall have the sole and exclusive right, but not the obligation, to defend, and take other actions (including to settle) with respect to, any such claim of Third Party Infringement, at Celgene’s sole discretion, cost, and expense, and Jounce shall have the right to be represented in any such action by counsel of its own choice at Jounce’s sole cost and expense.

9.5 Recovery. Any recovery received as a result of any action under Section 9.3 or Section 9.4 shall be allocated in the following order: (a) to reimburse Celgene for the reasonable costs and expenses

(including attorneys’ and professional fees) that Celgene incurred in connection with such action, to the extent not previously reimbursed; (b) to reimburse Jounce, where it joins a legal action as provided under Section 9.3 or Section 9.4 (as applicable), for the reasonable costs and expenses (including attorneys’ and professional fees) that Jounce incurred in connection with such action, to the extent not previously reimbursed; and (c) the remainder of the recovery shall be [***] and, with respect to any portion of such recovery representing lost sales of Initial Licensed Products, such portion shall be treated as [***] for the purposes of Section [***].

9.6 Trademarks. Celgene shall have the exclusive right, but not the obligation, to brand the Licensed Products using trademarks and trade names it determines appropriate in its sole discretion for the Licensed Products, which may vary within the Territory (the “Licensed Product Marks”). Celgene shall own all rights in the Licensed Product Marks and shall register and maintain the Licensed Product Marks to the extent it determines reasonably necessary.

9.7 Patent Extensions. Celgene shall have the sole right to obtain patent term restoration (including under the Drug Price Competition and Patent Term Restoration Act), supplemental protection certificates or their equivalents, and patent term extensions (collectively, “Patent Extensions”) with respect to the Jounce Patents or Joint Patents, where applicable, at Celgene’s sole discretion, cost, and expense. Jounce shall provide all reasonable assistance requested by Celgene, including permitting Celgene to proceed with applications for such Patent Extensions in the name of Jounce, if deemed appropriate by Celgene, and executing documents and providing any relevant information and assistance to Celgene.

9.8 Purple Book Listings. Celgene (or its designee) shall have the sole right to list, with the applicable Regulatory Authorities in the Territory, all applicable Patents (including any Jounce Patents or Joint Patents) for any Licensed Product, including all so-called “Purple Book” listings required under the U.S. Public Health Service Act, and all similar listings in any other relevant countries. For the avoidance of doubt, Celgene will retain final decision-making authority with respect to the listing of all applicable Patents for any Licensed Product, regardless of which Party owns such Patent, and Jounce shall reasonably assist Celgene in connection therewith.

ARTICLE 10

[INTENTIONALLY OMITTED]

ARTICLE 11

CONFIDENTIALITY

11.1 Nondisclosure. Each Party agrees that a Party (the “Receiving Party”) which receives the Confidential Information of the other Party (the “Disclosing Party”) pursuant to this Agreement shall: (a) maintain in confidence such Confidential Information using not less than the efforts that such Receiving Party uses to maintain in confidence its own proprietary information of similar kind and value, but in no event less than a reasonable degree of efforts; (b) not disclose such Confidential Information to any Third

Party without first obtaining the prior written consent of the Disclosing Party, except for disclosures expressly permitted pursuant to this Article 11; and (c) not use such Confidential Information for any purpose except those permitted under this Agreement, including, in the case of Celgene, the exercise of the rights and licenses granted to Celgene hereunder. The obligations of confidentiality, non-disclosure, and non-use under this Section 11.1 shall be in full force and effect from the Effective Date until [***] years following the Term. The Receiving Party shall return all copies of or destroy the Confidential Information of the Disclosing Party disclosed or transferred to it by the other Party pursuant to this Agreement, within [***] days after the expiration or termination of this Agreement; provided, however, that, subject to the other provisions of this Article 11, a Party may retain: (i) Confidential Information of the other Party to exercise rights and licenses which expressly survive such termination or expiration pursuant to this Agreement; (ii) one (1) copy of all other Confidential Information in archives solely for the purpose of establishing the contents thereof; and (iii) the Disclosing Party’s Confidential information contained in the Receiving Party’s electronic back-up files that are created in the normal course of business pursuant to the Receiving Party’s standard protocol for preserving its electronic records.

11.2 Exceptions.

11.2.1 General. Section 11.1 shall not apply with respect to any portion of the Confidential Information of the Disclosing Party to the extent that such Confidential Information:

(a) was known to the Receiving Party or any of its Affiliates, as evidenced by written records, without any obligation to keep it confidential or any restriction on its use, prior to disclosure by the Disclosing Party;

(b) is subsequently disclosed to the Receiving Party or any of its Affiliates by a Third Party lawfully in possession thereof and without any obligation to keep it confidential or any restriction on its use;

(c) is published by a Third Party or otherwise becomes publicly available or enters the public domain, either before or after it is disclosed to the Receiving Party, without any breach by the Receiving Party of its obligations hereunder; or

(d) is independently developed by or for the Receiving Party or any of its Affiliates, as evidenced by written records, without reference to or reliance upon the Disclosing Party’s Confidential Information.

Any combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of the Receiving Party unless the combination itself and principle of operation are published or available to the general public or in the rightful possession of the Receiving Party.

11.3 Authorized Disclosure and Use.

11.3.1 Disclosure. Notwithstanding Section 11.1, the Receiving Party may disclose Confidential Information belonging to the Disclosing Party in the following instances:

(a) subject to Section 11.5, to comply with Applicable Law (including the rules and regulations of the U.S. Securities and Exchange Commission or any national securities exchange in any jurisdiction in the Territory) (collectively, the “Securities Regulators”) or with judicial process (including prosecution or defense of litigation), if, in the reasonable opinion of the Receiving Party’s counsel, such disclosure is necessary for such compliance or for such judicial process (including prosecution or defense of litigation);

(b) disclosure to governmental or other regulatory agencies in order to obtain Patents, to obtain or maintain approval to conduct Clinical Trials, or to market the Licensed Compounds or Licensed Products under this Agreement, in each case, in accordance with this Agreement; provided, that reasonable steps are taken to ensure confidential treatment of such Confidential Information to the extent available;

(c) disclosure to: (i) any of its officers, directors, employees, consultants, agents, or Affiliates; (ii) in the case of Celgene, any actual or potential collaborators, licensees, or Sublicensees; (iii) in the case of either Party, to such Party’s permitted subcontractors for the purpose of such subcontractors performing obligations of such Party under this Agreement; and (iv) in the case of either Party, to such Party’s actual or potential acquirers; provided, that, prior to any such disclosure, each such disclosee is bound by reasonable and customary written obligations of confidentiality, non-disclosure, and non-use, including, in the case of disclosure to Third Parties, obligations that are consistent with the obligations set forth in this Article 11; provided, however, that, in each of the above situations described in this Section 11.3.1(c), the Receiving Party shall remain responsible for any failure by any Person who receives Confidential Information from such Receiving Party pursuant to this Section 11.3.1(c) to treat such Confidential Information as required under this Article 11;

(d) disclosure to any actual or potential acquirer, or prospective investment bankers, investors, lenders, or other financial partners; provided, that, other than in the case of disclosure by Celgene to Bristol-Myers Squibb Company pursuant to that certain Agreement and Plan of Merger, by and among Celgene Corp., Bristol-Myers Squibb Company, and Burgundy Merger Sub, Inc., dated January 2, 2019, (i) prior to any such disclosure, each such disclosee is bound by written obligations of confidentiality, non-disclosure, and non-use consistent with the obligations set forth in this Article 11, (ii) such disclosure shall solely be in the form of the redacted version of this Agreement, which version has been agreed upon by the Parties in good faith, including any such redacted version that has been agreed upon for actual or potential filing to the SEC, and (iii) it being understood and agreed that only after negotiations between the Receiving Party and any such Third Party have progressed so that the Receiving Party reasonably and in good faith believes that consummation of the proposed transaction with such Third Party is imminent, the Receiving Party may provide an unredacted version of this Agreement to such Third Party; and

(e) disclosure to its advisors (including attorneys and accountants) in connection with activities under this Agreement; provided, that, prior to any such disclosure, each such disclosee is bound by written obligations of confidentiality, non-disclosure, and non-use consistent with the obligations set forth in this Article 11 (provided, however, that in the case of legal advisors, no written agreement shall be required), to maintain the confidentiality thereof and not to use such Confidential Information except as expressly permitted by this Agreement; provided, however, that, in each of the above situations in this Section 11.3.1(e), the Receiving Party shall remain responsible for any failure by any Person who receives Confidential Information from such Receiving Party pursuant to this Section 11.3.1(e) to treat such Confidential Information as required under this Article 11.

11.3.2 Use. Subject to the terms of this Article 11, each Party shall have the right to use the Confidential Information of the other Party to fulfill its obligations and exercise its rights under this Agreement.

11.3.3 Terms of Disclosure. If and whenever any Confidential Information is disclosed in accordance with this Section 11.3, such disclosure shall not cause any such information to cease to be Confidential Information, except to the extent that such disclosure results in a public disclosure of such information other than by breach of this Agreement.

11.4 Terms of this Agreement. The Parties agree that this Agreement and the terms hereof shall be deemed to be Confidential Information of both Jounce and Celgene, and each Party agrees not to disclose this Agreement or any terms hereof without obtaining the prior written consent of the other Party; provided, that each Party may disclose this Agreement or any terms hereof in accordance with the provisions of Section 11.3 or Section 11.5, as applicable.

11.5 Securities Filings; Disclosure under Applicable Law. Each Party acknowledges and agrees that the other Party may submit this Agreement to, or file this Agreement with, the Securities Regulators or other Persons as may be required by Applicable Law, and if a Party submits this Agreement to, or files this Agreement with, any Securities Regulator or other Person as may be required by Applicable Law, such Party agrees to consult with the other Party with respect to the preparation and submission of a confidential treatment request for this Agreement. Notwithstanding the foregoing, if a Party is required by any Securities Regulator or other Person as may be required by Applicable Law to make a disclosure of the terms of this Agreement in a filing or other submission as required by such Securities Regulator or such other Person, and such Party has: (a) provided copies of the disclosure to the other Party reasonably in advance under the circumstances of such filing or other disclosure; (b) promptly notified the other Party in writing of such requirement and any respective timing constraints; and (c) given the other Party reasonable time under the circumstances from the date of provision of a copy of such disclosure to comment upon and request confidential treatment for such disclosure, then such Party shall have the right to make such disclosure at the time and in the manner reasonably determined by its counsel to be required by the Securities Regulator or the other Person. Notwithstanding the foregoing, if a Party seeks to make a disclosure as required by a Securities Regulator or other Person as may be required by Applicable Law as set forth in this Section 11.5 and the other Party provides comments in accordance with this Section 11.5, the Party seeking to make such disclosure or its counsel, as the case may be, shall use good-faith efforts to incorporate such comments.

11.6 Press Releases; Publications; Public Statements.

11.6.1 Jounce will issue a press release in the form substantially attached hereto as Schedule 11.6.1 promptly following the Effective Date.

11.6.2 Subject to Section 11.3, Section 11.4, Section 11.5, and this Section 11.6, Jounce shall not, and shall cause its Affiliates not to, issue any press release, publication (including publications in journals, posters, presentations at conferences, and abstracts submitted in advance of conferences), or other public statement disclosing this Agreement, the activities hereunder, or the transactions contemplated hereby, without first obtaining Celgene’s prior written consent; provided, that Jounce shall be authorized to make any disclosure, without first obtaining Celgene’s prior written consent, that is required by Applicable Law (including the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934), the rules of any Securities Regulator, or by judicial process, subject to and in accordance with Sections 11.3 and 11.5, as applicable. The contents of any press release, publication, or other public statement that has been reviewed and approved by Celgene may be re-released by Jounce without first obtaining Celgene’s prior written consent in accordance with this Section 11.6.2.

11.6.3 Celgene shall have the right to issue any press release, publication, or other public statement disclosing this Agreement (subject to Section 11.4), the activities under this Agreement, or the transactions contemplated hereby without first obtaining the prior written consent of Jounce.

11.6.4 Without limiting any other disclosure rights that Jounce has in accordance with this Article 11, Jounce shall have the right, without first obtaining Celgene’s consent, to disclose in connection with investor meetings, on its website, or in non-confidential materials, any information previously publicly disclosed: (a) by Celgene or any of its Affiliates; or (b) by Jounce in accordance with this Agreement in public filings in order to comply with Applicable Law (including the rules and regulations of the Securities Regulators) pursuant to Section 11.3.1(a) or Section 11.5.

11.7 Use of Names. Except as otherwise expressly set forth herein, neither Party (or any of its respective Affiliates) shall use the name, trademark, trade name, or logo of the other Party or any of its Affiliates, or its or their respective employees, in any publicity, promotion, news release, or other public disclosure relating to this Agreement or its subject matter, without first obtaining the prior written consent of the other Party; provided, that such consent shall not be required to the extent use thereof may be required by Applicable Law, including the rules of any securities exchange or market on which a Party’s or its Affiliate’s securities are listed or traded.

11.8 Clinical Trials Registry. For clarity, Celgene, its Affiliates, and its and their designees shall have the right to publish registry information and summaries of data and results from any Clinical Trials conducted in connection with activities under this Agreement, on its clinical trials registry or on a government-sponsored database such as www.clinicaltrials.gov, without first obtaining the prior consent of Jounce. The Parties shall reasonably cooperate if required or reasonably requested by Celgene in order to facilitate any such publication by Celgene, any of its Affiliates, and any of its or their designees.

ARTICLE 12

REPRESENTATIONS AND WARRANTIES; COVENANTS

12.1 Representations and Warranties of Each Party. Each Party hereby represents and warrants to the other Party, as of the Effective Date, that:

(a) such Party is duly organized, validly existing, and in good standing under the Applicable Law of the jurisdiction of its formation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b) such Party has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;

(c) this Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid, and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforcement of the rights and remedies created hereby is subject to: (i) bankruptcy, insolvency, reorganization, moratorium, and other similar laws of general application affecting the rights and remedies of creditors; or (ii) laws governing specific performance, injunctive relief, and other equitable remedies;

(d) the execution, delivery, and performance of this Agreement by such Party does not breach or conflict with any agreement or any provision thereof, or any instrument or understanding, oral or written, to which such Party (or any of its Affiliates) is a party or by which such Party (or any of its Affiliates) is bound, nor violate any Applicable Law of any Governmental Authority having jurisdiction over such Party (or any of its Affiliates);

(e) no government authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, under any Applicable Law currently in effect, is or shall be necessary for, or in connection with, the transaction contemplated by this Agreement, or for the performance by it of its obligations under this Agreement, except: (i) as may be required to conduct Clinical Trials or to seek or obtain Regulatory Approvals or applicable Regulatory Materials; or (ii) as set forth in Article 10; and

(f) it has obtained all necessary authorizations, consents, and approvals of any Third Party that is required to be obtained by it for, or in connection with, the transactions contemplated by this Agreement, or for the performance by it of its obligations under this Agreement, except: (i) as may be required to conduct Clinical Trials or to seek or obtain Regulatory Approvals or applicable Regulatory Materials; or (ii) as may be required for the assignment by Jounce of the Jounce JTX-8064-Only Development and Manufacturing Agreements pursuant to Section 6.4.

12.2 Representations and Warranties of Jounce. Except as set forth on Schedule 12.2, Jounce hereby represents and warrants to Celgene, as of the Effective Date, that:

(a) Schedule 1.77 sets forth a complete and accurate list of all Jounce Patents. To Jounce’s Knowledge: (i) all issued Patents constituting Jounce Patents are in full force and effect, valid, and enforceable; and (ii) with respect to Jounce Patents that are patent applications in existence as of the Effective Date, Jounce has not engaged in any inequitable conduct in the course of prosecuting such applications;

(b) Jounce has Prosecuted and Maintained each of the Jounce Patents set forth on Schedule 1.77 in good faith and complied with all duties of disclosure with respect thereto;

(c) no claim has been served on Jounce or any of its Affiliates, or written threat of a claim or litigation made by any Person received by Jounce or any of its Affiliates, in each case, against Jounce or any of its Affiliates that alleges, and, to Jounce’s Knowledge, there is no reasonable basis for any such threat or claim, that any Jounce IP is unpatentable, invalid, or unenforceable, or that the Jounce IP has been misappropriated or that any Third Party has any right to or under the Jounce IP or to any Licensed Compound or Licensed Product;

(d) Jounce has the full right and authority to grant all of the rights and licenses granted to Celgene (or purported to be granted to Celgene) hereunder, and neither Jounce nor its Affiliates have granted any right or license to any Third Party relating to any of the Jounce IP that would conflict with or limit the scope of any of the rights or licenses granted to Celgene hereunder;

(e) Jounce is the sole and exclusive owner of the Jounce IP. All Affiliates of Jounce have exclusively licensed or assigned all of their right, title, and interest in and to the Jounce IP to Jounce. Neither Jounce nor any of its Affiliates has granted any mortgage, pledge, claim, security interest, lien, or other charge of any kind on the Jounce IP, and the Jounce IP is free and clear of any mortgage, pledge, claim, security interest, lien, or charge of any kind;

(f) Jounce and its Affiliates have obtained from all individuals who participated in any respect in the invention or authorship of any Jounce IP effective assignments of all ownership rights of such individuals in such Jounce IP, either pursuant to written agreement or by operation of law; and no Person who claims to be an inventor of an invention claimed in a Jounce Patent is not identified as an inventor of such invention in the filed patent documents for such Jounce Patent;

(g) all of Jounce’s and its Affiliates’ employees, officers, and consultants: (i) have executed agreements or have existing obligations under Applicable Law requiring assignment to Jounce or its Affiliates of all inventions made during the course of and as the result of their association with Jounce or its Affiliates, as applicable, and obligating the individual to assign to Jounce or its Affiliate, as applicable, of all Inventions made during the course of performance under this Agreement; (ii) are not subject to any agreement with any other Third Party that requires such officer or employee or consultant to assign any interest in any Jounce IP to such Third Party; and (iii) have executed agreements or have existing obligations under Applicable Law obligating the individual to maintain as confidential Jounce’s Confidential Information as well as confidential information of other parties (including of Celgene and its Affiliates) that such individual

may receive in its performance under this Agreement, to the extent required to support Jounce’s obligations under this Agreement;

(h) neither Jounce nor its Affiliates have received any written notice of any claim that any Patent or Know-How (including any trade secret right) owned or controlled by a Third Party [***] by the Development, Manufacture, or Commercialization of the Licensed Products;

(i) to the Knowledge of Jounce: (i) the Development and Manufacture of the Initial Licensed Compound or any Initial Licensed Product, as conducted by or on behalf of Jounce or its Affiliates, [***]; and (ii) except as otherwise previously disclosed to Celgene, the Development, Manufacture, and Commercialization of the Initial Licensed Compound or any Initial Licensed Product, as contemplated to be conducted under this Agreement, [***];

(j) there are no claims, judgments, settlements, litigations, suits, actions, disputes, arbitration, judicial, or legal, administrative or other proceedings, or governmental investigations pending or, to the Knowledge of Jounce, threatened against Jounce or its Affiliates which could reasonably be expected to adversely affect or restrict the ability of Jounce to consummate or perform the transactions contemplated under this Agreement, or which would affect the Jounce IP or Jounce’s Control thereof, any Licensed Compound, or any Licensed Product;

(k) neither Jounce nor any of its Affiliates has made a claim against a Third Party alleging that a Third Party is violating or has violated, is infringing or has infringed, or is misappropriating or has misappropriated any Jounce IP, and, to the Knowledge of Jounce, no Jounce IP is being violated, infringed, or misappropriated by any Third Party;

(l) neither Jounce nor any of its Affiliates has employed, or otherwise used in any capacity, the services of any Person suspended, proposed for debarment, or debarred under United States law, including under 21 U.S.C. § 335a, or any foreign equivalent thereof, with respect to the Licensed Products. All Development and Manufacture (including non-clinical studies and Clinical Trials) related to any Licensed Compound or any Licensed Product conducted by or on behalf of Jounce or its Affiliates has been conducted in accordance with all Applicable Law (including, to the extent applicable, GCP, GLP, and GMP);

(m) other than the Jounce Upstream License Agreements, the Jounce JTX-8064-Only Development and Manufacturing Agreements listed on Schedule 1.71(a), or the Jounce General Development and Manufacturing Agreements listed on Schedule 1.71(b), neither Jounce nor its Affiliates have entered into any agreement under which Jounce or its Affiliates: (i) has obtained a license or sublicense of rights from a Third Party to any Jounce IP; or (ii) has granted a license, sublicense, option, or right to a Third Party that remains in effect to Develop, Manufacture, or Commercialize any Licensed Compound or Licensed Product;

(n) other than the Jounce Upstream License Agreements listed on Schedule 1.78, the Jounce JTX-8064-Only Development and Manufacturing Agreements listed on Schedule 1.71(a),

or the Jounce General Development and Manufacturing Agreements listed on Schedule 1.71(b), Jounce (or its Affiliates, as applicable) has not entered into any agreement with any Third Party relating to the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product or the Jounce IP;

(o) with respect to each Jounce Upstream License Agreement listed on Schedule 1.78, each Jounce JTX-8064-Only Development and Manufacturing Agreement listed on Schedule 1.71(a), and each Jounce General Development and Manufacturing Agreement listed on Schedule 1.71(b): (i) such Jounce Upstream License Agreement and such Jounce Development and Manufacturing Agreement, excluding those listed on Schedule 12.2(o), is in full force and effect; (ii) Jounce (or its Affiliate, as applicable) is not in breach thereof; (iii) Jounce (or its Affiliate, as applicable) has not received any notice from the counterparty to such Jounce Upstream License Agreement or such Jounce Development and Manufacturing Agreement of Jounce’s (or its Affiliate’s, as applicable) breach or notice of threatened breach by Jounce (or its Affiliate, as applicable) thereof; and (iv) Jounce has provided Celgene with a true, correct, and complete copy of each such Jounce Upstream License Agreement and each such Jounce Development and Manufacturing Agreement;

(p) Jounce has made good-faith efforts to disclose (or cause to be disclosed) to Celgene all material information known to Jounce or any of its Affiliates relevant to this Agreement where its omission would reasonably be expected to have a material impact on Celgene’s decision to enter into the transactions contemplated by this Agreement;

(q) Jounce has not obtained, or filed, any INDs, MAAs, or Regulatory Approvals or any other form of regulatory application for approval of Clinical Trials, marketing, or other purpose, in each case, for any Licensed Compound or Licensed Product, and no other Person has obtained, or filed for, any such INDs, MAAs, or Regulatory Approvals; and

(r) no funding, facilities, or personnel of any Governmental Authority or any public or private educational or research institutions were used to develop or create any Jounce IP, and neither Jounce nor any of its Affiliates has entered into a government funding relationship that would result in rights to any Licensed Compound or Licensed Product residing in the U.S. Government, the National Institutes of Health, the National Institute for Drug Abuse, or other agency, and the licenses granted hereunder are not subject to overriding obligations to the U.S. Government as set forth in Public Law 96-517 (35 U.S.C. §§ 200-204), or any similar obligations under the laws of any other country in the Territory.

12.3 Covenants.

12.3.1 Mutual Covenant. Each Party hereby covenants to the other Party that such Party and its Affiliates shall perform its activities pursuant to this Agreement in compliance (and shall ensure compliance by any of its subcontractors) with all Applicable Law, including, to the extent applicable, GCP, GLP, and GMP.

12.3.2 Additional Jounce Covenants. Jounce hereby covenants to Celgene that:

(a) Neither Jounce nor its Affiliates shall grant any right or license to any Third Party relating to any of the intellectual property rights it Controls (including the Jounce IP), or otherwise with respect to any Licensed Compound or Licensed Product, which conflict with, or could otherwise adversely impact any of the rights or licenses granted to Celgene hereunder.

(b) Except as expressly agreed to by Celgene in writing, neither Jounce nor its Affiliates shall use (and neither shall grant any Third Party the right to use) any Licensed Compound or Licensed Product for any purposes in the Territory.

(c) Except as otherwise expressly permitted under this Agreement, Jounce shall not, and shall cause its Affiliates not to: (i) assign, transfer, convey, encumber (through a lien, charge, security interest, mortgage, or similar encumbrance) or dispose of, or enter into any agreement with any Third Party to assign, transfer, convey, encumber (through a lien, charge, security interest, mortgage, or similar encumbrance) or dispose of, any assets related to the Jounce IP or Joint IP (including the Jounce IP or Joint IP itself) or any Licensed Compound or Licensed Product, except to the extent that such assignment, transfer, conveyance, encumbrance, or disposition would not conflict with, be inconsistent with, or adversely affect in any respect any of the rights or licenses granted to Celgene hereunder; (ii) license or grant to any Third Party, or agree to license or grant to any Third Party, any rights to the Jounce IP, Joint IP, or any Licensed Compound or Licensed Product if such license or grant could conflict with, be inconsistent with, or adversely affect in any respect any of the rights or licenses granted to Celgene hereunder; or (iii) disclose any Confidential Information relating to the Jounce IP, Joint IP, or any Licensed Compound or Licensed Product to any Third Party if such disclosure could impair or conflict in any respect with any of the rights or licenses granted to Celgene hereunder.

(d) Solely with respect to the Jounce Upstream License Agreements and each Jounce Development and Manufacturing Agreement that is not assigned to Celgene under this Agreement: (i) Jounce (or its Affiliate, as applicable) shall not breach, or commit any acts or permit the occurrence of any omissions that would cause the breach or termination of, or otherwise Default under, any such Jounce Development and Manufacturing Agreement or any Jounce Upstream License Agreement; and (ii) subject to Section 6.4, Jounce shall (or shall cause its Affiliates to, as applicable) satisfy all of its obligations under each such Jounce Development and Manufacturing Agreement and Jounce Upstream License Agreement and shall, or shall cause its Affiliates to, as applicable, maintain each such Jounce Development and Manufacturing Agreement and Jounce Upstream License Agreement in full force and effect. Jounce shall, or shall cause its Affiliates to, as applicable, enforce its rights under each Jounce Development and Manufacturing Agreement and Jounce Upstream License Agreement to the extent necessary to preserve Celgene’s rights under this Agreement. Jounce shall not, and shall cause its Affiliates not to, amend, modify, or terminate any Jounce Development and Manufacturing Agreement (except as permitted in accordance with Section 6.4.3) or any Jounce Upstream License Agreement without first obtaining Celgene’s prior written consent. Except as set forth in Section 6.4, Jounce shall not, and shall cause its Affiliates not to assign or otherwise transfer any Jounce Development and Manufacturing Agreement or any Jounce Upstream License Agreement. Jounce shall provide Celgene with prompt written notice of alleged Default of which

it is aware under any Jounce Development and Manufacturing Agreement or Jounce Upstream License Agreement or notice of termination of any Jounce Development and Manufacturing Agreement or Jounce Upstream License Agreement.

(e) If Jounce receives notice of an alleged Default by Jounce or its Affiliates under any Jounce Upstream License Agreement, where termination of such Jounce Upstream License Agreement could be sought by the counterparty or result from such Default, then Jounce shall promptly, but in no event less than [***] Business Days thereafter, provide written notice thereof to Celgene and grant Celgene the right (but not the obligation) to: (i) cure such alleged breach or Default; and (ii) offset any costs or expenses incurred in connection therewith against any payments due or that may become due under this Agreement.

12.4 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED (AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY PROVIDED IN THIS AGREEMENT), INCLUDING WITH RESPECT TO ANY PATENTS OR KNOW-HOW, INCLUDING WARRANTIES OF VALIDITY OR ENFORCEABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, PERFORMANCE, AND NON-INFRINGEMENT OF ANY THIRD PARTY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT. WITHOUT LIMITING THE FOREGOING, THE PARTIES AGREE THAT THE MILESTONE EVENTS, SALES MILESTONE EVENTS, AND NET SALES LEVELS SET FORTH IN THIS AGREEMENT OR THAT HAVE OTHERWISE BEEN DISCUSSED BY THE PARTIES ARE MERELY INTENDED TO DEFINE THE MILESTONE PAYMENTS, SALES MILESTONE PAYMENTS, AND ROYALTY OBLIGATIONS IF SUCH MILESTONE EVENTS, SALES MILESTONE EVENTS, OR NET SALES LEVELS ARE ACHIEVED. NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE TO SUCCESSFULLY DEVELOP, MANUFACTURE, OR COMMERCIALIZE ANY LICENSED COMPOUND OR LICENSED PRODUCT OR, IF COMMERCIALIZED, THAT ANY PARTICULAR SALES LEVEL OF SUCH LICENSED PRODUCT WILL BE ACHIEVED.

ARTICLE 13

INDEMNIFICATION; INSURANCE

13.1 Indemnification by Celgene. Celgene shall indemnify, defend, and hold harmless Jounce, its Affiliates, and its and their respective directors, officers, employees, agents, successors, and assigns (collectively, the “Jounce Indemnitees”) from and against any and all Damages to the extent arising out of or relating to, directly or indirectly, any Third Party Claim based upon:

(a) the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product in the Field in the Territory by Celgene, its Affiliates, or its Sublicensees;

(b) the gross negligence or willful misconduct of Celgene or its Affiliates or its or their respective directors, officers, employees, consultants, subcontractors, or agents, in connection with Celgene’s performance of its obligations under this Agreement; or

(c) any breach by Celgene of any of its representations, warranties, covenants, agreements, or obligations under this Agreement;

provided, however, that, in each case ((a)-(c)), such indemnity shall not apply to the extent Jounce has an indemnification obligation pursuant to Sections 13.2(a), 13.2(b), 13.2(c), or 13.2(d) for such Damages.

13.2 Indemnification by Jounce. Jounce shall indemnify and hold harmless Celgene, its Affiliates, and its and their respective directors, officers, employees, agents, successors, and assigns (collectively, the “Celgene Indemnitees”), from and against any and all Damages to the extent arising out of or relating to, directly or indirectly, any Third Party Claim based upon:

(a) events or occurrences arising out of or relating to any Jounce Development and Manufacturing Agreement prior to the date such Jounce Development and Manufacturing Agreement is assigned or terminated under Section 6.4 (including any payments that accrued prior to the date of such assignment or termination but which do not become payable until after the date of such assignment or termination), except in accordance with Section 6.4.2;

(b) any activity conducted by or on behalf of Jounce under this Agreement that is not done at the express written direction of Celgene;

(c) the gross negligence or willful misconduct of Jounce or its Affiliates or its or their respective directors, officers, employees, consultants, subcontractors or agents, in connection with Jounce’s performance of its obligations under this Agreement; or

(d) any breach by Jounce of any of its representations, warranties, covenants, agreements, or obligations under this Agreement;

provided, however, that, in each case ((a)-(d)), such indemnity shall not apply to the extent Celgene has an indemnification obligation pursuant to Sections 13.1(a), 13.1(b), or 13.1(c) for such Damages.

13.3 Procedure.

13.3.1 If a Party is seeking indemnification under Section 13.1 or Section 13.2, as applicable (the “Indemnitee”), it shall inform the other Party (the “Indemnitor”) of the claim giving rise to the obligation to indemnify pursuant to Section 13.1 or Section 13.2, as applicable, as soon as reasonably practicable after receiving notice of the claim (an “Indemnification Claim Notice”); provided, that any delay or failure to provide such notice shall not constitute a waiver or release of, or otherwise limit, the Indemnitee’s rights to indemnification under Section 13.1 or Section 13.2, as applicable, except to the extent that such delay or failure materially prejudices the Indemnitor’s ability to defend against the relevant claims.

13.3.2 The Indemnitor shall have the right, upon written notice given to the Indemnitee within thirty (30) days after receipt of the Indemnification Claim Notice (and, where the Indemnitor is Jounce, subject to receipt of Celgene’s prior written consent), to assume the defense of any such claim for which the Indemnitee is seeking indemnification pursuant to Section 13.1 or Section 13.2, as applicable. The Indemnitee shall cooperate with the Indemnitor and the Indemnitor’s insurer as the Indemnitor may reasonably request, and at the Indemnitor’s cost and expense. The Indemnitee shall have the right to participate, at its own expense and with counsel of its choice, in the defense of any claim or suit that has been assumed by the Indemnitor.

13.3.3 The Indemnitor shall not settle any claim to which it is subject pursuant to Section 13.1 or Section 13.2, as applicable, without first obtaining the prior written consent of the Indemnitee, not to be unreasonably withheld, conditioned, or delayed; provided, however, that the Indemnitor shall not be required to obtain such consent if the settlement: (a) involves only the payment of money and shall not result in the Indemnitee (or other Jounce Indemnitees or Celgene Indemnitees, as applicable) becoming subject to injunctive or other similar type of relief; (b) does not require an admission by the Indemnitee (or other Jounce Indemnitees or Celgene Indemnitees, as applicable); and (c) does not adversely affect the rights or licenses granted to the Indemnitee (or its Affiliate) under this Agreement. The Indemnitee shall not settle or compromise any such claim without first obtaining the prior written consent of the Indemnitor.

13.3.4 If the Parties cannot agree as to the application of Section 13.1 or Section 13.2, as applicable, to any claim, pending the resolution of the dispute pursuant to Section 15.7, the Parties may conduct separate defenses of such claims, with each Party retaining the right to claim indemnification from the other Party in accordance with Section 13.1 or Section 13.2, as applicable, upon resolution of the underlying claim. In each case, the Indemnitee shall reasonably cooperate with the Indemnitor and shall make available to the Indemnitor all pertinent information under the control of the Indemnitee, which information shall be subject to Article 11.

13.4 Insurance. During the Term and for a period of [***] years thereafter, each Party shall maintain, at its cost, a program of insurance (or self-insurance, in the case of Celgene) against liability and other risks associated with its activities and obligations under this Agreement (including with respect to its Clinical Trials), and its indemnification obligations hereunder, in such amounts, subject to such deductibles and on such terms as are customary for such Party for the activities to be conducted by it under this Agreement. Such insurance shall not be construed to create a limit on either Party’s liability with respect to its indemnification obligations under this Article 13, or otherwise.

13.5 LIMITATION OF LIABILITY. NEITHER JOUNCE NOR CELGENE, NOR ANY OF THEIR RESPECTIVE AFFILIATES, WILL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES (INCLUDING LOST PROFITS OR LOST REVENUES), WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY, CONTRIBUTION, OR OTHERWISE, AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF THAT PARTY HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE

POSSIBILITY OF, ANY SUCH LOSS OR DAMAGE. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 13.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT: (A) THE [***] RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTIONS [***] OR [***], AS APPLICABLE, IN CONNECTION WITH ANY [***]; (B) THE LIABILITY OF (I) JOUNCE FOR BREACH OF ITS [***] OBLIGATIONS UNDER SECTIONS [***] OR [***] OR (II) CELGENE FOR BREACH OF SECTION [***]; OR (C) DAMAGES AVAILABLE FOR A PARTY’S GROSS NEGLIGENCE, INTENTIONAL MISCONDUCT, OR FRAUD.

ARTICLE 14

TERM AND TERMINATION

14.1 Term; Expiration.

14.1.1 Term. This Agreement shall become effective on the Effective Date and, unless earlier terminated in accordance with this Article 14, shall remain in effect until it expires as follows (the “Term”):

(a) on an Initial Licensed Product-by-Initial Licensed Product and country-by-country basis, this Agreement shall expire on the date of the expiration of the Royalty Term with respect to such Initial Licensed Product in such country; and

(b) this Agreement shall expire in its entirety upon the expiration of all applicable Royalty Terms under this Agreement with respect to the Initial Licensed Products in all countries in the Territory.

14.1.2 Effect of Expiration. Upon the expiration of the Term pursuant to Section 14.1.1, the following terms shall apply:

(a) Licenses after Licensed Product Expiration. Upon the expiration of the Term with respect to a given Initial Licensed Product in a given country pursuant to Section 14.1.1(a), the licenses set forth in Section 8.1 with respect to the Initial Licensed Product in such country shall become fully paid-up, perpetual, irrevocable, and royalty-free.

(b) Licenses after Expiration of Agreement. Upon the expiration of the Term with respect to this Agreement in its entirety pursuant to Section 14.1.1(b), the licenses set forth in Section 8.1 with respect to all Licensed Products in all countries in the Territory shall become fully paid-up, perpetual, irrevocable, and royalty-free.

14.2 Termination for Material Breach.

14.2.1 Material Breach. This Agreement may be terminated in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis by a Party for the material breach by the other Party of this Agreement; provided, that the breaching Party has not cured such breach within [***] days for

failure to make any payments due to the other Party hereunder, and, for all other breaches, [***] days, in each case, after the date of written notice to the breaching Party of such breach (the “Cure Period”), which notice shall describe such breach in reasonable detail and shall state the non-breaching Party’s intention to terminate this Agreement (in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis). In the event that a material breach relates solely to a given Licensed Product (it being understood that a breach by Celgene of Section 2.2 or Section 4.2 would constitute a breach relating solely to a given Licensed Product), then the non-breaching Party may only exercise its termination right under this Section 14.2.1 with respect to such Licensed Product. Any such termination of this Agreement (in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis) under this Section 14.2.1 shall become effective at the end of the Cure Period, unless the breaching Party has cured such breach prior to the expiration of such Cure Period, or, if such breach is not susceptible to cure within the Cure Period, then such Cure Period shall be extended for an additional [***] days so long as the breaching Party continues to use commercially reasonable efforts to cure such material breach during such extension period.

14.2.2 Disagreement as to Material Breach. Notwithstanding Section 14.2.1, if the Parties in good faith disagree as to whether there has been a material breach of this Agreement, then: (a) the Party that disputes whether there has been a material breach may contest the allegation by referring such matter, within [***] days following its receipt of notice of alleged material breach, for resolution in accordance with Section 15.7.3(a); (b) the relevant Cure Period with respect to such alleged material breach shall be tolled from the date on which the Party that disputes whether there has been a material breach notifies the other Party of such dispute until the resolution of such dispute in accordance with the applicable provisions of this Agreement; (c) subject to Section 14.8, during the pendency of such dispute, all of the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder; and (d) if it is ultimately determined that the breaching Party committed such material breach, then the breaching Party shall have the right to cure such material breach, after such determination, within the Cure Period (as may be extended in accordance with Section 14.2.1), which shall commence as of the date of such determination.

14.3 Termination at Will. Celgene may terminate this Agreement at will, in its sole discretion, in its entirety or on a Licensed Product-by-Licensed Product or country-by-country basis, at any time upon [***] days’ prior written notice to Jounce.

14.4 Termination for Bankruptcy.

14.4.1 If either Party makes a general assignment for the benefit of, or an arrangement or composition generally with, its creditors, appoints or suffers appointment of an examiner or of a receiver or trustee over all or substantially all of its property, passes a resolution for its winding up, or files a petition under any bankruptcy or insolvency act or law or has any such petition filed against it which is not dismissed, discharged, bonded, or stayed within [***] days after the filing thereof (each, an “Insolvency Event”), the other Party may terminate this Agreement in its entirety, effective immediately upon written notice to such Party.

14.4.2 For purposes of Section 365(n) of the U.S. Bankruptcy Code (the “Code”) and any similar laws in any country other than the U.S., all rights and licenses granted under or pursuant to any Section of this Agreement are rights to “intellectual property” (as defined in Section 101(35A) of the Code). The Parties agree that the licensee of such rights under this Agreement will retain and may fully exercise all of its protections, rights, and elections under the Code and any similar laws in any country other than the U.S. Each Party hereby acknowledges that: (a) copies of research data, (b) laboratory samples, (c) product samples, (d) formulas, (e) laboratory notes and notebooks, (f) data and results related to Clinical Trials, (g) regulatory filings and Regulatory Approvals, (h) rights of reference in respect of regulatory filings and Regulatory Approvals, (i) pre-clinical research data and results, and (j) marketing, advertising, and promotional materials, in each case ((a) through (j)), that relate to such intellectual property, constitute “embodiments” of such intellectual property pursuant to Section 365(n) of the Code, and that the licensee will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and the same, if not already in its possession, will be promptly delivered to it upon its written request therefor and election under Section 365(n)(1)(B) of the Code to retain the licenses granted by Jounce to Celgene hereunder in the event of Jounce’s rejection of this Agreement, unless Jounce elects to continue to perform all of its obligations under this Agreement. The provisions of this Section 14.4.2 are without prejudice to any rights the non-subject Party may have arising under the Code, laws of other jurisdictions governing insolvency and bankruptcy, or other Applicable Law. The Parties agree that they intend the following rights to extend to the maximum extent permitted by Applicable Law, including for purposes of the Code and any similar laws in any country other than the U.S.: (x) the right of access to any intellectual property (including all embodiments thereof) of Jounce, or any Third Party with whom Jounce contracts in accordance with this Agreement to perform an obligation of Jounce under this Agreement which is necessary or useful for the Development, Manufacture, or Commercialization of any Licensed Compound or Licensed Product; (y) the right to contract directly with any Third Party described in (x) to complete the contracted work, and (z) the right to cure any Default under any such agreement with a Third Party and set off the costs thereof against amounts payable to such licensor under this Agreement.

14.5 Effects of Termination.

14.5.1 Termination by Celgene for Convenience or by Jounce for Material Breach or Bankruptcy. Upon termination of this Agreement with respect to a Terminated Licensed Product: (a) by Celgene, in accordance with Section 14.3; or (b) by Jounce, in accordance with Section 14.2 or Section 14.4:

(a) the licenses granted by Jounce to Celgene pursuant to Section 8.1 with respect to the Terminated Licensed Product shall terminate, and Celgene shall not have any rights to use or exercise any rights under the Jounce IP with respect to such Terminated Licensed Product;

(b) Celgene shall be released from its Development, Manufacturing, and Commercialization obligations under this Agreement with respect to the Terminated Licensed Product, including with respect to Section 2.2;

(c) Celgene shall promptly transfer and assign to Jounce all of Celgene’s and its Affiliates’ rights, title, and interests in and to Licensed Product Marks (but not any house marks of Celgene or any of its Affiliates) owned by Celgene and used solely in connection with the Commercialization of the Terminated Licensed Product, in exchange for a payment to Celgene in an amount equal to Celgene’s incurred costs related to the development, clearance, registration, enforcement, and maintenance of the applicable trademarks throughout the Territory;

(d) Celgene shall as soon as reasonably practicable transfer and assign (to the extent permitted) to Jounce all Jounce JTX-8064-Only Development and Manufacturing Agreements that have been assigned to Celgene under this Agreement, and all Regulatory Materials and other documented technical and other information or materials owned and controlled by Celgene or any of its Affiliates, in each case, to the extent solely related to the Terminated Licensed Product and necessary for Developing, Manufacturing, or Commercializing such Terminated Licensed Product in the Field in the Territory; provided, that: (i) Celgene may retain a copy of such items for its records; and (ii) within [***] days after Jounce’s receipt of an invoice therefor, Jounce shall reimburse Celgene for Celgene’s and its Affiliates’ costs incurred in connection with such transfers and assignment;

(e) Jounce shall have the option, exercisable within [***] days following the effective date of such termination, to obtain Celgene’s inventory of such Terminated Licensed Product at a price equal to [***] percent ([***]%) of Celgene’s costs for such inventory of the Terminated Licensed Product. In the event Jounce exercises such right to purchase such inventory, Celgene shall grant, and hereby does grant, a royalty-free license to any trademarks, names, and logos of Celgene contained therein for a period of [***] months from the date of Jounce’s exercise solely to permit the orderly sale of such inventory;

(f) the provisions of Article 9 (other than Section 9.1) shall be terminated with respect to the Terminated Licensed Product;

(g) upon the effective date of termination, Celgene shall grant, and hereby grants, to Jounce a non-exclusive, worldwide license, with the right to grant sublicenses, under any Patents or Know-How Controlled by Celgene or any of its Affiliates that arose from the Parties’ activities under this Agreement, solely to Develop, Manufacture, and Commercialize the Terminated Licensed Product (if currently under Development or Commercialization) pursuant to this Agreement as of the effective date of termination. For a period of [***] days after the effective date of such termination, the Parties shall negotiate in good faith the economic terms Jounce is to pay Celgene for the exercise of the license described in this Section 14.5.1(g), including the royalty rate to be paid for such exercise. If the Parties do not agree upon terms during such [***]-day period, then the Parties shall promptly (but in no event later than [***] days after the expiration of such [***]-day period) designate in writing a single mutually acceptable arbitrator experienced in the licensing, development, and commercialization of pharmaceutical products, who is not a current or former employee, consultant, officer, or director, nor a current stockholder, of either Party (or any of their respective Affiliates), and who does not otherwise have any current or previous relationship with either Party or any of their respective Affiliates. Within [***] days of the arbitrator’s appointment, each Party will prepare and deliver to both the arbitrator and the other Party its last, best offer for such economic terms (“Proposed Economic Terms”). The Parties shall also provide the arbitrator with a copy of the relevant

provisions of this Agreement. The Parties shall instruct the arbitrator to select, from the two (2) Proposed Economic Terms and within [***] days after the arbitrator’s appointment, the Proposed Economic Terms that he or she believes most closely reflects the economic value of the license described in this Section 14.5.1(g) with respect to the applicable Terminated Licensed Product. The decision of the arbitrator shall be final and binding upon the Parties;

(h) in the case of termination of this Agreement in its entirety, any and all sublicense agreements entered into by Celgene or any of its Affiliates with a Sublicensee pursuant to this Agreement shall survive such termination of this Agreement, except to the extent that: (i) any such Sublicensee is in material breach of this Agreement or such sublicense; or (ii) Jounce elects to grant such Sublicensee a direct license of the sublicensed rights on the same terms applicable to Celgene under this Agreement. Celgene shall, upon the written request of Jounce, assign any such sublicense (to the extent not terminated pursuant to the preceding sentence) to Jounce or its Affiliates and, upon such assignment, Jounce or its Affiliate(s), as applicable, shall assume such sublicense; and

(i) the Jounce IP that was deemed under Section 1.28 to be Celgene’s Confidential Information that is solely related to the applicable Terminated Licensed Product (and not related to any other Licensed Product) shall be deemed Jounce’s Confidential Information.

14.5.2 Termination by Celgene for Material Breach or Bankruptcy. Upon termination of this Agreement with respect to a Terminated Licensed Product by Celgene in accordance with Section 14.2 or Section 14.4:

(a) Celgene shall be released from its Development, Manufacturing, and Commercialization obligations under this Agreement with respect to the Terminated Licensed Product, including with respect to Section 2.2;

(b) Celgene’s rights and Jounce’s obligations pursuant to Sections 9.2, 9.3, and 9.4 shall survive; and

14.6 Certain Additional Remedies of Celgene in Lieu of Termination. In the event that: (a) Celgene notifies Jounce in writing of a material breach of this Agreement by Jounce; and (b) Celgene has the right to terminate this Agreement pursuant to Section 14.2 (including Section 14.2.2), then, in lieu of Celgene terminating this Agreement pursuant to Section 14.2, and without limiting any other rights or remedies of Celgene, Celgene may elect to have this Agreement continue in full force and effect by providing written notice thereof to Jounce; provided, that if Celgene so elects to continue this Agreement, then from and after such time as Celgene delivers such written notice to Jounce, any and all amounts thereafter payable by Celgene hereunder (including Milestone Payments, Sales Milestone Payments, and royalties) shall be reduced by [***] percent ([***]%); provided, however, that if Jounce contests Celgene’s right to terminate this Agreement as described in Section 14.2.2, then such reduction shall not become effective until it is finally determined pursuant to Section 15.7 that Celgene has a right to terminate this Agreement.

14.7 Surviving Provisions.

14.7.1 Accrued Rights; Remedies. The expiration or termination of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such expiration or termination, and any and all damages or remedies (whether at law or in equity) arising from any breach hereunder, each of which shall survive expiration or termination of this Agreement. Such expiration or termination shall not relieve any Party from obligations which are expressly indicated to survive expiration or termination of this Agreement. Except as otherwise expressly set forth in this Agreement, the termination provisions of this Article 14 are in addition to any other relief and remedies available to either Party under this Agreement, at law, or in equity.

14.7.2 Survival. Without limiting the provisions of Section 14.7.1, the rights and obligations of the Parties set forth in the following Sections and Articles of this Agreement shall survive the expiration or termination of this Agreement, in addition to those other terms and conditions that are expressly stated to survive termination or expiration of this Agreement: Article 1 (to the extent the definitions are used in other surviving provisions), Article 11, Article 13, Article 15, Section 7.6, Section 7.7, Section 8.3, Section 8.4, Section 9.1, Section 12.1, Section 12.2, Section 12.4, Section 14.1, Section 14.5, and this Section 14.7.

14.8 Milestone Payments. Notwithstanding anything to the contrary contained herein, in the event notice of termination of this Agreement is given prior to achievement of a Milestone Event set forth in Section 7.2 or a Sales Milestone Event set forth in Section 7.3, Celgene shall not be obligated to make any Milestone Payment or Sales Milestone Payment to Jounce with respect to any Milestone Event or Sales Milestone Event achieved following the date such termination takes effect.

ARTICLE 15

MISCELLANEOUS

15.1 Severability. If one (1) or more of the terms or provisions of this Agreement is held by a court of competent jurisdiction to be void, invalid, or unenforceable in any situation in any jurisdiction, such holding shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the void, invalid, or unenforceable term or provision in any other situation or in any other jurisdiction, and such term or provision shall be considered severed from this Agreement solely for such situation and solely in such jurisdiction, unless the void, invalid, or unenforceable term or provision is of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the void, invalid, or unenforceable term or provision. If the final judgment of such court declares that any term or provision hereof is void, invalid, or unenforceable, the Parties agree to: (a) reduce the scope, duration, area, or applicability of the term or provision or to delete specific words or phrases to the minimum extent necessary to cause such term or provision as so reduced or amended to be enforceable; and (b) make a good-faith effort to replace any void, invalid, or unenforceable term or provision with a valid and enforceable term or provision such that the objectives contemplated by the Parties when entering this Agreement may be realized.

15.2 Notices. Any notice required or permitted to be given by this Agreement shall be in writing and in English and shall be: (a) delivered by hand or by overnight courier with tracking capabilities; or (b) mailed postage prepaid by first class, registered, or certified mail, in each case, addressed as set forth below unless changed by notice so given:

If to Celgene Corp.:

Celgene Corporation

86 Morris Avenue

Summit, NJ 07901

Attention: Senior Vice President Business Development

If to Celgene RIVOT:

Celgene RIVOT LLC

2711 Centerville Road, Suite 400

Wilmington, DE 19808

Attention: Director

With copies to (in the case of either Celgene Corp. or Celgene RIVOT):

Celgene Corporation

86 Morris Avenue

Summit, New Jersey 07901

Attention: General Counsel

If to Jounce:

Jounce Therapeutics, Inc.

780 Memorial Drive

Cambridge, MA 02139

Attention: Chief Executive Officer

With copies to:

Jounce Therapeutics, Inc.

780 Memorial Drive

Cambridge, MA 02139

Attention: General Counsel

Any such notice shall be deemed given on the date received, except any notice received after 5:30 p.m. (in the time zone of the receiving Party) on a Business Day or received on a non-Business Day shall be deemed to have been received on the next Business Day. A Party may add, delete, or change the person or address

to which notices should be sent at any time upon written notice delivered to the other Parties in accordance with this Section 15.2.

15.3 Force Majeure. A Party shall not be liable for delay or failure in the performance of any of its obligations hereunder if such delay or failure is due to a cause beyond the reasonable control of such Party, including acts of God, fires, earthquakes, acts of war, terrorism, or civil unrest, or hurricane or other inclement weather; provided, that the affected Party: (a) promptly notifies the other Party; and (b) shall use its commercially reasonable efforts to avoid or remove such causes of non-performance and to mitigate the effect of such occurrence, and shall continue performance in accordance with the terms of this Agreement whenever such causes are removed. When such circumstances arise, the Parties shall negotiate in good faith any modifications of the terms of this Agreement that may be necessary or appropriate in order to arrive at an equitable solution.

15.4 Assignment.

15.4.1 Generally. Except as expressly permitted herein, this Agreement may not be assigned or transferred by any Party, nor may any Party assign or transfer any rights or obligations created by this Agreement, except as expressly permitted hereunder without first obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed.

15.4.2 Celgene. Notwithstanding the limitations in Section 15.4.1, and subject to Section 7.6.2 and the remaining provisions of this Section 15.4.2, Celgene Corp. or Celgene RIVOT may assign or transfer this Agreement, or any rights or obligations hereunder in whole or in part, to: (a) one (1) or more of its Affiliates (provided, that Celgene shall remain fully and unconditionally liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate); or (b) its successor in interest in connection with its merger, consolidation, or sale of all or substantially all of its assets or that portion of its business pertaining to the subject matter of this Agreement.

15.4.3 Jounce. Notwithstanding the limitations in Section 15.4.1, and subject to Section 7.6.2 and the remaining provisions of this Section 15.4.3, Jounce may assign or transfer this Agreement, or any rights or obligations hereunder in whole or in part, to: (a) one (1) or more of its Affiliates (provided, that Jounce shall remain fully and unconditionally liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate); or (b) its successor in interest in connection with its merger, consolidation, or sale of all or substantially all of its assets.

15.4.4 All Other Assignments Null and Void. The terms of this Agreement shall be binding upon and shall inure to the benefit of the successors, heirs, administrators, and permitted assigns of the applicable Party. Any purported assignment in violation of this Section 15.4 shall be null and void ab initio.

15.4.5 Change of Control. Whether or not this Agreement is assigned pursuant to Section 15.4, the Parties agree as follows: the rights to information, materials, Patents, Know-How, or other intellectual property rights: (a) controlled by a Third Party permitted assignee of a Party or any of its Affiliates

that were controlled by such assignee or any of its Affiliates (and not such Party or any of its Affiliates) immediately prior to such assignment (other than as a result of a license or other grant of rights, covenant, or assignment by such Party or its Affiliates to, or for the benefit of, such Third Party); or (b) controlled by any successor-in-interest of a Party as a result of a Change of Control of such Party or any Person that becomes an Affiliate of a Party through any Change of Control of such Party, that were controlled by such successor-in-interest or Person (and not such Party or any of its Affiliates) immediately prior to the closing of such Change of Control (other than as a result of a license or other grant of rights, covenant, or assignment by such Party or its other Affiliates to, or for the benefit of, such Person), in each case ((a) and (b)), shall be [***] this Agreement, except: (i) with respect to any such information, materials, Patents, Know-How, or other intellectual property rights arising as a result of activities of employees or consultants of such assignee, successor-in-interest, Person, or any of their respective Affiliates who participate in activities or have access to Confidential Information of the other Party, in each case, under this Agreement after any such assignment or the closing of such Change of Control; or (ii) to the extent that any such information, materials, Patents, Know-How, or other intellectual property rights are included in or used in furtherance of a Party’s activities under this Agreement by such assignee, successor-in-interest, Person, or any of their Affiliates.

15.5 Waivers and Modifications. The failure of any Party to insist on the performance of any obligation hereunder shall not be deemed to be a waiver of such obligation. Waiver of any breach of any provision hereof shall not be deemed to be a waiver of any other breach of such provision or any other provision on such occasion or any succeeding occasion. No waiver, modification, release, or amendment of any obligation under or provision of this Agreement shall be valid or effective unless in writing and signed by the Parties.

15.6 WAIVER OF JURY TRIAL. EXCEPT AS LIMITED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, AND ENFORCEMENT HEREOF. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

15.7 Choice of Law; Dispute Resolution; Jurisdiction.

15.7.1 Choice of Law. This Agreement shall be governed by, enforced, and construed in accordance with the laws of the State of New York without reference to any rules of conflict of laws and excluding the United Nations Convention on Contracts for the International Sales of Goods.

15.7.2 Dispute Resolution. The Parties agree that the procedures set forth in Section 15.7.3 shall be the exclusive mechanism for resolving any dispute (whether in contract, tort, or otherwise),

controversy, or claim between the Parties arising out of or in connection with this Agreement, any Party’s rights or obligations under this Agreement, breach of this Agreement, or the transactions contemplated by this Agreement (each, a “Dispute”).

15.7.3 Jurisdiction.

(a) Except as otherwise set forth in this Section 15.7.3, the sole jurisdiction and venue for all actions, suits, and proceedings arising out of any Dispute shall be the state and federal courts located in the Borough of Manhattan in New York, New York, U.S. Each Party hereby irrevocably and unconditionally: (i) consents to submit to the exclusive jurisdiction of the federal (and, if unavailable, state) courts located in the Borough of Manhattan in New York, New York, U.S. for any action, suit, or proceeding arising out of such Dispute; and (ii) waives any objection to the laying of venue of any action, suit, or proceeding arising out of such Dispute in the federal (and, if unavailable, state) courts of the Borough of Manhattan in New York, New York, U.S. and agrees not to plead or claim in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum. Each of the Parties agrees that process may be served upon it in the manner specified in Section 15.2 and irrevocably waives and covenants not to assert or plead any objection which it might otherwise have to such jurisdiction, or to such manner of service of process. It shall be a condition precedent to the commencement of any action, suit, or proceeding in court or other tribunal (except for an action, suit, or proceeding for an interim injunction or provisional relief) with respect to any Dispute relating to this Agreement that the Parties have sought to resolve the Dispute by either Party notifying the other Party in writing for resolution to the Executive Officers who shall meet (whether in person or via teleconference) within [***] Business Days of such notice to seek resolution in good faith. If the Executive Officers are unable to resolve the Dispute at such meeting, either Party may pursue any remedy available to such Party at law or in equity, subject to the terms and conditions of this Agreement, including this Section 15.7.3.

(b) Notwithstanding the provisions of Section 15.7.3(a), either Party may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any equitable relief, including any injunctive or provisional relief and specific performance to protect the rights or property of that Party. Such remedies shall not be deemed to be the exclusive remedies for a breach of this Agreement but shall be in addition to all other remedies available at law or in equity. In addition, notwithstanding the provisions of Section 15.7.3(a), either Party may bring an action: (i) in any court having jurisdiction to enforce an award rendered pursuant to Section 15.7.3(a); or (ii) relating to the Jounce Patents in the United States Patent and Trademark Office without regard to whether an action has been filed under Section 15.7.3(a).

(c) Until final resolution of the Dispute through judicial determination: (i) this Agreement shall remain in full force and effect; and (ii) the time periods for cure as to any termination shall be tolled. The Parties further agree that any payments made pursuant to this Agreement pending resolution of the Dispute shall be refunded if a court determines that such payments are not due.

15.8 Relationship of the Parties. Jounce and Celgene are independent contractors under this Agreement. Nothing contained herein is intended or is to be construed so as to constitute either Party as a partner, agent, or joint venturer of the other Party. No Party will incur any debts or make any commitments

for the other Party, except to the extent, if at all, specifically provided therein. Neither Jounce nor Celgene, respectively, shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of Jounce and Celgene, respectively, or to bind Jounce and Celgene, respectively, to any contract, agreement, or undertaking with any Third Party.

15.9 Fees and Expenses. Except as otherwise specified in this Agreement, each Party shall bear its own costs and expenses (including investment banking and legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

15.10 Third Party Beneficiaries. There are no express or implied Third Party beneficiaries hereunder. The provisions of this Agreement are for the exclusive benefit of the Parties, and no other Person or entity shall have any right or claim against any Party by reason of these provisions or be entitled to enforce any of these provisions against any Party, except for the indemnification rights of the Jounce Indemnitees pursuant to Sections 13.1 and 13.3 and the Celgene Indemnitees pursuant to Sections 13.2 and 13.3.

15.11 Entire Agreement. This Agreement (together with the attached Schedules) contain the entire agreement by the Parties with respect to the subject matter hereof and supersede any prior express or implied agreements, understandings, and representations, either oral or written, which may have related to the subject matter hereof in any way, including any and all term sheets relating to the transactions contemplated by this Agreement and exchanged between the Parties prior to the Effective Date. In the event of any conflict between this Agreement and the Termination Agreement, this Agreement shall prevail.

15.12 Counterparts. This Agreement may be executed in counterparts with the same effect as if both Parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together, and shall constitute one (1) and the same instrument. Any such counterpart, to the extent delivered by means of facsimile by .pdf, .tif, .gif, .jpeg, or similar attachment to electronic mail (any such delivery, an “Electronic Delivery”) shall be treated in all manners and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No Party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each Party forever waives any such defense, except to the extent that such defense relates to lack of authenticity.

15.13 Equitable Relief; Cumulative Remedies. Notwithstanding anything to the contrary herein, the Parties shall be entitled to seek equitable relief, including injunction and specific performance, as a remedy for any breach of this Agreement. Such remedies shall not be deemed to be the exclusive remedies for a breach of this Agreement but shall be in addition to all other remedies available at law or in equity. The Parties further agree not to raise as a defense or objection to the request or granting of such relief that any breach of this Agreement is or would be compensable by an award of money damages. No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under Applicable Law.

15.14 Interpretation.

15.14.1 Generally. This Agreement has been diligently reviewed by and negotiated by and between the Parties, and in such negotiations each of the Parties has been represented by competent (in-house or external) counsel, and the final agreement contained herein, including the language whereby it has been expressed, represents the joint efforts of the Parties and their counsel. Accordingly, in interpreting this Agreement or any provision hereof, no presumption shall apply against any Party as being responsible for the wording or drafting of this Agreement or any such provision, and ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision.

15.14.2 Definitions; Interpretation.

(a) The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined and, where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(b) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms.

(d) The words “including,” “includes,” “include,” “for example,” and “e.g.,” and words of similar import, shall be deemed to be followed by the words “without limitation.”

(e) The word “or” shall be interpreted to mean “and/or,” unless the context requires otherwise.

(f) The words “hereof,” “herein,” and “herewith,” and words of similar import, shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

(g) Unless the context requires otherwise or otherwise specifically provided: (i) all references herein to Articles, Sections, or Schedules shall be construed to refer to Articles, Sections, or Schedules of this Agreement; and (ii) reference in any Section to any subclauses are references to such subclauses of such Section.

15.14.3 Subsequent Events. Unless the context requires otherwise: (a) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, supplemented, or otherwise modified (subject to any restrictions on such amendments, supplements, or modifications set forth herein); (b) any reference to any Applicable Law herein shall be construed as referring to such Applicable Law as

from time to time enacted, repealed, or amended; and (c) subject to Section 15.4, any reference herein to any Person shall be construed to include the Person’s successors and assigns.

15.14.4 Headings. Headings, captions, and the table of contents are for convenience only and shall not be used in the interpretation or construction of this Agreement.

15.14.5 Prior Drafts. No prior draft of this Agreement shall be used in the interpretation or construction of this Agreement.

15.14.6 Independent Significance. Although the same or similar subject matter may be addressed in different provisions of this Agreement, the Parties intend that, except as reasonably apparent on the face of the Agreement or as expressly provided in this Agreement, each such provision shall be read separately, be given independent significance, and not be construed as limiting any other provision of this Agreement (whether or not more general or more specific in scope, substance, or content).

15.15 Further Assurances. Each Party shall execute, acknowledge, and deliver such further instruments, and do all such other ministerial, administrative, or similar acts, as may be reasonably necessary or appropriate in order to carry out the expressly stated purposes and the clear intent of this Agreement.

15.16 Extension to Affiliates. Subject to Sections 7.6.2(b) and 15.4, Celgene shall have the right to extend the rights, licenses, immunities, and obligations granted in this Agreement to one (1) or more of its Affiliates. All applicable terms and provisions of this Agreement shall apply to any such Affiliate to which this Agreement has been extended to the same extent as such terms and provisions apply to Celgene. Celgene shall remain fully liable for any acts or omissions of such Affiliates.

15.17 Celgene Parties. The Parties hereby acknowledge and agree that: (a) Celgene Corp. is the Celgene Party to this Agreement with respect to all rights and obligations under this Agreement in the United States; and (b) Celgene RIVOT is the Celgene Party to this Agreement with respect to all rights and obligations under this Agreement outside of the United States.

[Signature Page Follows]

IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties have caused this LICENSE AGREEMENT to be executed by their respective duly authorized officers as of the Effective Date.



JOUNCE THERAPEUTICS, INC.	CELGENE CORPORATION


By: /s/ Richard Murray	By: /s/ David V. Elkins

Name: Richard Murray	Name: David V. Elkins

Title: Chief Executive Officer & President	Title: EVP & CFO
	Solely with respect to the rights and obligations under this License Agreement outside of the United States (subject to Section 15.17) CELGENE RIVOT LLC By its managing member, Celgene RIVOT Ltd.


	By: /s/ Kevin Mello

	Name: Kevin Mello

	Title: Manager

[Signature Page to License Agreement]

Schedule 1.71(a)

Jounce JTX-8064-Only Development and Manufacturing Agreements

[***]

Schedule 1.71(a)

Schedule 1.71(b)

Jounce General Development and Manufacturing Agreements

[***]

Schedule 1.71(b)

Schedule 1.77

Jounce Patents

[***]

Schedule 1.77

Schedule 1.78

Jounce Upstream License Agreements

[***]

Schedule 1.80

Schedule 1.80

Knowledge

[***]

Schedule 1.80

Schedule [***]

[***]

Schedule [***]

[***]

Schedule [***]

Schedule 1.130

Transition Plan^,

[***]

Schedule 1.130

Schedule 6.4.2

Pre-Approved Third Party Transition Activities

[***]

Schedule 6.4.2

Schedule 11.6.1

Form of Press Release

[Attached.]

Schedule 11.6.1

DRAFT

Jounce Therapeutics Announces Update on Strategic Collaboration with Celgene Corporation

- Celgene licenses JTX-8064, resulting in $50.0 million upfront payment to Jounce -

- Jounce retains full worldwide rights to vopratelimab, JTX‑4014 and all discovery programs -

- Company to host conference call and webcast today at 5:00 p.m. ET -

CAMBRIDGE, Mass., July 16, 2019 – Jounce Therapeutics, Inc. (NASDAQ: JNCE), a clinical-stage company focused on the discovery and development of novel cancer immunotherapies and predictive biomarkers, today announced an update on its strategic collaboration with Celgene Corporation (NASDAQ: CELG), originally established in July 2016. Under the terms of a new license agreement, Celgene has licensed worldwide rights to JTX-8064, a, highly-selective, potential first-in-class antibody that targets the LILRB2 receptor on macrophages. Jounce retains full worldwide rights to its pipeline beyond JTX-8064, including vopratelimab, JTX-4014 and all discovery programs, as Jounce and Celgene have also entered into a mutual agreement to terminate their original strategic collaboration agreement.

Under the terms of the new license agreement for JTX-8064, Jounce receives a $50.0 million non-refundable license fee and is eligible to receive from Celgene up to $480 million in development, regulatory and commercial milestone payments, as well as royalties on potential worldwide sales. Celgene will be responsible for all development and commercialization of JTX-8064.

“We are grateful for Celgene’s investment and support of Jounce over the past three years as it has helped us grow our diversified pipeline and further enhance our translational science platform. We are proud of the many accomplishments we have achieved under the original agreement with Celgene and remain committed to developing innovative immunotherapies for patients with cancer,” said Richard Murray, Ph.D., chief executive officer and president of Jounce Therapeutics. “The discovery and development of JTX-8064 showcases the strength of our translational science platform, validating our approach to discovering novel immunotherapies for patients in need. We look forward to the advancement of JTX-8064 by Celgene. Most importantly, we retain full global rights to all of our other programs, including vopratelimab, giving Jounce greater flexibility to create value for patients and shareholders moving forward. In addition to our ongoing clinical development programs, we are also poised to expand our broader pipeline and advance additional novel immunotherapy programs based on our translational science platform.”

“We are pleased to have collaborated with Jounce for the last three years, and to continue our relationship with the licensing of worldwide rights to JTX-8064, a novel macrophage program coming from Jounce’s innovative, translational science platform,” said Robert Hershberg, executive vice president and head of business development of Celgene. “We look forward to advancing its development toward an IND filing.”

Schedule 11.6.1

Clinical Program Guidance:

Jounce is currently enrolling patients in the Phase 2 EMERGE clinical trial of vopratelimab in combination with ipilimumab in patients with non-small cell lung cancer or urothelial cancer who have progressed on or after PD-1/PD-L1 inhibitor therapies. Jounce expects to report preliminary efficacy data and biomarker relationships to clinical outcomes from EMERGE in 2020.

Jounce is also currently conducting a Phase 1 clinical trial of JTX-4014, its PD-1 inhibitor. This Phase 1 clinical trial is nearing completion, and Jounce remains on track to identify the recommended Phase 2 dose of JTX-4014 in 2019.

Revised Financial Guidance:

As a result of the changes to the Celgene strategic collaboration, Jounce now expects to record approximately $50.0 million in cash revenue in 2019 related to the license of JTX-8064 and approximately $98.0 million in non-cash revenue in 2019 representing the remaining recognition of the upfront payment received in July 2016.

Based on its operating and development plans Jounce continues to expect gross cash burn on operating expenses and capital expenditures for the full year 2019 to be approximately $80.0 million to $95.0 million.

Conference Call and Webcast Information:

Jounce Therapeutics will host a live conference call and webcast today at 5:00 p.m. ET. To access the conference call, please dial (866) 916-3380 (domestic) or (210) 874-7772 (international) and refer to conference ID 6684846. The live webcast can be accessed under "Events & Presentations" in the Investors and Media section of the company's website atwww.jouncetx.com. The webcast will be archived and made available for replay on the company’s website approximately two hours after the call and will be available for 30 days.

About Vopratelimab

Jounce’s lead product candidate, vopratelimab (formerly JTX-2011), is a clinical-stage monoclonal antibody that binds to and activates ICOS, the Inducible T cell COStimulator, a protein on the surface of certain T cells commonly found in many solid tumors. Vopratelimab was assessed in a Phase 1/2 clinical trial that we refer to as ICONIC. In the initial Phase 1/2 portion of ICONIC, vopratelimab was found to be safe and well-tolerated, both alone and in combination with nivolumab, an anti-PD-1 antibody. At the June 2018 annual meeting of the American Society of Clinical Oncology, we reported Response Evaluation Criteria in Solid Tumors, or RECIST, responses and other tumor reductions as determined by investigator assessment that were associated with an ICOS pharmacodynamic biomarker. We subsequently reported that these responses were durable, lasting six or more months and that all responders, as determined by investigator assessments, remained on study for more than one year. ICONIC also included dose-escalation Phase 1 portions to assess vopratelimab in combination with pembrolizumab, an anti-PD-1 antibody, and in combination with ipilimumab, an antibody that binds to CTLA-4 on certain T cells. This Phase 1 portion established the safety of vopratelimab in combination with each of ipilimumab and pembrolizumab.

Schedule 11.6.1

About JTX-4014

JTX-4014 is a well-characterized fully human IgG4 monoclonal antibody designed to block binding to PD-L1 and PD-L2. Jounce is developing JTX-4014 for potential use in combination with its pipeline of future product candidates. JTX-4014 is currently in Phase 1 clinical development, which is nearing completion.

About JTX-8064

JTX-8064 is an anti-Leukocyte Immunoglobulin Like Receptor B2 (LILRB2) antibody and is the first candidate to emerge from Jounce’s Translational Science Platform efforts that focuses on tumor-associated macrophages. Preclinical data presented at the 2019 American Association for Cancer Research Annual Meeting supports the development of JTX-8064 as a novel immunotherapy to reprogram immune-suppressive macrophages and enhance anti-tumor immunity.

About Jounce Therapeutics

Jounce Therapeutics, Inc. is a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long lasting benefits to patients. Through the use of its Translational Science Platform, Jounce first focuses on specific cell types within the human tumor microenvironment to prioritize targets, and then identifies related biomarkers designed to match the right immunotherapy to the right patient. Jounce has two clinical product candidates, vopratelimab, a monoclonal antibody that binds to and activates ICOS and JTX-4014, a monoclonal antibody that binds to PD-1 and for potential use in combination with Jounce’s pipeline of future product candidates. In addition, Jounce is progressing numerous novel discovery stage programs. For more information, please visit www.jouncetx.com.

Forward-Looking Statements

Statements in this release concerning Jounce’s future expectations and plans, including without limitation, Jounce’s clinical development strategy may constitute forward looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 and other federal securities laws and are subject to substantial risks, uncertainties and assumptions. You should not place reliance on these forward-looking statements, which include words such as “believe,” “expect,” “aims,” “anticipates,” “intend,” “may,” “potential” or similar terms, variations of such terms or the negative of those terms. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee such outcomes. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, as well as those risks more fully discussed in the section entitled “Risk Factors” in Jounce’s most recent annual report on Form 10-K or quarterly report on Form 10-Q, as well as discussions of potential risks, uncertainties, and other important factors in Jounce’s subsequent filings with the U.S. Securities and Exchange Commission. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Schedule 11.6.1

Investor Contact:

Komal Joshi

Jounce Therapeutics, Inc.

(857) 320-2523

kjoshi@jouncetx.com

Media Contact:

Gina Nugent

The Yates Network

(617) 460-3579

gina@theyatesnetwork.com

Schedule 11.6.1

Schedule 12.2

Exceptions to Representations and Warranties of Jounce

[Attached.]

Schedule 12.2

As described in Section 12.2(o): Expired/Terminated Jounce Development and Manufacturing Agreements and Jounce Upstream License Agreements

[***]

Schedule 12.2

Exhibit 31.1

CERTIFICATIONS

I, Richard Murray, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Jounce Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date: November 7, 2019	By:	/s/ Richard Murray
		Richard Murray, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATIONS

I, Kim C. Drapkin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Jounce Therapeutics, Inc.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.




Date: November 7, 2019	By:	/s/ Kim C. Drapkin
		Kim C. Drapkin
		Treasurer and Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATIONS OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of Jounce Therapeutics, Inc. (the “Company”) for the period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of her or his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




Date: November 7, 2019	By:	/s/ Richard Murray
		Richard Murray, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: November 7, 2019	By:	/s/ Kim C. Drapkin
		Kim C. Drapkin
		Treasurer and Chief Financial Officer
		(Principal Financial and Accounting Officer)



Per Initial Licensed Product Annual Net Sales in the Territory for a given Initial Licensed Product in a given Calendar Year	Royalty Rate
(a) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year up to and including [*] Dollars ($[*])	[*] Percent ([*]%)
(b) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[]), up to and including [] Dollars ($[*])	[*] Percent ([*]%)
(c) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[]), up to and including [] Dollars ($[*])	[*] Percent ([*]%)
(d) Portion of Per Initial Licensed Product Annual Net Sales in the Territory of a given Initial Licensed Product in a given Calendar Year above [*] Dollars ($[*])	[*] Percent ([*]%)