Document:

EX-4.3

 Exhibit 4.3 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION. 
 WARRANT TO PURCHASE
STOCK 
  

			
	Company:	  	PROMETHEUS BIOSCIENCES, INC., a Delaware corporation
	Number of Shares:	  	112,500 (Subject to Section 1.7)
	Type/Series of Stock:	  	Series C Preferred (Subject to Section 1.7)
	Warrant Price:	  	$1.00 per share (Subject to Section 1.7)
	Issue Date:	  	January 24, 2020
	Expiration Date:	  	January 24, 2030 (See also Section 5.1(b))
	Credit Facility:	  	This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Oxford Finance LLC, as Lender and Collateral Agent, the Lenders from time
to time party thereto, and the Company (as modified, amended and/or restated from time to time, the “Loan Agreement”).

 THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE LLC
(“Oxford” and, together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”) at the above-stated Warrant
Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. 

SECTION 1.    EXERCISE. 

1.1    Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part,
by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set
forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares
being purchased. 
 1.2    Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the
aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which
this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula: 

 

	
	 X = Y(A-B)/A

 where: 
  

			
	X =	    	the number of Shares to be issued to the Holder;
		
	Y =	    	the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

  
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	 A =
	    	 the fair market value (as determined pursuant to Section 1.3 below) of one Share;
and

		
	B =	    	the Warrant Price.

 1.3    Fair Market Value. If the Company’s common stock is then traded
or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”) and the
Class is common stock, the fair market value of a Share shall be the closing price or last sale price of a share of common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its
Notice of Exercise to the Company. If the Company’s common stock is then traded in a Trading Market and the Class is a series of the Company’s convertible preferred stock, the fair market value of a Share shall be the closing price or
last sale price of a share of the Company’s common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company multiplied by the number of shares of
the Company’s common stock into which a Share is then convertible. If the Company’s common stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable
good faith judgment. 
 1.4    Delivery of Certificate and New Warrant. Within a reasonable time after Holder
exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise (or, if such Shares are not certificated, the Company
shall reflect Holder’s ownership of such Shares by book entry in the Company’s books and records) and, if this Warrant has not been fully exercised and has not expired, the Company shall deliver to Holder a new warrant of like tenor
representing the Shares not so acquired. 
 1.5    Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or,
in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount. 

1.6    Treatment of Warrant Upon Acquisition of Company. 

(a)    Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series
of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity
(other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger,
consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders
beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or
other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power (other than a bona fide equity financing exclusively for capital raising purposes in
which the Company sells and issues equity securities to institutional investors and is the surviving and continuing entity in such transaction). 

(b)    Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be
received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), either (i) Holder shall exercise this
Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will
expire immediately prior to the consummation of such Acquisition. 
 (c)    The Company shall provide Holder with
written notice of its request relating to the Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition
giving rise to such notice), 

  
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which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition. In the event the Company does not provide such notice,
then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in
effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the
Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the
Warrant as the date thereof. If, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would not be greater
than the Warrant Price in effect on such date, then this Warrant shall terminate without exercise or conversion immediately prior to, and subject to, the closing of such Cash/Public Acquisition. 

(d)    Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or
successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of
this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant. 

(e)    As used in this Warrant, “Marketable Securities” means securities meeting all of the following
requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its
filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to
exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling
all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such
restriction (x) arises solely under federal or state securities laws, rules or regulations, or a contractual lock-up provision that is generally applicable to the other former securityholders of the
Company receiving such securities, and (y) does not extend beyond six (6) months from the closing of such Acquisition. 

1.7    Adjustment to Class of Shares; Number of Shares; Warrant Price; Adjustments Cumulative.
If, upon the closing of the Next Equity Financing, the Next Equity Financing Price shall be less than the Warrant Price in effect as of immediately prior thereto, then the “Class” shall be Next Equity Financing Securities from and after
such closing, subject to adjustment thereafter from time to time in accordance with the provisions of this Warrant and the “Warrant Price” shall be the Next Equity Financing Price from and after such closing, subject to adjustment
thereafter from time to time in accordance with the provisions of this Warrant; provided, that upon such date, if any, as the “Class” becomes Next Equity Financing Securities pursuant to this sentence, this Warrant shall be exercisable for
such number of shares of such Class as shall equal (i) One Hundred Twelve Thousand Five Hundred Dollars ($112,500.00), divided by (ii) the Next Equity Financing Price, subject to adjustment thereafter from time to time in accordance
with the provisions of this Warrant. As used herein (i) “Next Equity Financing” means the first sale or issuance by the Company on or after the Issue Date of this Warrant set forth above, in a single transaction or series of related
transactions, of shares of its convertible preferred stock or other senior equity securities to one or more investors for cash for financing purposes; (ii) “Next Equity Financing Securities” means the type, class and series of convertible
preferred stock or other senior equity security sold or issued by the Company in the Next Equity Financing; and (iii) “Next Equity Financing Price” means the lowest price per share for which Next Equity Financing Securities are sold or
issued by the Company in the Next Equity Financing. 
 SECTION 2.    ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 2.1    Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the
outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder,

  
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the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company
subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately
decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be
proportionately decreased. 
 2.2    Reclassification, Exchange, Combinations or Substitution. Upon any event
whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event,
this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from
time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events. 

2.3    Conversion of Preferred Stock. If the Class is a class and series of the Company’s convertible
preferred stock, in the event that all outstanding shares of the Class are converted, automatically or by action of the holders thereof, into common stock pursuant to the provisions of the Company’s Amended and Restated Certificate of
Incorporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”), including, without limitation, in connection with the Company’s initial, underwritten public offering and sale of
its common stock pursuant to an effective registration statement under the Act (the “IPO”), then from and after the date on which all outstanding shares of the Class have been so converted, this Warrant shall be exercisable for
such number of shares of common stock into which the Shares would have been converted had the Shares been outstanding on the date of such conversion, and the Warrant Price shall equal the Warrant Price in effect as of immediately prior to such
conversion divided by the number of shares of common stock into which one Share would have been converted, all subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. 

2.4    Adjustments for Diluting Issuances. Without duplication of any adjustment otherwise provided for in this
Section 2, the number of shares of common stock issuable upon conversion of the Shares shall be subject to anti-dilution adjustment from time to time in the manner set forth in the Certificate of Incorporation (including giving effect to any
waiver of such required adjustment effected in accordance with the terms of the Certificate of Incorporation) as if the Shares were issued and outstanding on and as of the date of any such required adjustment 

2.5    No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of
Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by
multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price. 

2.6    Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class and/or number of
Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The
Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such
adjustment. 

  
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 SECTION 3.    REPRESENTATIONS AND COVENANTS OF THE COMPANY. 

3.1    Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as
follows as of the Issue Date: 
 (a)    The initial Warrant Price referenced on the first page of this Warrant is not
greater than the price per share at which shares of the Class were last sold and issued prior to the Issue Date hereof in an arms-length transaction in which at least Five Hundred Thousand Dollars ($500,000.00) of such shares were sold. 

(b)    All Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein
or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, common stock and
other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Shares into common stock or such other securities. 

(c)    The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material
respects, as of the Issue Date. 
 3.2    Notice of Certain Events. If the Company proposes at any time to: 

(a)    declare any dividend or distribution upon the outstanding shares of the Class or common stock, whether in
cash, property, stock, or other securities and whether or not a regular cash dividend; 
 (b)    offer for subscription
or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 (c)    effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the
outstanding shares of the Class; 
 (d)    effect an Acquisition or to liquidate, dissolve or wind up; or 

(e)    effect an IPO; 

then, in connection with each such event, the Company shall give Holder: 

(1)    at least five (5) Business Days prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in
(a) and (b) above; 
 (2)    in the case of the matters referred to in (c) and (d) above at least five
(5) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other
property deliverable upon the occurrence of such event); and 
 (3)    with respect to the IPO, written notice no later
than the date on which the Company files its registration statement in connection therewith. 
 Reference is made to Section 1.6(c) whereby this
Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if the Company does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof. Company will also provide information requested by Holder
that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements. Holder agrees that in handling any confidential information of the Company, Holder shall handle such information in accordance with the
provisions of Section 12.9 of the Loan Agreement (regardless of whether the Obligations (as defined in the Loan Agreement) have been repaid in full). 

  
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 SECTION 4.    REPRESENTATIONS, WARRANTIES OF THE HOLDER. 

The Holder represents and warrants to the Company, as of the Issue Date and as of the date of issuance of any of the Shares issuable upon
exercise of this Warrant, as follows: 
 4.1    Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents
that it has not been formed for the specific purpose of acquiring this Warrant or the Shares. By executing this Warrant, Holder further represents that as of the Issue Date, Holder does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to any third person with respect to this Warrant, the Shares issuable upon exercise of this Warrant or any shares of common stock issuable upon conversion of such Shares,
except for the transfer from Oxford to one or more of Oxford’s affiliates (each an “Oxford Affiliate”), as contemplated and allowed by Section 5.4. 

4.2    Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition
and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an
opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access. 

4.3    Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities
involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying
securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons. 

4.4    Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D
promulgated under the Act. 
 4.5    The Act. Holder understands that this Warrant and the Shares issuable upon
exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder
understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and
qualification are otherwise available. Holder understands that this Warrant and the Shares issuable upon exercise of this Warrant are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such federal securities laws and applicable regulations such securities may be resold without registration under the Act only in certain limited circumstances and absent such
circumstances Holder may be required to hold this Warrant and the Shares to be issued upon any exercise hereof indefinitely. Holder is aware of the provisions of Rule 144 promulgated under the Act. 

4.6    Market Stand-off Agreement. The Holder agrees that the Shares (or,
if the Shares are convertible into shares of common stock of the Company, such shares of common stock) shall be subject to the market stand-off provisions in Section 2.11 of the Amended and Restated
Investors’ Rights Agreement, dated as of June 30, 2019, by and among the Company and the investors party thereto, as the same may be amended and/or restated from time to time (the “Investors’ Rights Agreement”), or a similar
agreement. 

  
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 4.7    No Stockholder Rights. Holder, as a Holder of this
Warrant, will not have any voting rights, rights to receive dividends, rights to receive notice of meetings, subscription rights or any other stockholder rights until the exercise of this Warrant. 

4.8    Company Agreements. If upon exercise or conversion of this Warrant (other than in connection with an
Acquisition) Holder continues to hold the Shares, upon the request of the Company, Holder shall execute a counterpart signature page to the investor and stockholder agreements governing the obligations with respect to the shares of the Class. 

SECTION 5.    MISCELLANEOUS. 

5.1    Term; Automatic Cashless Exercise Upon Expiration. 

(a)    Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at
any time and from time to time on or before 6:00 PM, Eastern time, on the Expiration Date and shall be void thereafter. 

(b)    Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market
value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of
such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the
Shares (or such other securities) issued upon such exercise to Holder. 
 5.2    Legends. Each certificate
evidencing Shares (and each certificate evidencing the securities issued upon conversion of any Shares, if any) shall be imprinted with a legend in substantially the following form: 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO OXFORD FINANCE LLC DATED JANUARY 24, 2020, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION. 

5.3    Compliance with Securities Laws on Transfer. This Warrant and the Shares issued upon exercise of this
Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and
the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company) and in compliance with the terms of this Warrant. The
Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.
Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act. 

5.4    Transfer Procedure. After receipt by Oxford of the executed Warrant, Oxford may transfer all or part of this
Warrant to one or more Oxford Affiliates, by execution of an Assignment substantially in the form of Appendix 2. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, Oxford, any such Oxford Affiliate and
any subsequent Holder, may transfer all or part of this Warrant or the 

  
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Shares issuable upon exercise of this Warrant (or the Shares issuable directly or indirectly, upon conversion of the Shares, if any) to any other transferee, provided, however, in connection with
any such transfer, the Oxford Affiliate(s) or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender
this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this
Warrant or any portion hereof, or any Shares issued upon any exercise hereof, or any shares or other securities issued upon any conversion of any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company,
except in connection with an Acquisition of the Company by such a direct competitor. 
 5.5    Notices. All
notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered
or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight
courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this
Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise: 

Oxford Finance LLC 
 133 N.
Fairfax Street 
 Alexandria, VA 22314 

Attn: Legal Department 
 Notice
to the Company shall be addressed as follows until Holder receives notice of a change in address: 
 PROMETHEUS BIOSCIENCES, INC. 

9410 Carroll Park Drive 
 San
Diego, CA 92121 
 Attn: Vika Brough, VP Finance 

With a copy (which shall not constitute notice) to: 

LATHAM & WATKINS LLP 

12670 High Bluff Drive 
 San
Diego, CA 92130 
 Attn: Cheston Larson 

5.6    Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally
or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 

5.7    Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of
this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees. 

5.8    Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which
together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any
amendment thereto. 
 5.9    Governing Law. This Warrant shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to its principles regarding conflicts of law. 

  
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 5.10    Headings. The headings in this Warrant are for purposes
of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 

5.11    Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which
banks in California are closed. 
 [Remainder of page left blank intentionally] 

[Signature page follows] 

  
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 IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by
their duly authorized representatives effective as of the Issue Date written above. 
  

			
	“COMPANY”
	
	PROMETHEUS BIOSCIENCES, INC.
		
	By:	 	 /s/ Mark McKenna

		
	Name:	 	Mark McKenna
		 	(Print)
	Title:	 	President and Chief Executive Officer
	
	“HOLDER”
	
	OXFORD FINANCE LLC
		
	By:	 	 /s/ Colette H. Featherly

		
	Name:	 	Colette H. Featherly
		 	(Print)
	Title:	 	Senior Vice President

  
 [Signature
Page to Warrant to Purchase Stock] 
 [Term A Loan] 

 APPENDIX 1 

NOTICE OF EXERCISE 

1.    The undersigned Holder hereby exercises its right to purchase
                 shares of the Common/Series                     
Preferred [circle one] Stock of PROMETHEUS BIOSCIENCES, INC. (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows: 

☐    check in the amount of $             payable to
order of the Company enclosed herewith 
 ☐    Wire transfer of immediately available funds to the Company’s
account 
 ☐    Cashless Exercise pursuant to Section 1.2 of the Warrant 

☐    Other [Describe]
                                         
                                         
                   

2.    Please issue a certificate or certificates representing the Shares in the name specified below: 

 

			
	  
	 	
	Holder’s Name	 	
		
	  
	 	
		
	  
	 	
	(Address)	 	

 3.    By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof. 
  

			
	HOLDER:
	
	
                     
                                       

		
	By:	 	
                     
                                         
              

	Name:	 	
                     
                                         
              

	Title:	 	
                     
                                         
              

	Date:	 	
                     
                                       

 APPENDIX 2 

ASSIGNMENT 
 For
value received, Oxford Finance LLC hereby sells, assigns and transfers unto 
  

			
	 Name:
	  	 [OXFORD TRANSFEREE]

		
	Address:            	  	                                     
                       
		
	Tax ID:	  	                                     
                       

 that certain Warrant to Purchase Stock issued by PROMETHEUS BIOSCIENCES, INC. (the
“Company”), on January     , 2020 (the “Warrant”) together with all rights, title and interest therein. 

 

			
	OXFORD FINANCE LLC
		
	By:	 	
                     
                                         
          

	 Name:
	 	
                  
                                         
             

	Title:	 	
                     
                                         
          

 Date:
                                         
                        
 By its
execution below, and for the benefit of the Company, [OXFORD TRANSFEREE] makes each of the representations and warranties set forth in Article 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof. 

 

			
	[OXFORD TRANSFEREE]
		
	By:	 	
                     
                                         
          

	Name:	 	
                     
                                         
          

	Title:EX-10.5

 Exhibit 10.5 
  

 
 February 17, 2021 
 Mark McKenna 

Prometheus Biosciences, Inc. 
 9410 Carroll Park Drive 

San Diego, CA 92121 
 Dear Mark: 

Prometheus Biosciences, Inc. (the “Company”) and you entered into that certain letter agreement dated August 7, 2019 (the “Original
Agreement”). The Company and you desire to amend and restate the Original Agreement on the terms and conditions set forth in this letter agreement (this “Agreement”), effective immediately. 

You will continue to be an employee of the Company in the position of President and Chief Executive Officer. You will report to the Company’s Board
of Directors (the “Board”). You will perform your duties at the Company’s headquarters. This is an exempt position. During the term of your employment, you shall devote your full working time and attention to the business affairs of
the Company. 
 Associated with this opportunity, the Company offers the following compensation and benefits: 

 

	 	1.	 Salary: Effective immediately, you will receive a base salary of USD $575,000.00 on an annualized basis
(the “Base Salary”), to be paid in accordance with the Company’s customary payroll practices. Your Base Salary will be subject to annual review by the Board or its Compensation Committee and may be increased but not decreased.

  

	 	2.	 Annual Bonus Plan: You will be eligible to receive an annual performance bonus. Your bonus target (your
“Target Bonus”) shall be 55% of your Base Salary actually paid for the year to which such annual bonus relates. Actual bonus payments are based on your continuous performance of services to the Company, the achievement of individual and
corporate goals, and the approval of the Board or its Compensation Committee. Bonus payouts may be more or less than the targeted amount based on the before mentioned criteria. Your annual bonus will be paid between January 1 and March 15
of the calendar year following the year to which such bonus relates. 

  

	 	3.	 Transaction Bonus: You shall be eligible to receive a cash bonus of one million dollars (USD $1,000,000)
with an initial public offering (the “IPO”) of the Company 

 

 
  

	 	 
before March 9, 2022, which bonus shall be payable within 30 days following the closing of the IPO. To the extent that the Company becomes publicly-traded through comparable alternative
means (i.e., reverse merger), such activity will trigger the payment of such bonus as dictated by the circumstances. 

  

	 	4.	 Employee Benefits: As a regular employee of the Company, you will be eligible to participate in a number
of Company-sponsored benefits. In addition, you will be entitled to paid time off in accordance with the Company’s paid time off policy, as in effect from time to time. Terms and conditions of each plan or program are subject to applicable
laws, regulations and policies. Should there be a conflict between a plan document and this information, the plan document will always govern. The Company reserves the right to change, alter, or terminate any benefit plan at its sole discretion.

  

	 	5.	 Withholding: All amounts payable to you will be subject to appropriate payroll deductions and all
required withholdings. 

 Additional Information Regarding Employment at the Company: 

 

	 	1.	 Qualifications: Your continued employment with the Company is contingent on your obtaining and keeping
the licenses, credentials, permits, certifications and such similar authorizations necessary to perform your job. By signing this Agreement, you are acknowledging that you have never been and are not currently debarred, excluded or banned from any
federal healthcare program. You agree to immediately notify the Company should you become debarred, excluded or banned from any federal healthcare program or should you be convicted of a felony involving fraud or deceit. 

 

	 	2.	 At-Will Employment; Severance: Your employment with the Company is
at-will. This at-will employment relationship cannot be changed except in writing signed by an executive officer of the Company. You may terminate your employment with the Company at any time and
for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time and for any reason whatsoever, with or without Cause (as defined below) or advance written notice. 

In the event that your employment is terminated by the Company (a) for any reason other than for Cause, death or Disability (as
defined below), or (b) by you for Good Reason (as defined below) (each, a “Qualifying Termination”), subject to your continued compliance with the Employee Confidential Information and Inventions Agreement, as described below, and the
effectiveness of your Release (as defined below), you will be entitled to receive, in addition to the Accrued Obligations (as defined below), the following severance benefits: 

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

	 	(i)	 an amount equal to 100% of your annualized Base Salary, as then in effect on the date of your termination (the
“Separation Date”) and prior to any reduction in such Base Salary that would permit you to voluntarily terminate employment for Good Reason (the “Severance Payment”), to be paid in substantially equal installments over the 12
month period following the Separation Date in accordance with the Company’s regular payroll schedule, with the first such installment commencing on the 30th day following the Separation Date
(which first installment will include any installments that would have occurred prior to such date in accordance with the Company’s regular payroll schedule); provided, however, in the event your Qualifying Termination occurs within 24 months
following a Change in Control, the foregoing reference to 12 months shall be increased to 18 months; 

  

	 	(ii)	 an amount equal to 100% of your Target Bonus for the calendar year in which the Separation Date occurs, to be paid in
a single lump sum on the 30th day following the Separation Date (which Target Bonus to be calculated based on the Base Salary used for purposes of determining the Severance Payment in clause
(i) above); 

  

	 	(iii)	 the right to continued health care benefits under the Company’s health insurance plans pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for you and your eligible dependents who were covered under the Company’s health insurance plans as of the Separation Date paid by the Company for a period
commencing on the Separation Date and ending until the earlier of (a) the date that is 12 months following the Separation Date or (b) the date on which you become eligible for healthcare insurance with a subsequent employer or (c) the
date on which the applicable continuation period under COBRA expires (provided that, if any of the Company’s health benefits are self-funded as of the Separation Date, or if the Company cannot provide the foregoing benefits in a manner that is
exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or that is otherwise compliant with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), instead of
providing the payments or reimbursements as set forth above, the Company shall instead pay to you the foregoing monthly amount as a taxable monthly payment for the foregoing period (or any remaining portion thereof)). You shall be solely responsible
for all matters relating to continuation of coverage pursuant to COBRA, including, without limitation, the election of such coverage and the timely payment of premiums. You shall notify the Company immediately if you become eligible to receive the
equivalent or increased healthcare coverage by means of subsequent employment or self-employment; provided, however, in the event your Qualifying Termination occurs within 24 

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

	 	 
months following a Change in Control, the foregoing reference to 12 months shall be increased to 18 months; and 

 

	 	(iv)	 accelerated vesting of all of the Company’s equity awards that are subject to time vesting conditions effective
as of the Separation Date. 

 As a condition to your receipt of any post-termination payments and benefits pursuant
to the preceding paragraphs, you shall execute and not revoke a general release of all claims in favor of the Company (the “Release”) in a form reasonably acceptable to the Company. In the event the Release does not become effective within
the 30-day period following the date of your termination of employment, you will not be entitled to the aforesaid payments and benefits. 

“Accrued Obligations” means (i) any Base Salary that had accrued but had not been paid (including accrued and unpaid
vacation time or paid time off) on or before the Separation Date; (ii) any incentive bonus payable to you (to the extent not previously paid) with respect to the calendar year of the Company preceding the calendar year in which the Separation
Date occurs; (iii) all other amounts or benefits to which you are entitled under any compensation, retirement or benefit plan of the Company as of the Separation Date in accordance with the terms of such plans; and (iv) any reimbursement
due to you for expenses reasonably incurred by you on or before the Separation Date. 
 “Cause” is defined as your
(i) conviction of a felony, plea of guilty or “no contest” to a felony, or confession of guilt to a felony; (ii) act or omission which constitutes willful misconduct or gross negligence that results in loss, damage or injury to
the Company or its prospects, including, but not limited to (A) dishonesty or a breach of fiduciary duty to the Company or the Company’s stockholders, or (B) theft, fraud, embezzlement or other illegal conduct; (iii) continued
failure, refusal or unwillingness to perform, to the reasonable satisfaction of the Board determined in good faith, any material duty or responsibility assigned to you, which failure of performance continues for a period of more than 30 days after
written notice thereof has been provided by the Board, setting forth in reasonable detail the nature of such failure of performance; or (iv) the material breach of any of the provisions of this Agreement or any other written agreement between
you and the Company. 
 “Change in Control” shall have the same meaning as Change in Control as defined in the Company’s
2017 Equity Incentive Plan; provided, however, that effective upon the date of the IPO, “Change in Control” shall have the meaning given to such term in the Company’s 2021 Incentive Award Plan adopted in connection with the IPO.
Notwithstanding the foregoing, if a Change in Control would give rise to a payment or settlement event with respect to any payment or benefit that constitutes “nonqualified deferred compensation,” the transaction or event constituting the
Change in Control must also constitute a “change in control event” (as defined in 

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

 
Treasury Regulation Section 1.409A-3(i)(5)) in order to give rise to the payment or settlement event for such payment or benefit, to the extent
required by Section 409A. 
 “Disability” is defined as your inability, due to physical or mental illness or disease, to
perform the functions then performed by you for 180 consecutive days, accompanied by the likelihood, in the opinion of a physician chosen by the Company and reasonably acceptable to you, that you will be unable to perform such functions within the
reasonably foreseeable future. 
 “Good Reason” is defined as a resignation that occurs following the occurrence of any of
the following without your written consent: (i) a material change in the geographic location at which you must perform your duties (and you and the Company agree that a relocation of the geographic location at which you must perform your duties
to a location outside a 35-mile radius of your principal place of employment prior to such relocation shall be considered material for this purpose); (ii) a material reduction of your base compensation, Target
Bonus and/or benefits; (iii) any action or inaction that constitutes a material breach of this Agreement by the Company; or (iv) a material reduction in your authority, duties or responsibilities (including a requirement to report to any
person or entity other than the Board, or following a Change in Control, the board of directors (or similar governing body) of the ultimate parent company of the surviving entity in such Change in Control that has at least one class of publicly
traded securities listed on a national stock exchange). You must provide written notice to the Company of the occurrence of any of the foregoing events or conditions without your written consent within 30 days of the occurrence of such event. The
Company or any successor or affiliate shall have a period of 30 days to cure such event or condition after receipt of written notice of such event from you. Your termination of employment by reason of resignation from employment with the Company for
Good Reason must occur within 30 days following the expiration of the foregoing 30-day cure period. 

The Company will take any steps available to it to mitigate tax liabilities to you if adversely impacted by Section 409A of the Code
or Section 280G of the Code. You will cooperate to the extent necessary with any mitigation strategies, but in the event that you incur additional liability under 409A or 280G, the Company will pay any additional amount equal to the sum of any
applicable excise tax payable by you, plus the amount necessary to put you in the same after-tax position (taking into account any and all applicable federal, state, and local excise, income, or other taxes at the highest applicable rates on such
payments and on any payments under this paragraph or otherwise) as if no excise tax had been imposed. Any tax gross-up pursuant to this paragraph shall be paid in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v). 

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

 The intent of the parties is that payments and benefits under this Agreement comply
with, or be exempt from Section 409A of the Code and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance with such intention. To the extent that any provision in this Agreement is ambiguous as
to its compliance with or exemption from Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in
Section 409A(a)(1)(B) of the Code. For purposes of Section 409A of the Code, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. For purposes of this Agreement,
all references to your “termination of employment” shall mean your “separation from service” (as defined in Treasury Regulation Section 1.409A-1(h)) (“Separation from
Service”). If you are a “specified employee” (as defined in Section 409A of the Code), as determined by the Company in accordance with Section 409A of the Code, on the date of your Separation from Service, to the extent that
the payments or benefits under this Agreement are “non-qualified deferred compensation” subject to Section 409A of the Code and the delayed payment or distribution of all or any portion of such
amounts to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion deferred pursuant to this paragraph shall be paid or distributed to you
in a lump sum on the earlier of (a) the date that is 6 months and one day following your Separation from Service, (b) the date of your death or (c) the earliest date as is permitted under Section 409A of the Code. Any remaining
payments due under this Agreement shall be paid as otherwise provided herein. 
 To the extent that the payments or benefits under this
Agreement are “non-qualified deferred compensation” subject to Section 409A of the Code, if the period during which you may deliver the Release required hereunder spans two calendar years, the
payment of your post-termination benefits shall occur (or commence) on the later of (a) January 1 of the second calendar year, or (b) the first regularly-scheduled payroll date following the date your Release becomes effective. 

Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in
accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of your taxable year following the taxable year in which you incurred the expenses. The amount of
expenses reimbursed or in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year
of yours, and your right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit. 
  

	 	3.	 Policies and Procedures: As a Company employee, you will be expected to abide by Company rules,
policies, and regulations as they may be interpreted, adopted, revised or deleted from time to time in the Company’s sole discretion. You have 

  
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previously signed an acknowledgement that you have read and understand the Company’s policies and procedures that govern the terms and conditions of your employment, including, but not
limited to, the Employee Handbook and the Code of Ethical Business Conduct. 

  

	 	4.	 Confidential Information: You have previously executed the Company’s standard form of
Employee Confidential Information and Inventions Agreement. A copy of this agreement is attached hereto as Exhibit A. We understand that you may have signed similar agreements with prior employers, and wish to impress upon you that you are
prohibited from using or disclosing the confidential or proprietary information of others during your employment by the Company. You agree not to bring to the Company or use in the performance of your responsibilities at the Company any materials or
documents of a former employer that are not generally available to the public, unless you have obtained express written authorization from the former employer for the possession and use of such materials or documents. 

 

	 	5.	 Indemnification: The Company agrees that it will maintain director and officer insurance liability in
order to protect you from exposure or liability incurred as a result of your role as an officer and director. In some instances, such liability insurance coverage available to the Company may be inadequate to cover all possible exposure for which
indemnitee should be protected. The Company believes that the interests of the Company and its stakeholders would best be served by a combination of insurance and the indemnification by the Company of the directors and officers of the Company.
Therefore, the Company agrees to indemnify you to the fullest extent permitted by the law of the state of incorporation. Said indemnity may not extend to matters outside the scope of your employment or liability incurred as a direct result of your
intentional misconduct or gross negligence. 

  

	 	6.	 Arbitration: The Company has a policy of arbitration for settlement of any dispute between employees or
former employees and the Company. You have previously executed the Arbitration Agreement, attached hereto as Exhibit B. 

  

	 	7.	 Complete Agreement: This Agreement, together with the Employee Confidential Information and Inventions
Agreement and the Arbitration Agreement, contains the complete understanding and agreement regarding the terms of your employment by the Company. There are no other, different or prior agreements or understandings, written or oral, on this or
related subjects, and this Agreement supersedes any such prior agreements or understandings, including, without limitation, the Original Agreement. Changes to the terms of your employment can be made only in a writing signed by you and an executive
officer of the Company, although it is understood that the Company may, from time to time, in its sole discretion, adjust the salaries, incentive compensation and benefits paid to you and

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

	 	 
its other employees, as well as job titles, locations, duties, responsibilities, assignments and reporting relationships. This Agreement shall be construed in accordance with the laws of the
State of California, without regard to conflicts-of-law principles. 

If you accept the terms of this Agreement, kindly sign and date this Agreement below. 

 

	
	 Best Regards,

	
	 /s/ Tadataka Yamada, M.D.

	 Tadataka Yamada, M.D.

	 Chairman

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com 

 

 
  

	
	
	 ACCEPTANCE OF AGREEMENT:

	
	 I accept the terms described in this Agreement.

	
	 Signature: /s/ Mark
McKenna                            

	
	 Date: February 17, 2021

  
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Prometheus Biosciences | 9410 Carroll Park Drive, San Diego, CA 92121 | main 858.824.0895 | fax 858.332.3306 | prometheusbiosciences.com

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