What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-16 compared with 2022-03-17 · 436 added, 625 removed, 588 unchanged (64% of the section changed)

We are a clinical-stage biotechnology company focused on the discovery and development of engineered T cell therapies, and aim to provide a deep and durable, perhaps curative, treatment, for patients with B cell-mediated autoimmune diseases.

Our proprietary technology utilizes C himeric A uto A ntibody R eceptor, or CAAR, T cells that are designed to selectively bind and eliminate only specific B cells that produce disease-causing autoantibodies, or pathogenic B cells, while sparing normal B cells.

Our lead CAAR T cell product candidate was designed based on the clinically validated and commercially approved Chimeric Antigen Receptor, or CAR, T cell technology that is marketed for the treatment of B cell cancers.

By harnessing the power of targeted cell therapy, we believe our CAAR T product candidates have the potential to provide responses that may be a safer and more effective option than current treatments.

We believe our technology, in combination with our proprietary C abaletta A pproach for selective B cell A blation platform, called our CABA TM platform, has applicability across over two dozen B cell-mediated autoimmune diseases that we have identified, evaluated, and prioritized.

Our initial focus is mucosal pemphigus vulgaris, or mPV, which is an autoimmune blistering disease.

Our lead product candidate, DSG3-CAART, is being evaluated for the treatment of mPV, a subtype of pemphigus vulgaris, or PV, that affects the mucous membrane.

We are a clinical-stage biotechnology company focused on the discovery and development of engineered T cell therapies that have the potential to provide a deep and durable, perhaps curative, treatment for patients with autoimmune diseases.

The Cabaletta Approach to B cell Ablation, or our CABA platform, encompasses two strategies –

chimeric antigen receptor T cells for autoimmunity, or CARTA, and our proprietary chimeric autoantibody receptor T cells, or CAART.

We believe these two strategies, which comprise our CABA platform, have the potential to be applied across a broad range of autoimmune diseases.

The initiation or maintenance of many autoimmune diseases involves B lymphocytes, also called B cells, which create a type of protein called an antibody, which bind to pathogens, such as bacteria or viruses, or to foreign substances, such as toxins, to neutralize them.

Additional B cell effects include releasing cytokines, presenting antigens to T cells, and co-stimulating other immune cells to eliminate the foreign pathogens or substances.

When these B cell functions become misdirected to the healthy tissues or cells in the body, they can contribute to the initiation or maintenance of an autoimmune disease.

Current treatment options for these autoimmune diseases are generally limited to corticosteroids and generalized immunosuppressants that offer only temporary disease suppression, may require chronic dosing, in-hospital administration, and are associated with potentially severe side effects.

Optimal therapy would either reset the immune system or selectively eliminate only the disease-causing B cells, while sparing the normal protective B cells.

Our CABA platform encompasses two strategies that seek to address both of these potentially curative approaches for patients with autoimmune diseases.

The CARTA strategy is designed to achieve transient depletion of all B cells following a single treatment by using T cells engineered to express an antibody fragment that recognizes a B cell receptor expressed on the surface of all B cells, which is designed to allow for the complete elimination of B cells that contribute to disease with subsequent repopulation by healthy naïve B cells, offering the potential for durable and complete clinical responses through an immune system reset without the need for chronic immunosuppression in patients with autoimmune diseases.

The CAART strategy is designed to selectively engage and eliminate only the pathogenic B cells responsible for driving disease by using T cells engineered to express disease specific targeting domains which are designed to mimic the antigen that is the subject of attack in an autoimmune disease.

Our CAARs differ from chimeric antigen receptors, or CARs, in the use of the autoantigen rather than an antibody fragment, which enables the CAAR T cells to serve as a “decoy”

for specific autoreactive B cell receptors expressed on the surface of B cells, causing the pathogenic B cells to engage with the CAAR T cells, mistaking them for a target antigen, and resulting in their elimination.

We believe our CABA platform has potential applicability across dozens of autoimmune diseases that we have identified, evaluated and prioritized.

Academic clinical data published in Nature Medicine in September 2022 demonstrated that a CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain following standard doses of lymphodepletion with fludarabine and cyclophosphamide induced clinical remission in 5 out of 5 patients with moderate to severe, refractory systemic lupus erythematosus, SLE, with up to 17 months of follow up in the first treated patient (Mackensen, Andreas, et al.

"Anti-CD19 CAR T cell therapy for refractory systemic lupus erythematosus." Nature Medicine (2022):

Grade 1 cytokine release syndrome, or CRS, was observed in 3 out of 5 patients, and there was no observation of neurotoxicity of any grade.

New naïve B cells repopulated within 2-5 months of CAR T infusion in all patients, with no evidence of recurrence of disease or autoantibodies following repopulation.

In summary, the data suggest the potential to reset the immune system in these patients.

Extending the observation of the potential of 4-1BB containing CD19-CAR T beyond SLE, in February 2023, a clinical case report was published in Lancet Rheumatology which reported that the same 4-1BB containing CD19-CAR T cell therapy was administered at the same dose following a similar preconditioning regimen with fludarabine and cyclophosphamide to a patient with anti-synthetase syndrome, which is a form of myositis (Müller, Fabian, et al.

“CD19-targeted CAR T cells in refractory antisynthetase syndrome.”

The Lancet (2023)).

This patient experienced rapid, durable and profound decreases in muscle inflammation, improvement in muscle function and reduction of autoantibody titers as early as three months after therapy and lasting for at least six months following therapy with reconstitution of the B cell population occurring within the follow-up period.

Grade 1 CRS and no immune effector cell-associated neurotoxicity, or ICANS, were reported.

CABA-201 was designed for use in autoimmune patients to closely replicate the design of the academic product that has produced the clinical data reported above.

The fully human CD19 binder in CABA-201, which was exclusively licensed from Nanjing IASO Biotherapeutics Co., Ltd., or IASO, was designed through screening of 100 billion antibody fragments to be a fully human equivalent of the murine FMC63 CD19 binder that was used in the Nature Medicine and Lancet Rheumatology papers referenced above.

T cells expressing a 4-1BB-containing CAR with our fully human binder have been demonstrated to possess similar biologic activity in vitro and in vivo when compared to T cells expressing a 4-1BB-containing CAR utilizing the murine FMC63 CD19 binder employed in the academic studies (Dai, Zhenyu, et al.

“Development and functional characterization of novel

fully human anti‐CD19 chimeric antigen receptors for T‐cell therapy.”

Journal of Cellular Physiology 236.8 (2021):

The fully human binder has been clinically evaluated in a dual-CD19xCD22 CAR T candidate under development for B cell leukemia and lymphoma in an investigator-initiated trial in China, and IASO has reported a tolerability profile that we believe is favorable for development in autoimmune diseases.

We believe CABA-201 may have the potential to transform treatment of autoimmune diseases with high unmet need through a potential immune system reset given the similarity of the overall design to the construct used in the Nature Medicine and Lancet Rheumatology studies specifically the similarities in the targeting domain as well as the use of the same 4-1BB costimulatory domain.

Subject to the FDA review, we expect a potential IND clearance of CABA-201 in the first half of 2023, and initial clinical data by the first half of 2024.

In addition to a product candidate that we believe is specifically designed for use in autoimmune patients, we have established an exclusive translational research partnership with Dr.

Georg Schett, who is a pioneer and global leader in the application of CD19-targeting cell therapies in autoimmunity and the senior author on the Nature Medicine and Lancet Rheumatology papers cited above.

The collaboration is designed to allow Dr.

Schett to share his patient samples with us in order for us to generate translational data on his patients, which will be combined with real time clinical data to generate insights and a deeper understanding of the immunologic mechanisms of response from ongoing and continued clinical studies in multiple autoimmune diseases.

With the addition of CABA-201 to our cell therapy pipeline as the lead product in our CARTA strategy, informed by confidential clinical and translational insights from this scientific collaboration, we believe we can potentially address a broad range of autoimmune diseases in which B cells have a role initiating or maintaining disease.

Within the CAART strategy, our initial therapeutic focus is on mucosal pemphigus vulgaris, or mPV, a chronic, autoimmune blistering skin disease that affects the mucous membranes.

mPV is caused by autoantibodies against the cell adhesion protein desmoglein 3, or DSG3.

DSG3-CAART is designed to selectively target and eliminate autoreactive B cells specific for DSG3, which may prevent these B cells from differentiating into antibody secreting plasma cells that produce anti-DSG3 antibodies that are the cause of mPV, while preserving general B cell immune function.

DSG3-CAART is being evaluated in a Phase 1 trial, or the DesCAARTes TM trial, in which we are currently enrolling patients.

During 2021, we reported acute and 28-day safety data from the first three cohorts of patients in the DesCAARTes TM trial, with no dose-limiting toxicities, or DLTs, or clinically relevant adverse events observed in the 28 days after infusion of DSG3-CAART.

In November 2021, we reported that dose-dependent increases in DSG3-CAART persistence in the third cohort relative to the first two low dose cohorts throughout the 28 days following infusion had been observed.

On December 14, 2021, we reported top-line biologic activity data for the first, two low dose cohorts, where no clear evidence of biologic activity was observed at doses that represent less than 2% of the current planned maximum dose in the trial, as well as the continued absence of any DLTs or clinically relevant adverse events.

Furthermore, we announced the addition of a planned fifth cohort to receive a higher dose with a more consolidated dosing regimen, which we expect to initiate in 2022 after review of the fourth cohort’s 28-day safety data.

In January 2022, we announced that 28-day safety data for the fourth cohort was anticipated to be announced in the first quarter of 2022, and that other clinical data updates from the DesCAARTes TM trial are expected to be provided at scientific meetings throughout 2022 and 2023 with biologic activity data for cohorts A3 and A4 expected to be announced in mid-2022.

In March 2022, we disclosed 28-day safety data for the fourth cohort with no DLTs observed in any patient during the 28 days after infusion of DSG3-CAART.

In addition, we disclosed that we are currently enrolling patients for the fifth cohort, and expect to announce the 28-day safety data for the fifth cohort at a scientific meeting in mid-2022, assuming no DLTs are observed during such cohort, that enrollment is uninterrupted and there are no delays due to COVID-19 resurgence.

Our MuSK-CAART product candidate is designed for the treatment of muscle-specific kinase, or MuSK, myasthenia gravis, or MG.

In the fourth quarter of 2021, we submitted an Investigational New Drug, or IND, application for the first-in-human studies to the United States Food and Drug Administration, or FDA.

This IND became effective in January 2022.

I n February 2022, MuSK-CAART received fast track designation from the FDA for improving activities of daily living and muscle strength in patients with MuSK antibody-positive myasthenia gravis.

W e plan to initiate the Phase 1 clinical trial for MuSK-CAART, or the MusCAARTes TM trial, in 2022.

We are also advancing additional product candidates currently in discovery-stage or preclinical development for the treatment of mucocutaneous PV, or mcPV, PLA2R-associated membranous nephropathy, or PLA2R MN, and Hemophilia A with Factor VIII, or FVIII, alloantibodies, in addition to two undisclosed targets.

We conducted a pre-IND interaction with the FDA to discuss the development path for PLA2R-CAART in the fourth quarter of 2021.

Preclinical data demonstrating that PLA2R CAAR T cells specifically recognized and eliminated anti-PLA2R antibody-expressing B cells and that membrane proteome arrays screened with PLA2R-CAAR candidates did not identify off-target interaction was presented at the American Society of Nephrology Kidney Week in the fourth quarter of 2021.

B cell-mediated autoimmune diseases occur when autoreactive B cells differentiate into plasma cells that produce autoantibodies, which are directed against specific healthy tissue or cells in the body.

The presence of autoantibodies can manifest in a variety of autoimmune diseases and result in the destruction of healthy tissue in the body.

Current treatment options for B cell-mediated autoimmune diseases are generally limited to corticosteroids and other generalized immunosuppressants that offer only temporary disease suppression, may require chronic, in-hospital administration and are associated with potentially life-threatening side effects.

We believe the ideal therapy for B cell-mediated autoimmune diseases would selectively and completely eliminate the pathogenic B cells while sparing the body’s normal B cells.

We are pioneering the development of a new class of engineered T cell therapies that express CAARs to selectively engage and eliminate pathogenic B cells.

Our CAARs build upon the scientific foundation of CARs, differing primarily in the use of the antigen rather than an antibody fragment, which enables the CAAR T cells to serve as a “decoy” for specific autoantibodies expressed on the surface of B cells.

This allows these pathogenic B cells to engage with the CAAR T cells instead of benign antigens, resulting in their elimination.

We have developed our CABA™ platform to inform product candidate development from scientific, clinical, and commercial assessment through CAAR design.

Using our CABA™ platform, we have identified and thoroughly evaluated over two dozen B cell-mediated autoimmune diseases that we believe will be amenable to treatment with the Cabaletta approach and have advanced several of our highest priority targets into discovery and preclinical testing.

Our current product candidate pipeline 1 is illustrated below.

Two additional undisclosed disease targets, currently in discovery stage, and part of our pipeline portfolio through our Sponsored Research Agreement with the University of Pennsylvania are not shown.

In our discovery stage, we perform epitope mapping and optimize CAAR construct and design.

Our initial therapeutic focus is on pemphigus vulgaris, or PV, a chronic, autoimmune blistering skin disease.

Despite a current standard of care that includes corticosteroids and adjunctive immunosuppressive agents, PV remains associated with frequent recurrences as well as substantial morbidity and mortality.

Despite a current standard of care that includes corticosteroids and adjunctive immunosuppressive agents, pemphigus vulgaris, or PV, remains associated with frequent recurrences as well as substantial morbidity and mortality.

Our lead product candidate, DSG3-CAART, is being evaluated for the treatment of mPV, a subtype of PV that affects the epithelium of the mucous membranes.

mPV is caused by autoantibodies against DSG3.

In January 2020, the FDA granted orphan drug designation to DSG3-CAART for the treatment of PV.

In January 2020, the United States Food and Drug Administration, or FDA, granted orphan drug designation to DSG3-CAART for the treatment of PV.

In May 2020, DSG3-CAART received fast track designation from the FDA for improving healing of mucosal blisters in patients with mPV.

DSG3-CAART is currently being evaluated in the DesCAARTes TM trial.

Our next PV-directed product candidate, DSG3/1-CAART, is being designed to target B cells that differentiate into antibody secreting cells that produce autoantibodies against DSG3 and desmoglein 1, or DSG1.

It is being developed for the treatment of mucocutaneous PV, or mcPV, another subtype of PV that affects both mucosal and skin surfaces and is caused by autoantibodies against DSG3 and DSG1, respectively.

Our second clinical product candidate, MuSK-CAART, is designed to treat a subset of patients with MG.

DSG3-CAART is currently being evaluated in the Phase 1 DesCAARTes TM trial, which is currently enrolling patients.

As recently presented at the 31 st European Academy of Dermatology and Venereology (EADV) Congress in September 2022 and at the 29 th European Society of Gene and Cell Therapy (ESGCT) Congress in October 2022, when administered as a monotherapy without combination therapy, we observed no dose-limiting toxicities through cohort A5, at up to a 7.5 billion DSG3-CAART cell dose.

Though no clear trends in antibody levels or disease activity reduction were observed through cohort A5, one subject in cohort A4 had no disease activity by three months post-infusion while reducing steroid usage during that period, an antibody titer that dropped more than 20% by three months post-infusion, and was the only patient in the first four cohorts that had detectable DSG3-CAART persistence at the three month time point following initial DSG3-CAART infusion.

Based on the data observed from these cohorts, we announced that the combination sub-study, incorporating a pre-treatment combination regimen with IVIG and cyclophosphamide, would be prioritized to follow cohort A5.

We anticipate reporting one month safety and persistence data from the combination sub-study in the first half of 2023, and six month clinical data from the combination sub-study by the first half of 2024.

Our second clinical product candidate, MuSK-CAART, is designed to treat a subset of patients with myasthenia gravis, or MG.

MG is an autoimmune disease induced by autoantibodies targeting the neuromuscular junction, or NMJ, which can lead to life-threatening muscle weakness.

Our product candidate targets autoreactive B cells that differentiate into antibody secreting cells that produce autoantibodies against a transmembrane protein, muscle-specific kinase, or MuSK, and is being developed for the treatment of MuSK MG.

Data from our initial in vitro and in vivo studies of MuSK-CAART was presented at the American Academy of Neurology’s Science Highlights Virtual Platform in May 2020.

The efficacy and safety of MuSK CAAR T cells were investigated using in vitro cytotoxicity assays, in vitro screens for off-target toxicity, and a mouse model to evaluate the efficacy of human MuSK CAAR T cells against MuSK antibody-expressing B cells in vivo .

In preclinical studies, MuSK CAAR T cells demonstrated in vitro cytotoxicity towards B cell lines expressing various anti-MuSK antibodies, but we did not observe any cytotoxicity when anti-MuSK antibodies were not expressed.

In addition, MuSK CAAR T cells also targeted and eliminated a panel of B cells targeting different MuSK epitopes.

In an in vivo mouse model, MuSK CAAR T cells, but not control CAAR T cells, showed biological activity by blocking the growth of B cell lines expressing anti-MuSK antibodies.

Based in part on these results, in the fourth quarter of 2021, we submitted an IND application for the first-in-human studies of MuSK-CAART to the FDA.

This IND became effective in January 2022 .

In the fourth quarter of 2021, we submitted an Investigational New Drug, or IND, application for the first-in-human studies of MuSK-CAART to the FDA, which became effective in January 2022.

In February 2022, MuSK-CAART received fast track designation from the FDA for improving activities of daily living and muscle strength in patients with MuSK antibody-positive myasthenia gravis.

We plan to initiate the MusCAARTes TM trial in 2022.

In June 2022, we received a no objection letter from Health Canada, allowing us to initiate clinical trial activities in Canada.

In October 2022, MuSK-CAART received orphan drug designation for the treatment of MuSK MG.

We initiated the Phase 1 MusCAARTes trial in November 2022.

We anticipate reporting six month clinical data from the combination cohort by the first half of 2024.

Our CAART pipeline also includes product candidates currently in discovery-stage or preclinical development for the treatment of mucocutaneous PV, or mcPV and PLA2R-associated membranous nephropathy, or PLA2R MN, in addition to two undisclosed targets.

DSG3/1-CAART, is being developed for mcPV, which affects both mucosal and skin surfaces and is caused by autoantibodies against DSG3 and desmoglein 1, or DSG1.

PLA2R-CAART is being developed to treat patients with PLA2R-assoicated membranous nephropathy, an autoimmune disease that is typically caused by production of autoantibodies directed to phospholipase A2 receptor (PLA2R), a single-pass transmembrane protein expressed in the glomerulus of the kidney.

We are also pursuing development of an additional product candidate, FVIII-CAART, which is being designed to treat a subset of patients with Hemophilia A, an X-linked bleeding disorder caused by mutations in the FVIII gene.

While our CABA™ platform is primarily focused on the treatment of B cell-mediated autoimmune diseases, we believe our approach may be applicable in other instances where B cell antibody production is implicated in immune response to exogenous proteins, such as FVIII administration for the treatment of Hemophilia A.

Some patients receiving repeated administrations of exogenous FVIII will have an immune system response to the exogenous antigens, known as an alloimmune response.

This can result in significant unmet need as these patients may develop alloantibodies against the treatment, also known as inhibitors, neutralizing the therapeutic potential of FVIII.

Patients with FVIII alloantibodies may often require high-dose FVIII, immune tolerance induction with FVIII, agents that mimic FVIII or plasmapheresis to remove the FVIII alloantibodies.

FVIII-CAART leverages a CAAR designed to target B cells expressing alloantibodies against FVIII, and it is initially being developed as an adjunctive therapy for Hemophilia A patients who develop FVIII alloantibodies.

Our manufacturing strategy is comprised of three stages, designed to initially leverage the extensive early-stage manufacturing expertise of our academic partners while migrating to contract manufacturing organization, or CMO, partnerships and ultimately aiming to achieve full manufacturing independence.

Stage 1 leverages the expertise in cell and vector manufacturing of our partners at the Children’s Hospital of Philadelphia, or CHOP, and the University of Pennsylvania, or Penn.

This stage included early development work, support of the DSG3-CAART IND, and cell and vector product manufacturing for our DesCAARTes TM trial.

We believe these partnerships and use of these established facilities have allowed us to move efficiently into clinical trials, but are not sufficient to support a commercial license.

Stage 2, which is ongoing, is designed to engage partners who are qualified for manufacturing of vectors at commercial grade and scale and who have experience with cell processing.

Stage 1 leverages the expertise in cell and vector manufacturing of our partners at the Children’s Hospital of Philadelphia, or CHOP, and the University of Pennsylvania, or Penn.

This stage included early development work, IND support and cell and vector product manufacturing for CABA-201 and DSG3-CAART.

We believe these partnerships and use of these established facilities have allowed us to move efficiently and reliably into clinical trials, but will not be sufficient to support a commercial license.

Stage 2, which is ongoing, is designed to engage partners who are positioned for manufacturing of vectors and cell processing at commercial grade and scale.

In January 2021, we initiated a collaboration with WuXi Advanced Therapies, Inc.

or WuXi, to serve as our cell processing manufacturing partner, and have completed enabling engineering runs in preparation for our planned MusCAARTes TM trial .

or WuXi, to serve as our cell processing manufacturing partner, and have completed enabling engineering runs in preparation for our MusCAARTes TM trial.

In December 2021, we entered into a license and supply agreement with Oxford Biomedica (UK) Limited, or Oxford Biomedica, to supply lentiviral vector for the clinical and commercial development of our DSG3-CAART candidate.

Contingent on sufficient clinical evidence from the DesCAARTes TM trial, we plan to advance the third stage of our manufacturing strategy which will include leasing, building, qualifying and operating our own manufacturing facility.

Contingent on sufficient clinical evidence from our product candidates, we plan to advance the third stage of our manufacturing strategy which will include leasing, building, qualifying and operating our own manufacturing facility and/or establishing a strategic partnership to rapidly and reliably scale manufacturing leveraging the partner’s manufacturing expertise.

We believe this additional stage will enable full control of product development and commercial supply for products arising from our CABA platform, enabling us to achieve continuous improvement of our product candidates.

Our Chief Executive Officer and our President, Science and Technology, have both, in prior roles, built and led organizations that have constructed and commissioned cell therapy facilities which we hope will enable us to smoothly transition to stage 3 when feasible.

We plan to build upon our first mover advantage in the field of targeted cell therapy for B cell-mediated autoimmune diseases and further advance the discovery, development, and commercialization of our CAAR T portfolio.

Our extensive translational and correlative sciences program has been designed to inform clinical observations from the DesCAARTes TM trial in order to preserve and expand our industry leading insights into the impact of CAAR T therapies in patients.

Our scientific founders are leading experts in B cell-mediated autoimmune diseases and CAR T technology, and we are led by an experienced team with demonstrated success in discovering, developing, manufacturing and evaluating novel cell therapy products in clinical trials.

Our Chief Executive Officer and our President, Science and Technology, have both, in prior roles, built and led organizations that have constructed and commissioned cell therapy facilities which we believe will enable us to build our own manufacturing organizations and facilities, if desirable.

We plan to build upon our first mover advantage in the field of engineered T cell therapy for autoimmune diseases and further advance the discovery, development, and commercialization of our product candidate portfolio.

Our preclinical, regulatory and clinical development experience have enabled the successful clearance of two cell therapy INDs for first-in-human studies in patients with autoimmune diseases within the routine review period.

We have a track record of successful manufacturing and timely clinical trial execution, with robust capabilities in clinical operations and manufacturing in order to manage the complex logistics and to implement clinical trials of engineered T cell therapy in autoimmune diseases involving oncologists and medical specialists, such as dermatologists and neurologists, across a dozen sites in the United States, requiring coordination of multiple stakeholders across therapeutic areas.

We believe this experience has the potential to be a significant operating advantage.

Our scientific founders are leading experts in autoimmune diseases and CAR T technology, and we are led by an experienced team with demonstrated success in discovering, developing, manufacturing and evaluating novel cell therapy products in clinical trials.

We have assembled a Scientific Advisory Board with relevant experience in discovery, clinical and regulatory science for autoimmunity and cell and gene therapy.

In addition, we have partnered our discovery and initial development efforts with Penn, a pioneer in cell and gene therapy with a proven track record of expertise in the translational research, clinical development, and manufacturing of cell therapy products, in order to advance our lead product candidate in clinical trials along with our preclinical product candidates.

In addition, we have partnered our discovery and initial development efforts with Penn, a pioneer in cell and gene therapy with a proven track record of expertise in the translational research, clinical development, and manufacturing of cell therapy products, in order to advance multiple product candidates in clinical trials along with continued progress with our preclinical product candidates.

Our History and Team

Our scientific co-founders, Aimee Payne, M.D., Ph.D., and Michael Milone, M.D., Ph.D., began partnering at Penn in 2013 to combine Dr.

Payne’s expertise in B cell-mediated autoimmune diseases with Dr.

Milone’s deep and experienced insights into the design and implementation of CAR T products.

Payne’s expertise in B cell-mediated autoimmune diseases with Dr.

Milone’s deep and experienced insights into the design and implementation of CAR T products.

Payne is a worldwide leader in characterizing B cell-mediated autoantibody repertoires in PV and other autoimmune diseases.

Milone is a renowned scientist in CAR T therapy and was a co-inventor of and a key driver in the preclinical discovery and development efforts that yielded Kymriah®, the first FDA-approved CAR T therapy for the treatment of B cell cancers.

Payne’s laboratory surmised that by incorporating an antigen instead of an antibody fragment as the extracellular domain of the CAAR, specific pathogenic B cells could be targeted.

This resulted in a collaboration between the two investigators to apply the scientific foundation of CAR T technology as it has been advanced by Drs.

Payne and Milone in order to address B cell-mediated autoimmune diseases.

Their first scientific publication, “Reengineering chimeric antigen receptor T cells for targeted therapy of autoimmune disease” ( Science , July 2016), attracted the attention of a colleague, Steven Nichtberger, M.D., who is an adjunct professor at the Wharton School at the University of Pennsylvania, teaching a class on biotech company formation, financing and leadership in the Vagelos Life Sciences & Management Program.

Their first scientific publication, “Reengineering chimeric antigen receptor T cells for targeted therapy of autoimmune disease”

( Science , July 2016), attracted the attention of a colleague, Steven Nichtberger, M.D., who is an adjunct professor at the Wharton School at the University of Pennsylvania, teaching a class on biotech company formation, financing and leadership in the Vagelos Life Sciences & Management Program.

Additionally, Dr.

Nichtberger has experience creating and building companies, including a novel cellular therapy company, which required transferring the technology from an academic institution, establishing a research and development organization, hiring of manufacturing and quality teams, creating novel manufacturing processes, reaching agreement with the FDA on novel clinical development pathways and constructing a commercial-scale Good Manufacturing Practices, or GMP, facility that manufactured autologous cell therapy products for clinical trials.

In 2017, based on over a year of interaction and discussions regarding the optimal strategy to advance the scientific opportunity into a commercially developed product portfolio that could offer potentially curative treatment options to patients, Drs.

In 2017, based on over a year of

interaction and discussions regarding the optimal strategy to advance the scientific opportunity into a commercially developed product portfolio that could offer potentially curative treatment options to patients, Drs.

Payne, Milone and Nichtberger decided to launch Cabaletta Bio.

4 unchanged sentences

Milone and others to drive the IND-enabling translational studies that facilitated the initial CAR T clinical trial in B cell cancers at Penn.

Binder also built and led a clinical stage biotechnology company’s manufacturing operations and quality teams, including creation of a fully functioning commercial grade GMP facility.

Binder also built the translational research program and ultimately led the company’s research organization.

Binder also built and led a clinical stage biotechnology company’s manufacturing operations and quality teams, including creation of a fully functioning commercial grade GMP facility.

Binder also built the translational research program and ultimately led the company’s research organization.

Our Chief Medical Officer, David Chang, M.D.

was the late-stage clinical development leader of the only two drugs approved for SLE in the United States in over 60 years, belimumab, or Benlysta, and anifrolumab, or Sapnelo, through his roles at GlaxoSmithKline plc and AstraZeneca Pharmaceuticals LP prior to joining the team at Cabaletta Bio.

Chang completed his fellowship in Rheumatology and was a faculty member in the Division of Rheumatology at the Perelman School of Medicine at the University of Pennsylvania prior to his transition to the biopharmaceutical industry.

Over the past five years, Cabaletta has implemented two clinical-stage CAART cell therapy programs in autoimmunity, which have required collaborations between specialists in current therapeutic areas of interest –

dermatologists and neurologists –

and oncologists who are responsible for administering the cell therapy at each site.

Given our track record of timely clinical trial implementation with CAART cell therapy in autoimmune diseases over the past five years at a dozen sites across the United States, we believe that our team’s successful management of the complicated planning and logistics involved with implementation of these clinical trials has the potential to be an operating advantage.

The safety data from the Phase 1 DesCAARTes trial, evaluating DSG3-CAART, the lead CAART candidate, has been encouraging in patients at doses up to 7.5 billion cells.

Based on emerging translational data, combination strategies to increase DSG3-CAART activity are being evaluated.

The next CAART candidate, MuSK-CAART for patients with MuSK-associated myasthenia gravis, is being evaluated in the recently initiated Phase 1 MusCAARTes TM trial and has benefitted from our deep understanding of cell therapy in autoimmunity through application of our learnings to the trial design, including a higher starting cell dose delivered as a single infusion, smaller patient cohorts and earlier implementation of combination strategies.

Our robust clinical execution is demonstrated through our positive regulatory interactions since 2018, with two IND applications cleared within the routine 30-day period, implementation of multiple clinical trial protocol modifications, two Fast Track Designations and two Orphan Drug Designations granted to pipeline candidates, as well as our successful manufacturing of our novel cell therapy product candidates with academic and industry partners.

As we have established our position in the field of autoimmunity, we continue to evaluate novel approaches that have the potential to cure autoimmune diseases.

We were encouraged to see the results generated in an academic clinical study published in Nature Medicine in September 2022, showing the potential for CD19-CAR T to transform the course of systemic lupus erythematosus (SLE).

In five patients with SLE, one-time treatment with a 4-1BB-containing CD19-CAR T cell therapy induced deep and durable clinical responses in all five patients within three months after treatment, with favorable tolerability.

Healthy B cells repopulated in all patients within five months of treatment, and responses remained durable off SLE-associated medications for up to 17 months of follow-up.

These findings demonstrate the potential for CD19-CAR T to “reset the immune system,”

eliminating the cause of autoimmune disease with restoration of the healthy immune system.

Building on these results, we announced in October 2022 the development of CABA-201, a 4-1BB-containing CD19-CAR T investigational therapy, for the treatment of severe autoimmune diseases.

The product has been designed to be highly similar to the construct used by Dr.

Schett in the Nature Medicine paper.

We are employing a fully human CD19 binder that has high similarity, including similar binding activity, to the construct employed in the academic study.

Our exclusive translational research partnership with Dr.

Schett, involves our robust translational research laboratory combined with confidential sharing of his unpublished clinical data to generate early and actionable insights from his trials that are informing our clinical development strategy and plans.

Accelerated by our team’s deep expertise in cell therapy, robust clinical experience in autoimmunity, and demonstrated track record of strong execution, we are uniquely positioned to advance CD19-targeting strategies to further our mission to develop therapies that deliver deep, durable and potentially curative responses for patients with autoimmune diseases.

Our Research and Manufacturing Collaboration with Penn

1 unchanged sentence

Payne and Milone.

Our continuing relationship with our scientific co-founders provides important guidance and insights to us.

Our continuing relationship with our scientific co-founders provides important advice and insights to us.

Our contractual relationship with Penn through ongoing licensing and research arrangements also provides important services around manufacturing supply.

1 unchanged sentence

This license agreement provides us with access to multiple patent families covering CAAR T therapy as applied to the field of B cell-mediated autoimmune and alloimmune diseases and to the robust intellectual property portfolio created by Penn under these SRAs in this field.

See “—Our Material Agreements—Amended and Restated License Agreement with Penn.”

Our ongoing collaboration with Penn is also based on a Master Translational Research Services Agreement, or the Services Agreement, that we entered into in October 2018, along with multiple additional agreements under the Services Agreement to engage and partner in individual Penn entities, including cell product manufacturing, correlative research, vector manufacturing, clinical trial operations and protocol development.

In addition to the Services Agreement, we have agreements in place with various functional areas and centers that provide additional resources to Penn as well as contractual commitments from Penn with the goal of providing the capacity to manufacture our lead product candidate, DSG3-CAART.

Penn has also agreed to manufacture vector product for use in our clinical trials.

Penn’s obligations are subject to certain limitations and termination rights.

See “—Our Material Agreements—Master Translational Research Services Agreement with Penn”.

We believe Penn is uniquely suited to be our partner in our efforts to develop product candidates leveraging our CAAR T technology based on a decade of experience, including manufacturing and clinical support for approximately a dozen active cell therapy clinical trials.

Penn’s obligations are subject to certain limitations and termination rights.

See “—Our Material Agreements—Master Translational Research Services Agreement with Penn”.

We believe Penn is uniquely suited to be our partner in our efforts to develop product candidates leveraging our CAR T and CAAR T technology based on a decade of experience, including manufacturing and clinical support for approximately a dozen active cell therapy clinical trials.

The original manufacturing process for the first FDA-approved CAR T therapy was developed at Penn before being transferred to Novartis Pharmaceuticals Corporation during late-stage clinical trials.

We are leveraging Penn’s experience, validated standard operating procedures, manufacturing facilities and staffing to accelerate development efforts for our lead product candidate.

Our goal is to build upon our first mover advantage and expertise in cell therapies for B cell-mediated autoimmune diseases to accelerate the discovery, development and commercialization of our CAAR T cell therapies, with a focus on reliable manufacturing.

We believe achieving this goal could result in potentially curative therapies for patients with unmet medical needs who suffer from certain B cell-mediated autoimmune diseases.

We are leveraging Penn’s experience, validated standard operating procedures, manufacturing facilities and staffing to accelerate development efforts for our lead product candidate.

Our goal is to build upon our expertise in engineered T cell therapies for autoimmune diseases enhanced by our exclusive translational research partnership with Dr.

Georg Schett to accelerate the discovery, development and commercialization of our product candidates.

We believe achieving this goal could result in potentially curative therapies for patients with unmet medical needs who suffer from a broad range of autoimmune diseases with B cell involvement.

To achieve this goal, key elements of our strategy include:

Achieving clinical proof-of-concept for our lead product candidate, DSG3-CAART in mPV, the first in a series of well-understood and validated B cell-mediated autoimmune diseases for which we are developing CAAR T cell product candidates.

It is well-established that the presence of DSG3 autoantibodies and DSG3 autoantibody producing cells in patients are both necessary and sufficient to cause mPV in the vast majority of cases.

We believe our biologic understanding coupled with the well-understood clinical signs, symptoms and natural course of the disease, identify mPV as a model disease to evaluate our CAAR T approach.

In addition, we have made significant investment in the design and development of DSG3-CAART, generating a lead candidate that has demonstrated robust target engagement and no off-target toxicities in preclinical studies.

Taken together, our Phase 1 clinical trial evaluating DSG3-CAART for the treatment of mPV represents an optimal first opportunity to establish initial clinical proof-of-concept of our CABA™ platform.

Leveraging our CABA ™ platform to identify optimal targets for the CAAR T approach and apply learnings from DSG3-CAART to advance additional product candidates.

Shortly after inception, we undertook a comprehensive review of all known B cell-mediated autoimmune diseases in order to evaluate and prioritize the opportunity for selective destruction of B cells in an effort to cure B cell-mediated autoimmune diseases.

Central to this analysis were (i) scientific, clinical and commercial assessment, (ii) epitope mapping to determine regions targeted by autoantibodies, (iii) evaluation of the ability to optimize the CAAR construct and design with the goal of selectively ablating auto reactive B cells, and (iv) evaluation of existing or required development of new preclinical models and in vitro and in vivo clinical testing.

As we performed this analysis of potential product candidates, we considered possible paths for clinical trial design and regulatory approval.

This analysis incorporated the extensive learnings gleaned from years of effort devoted to development of DSG3-CAART.

We prioritized the targets and since then have been focused on being first to discover and develop a series of products with each providing the potential for cure of an important B cell-mediated autoimmune disease in patients.

We intend to continue to apply our proprietary learnings from DSG3-CAART, including scientific and regulatory learnings, to most effectively advance these additional opportunities.

Preclinical studies that are generally similar to, and informed by, DSG3-CAART preclinical studies are actively ongoing with other CAAR T cell product candidates.

Achieving clinical proof-of-concept for our lead product candidate, CABA-201, across multiple autoimmune diseases where B cells are involved.

Academic clinical data published in Nature Medicine in September 2022 demonstrated that a CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain following lymphodepletion with fludarabine and cyclophosphamide induced a clinical remission in 5 out of 5 patients with moderate to severe, refractory SLE, with up to 17 months of follow up.

In addition, in February 2023, a case report was published in Lancet Rheumatology which demonstrated that the same CD19-CAR T cell therapy at the same dose with a 4-1BB co-stimulatory domain was administered following a similar preconditioning regimen with fludarabine and cyclophosphamide to a patient with anti-synthetase syndrome, which is a form of myositis.

This patient experienced profound and rapid reductions in muscle inflammation, improvement in muscle function and reduction of autoantibody titers for up to six months following therapy with reconstitution of the B cell population occurring within the follow-up period.

Our exclusive translational partnership with Dr.

Schett, the lead investigator of the study, is focused on generation of additional translational data to gain a deeper understanding of the immunologic mechanisms of response and clinical insights from ongoing and continued clinical studies in multiple autoimmune disease indications.

Due to the high level of similarity between CABA-201 and the construct used in these studies, we believe CABA-201 may have the potential to transform the treatment of autoimmune diseases.

Leveraging our cellular therapy knowledge and experience in addition to development efficiencies gained through our longstanding Penn collaboration to rapidly build fully integrated internal infrastructure.

We have differentiated expertise that we believe is uniquely suited to the continued buildout of our CABA platform, focused on autoimmune diseases.

Our management team has expertise in conducting complex, interdisciplinary autoimmune-focused cell therapy clinical trials with a track record of positive regulatory interactions to support cell therapies in autoimmune diseases since 2018.

We have had two INDs for autoimmune cell therapies cleared within the routine 30-day period with fast-track designations granted for each product candidate.

In addition, we have a successful track record of manufacturing novel cell therapy product candidates with academic and industry partners.

Not only does our team possesses significant experience in the manufacturing of cell therapy product candidates, but our partnership with Penn allows us to utilize their existing infrastructure, which has accelerated our early development activities.

In parallel, we continue to build out our internal capabilities while developing and continuing to implement a path to manufacturing independence, with established partnerships to provide vector and cell processing capabilities at commercial grade and scale.

Continuing execution of the DesCAARTes trial to achieve clinical proof-of-concept for DSG3-CAART when administered in a combination regimen or at very high doses for the CAART strategy, and leverage insights and learnings to advance additional product candidates.

We believe our Phase 1 clinical trial evaluating DSG3-CAART for the treatment of mPV represents an optimal first opportunity to establish initial clinical proof-of-concept for the CAART strategy in our CABA platform.

We intend to continue to apply our proprietary learnings from DSG3-CAART, including scientific and regulatory strategies, to most effectively advance these additional opportunities with both the CAART and CARTA product candidates.

Expanding upon our established IP position and first mover advantage in CAAR T therapy targeted towards B cell-mediated autoimmune diseases .

We are focused on protecting our intellectual property as we continue to pursue the development of future product candidates.

We believe the issued U.S.

patent on our initial CAAR constructs is the first patent covering cells engineered to express the known pathogenic epitopes recognized by DSG3 and DSG1 autoantibodies, which we are working to supplement with additional patent filings.

We believe U.S.

patent 10,301,370, relating to our initial CAAR constructs, is the first patent covering cells engineered to express the known pathogenic epitopes recognized by DSG3 and DSG1 autoantibodies.

We have supplemented this initial U.S.

patent with additional U.S.

patents relating to our DSG3- and DSG1-CAAR constructs, which cover the constructs themselves, nucleic acids encoding these constructs, and methods of treatment using the same.

We are working to expand our existing patent protection with additional patent filings.

The design of a broadly effective CAAR requires a deep understanding of the location of immunogenic epitopes targeted by autoantibodies, a competency that we believe we are uniquely positioned to utilize in product candidate development.

We believe there is a particularly high value to the first mover advantage including, but not limited to, experience in discovery, preclinical development, regulatory efforts, intellectual property and insights from clinical trials that can be translated across programs.

Leveraging our cellular therapy experience and knowledge in addition to knowledge gained through our Penn collaboration to rapidly build our own fully-integrated internal infrastructure.

We have differentiated expertise that we believe is uniquely suited for the continued buildout of our CABA™ platform specializing in B cell-mediated autoimmune diseases.

Our scientific co-founders who initially developed our technology continue to collaborate closely with us through SRAs.

In addition, our management team has a successful history of building the capabilities of cell therapy-based companies from the discovery and preclinical stage through Phase 3 readiness.

In combination with our team, which possesses significant experience in executing on manufacturing strategies for cell therapy products, our partnership with Penn allows us to utilize their existing infrastructure, which accelerated our ability to submit our first IND.

In parallel, we continue to build out an experienced team to manage the relationship with Penn while also developing and continuing to implement a path to our manufacturing independence.

Ultimately, we intend to prepare and build our own manufacturing facility depending on the achievement of sufficient initial clinical trial data for DSG3-CAART.

B Cell-Mediated Autoimmune Diseases:

B Cells in Autoimmune Diseases:

Overview and Current Treatment Paradigm

The body’s immune system, which is designed to protect the body from infection and cancer, includes B cells and T cells.

B cells are responsible for producing antibodies against antigens that the body perceives as foreign whereas T cells are responsible for cell-mediated immunity.

In the case of B cell-mediated autoimmune diseases, certain populations of the patient’s B cells differentiate into antibody secreting cells that produce antibodies directed against normal tissues and cells, leading to disease.

While these autoantibodies are the major effectors of B cell-mediated autoimmune diseases, the underlying root cause of each B cell-mediated autoimmune disease is the defective B cells that mistakenly differentiate into cells that secrete these pathogenic antibodies.

The body’s immune system, which is designed to protect the body from infection and cancer, includes B cells and T cells.

In addition to producing antibodies against antigens that the body perceives as foreign, B cells are responsible for producing inflammatory cytokines, co-stimulating other immune cells, and presenting antigen to T cells to enable cell-mediated immunity.

Autoimmune disease occurs when the immune response becomes mistakenly targeted to healthy tissues and cells, and B cells can contribute to the incitement and/or maintenance of these processes through their varied immune mechanisms.

In the case of B cell-mediated autoimmune diseases, B cells are responsible for driving disease through production of autoantibodies, or antibodies against the ‘self,’

that lead to disease.

While these autoantibodies are the major effectors of B cell-mediated autoimmune diseases, the underlying root cause of disease is the defective B cells that mistakenly differentiate into autoantibody-secreting cells.

These pathogenic B cells express autoantibodies on their surface with the same antigen specificity as the circulating pathogenic autoantibodies, which can be used to distinguish them from the healthy B cell population, as shown in the figure below.

Forsthuber, et al.

“B cell-based therapies in CNS autoimmunity:

differentiating CD19 and CD20 as therapeutic targets.”

Therapeutic Advances in Neurological Disorders (2018):

Antibodies are B cell receptors that drive B cell maturation.

CD19 serves as a B cell marker throughout the naïve B cell phase, while CD20 is a surface marker expressed later in B cell maturation.

CAAR T is designed to eliminate antigen specific B cells and prevent their further development to antibody secreting plasma cells.

CD19 serves as a B cell marker from the pro B cell phase until differentiation to plasma cells, while CD20 is a surface marker expressed in a narrower range of the B cell maturation process.

CABA-201 is directed to the CD19 B cell marker.

CAAR T product candidates are designed to eliminate antigen specific B cells in each targeted disease, preventing their further development to antibody secreting plasma cells.

immunoglobulin M;

2 unchanged sentences

surface immunoglobulin, representing the autoantibody on the B cell surface.

Current treatment options for autoimmune mediated diseases involve generalized immune suppression, achieved through corticosteroids, immunosuppressive medications and biologics.

Current treatment options for autoimmune diseases involve generalized immune suppression, achieved through corticosteroids, immunosuppressive medications and biologics.

Most commonly, corticosteroids are used on both a chronic and acute basis to control disease and act via a variety of mechanisms to control or downregulate multiple inflammatory pathways.

1 unchanged sentence

Biologic therapies have emerged as a new class of therapies and have a variety of targets including cytokines, B cells, and co-stimulation molecules.

One particular biologic, rituximab, is an anti-CD20 antibody and is employed in multiple autoimmune diseases.

Rituximab was approved by the FDA in 2018 for treatment of moderate to severe PV.

Currently existing treatment options target parts of the immune system in addition to disease-causing B cells, and in general require chronic administration to reduce recurrence rates.

We believe the ideal therapy in autoimmune diseases would completely and specifically eliminate the pathogenic B cells while sparing the immune cells that protect against infection, without requiring chronic administration.

Using our CABA™ platform, we are developing engineered T cell therapy candidates that express CAARs, which serve as “decoys” for antibodies expressed on the surface of B cells.

We believe these CAARs enable the T cells to specifically engage and eliminate pathogenic B cells while sparing normal B cells.

By harnessing the power of cell therapy, our technology has the potential to overcome the ability of these B cells to evade elimination and thus lead to durable responses.

Our CAAR T platform is based on the foundation of established CAR T therapeutics, differing primarily in their use of the antigen rather than an antibody fragment to target pathogenic B cells.

We believe our technology has broad applicability and we are building a portfolio of product candidates for B cell-mediated autoimmune diseases.

Our CABA platform encompasses two strategies.

The CARTA (chimeric antigen receptor T cells for autoimmunity) strategy is designed to achieve transient depletion of all B cells following a single infusion, allowing for the elimination disease-causing B cells and subsequent repopulation by healthy B cells, providing potentially meaningful clinical responses to patients without long-term immunosuppression.

The CAART (chimeric autoantibody T cells) strategy is designed to engineer T cells to express CAARs that selectively engage and eliminate pathogenic B cells.

Our CAARs build upon the scientific foundation of CARs, differing primarily in the use of the antigen rather than an antibody fragment, which enables the CAAR T cells to serve as a “decoy”

for specific autoreactive B cell receptors expressed on the surface of B cells.

This allows these pathogenic B cells to engage with the CAAR T cells instead of benign antigens, resulting in their elimination.

We believe our CABA platform has potential applicability across dozens of autoimmune diseases.

Our CARTA Strategy

Engineered T cell therapy is a type of immunotherapy in which human T cells are genetically modified to express specific receptors, enabling the T cells to recognize and eliminate pathogenic cells.

A key application of engineered cell therapy involves the use of CARs, which are engineered molecules that enable T cells to identify specific antigens present on the surface of diseased cells.

When expressed on the patient’s T cells, the CAR directs the T cells to kill cells that express a particular antigen.

These CAR-expressing T cells, or CAR T cells, can proliferate, generating memory CAR T cells.

Many companies are using CAR T technology to develop therapies for the treatment of B cell cancers.

Several drug candidates have demonstrated clinical success, leading to the first FDA regulatory approvals of CAR T therapies for certain B cell cancers.

In these B cell cancers, CAR T therapy has resulted in complete remission of disease in many patients, even in cancer patients with severe, refractory disease.

Despite success in treating certain B cell cancers, we believe that CARs have not yet been developed or evaluated as a treatment option for other types of B cell-mediated autoimmune diseases in patients.

Our Technology:

Our CAAR T platform builds upon the scientific foundation of CARs to enable targeted B cell elimination in an autoimmune setting, which may lead to complete and durable remission of disease while sparing all other B cell populations that can provide beneficial immunity from infection.

The co-stimulatory domain and the signaling domain of both a CAR T cell and CAAR T cell carry out the same activation and cytotoxic functions once the engineered cell therapy engages a B cell.

Our CAAR T cells differ from CAR T cells primarily in the extracellular targeting domain.

Our CAAR T cells incorporate the relevant parts of the autoantigen that is subject to attack in autoimmune disease, as shown in the figure below.

Key differences between CAR T (left) vs.

CAAR T therapy (right) .

A CAR T cell typically contains a signaling domain and a co-stimulatory domain and incorporates antibody fragments that recognize a specific antigen, such as CD19, which is present in both B cell leukemia cells and healthy B cells.

In contrast, a CAAR T cell typically contains an antigen as its targeting domain rather than an antibody fragment.

The antigen is recognized by the specific, pathogenic antibody along with the limited population of B cells that produce the antibody.

The model CAAR T cell depicted here contains an identical signaling domain and a co-stimulatory domain.

The primary difference between a CAR T cell and a CAAR T cell is the target domain expressed on the cell surface.

The example shown demonstrates the pan-B cell ablation that happens when targeting the B cell lineage marker, CD19, and the highly selective pathogenic B cell targeting approach of CAAR T.

Potential Advantages of CAAR T Cell Therapy in B Cell-Mediated Autoimmune Diseases

In contrast to currently available therapies for B cell-mediated autoimmune diseases, based on observations of CAR T activity in refractory B cell cancers, we believe a single CAAR T treatment could potentially offer complete and durable remission of certain specific B cell-mediated autoimmune diseases while leaving the humoral, or bodily fluid, antibody-producing immune system intact.

We believe our CAAR T cells can recognize the specific autoantibodies that are responsible for causing an underlying disease and kill the cells that express the autoantibodies on their surface.

When expressed on the patient’s T cells, the CAR directs the T cells to kill cells that express a particular antigen.

CAR T technology has been used to develop treatments for B cell cancers, which have led to regulatory approvals for certain types of leukemias and lymphomas.

In these B cell cancers, CAR T therapy has resulted in complete remission of disease in many patients, even in patients with severe, refractory cancer.

Academic clinical data published in Nature Medicine in September 2022 demonstrated that a CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain following lymphodepletion with standard doses of fludarabine and cyclophosphamide induced clinical remission in 5 out of 5 patients with moderate to severe, refractory SLE, with up to 17 months of follow up in the first treated patient.

Grade 1 CRS was observed in 3 out of 5 patients, and there was no observation of neurotoxicity of any grade.

New naïve B cells repopulated within 2-5 months of CAR T infusion in all patients, with no evidence of recurrence of disease or autoantibodies following repopulation.

In summary, the data suggest the potential for a reset of the immune system in these patients.

Our licensed fully human CD19 binder has been designed to be highly similar to the construct used in the Nature Medicine paper.

The fully human binder has been clinically evaluated in a dual-CD19xCD22 CAR T candidate under development for B cell leukemia and lymphoma in an investigator-initiated trial in China, where IASO has reported a tolerability profile that we believe is favorable for development in autoimmune diseases.

The activity of T cells expressing a 4-1BB-containing CAR with our binder was evaluated against T cells expressing a 4-1BB-containing CAR utilizing the CD19 binder employed in the Nature Medicine study cited above, FMC63-CART, as a benchmark.

Compared to FMC63-CART, CABA-201 exhibited comparable biologic activity in vitro and in vivo.(Dai, Zhenyu, et al).

Given its similarity to the CD19-CAR T construct employed in the trial conducted by Dr.

Georg Schett and his colleagues, including incorporation of a 4-1BB co-stimulatory domain, we believe the data inform the dosing of CABA-201, which may have the potential to transform treatment of autoimmune diseases with high unmet need.

Our CAART Strategy

Our CAART strategy builds upon the scientific foundation of CARs to enable targeted B cell elimination in an autoimmune setting, which may lead to complete and durable remission of disease while sparing all other B cell populations that can provide beneficial immunity from infection.

The co-stimulatory domain and the signaling domain of both a CAR T cell and CAAR T cell carry out the same activation and cytotoxic functions once the engineered cell therapy engages its relevant target expressed on a B cell.

CAAR T cells differ from CAR T cells primarily in their extracellular targeting domain.

Rather than containing an antibody fragment, the CAAR domain incorporates the relevant components of the autoantigen that is subject to attack in a certain autoimmune disease.

The current standard of care for B cell-mediated autoimmune disease often provides limited and transient therapeutic benefit while also weakening the humoral immune system.

We believe our CAAR T cells have the potential to eliminate the reactive, antibody-producing B cells that are ultimately responsible for disease through precise targeting of cells that contain autoantibodies on their surface, while sparing normal B cells.

As a result, we believe CAAR T cell therapy used in B cell-mediated autoimmune disease has the potential for durable elimination of pathogenic B cells and an associated elimination of clinical recurrences with an improved adverse event, or tolerability, profile relative to the current standard of care.

Enhanced target specificity and preservation of humoral immune system

Preservation of the humoral immune system with CAAR T cell therapy represents a potentially meaningful benefit over existing CD19- or CD20-targeting methods for B cell ablation, as patients would be less susceptible to infection they may encounter after non-specific B cell elimination and would not require chronic in-hospital treatment with intravenous immunoglobulin, or IVIG, or other prophylactic therapies.

Additionally, because self-reactive B cells make up only 0.01% to 1% of the normal B cell population, we believe the risk of on-target toxicity may be reduced compared to systemically immunosuppressive medications that non-specifically weaken the immune system.

Continued use of these drugs poses significant risks, such as the potential for fatal infections due to the non-specific tempering of the immune system related to the complete depletion of CD20+ or CD19+ B cells.

Potential for complete, long-lasting elimination of pathogenic B cells

The current standard of care for B cell-mediated autoimmune disease displays limited and transient therapeutic benefit while also weakening the humoral immune system.

We believe our CAAR T cells have the potential to eliminate the reactive, antibody-producing B cells that are ultimately responsible for disease, while sparing normal B cells.

The curative potential of CAAR T cells would be consistent with clinical findings from use of CAR T products in B cell cancers and would be a significant improvement relative to the current standard of care for certain B cell-mediated autoimmune diseases.

While CAR T has demonstrated significant clinical success in B cell cancers, cancer cells employ a variety of mechanisms to evade detection by targeting immune cells, and antigen escape poses a significant risk of failure for CAR T cell treatment in oncology.

Antigen escape in CAR T treatment occurs when the antigen that the CAR T cell targets is lost from or mutated within the malignant cell.

Clinically, this results in response rates that decline from an initial complete response level of about 80% to approximately 50% over a period of years.

We believe this risk of antigen escape is reduced in our setting as mechanisms to evade CAAR T therapy would involve B cell receptor down-regulation or mutation such that antigen specificity is lost.

We believe that the implication of this is that the mutated B cell would no longer produce autoantibodies that recognize the antigen and therefore should no longer be pathogenic.

We also believe that a single infusion of CAAR T cells has the potential for curative effects due to either complete ablation of pathogenic cells or production of memory CAAR T cells.

Our CABA ™ Platform

Our team has developed our CABA™ platform to inform product candidate development from indication selection through preclinical studies.

Using our CABA™ platform, our team has identified our highest priority target indications following a rigorous analysis of B cell-mediated autoimmune diseases.

A deep understanding of the antigenic epitopes targeted in these diseases is required to design and construct a successful CAAR.

Our scientific founders have studied B cell repertoires for many years in the context of PV.

Their expertise is essential to provide insights and guidance regarding our portfolio of products.

We leverage the experience and insight gained from the development of each product candidate to improve the efficiency of our CABA™ platform in evaluating additional potential product candidates.

Scientific, Clinical and Commercial Assessment

Through broad literature review and consultation with internal and external experts, we have identified and continue to monitor the universe of diseases where pathogenic B cells are implicated in disease pathophysiology.

From this set of possible indications, our team then evaluates each disease based on numerous criteria, which include, but are not limited to:

Biologic Opportunity for Cure

the presence of the antibody is well established in patients with the clinical manifestations of the disease;

the identified antibody has been shown to be necessary and sufficient in causing clinical disease;

there is a correlation between antibody titer and disease activity;

B cell-depleting therapies or autoantibody reducing therapies are shown or believed to be effective in treating the disease;

the antibody repertoire has been or can be characterized for the disease;

Identifiable and Underserved Patient Populations

a routine and established antibody test exists or can be developed for diagnosis and biomarker assessment;

the clinical course and severity of the disease warrant a cellular therapy despite current standard of care;

products in development do not have the potential to materially improve outcomes versus the current standard of care;

Evaluation of Preclinical and Clinical Development Pathway

preclinical in vitro and in vivo models exist or can be developed;

potential clinical trial designs and endpoints appear reasonable and achievable.

In addition to assessing the underlying biologic and clinical rationale for each potential target, we also assess commercial feasibility of CAAR T therapy in various B cell-mediated indications.

As part of this assessment, we evaluate the direct lifetime drug and overall healthcare costs due to the burden from the disease, including the costs of managing potential adverse effects from existing standard of care compared to the potential CAAR T therapy.

We perform this rigorous and detailed conceptual analysis to enable us to be thorough and thoughtful before committing significant resources to a program.

We believe this analysis allows us to prioritize and advance potential product candidates through the CABA™ platform with a higher degree of confidence and a higher probability of success.

Epitope Mapping

Epitope mapping involves identifying specific sites on the antigen that are responsible for binding to the antibody of interest.

This step is required in order to facilitate an understanding of CAAR design and feasibility.

An understanding of the locations of the key immunogenic epitopes on the antigen heavily informs the potential feasibility of a CAAR.

With an understanding of these epitopes, we then leverage our cell therapy expertise to design the CAAR construct.

CAAR Construct / Design

Our scientists and collaborators design and create multiple CAAR constructs following completion of epitope mapping, which are tested against the antibody or antibodies of interest.

The goal in CAAR design is to maximize the inclusion of known immunogenic epitopes on the antigen while also optimizing the size of the construct to improve the ability of the CAAR to bind to the antibody.

Determining the location of antigen expression and if there are other antigens that may unintentionally cross-react with the CAAR will also inform CAAR design and feasibility.

The size of the antigen will also determine whether a CAAR can be designed based on the size constraints of the delivery system.

Once we have designed and developed optimal CAAR constructs, we test them in a variety of in vitro and in vivo studies.

In Vitro and In Vivo Testing

In vitro preclinical testing is focused on establishing the specificity and activity of the potential CAAR T cell product candidate against B cells expressing known pathogenic target antibodies.

Specificity is evaluated against non-target membrane proteins that may be expressed on other cells, with specific focus against any proteins that are known to bind to the antigen presented on the CAAR.

CAAR T function is tested in the presence and absence of soluble, or free, antibodies isolated from patients, since these antibodies may enhance or inhibit CAAR T cell function.

Where relevant animal models exist, the CAAR T cell product candidate is tested in one or more models to address specific questions around safety and the ability of the potential product candidate to reduce disease activity in vivo .

We are developing a portfolio of CAAR T cell product candidates for the treatment of B cell-mediated autoimmune diseases.

Our lead product candidate, DSG3-CAART, targets B cells that express pathogenic autoantibodies against the DSG3 protein, which cause mPV.

The publication of the first in vivo evaluation of activity and toxicity of the candidate in an animal model was followed by additional preclinical studies to support our IND submission, which was cleared by the FDA in September 2019.

The FDA granted our lead product candidate, DSG3-CAART, designed to treat patients with mPV, orphan drug designation for the treatment of PV in January 2020 and fast track designation for improving healing of mucosal blisters in patients with mPV in May 2020.

We initiated our DesCAARTes TM trial in June 2020 and announced the dosing of the first patient in December 2020.

In 2021, we announced the 28-day safety data for the first three cohorts in the study along with top-line data on biologic activity from the first two, low dose cohorts in December 2021.

In March 2022, we disclosed 28-day safety data for our fourth cohort.

Our next PV-directed product candidate, DSG3/1-CAART, targets B cells that give rise to pathogenic autoantibodies against either the DSG3 or DSG1 protein, which cause mcPV, and could address a broader PV population.

Our second product candidate, MuSK-CAART, targets B cells that differentiate into antibody secreting cells that produce pathogenic autoantibodies against the MuSK receptor in patients with MG.

In the fourth quarter of 2021, we submitted an IND for the first-in-human studies to the FDA, which became effective in January 2022.

In February 2022, MuSK-CAART received fast track designation from the FDA for improving activities of daily living and muscle

strength in patients with MuSK antibody-positive myasthenia gravis.

Our CABA platform encompasses two approaches –

CARTA and CAART.

Our current product candidate pipeline is illustrated below.

Two additional undisclosed disease targets, currently in discovery stage, and part of our pipeline portfolio through our Sponsored Research Agreement with Penn are not shown.

We have discontinued work on the FVIII product candidate.

This decision is due to the prioritization of other product candidates.

Our Product Candidates

CABA-201 for multiple autoimmune indications

Our lead product candidate for the CARTA strategy, CABA-201, is designed to achieve transient depletion of all CD19-positive B cells following a single infusion, allowing for the elimination disease-causing B cells with subsequent repopulation by naïve healthy B cells, providing potentially meaningful clinical responses to patients without long-term immunosuppression.

Through immune system reset, we believe CABA-201 has the potential to transform the treatment in a broad range of autoimmune diseases.

CABA-201 is comprised of a fully-human anti-CD19 binder, which is the extracellular targeting domain.

In addition, it contains a 4-1BB costimulatory domain and a CD3-zeta signaling domain, as shown in the figure below:

Image showing the design of CABA-201, with a fully human anti-CD19 binder, the 4-1BB costimulatory domain and the CD3-Zeta signaling domain.

The costimulatory and signaling domain are identical to the construct used in the academic clinical studies published in Nature Medicine and Lancet Rheumatology that were evaluated in SLE and myositis, respectively.

Academic clinical data published in Nature Medicine in September 2022 demonstrate that a CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain following lymphodepletion with fludarabine and cyclophosphamide induced a clinical remission in 5 out of 5 patients with moderate to severe, refractory SLE, with up to 17 months of follow up.

(Mackensen, Andreas, et al).

Grade 1 CRS was observed in 3 out of 5 patients, and there was no observation of neurotoxicity of any grade.

Naïve immature B cells repopulated within 2-5 months of CAR T infusion in all patients, with no evidence of recurrence of disease or autoantibodies following repopulation.

In addition, in February 2023, a case report was published in Lancet Rheumatology which demonstrated that the same CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain at the same dose was administered following a similar preconditioning regimen with fludarabine and cyclophosphamide to a patient with anti-synthetase syndrome, which is a form of myositis.

This patient experienced profound decreases in muscle inflammation, improvement in muscle function and reduction of autoantibody titers six months following therapy with reconstitution of the B cell population occurring within the follow-up period.

Grade 1 CRS and no ICANS were reported.

Our licensed fully human CD19 binder has been clinically evaluated in a dual-CD19xCD22 CAR T candidate under development for B cell leukemia and lymphoma in an investigator-initiated trial in China, where IASO has reported a tolerability profile that we believe is favorable for development in autoimmune diseases.

The activity of T cells expressing a 4-1BB-containing CAR with our binder was evaluated against T cells expressing a 4-1BB containing CAR utilizing the CD19 binder employed in the Nature Medicine study cited above, FMC63-CART, as a benchmark.

Compared to FMC63-CART, CABA-201 exhibits comparable biologic activity in vitro and in vivo, as shown in the figure below.

(Dai, Zhenyu, et al).

In vitro (top) and in vivo (bottom) data illustrating the binding affinity and body weight effects of a CD19-CAR T with the FMC63 binder vs.

the binder utilized in CABA-201 (clone 78).

Binding affinities and body weight impact are most similar between the FMC63 binder and Clone 78, which is the binder in CABA-201.

Given its structural and functional similarity to the CD19-CAR T construct employed in the academic clinical study published in Nature Medicine , including incorporation of a 4-1BB co-stimulatory domain, we believe CABA-201 may have the potential to reset the immune system and transform treatment of autoimmune diseases with high unmet need.

DSG3-CAART for Mucosal PV

Our lead product candidate, DSG3-CAART, is a CAAR T cell therapy expressing DSG3 antigen epitopes as the extracellular domain of a chimeric immunoreceptor, and is designed to enable specific cytotoxicity toward B cells with DSG3 autoantibody targeting abilities.

We believe this strategy has the potential to enable direct elimination of DSG3 autoantibody memory B cells and indirect elimination of DSG3-specific short-lived plasma cells that produce the pathogenic autoantibodies.

Scientific, Clinical and Commercial Assessment

Our lead product candidate for the CAART strategy, DSG3-CAART, is a CAAR T cell therapy expressing DSG3 as the extracellular domain of a chimeric immunoreceptor, and is designed to enable specific cytotoxicity toward B cells autoreactive to DSG3.

We believe this strategy has the potential to directly eliminate the disease-causing cells in mPV, which may lead to lasting clinical remission without damage to the healthy immune system.

Disease Background

PV is a potentially fatal, chronic autoimmune disease characterized by acantholysis, which is the loss of adhesion between cells of the skin or mucous membranes.

4 unchanged sentences

PV has two major subtypes:

mPV—Characterized by DSG3 autoantibodies only, affecting only the mucous membranes—accounts for approximately 25% of PV

mcPV—Characterized by DSG3 autoantibodies and DSG1 autoantibodies, affecting both the mucous membrane and skin—accounts for approximately 75% of PV

The presence of DSG-specific antibodies is 98% to 100% sensitive and specific in identifying patients with PV, and these antibodies have been deemed both necessary and sufficient to cause the disease.

Thus, in the absence of DSG autoantibodies, PV generally does not occur.

In mPV, patients will typically develop painful skin blisters on their mucous membrane, including mouth, nose, throat, and genitals, often leading to an inability to eat, drink and function normally.

The pathogenic DSG3 autoantibody is made by a specific small number of antibody secreting cells , which arise from B cells that express the DSG3 autoantibody on their surface.

An overview of mPV and mcPV is provided in the figure below.

Visual evidence of clinical manifestations of PV.

(Left panel) Inside of cheek of a patient with mPV, showing sloughing mucosa and blistering.

(Right panel) Back of a patient showing cutaneous skin blistering and sloughing in a patient with mcPV.

Image credit:

(1) mPV, which is caused by DSG3 autoantibodies and affects the mucous membranes;

and (2) mcPV, which is caused by DSG3 and DSG1 autoantibodies, affecting both the mucous membranes and the skin.

PV affects 11,000-19,000 prevalent patients in the United States, of which approximately 25% have mPV and 75% have mcPV.

Like most autoimmune diseases, the current standard of care for PV relies on general immune suppression, which is often transiently effective but can lead to severe infection, potentially resulting in hospitalization and death.

6 unchanged sentences

It does not specifically target the pathogenic B cells, but rather it depletes all CD20-expressing B cells, which leads to an ongoing risk of severe infection and death.

As such, there remains not only an unmet medical need in PV, but also a need for safer therapies that can provide a reliable, durable, and complete remission off of all other medications.

There are several emerging therapies also being developed for the treatment of PV, which are being evaluated in late-stage clinical trials.

These therapies provide important alternative therapeutic options for patients;

however, we believe based on early published data that these therapies are unlikely to be curative and do not specifically ablate autoreactive B cells.

Epitope Mapping

DSG3 consists of five extracellular cadherin, or EC, domains as shown schematically in the figure below.

Since T cell activation depends on the intermembrane distance of the immunologic synapse, we tested different combinations of ECs for expression in primary human T cells using DSG3 fragments as the extracellular domain as shown in the figure below.

Image showing the naturally occurring DSG3 protein and the five EC domains.

(B) The CAAR constructs that were evaluated in preclinical studies, containing the whole or subsets of the DSG3 protein.

The transmembrane and intracellular signaling domains are identical to those in the CART19 studies published by Penn.

CAAR Construct / Design

The DSG3 EC1-5 CAAR was minimally functional, likely due to the extracellular domain being too large to enable CAAR function or aggregation of the CAAR on the T cell surface.

The CAAR designs with either DSG3 EC1-3 or DSG3 EC1-4 showed interferon-gamma production after exposure to the target cells, demonstrating specific cytotoxic activity across targets.

In addition, no cytokine production was detected after exposure to cells that did not express surface immunoglobulins or other non-target cells.

The DSG3 EC1-3 was not effective against one target cell known to bind to the DSG3 EC3-4 domain.

Together, this data suggests that the DSG3 EC1-4 CAAR is the optimal construct to balance activity while retaining the ability to target locations of known pathogenic antibodies, as shown in the figures below.

Cytotoxicity assay to assess killing activity of DSG3 CAART.

Negative control is a CAR T with an antibody fragment attached to the extracellular domain.

* indicates construct that was selected for further development.

E:T ratio = effector to target ratio.

In Vitro Studies

A variety of in vitro studies were conducted to evaluate DSG3-CAART from a preclinical activity and toxicity perspective.

These studies included an evaluation of DSG3-CAART against proteins that are known to bind the DSG3 antigen, a screen of DSG3-CAART against an array of other membrane proteins and a set of studies designed to evaluate the potential effects of soluble DSG3 antibodies against DSG3-CAART.

The results of these studies are summarized below.

Evaluation of DSG3-CAART reactivity against known DSG3 binding proteins.

The DSG3 antigen presented on the extracellular domain of DSG3-CAART may naturally bind proteins in the body.

These proteins may bind to and activate DSG3-CAART, potentially causing toxicity.

The native binding proteins for DSG3 are the desmocollin proteins, which are important for cell adhesion in the skin and mucosa.

We performed a variety of studies to test whether DSG3-CAART recognizes and activates the desmocollin proteins.

Epithelial cells isolated from various primary organ systems that express some level of desmocollin proteins were screened.

Potential DSG3-CAART activity was evaluated through the detection of cytokines released against each cell type and cytotoxicity.

The data demonstrated an absence of inflammatory T cell cytokines after being exposed to these cells, indicating an absence of T cell activation.

No cytotoxicity was detected except at very high, non-pharmacologically feasible doses.

Collectively, we believe there is sufficient evidence to suggest that the DSG3 protein in the context of a CAAR does not meaningfully interact with desmocollin proteins.

Evaluation of DSG3-CAART off-target binding against membrane proteins.

A membrane protein array was utilized to screen the DSG3-CAART extracellular domain against 5,300 membrane proteins, which encompass the approximate number of membrane proteins contained in the human genome.

The confirmatory screen yielded no off-target signals, except for one weak signal against a protein that is known to bind to glycoproteins, and which was detected in both the test and control conditions.

Further evaluation of this protein in cell-based assays indicated that DSG3-CAART does not recognize and activate against this protein.

Evaluation of the effect of soluble antibodies on DSG3-CAART function.

We expect that circulating antibodies may prompt an active immune response against treatment with CAAR T cell therapy.

These antibodies can induce proliferation of DSG3 CAAR T cells but may also neutralize the cells.

In our preclinical in vitro studies, we observed that while DSG3 antibodies may have a variable effect on CAAR function, there was no systematic effect to enhance or reduce CAAR function.

These dynamics were evaluated in a series of in vitro studies as follows:

Soluble DSG3 antibodies were added to CAAR T cell cytotoxicity assays, at a range of concentrations likely to be encountered in patients, to assess the impact on CAAR function.

In all cases when the CAAR T cells were tested in the presence of soluble DSG3 antibodies, they retained their killing function.

In addition, the presence of antibodies did not demonstrate a systematic effect to enhance or reduce the CAAR T cells’ cytotoxic ability.

Therefore, we believe that removal of circulating soluble DSG3 antibodies from patients prior to infusions may not be necessary to enable potential benefit.

Monoclonal DSG3 antibodies with an enhancing effect were evaluated in combination with PV patient serum to assess their impact on DSG3 CAAR T cell division and stimulation of cytokine production.

Monoclonal DSG3 antibodies were capable of inducing DSG3 CAAR T cell division and stimulated production of moderate levels of cytokine production, as measured by interferon gamma.

Therefore, we believe the presence of DSG3 autoantibodies in patients may contribute to the DSG3 CAAR T cell population expansion post-infusion.

Antibodies purified from PV patients were added to DSG3 CAAR T cells at a range of concentrations known to commonly occur in patients in order to evaluate the extent to which patient serum may activate CAAR T cells.

These antibodies induced a dose dependent increase in interferon gamma.

Off-target toxicity may also be seen due to antibody-mediated bridging of DSG3 CAAR T cell cytotoxicity against hematopoietic cells that express receptors designed to bind to antibodies, known as Fc receptors.

To evaluate this, we loaded DSG3 antibodies onto cells expressing antibody-binding receptors, and evaluated the ability of DSG3 CAAR T cells to bind and activate against these targets in vitro.

No evidence of cytotoxicity was observed, suggesting the potentially low risk of off-target killing mediated by this mechanism.

In Vivo Studies

To evaluate DSG3-CAART in vivo , four murine models were used.

These models were designed to directly compare the potency of DSG3-CAART in comparison with CART19 cells;

evaluate the potential for on-target skin toxicity;

and measure the activity of DSG3-CAART in the presence of polyclonal soluble DSG3 antibodies.

Evaluation of potency of DSG3-CAART in a human B cell tumor line compared to CART19 cells.

This B cell model contained genetically-modified B cells to express DSG3 antibodies on the cell surface in addition to luciferase, a bioluminescence marker, and allowed evaluation of DSG3-CAART’s ability to engage and kill B cells that express the pathogenic antibody.

CART19 cells were used as a positive control in this model as the B cells express CD19 on their cell surface.

In this model, DSG3-CAART was found to result in a similar reduction of B cells compared to the CART19 cells.

Evaluation of on-target skin toxicity mediated by DSG3-CAART.

A human skin-xenografted model was used to evaluate the potential skin toxicity of DSG3-CAART by evaluating if the extracellular domain would react with desmocollin proteins, which are the known target for DSG3.

These results were compared directly to a positive control CAR T expressing a DSG3 specific antibody as an extracellular domain.

In this model, we observed the absence of skin toxicity mediated by the DSG3-CAART cells compared to the positive control, which did demonstrate skin toxicity.

Evaluation of DSG3-CAART in the presence of soluble antibodies.

We also tested a model where mice have circulating DSG3 antibodies to mimic the situation in PV patients.

In this model, the DSG3 antibodies have well-defined and different epitopes with varying affinities, which may reflect the potential breadth of B cell targets that could be encountered in PV patients.

The mice were then treated with DSG3-CAART, which was compared to non-CAAR expressing T cells, or negative control CAR T cells.

In this model, we observed amelioration of disease (see figure A below), reduction of DSG3 antibody titers (see figure B below), as well as control of the pathogenic B cells (see figure C below), by DSG3-CAART.

In this model, DSG3-CAART also demonstrated dose-related activity, particularly in regard to reduction of serum autoantibodies, epithelial-bound autoantibodies (not shown in Figures) and DSG3-CAART engraftment, suggesting that higher DSG3-CAART doses may promote engraftment (see Figures D and E).

We believe these results show the functional activity of DSG3-CAART in the presence of soluble antibody.

Histology showing DSG3 CAAR maintaining normal epithelial cell structure in treated animals.

OD450 is a proxy measure for anti-serum DSG3antibodies in the blood.

* indicates statistically significant reduction in DSG3 serum antibody level in DSG3-CAART treated mice.

P value is < 0.05.

*** indicates statistically significant increase in DSG3 serum antibody level in the negative control CAR treated group.

P value is < 0.001.

Total flux is a quantitative measure of cell bioluminescence, which approximates cell activity in this assay.

OD450 is a proxy measure for the level serum anti-DSG3 antibodies in the blood.

Serum anti-DSG3 ELISA was performed on day 10 for all mice with remaining serum samples available, indicating that mice treated with the 3x10 7 and 1x10 7 DSG3-CAART dose effectively reduced serum anti-DSG3 IgG production compared to mice treated with NTD T-cells or the 3x10 6 DSG3-CAART dose.** indicates statistically significant reduction in DSG3 serum antibody level in DSG3-CAART treated mice.

P value is < 0.01.

* indicates statistically significant increase in DSG3 serum antibody level in the negative control CAR treated group.

P value is < 0.05.

ns indicates a non-significant difference.

Quantification by flow cytometry of CD3-positive T-cells in peripheral blood on day 10 and 17 is shown.

The data support dose-related DSG3-CAART engraftment based on increased CD3+ cells with increased DSG3-CAART dose.

Evaluation of DSG3-CAART in an active immune model.

An exploratory active immune mouse model for PV was developed to better represent the human phenotype in autoimmune disease.

This model involved generating anti-DSG3 B cells in a mouse without DSG3 by repeated immunization with human DSG3.

Splenocytes containing anti-DSG3 B cells from the immunized mouse were transferred into an immunodeficient mouse to generate the PV phenotype.

These mice produced DSG3 antibodies against multiple extracellular domains of the DSG3 antigen, including EC5, at physiologic levels comparable to those observed in PV patients.

Treatment with DSG3 EC1-4 CAAR T cells, in the absence of preconditioning, effectively lowered serum DSG3 antibody levels by ELISA, reduced antibodies against relevant DSG3 domains by epitope mapping and reduced blistering by histology.

These mice retained autoantibodies targeting the DSG3 EC5 region, though the mice did not show clinical manifestations of PV.

See figure F below for a schematic representation of the experiment.

Schematic representation of the PV active immune model.

A DSG3 knockout mouse is immunized with DSG3 EC1-5.

The knockout mouse develops antibodies against DSG3 across all EC domains.

The splenocytes from the knockout mouse are transferred to an immunodeficient mouse where the DSG3 antibodies cause a clinical phenotype consistent with PV.

Those mice are then treated with DSG3-CAART (EC1-4 domains only).

Clinical Development Plan

As such, there remains not only an unmet medical need in PV, but also a need for safer therapies that can provide a reliable, durable, and complete remission without long-term immunosuppression.

Preclinical & Clinical Development Plan

A variety of in vitro and in vivo studies were conducted to evaluate DSG3-CAART from a preclinical activity and toxicity perspective and to support the IND for DSG3-CAART.

The FDA cleared our IND for a Phase 1 trial of DSG3-CAART in September 2019.

2 unchanged sentences

The DesCAARTes TM trial is an open-label trial to assess the safety and tolerability of various dosing regimens of DSG3-CAART in the treatment of subjects with active mPV.

DSG3-CAART is administered by intravenous infusion, using a fractionated-dose infusion scheme of escalating numbers of DSG3-CAART cells for the initial cohorts in the first phase.

This dosing scheme was designed to reduce the potential risks associated with acute infusion-

related toxicities while preserving potential benefit for subjects by allowing a total infused dose that we believe is large enough to be potentially therapeutic based on prior CAR T trials.

We expect that the Phase 1 trial will have three parts:

We expect that the Phase 1 trial will have three parts and a combination sub-study:

Fractionated dose escalation

Combination Sub-study:

Fractionated dose administered following pre-treatment with IVIG and cyclophosphamide

Fractionation reduction at the selected dose

Expansion phase at the selected dose and administration scheme

In Part A, the split dose uses dose fractionation to accommodate a low number of cells in the first infusion while still advancing the dose within the cohort up towards and spanning the range of cell doses that have been therapeutic in past gene-engineered T cell therapy trials.

In Part A, the split dose uses dose fractionation to accommodate a low number of cells in the first infusion while still advancing the dose within the cohort up to 7.5 billion DSG3-CAART cells.

In the combination sub-study, a dose of 2.5 billion DSG3-CAART cells is administered in combination with IVIG and cyclophosphamide pre-treatment.

In Part B, the dose selected from Part A will be delivered in a decreased number of dose fractionations to determine the dose fractionation strategy.

5 unchanged sentences

The primary objective of the trial is to evaluate the safety of DSG3-CAART cells, and secondary objectives include evaluating the initial signs of target engagement.

We believe the risk of cytokine release syndrome, or CRS, a potentially life-threatening toxicity that has been observed after treatment with some types of immunotherapy, may be reduced with our CAAR T cells, due to its correlation with target cell burdens.

In the context of treating cancer, the target cell population consists of all B cells (healthy and cancerous), whereas our CAAR T cells only target the small subset of disease-causing reactive B cell population.

While the possibility of cytokine release in a clinical trial resulting from strongly activating soluble antibody cannot be ruled out, to date we have not observed any evidence of it in preclinical studies.

The primary endpoint of the study is the incidence of adverse events within three months of DSG3-CAART infusion, including dose limiting toxicity defined as occurring within 28 days of infusion.

The FDA has requested, and we have agreed, that we will share data from cohort A to inform a discussion on the optimal design of cohort C.

According to FDA guidance, the submission of cohort A data is not gating to planned enrollment in cohort B and the FDA plans to provide feedback, if any, in a timely manner.

In May 2021, we reported the acute safety data from the first cohort of patients in the DesCAARTes TM trial, where no DLTs had been observed eight days after infusion in the first three patients who received DSG3-CAART.

DSG3-CAART was detected at low levels in both patients who had been evaluated and completed the DLT period at that time.

In August 2021, with FDA clearance, a protocol amendment was implemented in the DesCAARTes TM trial to allow a minimum dosing interval of seven days between patients within a cohort, versus 14 days.

In August 2021, we also reported the 28-day safety data from the second cohort of patients in the DesCAARTes TM trial , where no DLTs had been observed 28 days after infusion in the second cohort of three patients who received DSG3-CAART.

DSG3-CAART persistence was observed via quantitative polymerase chain reaction in peripheral blood samples of all three patients in the second dose cohort during the 28 days following infusion.

In November 2021, we reported that dose dependent increases in DSG3-CAART persistence in the third cohort relative to the first two low dose cohorts throughout the 28 days following infusion have been observed, as well as the continued absence of any DLTs or clinically relevant adverse events for the first three cohorts.

In December 2021, we reported biologic activity data from the six patients in the two lowest dose cohorts in the DesCAARTes TM trial with three to six months of follow-up evaluation.

Parameters being used in the trial to evaluate potential biologic activity include persistence of DSG3-CAART, change in level of DSG3 autoantibodies, change in mPV therapy or need for new systemic rescue therapy, and change in disease activity (e.g., assessed by Pemphigus Disease Area Index, or PDAI, and Oral Disease Severity Score, or ODSS).

Top-line data on biologic activity among the first six participants in the lowest dose cohorts demonstrated no clear indications of biologic activity at doses that represent less than 2% of the current planned maximum dose in the trial.

In the cohort receiving the 20 million DSG3-

CAART cell dose, two patients worsened, and one patient improved .

As permitted by protocol, the patient that improved was enrolled due to worsening symptoms despite receiving two different systemic therapies within nine months of DSG3-CAART infusion.

The systemic therapies may have impacted clinical scores and DSG3 levels, both of which improved between screening and infusion .

In the 100 million dose cohort, one patient had stable disease, one patient was stable then had increasing disease activity, and one patient worsened.

Furthermore, we announced the continued absence of any DLTs or clinically relevant adverse events.

As reported in November 2021, a dose-dependent increase in DSG3-CAART persistence in the 500 million cell dose cohort was observed relative to the two lowest dose cohorts throughout 28 days post-infusion, and patients in the fourth cohort are receiving 2.5 billion DSG3-CAART cells, which is 25 and 125-fold greater than the two dose cohorts reported at the end of 2021.

In the December 2021 announcement, we also reported that, based on the safety profile observed to date and FDA communications dating to early 2021, additional cohorts are planned to evaluate increased doses, consolidated fractions, and, subject to a protocol amendment, an enhanced manufacturing process which aims to amplify the already present cell subtypes in the product in order to potentially improve product potency and trafficking to tissue where the target B cells reside.

The additional fifth cohort will receive between 5.0-7.5 billion DSG3-CAART cells with a more consolidated fractionated infusion dosing regimen including only two fractions.

In February 2022, FDA cleared our protocol amendment regarding the planned enhanced manufacturing process.

In March 2022, we disclosed 28-day safety data from the fourth cohort of patients in the DesCAARTes TM trial , where no DLTs had been observed 28 days after infusion in the three patients who received DSG3-CAART at the 2.5 billion cell dose level.

In addition, we disclosed that we are currently enrolling patients for the fifth cohort, and expect to announce 28-day safety data for the fifth cohort at a scientific meeting in mid-2022, assuming no DLTs are observed during such cohort, that enrollment is uninterrupted and no there are no delays due to COVID-19 resurgence.

We also currently intend to announce serious adverse events, if any, if they materially change timelines or the trial design.

In December 2021, we reported top-line biologic activity data for the first two low dose cohorts, where no clear evidence of biologic activity was observed at doses that represented less than 2% of the current planned maximum dose in the trial, as well as the continued absence of any dose-limited toxicities, or DLTs, or clinically relevant adverse events.

Furthermore, we announced the addition of a planned fifth cohort to receive a higher dose with a more consolidated dosing regimen.

In May 2022, abstracts for our posters presented on May 17, 2022 at the American Society of Gene & Cell Therapy 25th Annual Meeting (ASGCT) were made available publicly, which summarized clinical and translational data from the first three cohorts in the DesCAARTes TM trial where we reported no DLTs, serious adverse events or clinically relevant adverse events within three months of DSG3-CAART infusion.

The observed dose-dependent increase in persistence indicated that DSG3-CAART cells were not eliminated by soluble anti-DSG3 antibodies.

Peak persistence in cohort A4 was at the lower end of the range observed with CAR T therapy in B cell cancers;

however, the range of persistence observed with CD19-CART therapy in oncology has not been confirmed to be necessary or sufficient for clinical response in patients with mPV.

In August 2022, we announced that two additional dose cohorts are planned after cohort A5:

A6m (multi-dose regimen at 10 to 15 billion cells) and a combination cohort (2.5 billion cells in addition to patient pre-treatment with intravenous immunoglobulin (IVIG) and cyclophosphamide).

We also announced that the A5e cohort (enhanced manufacturing process at 5.0 to 7.5 billion cells) was no longer planned to occur immediately after cohort A5.

In September 2022, we presented updated clinical and translational data through six months of follow-up in cohorts A1 through A4 as well as 28-day safety data and DSG3-CAART persistence data through day 29 for cohorts A1 through A5 from the DesCAARTes TM trial at the 31st European Academy of Dermatology and Venereology (EADV) Congress.

In October 2022, we presented additional clinical and translational data on those cohorts at the 29th European Society of Gene and Cell Therapy (ESGCT) Congress.

Additionally, we have disclosed

that no DLTs were observed through cohort A5, and that no clear trends in antibody levels or disease activity reduction were observed through cohort A5, though one subject in cohort A4 had no disease activity by three months post-infusion while reducing steroid usage during that period, an antibody titer that dropped more than 20% by three months post-infusion, and was the only patient in the first four cohorts that had detectable DSG3-CAART persistence at the three month time point following initial DSG3-CAART infusion.

Based on the data observed from these cohorts, we announced that the combination sub-study would be prioritized to follow cohort A5.

DSG3/1-CAART for mcPV

Scientific and Commercial Assessment

Our next PV product candidate, DSG3/1-CAART, is being designed to target DSG3 and/or DSG1 autoantibodies on pathogenic B cells that cause mcPV.

Disease Background

Our next PV product candidate, DSG3/1-CAART, is being designed to target DSG3 and/or DSG1 autoreactive B cell receptors on pathogenic B cells that cause mcPV.

mcPV is the most severe and most common subtype of PV and affects approximately 75% of PV patients.

1 unchanged sentence

Similar to mPV, mcPV is typically treated with immune suppression, which has a high rate of relapse and potential for hospitalizations and fatal infections.

Epitope Mapping

DSG1 consists of five EC domains, with all known pathogenic epitopes occurring in the DSG1 EC1-4 domains.

Similar to development of DSG3-CAART, we tested different combinations of DSG1 ECs for expression in primary human T cells using DSG1 fragments as the DSG1 EC domains.

Given prior development of DSG3 CAAR, we leveraged those findings in the design of our DSG1 CAAR.

CAAR Construct / Design

We also tested multiple combinations of EC domains of DSG1 CAAR administered alone and in combination with the DSG3 EC1-4 CAAR to evaluate for cell-surface expression of the CAAR along with the potency and breadth of target cell killing.

In this setting, the DSG1 EC1-4 CAAR showed robust and specific cytotoxicity towards all known pathogenic epitopes.

In Vitro Studies

CAAR development for mcPV, based on the targeting of DSG3- and/or DSG1-specific B cells, has shown promising preclinical results.

1 unchanged sentence

In addition, we observed that with a 1:1 mixture of DSG3 and DSG1 CAAR T cells had killing capabilities without synergistic or antagonistic effect.

In Vivo Studies

The activity and toxicity of DSG3 and DSG1-CAAR T cells was evaluated using human skin xenografts in comparison with anti-CART19 cells, which are known from human clinical trials not to cause direct skin toxicity.

A 1:1 mixture of DSG3 and DSG1 CAAR T cells did not show off-target toxicity in vivo.

Development Plan

From a regulatory and clinical trial design perspective, we anticipate that many of the elements incorporated into the planned DesCAARTes TM trial will carry over to DSG3/1-CAART.

We plan to evaluate the initial cohorts of patients from the planned DesCAARTes TM trial for safety and evidence of target engagement prior to proceeding with an IND submission for DSG3/1-CAART.

Preclinical & Clinical Development Plan

From a regulatory and clinical trial design perspective, we anticipate that many of the elements incorporated into the DesCAARTes TM trial will carry over to DSG3/1-CAART, including trial design features as well as site selection.

We believe that, because mcPV is the most prevalent subset of PV and the patients are generally followed by the same subspecialists, it will allow for a wider patient pool eligible for a clinical trial.

We anticipate the DSG3/1-CAART clinical trial design will have a significant amount of overlap with the DSG3-CAART trial design, but it will be informed by clinical data from the early cohorts in the DesCAARTes TM trial.

We further anticipate being able to use the same centers from the DesCAARTes TM trial to enroll patients for the DSG3/1-CAART clinical trials.

We are currently evaluating advanced manufacturing technologies that would potentially allow us to administer DSG3/1-CAART as a single product rather than requiring separate administration.

The size of the DSG3/1 product candidate will likely require us to incorporate additional technologies to accommodate the size of the final CAAR construct.

An evaluation of potential technologies to achieve this objective is ongoing.

Upon completing the evaluation of these manufacturing technologies, we expect to conduct additional in vitro and in vivo studies using the combined product.

While a product that administers a DSG3 CAAR and DSG1 CAAR as two separate products may be feasible, we believe that there would be significant advantages to developing a combined product from a regulatory and commercial perspective.

MuSK-CAART for MuSK Myasthenia Gravis

Scientific, Clinical and Commercial Assessment

Disease Background

MG is an autoimmune disease induced by autoantibodies targeting the neuromuscular junction, or NMJ, which can lead to life-threatening muscle weakness.

8 unchanged sentences

Corticosteroids are tapered to the extent possible to prevent disease relapse, though many remain dependent on corticosteroid despite concomitant treatment with immunosuppressive medications.

In the acute setting, plas ma exchange or intravenous immunoglobulin may be used to address severe disease.

In the acute setting, plasma exchange or intravenous immunoglobulin may be used to address severe disease.

Rituximab is often considered as a second-line therapeutic option in patients with an inadequate response to initial immunosuppressive medications.

Importantly, complement is not thought to be meaningfully implicated in the pathophysiology of MuSK MG, and complement inhibitors are not indicated for treatment of disease.

Epitope Mapping

The MuSK protein has a similar structure and size as compared to DSG3.

MuSK contains four extracellular domains, as shown below.

Figure illustrating the domains of the wild-type MuSK protein.

Studies conducted in patients with MuSK MG have revealed that the autoantibodies may be against epitopes located in each of the extracellular domains for MuSK.

CAAR Construct and Design

With an understanding that pathogenic autoantibody epitopes may target any domain of MuSK, multiple MuSK CAAR candidates have been engineered that incorporate all extracellular domains.

Each CAAR construct is being or will be tested in preliminary in vitro and in vivo experiments.

In Vitro Studies, In Vivo Studies and Development Plan

Data from our initial in vitro and in vivo studies of MuSK-CAART was presented at the American Academy of Neurology’s Science Highlights Virtual Platform in May 2020.

The efficacy and safety of MuSK CAAR T cells were investigated using in vitro cytotoxicity assays, in vitro screens for off-target toxicity and a mouse model to evaluate the efficacy of human MuSK CAAR T cells against MuSK antibody expressing B cells in vivo .

In preclinical studies, MuSK CAAR T cells containing the native MuSK extracellular domain demonstrated in vitro cytotoxicity towards a panel of B cells expressing anti-MuSK antibodies specific for different extracellular regions of the MuSK protein, but no observed cytotoxicity when anti-MuSK antibodies are not expressed (figure below).

Additionally, MuSK CAAR T cells did not demonstrate cytotoxicity toward cells expressing LRP4, which is a different protein in the neuromuscular junction that can bind with naturally occurring MuSK in certain configurations.

Figure illustrating that MuSK-CAART, which contains the native MuSK extracellular domain, demonstrated selective and specific in vitro cytotoxicity towards a B cell line expressing anti-MuSK antibodies targeting different MuSK epitopes across multiple domains of the native MuSK protein.

The specific lysis increases directly with increasing effector to target ratios for MuSK-CAART.

As illustrated in the figure below, in an in vivo mouse model, MuSK CAAR T cells, but not control CAAR T cells, showed biological activity by blocking the growth of B cell lines expressing an anti-MuSK antibody.

Figure illustrating MuSK CAAR T cells are able to recognize and suppress anti-MuSK target cells in a murine model.

The target cells express both CD19 and anti-MuSK B cell receptors, and CART19 is used as a positive control in this experimental system.

Clinical Development Plan

Based in part on these preclinical results, IND-enabling studies were completed for the MuSK-CAART product candidate.

Preclinical & Clinical Development Plan

Data from the in vitro and in vivo studies used to support the IND for MuSK-CAART were recently published in Nature Biote chnology, which showed preclinical data demonstrating that MuSK-CAART had similar efficacy as CD19-CAR T cells for depletion of MuSK-specific B cells and retained cytolytic activity in the presence of soluble anti-MuSK antibodies.

These data contributed to the Company’s IND application for the recently initiated Phase 1 MusCAARTes clinical study of MuSK-CAART (Oh, S., Mao, X., Manfredo-Vieira, S.

Precision targeting of autoantigen-specific B cells in muscle-specific tyrosine kinase myasthenia gravis with chimeric autoantibody receptor T cells.

Nat Biotechnol (2023)).

In the fourth quarter of 2021, we submitted an IND to the FDA for MuSK-CAART, which became effective in January 2022.

In February 2022, MuSK-CAART received fast track designation from the FDA for improving activities of daily living and muscle strength in patients with MuSK antibody-positive myasthenia gravis.

We plan to initiate the MusCAARTes TM trial in 2022.

The MusCAARTes TM trial is an open-label trial to assess the safety and tolerability of various dosing regimens of MuSK-CAART in the treatment of subjects with active MuSK MG.

We initiated the MusCAARTesTM trial in November 2022.

The MusCAARTesTM trial is an open-label trial to assess the safety and tolerability of various dosing regimens of MuSK-CAART in the treatment of subjects with active MuSK MG.

MuSK-CAART is administered by intravenous infusion, using a single infusion of MuSK-CAART cells at a starting dose informed by initial clinical data from the DesCAARTes TM trial and prior CAR T trials.

2 unchanged sentences

Expansion phase at the selected dose

In Part A, the dose will initially begin at 100 million MuSK-CAART cells, and plans to escalate up to 7.5 billion MuSK-CAART cells in four dose cohorts.

Cohort A2 is planned at 500 million MuSK-CAART cells, cohort A3 is planned at 2.5 billion MuSK-CAART cells and cohort A4 is planned at 5.0 to 7.5 billion MuSK-CAART cells.

We plan to enroll approximately 12 subjects in Part A, subject to observation of DLTs, with at least two patients planned per cohort and a total of 6 subjects to be dosed at the selected dose for Part A.

In Part A, the dose will initially begin at 500 million MuSK-CAART cells with plans to escalate up to 7.5 billion MuSK-CAART cells in three dose cohorts.

Cohort A2 is planned at 2.5 billion MuSK-CAART cells, cohort A3 is planned at 7.5 billion MuSK-CAART cells and cohort A4 is planned at 2.5 billion MuSK-CAART cells in combination with cyclophosphamide pre-treatment.

Cohorts A3 and A4 will be enrolled concurrently, subject to cohort A2 being well-tolerated with a preference for enrollment into A4.

We plan to enroll at least two patients per cohort and plan to dose a total of 6 subjects at the selected dose for Part A.

In Part B, subjects will be enrolled at the dose determined in Part A to generate additional safety and outcome data to support the rationale for and design of future clinical trials.

1 unchanged sentence

Patients are eligible to be enrolled if they have a confirmed diagnosis of MuSK MG based on a positive anti-MuSK antibody test;

myasthenia gravis severity Class I-IVa, a Myasthenia Gravis Composite Score ≥4 and a history of a negative anti-AChR antibody test.

The primary objective of the trial is to evaluate the safety of MuSK-CAART cells, and a key secondary objective is to evaluate the initial signs of biologic activity.

1 unchanged sentence

PLA2R-CAART for PLA2R MN

Scientific and Commercial Assessment

Disease Background

Primary MN is an immune-mediated kidney disease caused by autoantibodies against phospholipase A2 receptor (PLA2R), a single-pass transmembrane protein expressed in the glomerulus of the kidney.

5 unchanged sentences

By selectively depleting the PLA2R autoantibody expressing B cells that cause disease, we believe PLA2R-CAART could provide a potentially safe, effective, and durable therapeutic option for patients with PLA2R-associated MN.

Epitope Mapping

PLA2R is a single-pass transmembrane protein with distinct immunogenic regions.

The protein consists of a cysteine rich domain, a fibronectin type II domain, and eight C-type lectin domains, as depicted below.

Figure illustrating the domains of the wild-type PLA2R protein.

Studies have demonstrated that the cysteine rich domain is the immunodominant epitope in PLA2R MN, and autoantibody reactivity to C-type lectin domains one and seven portend a worse prognosis.

CAAR Construct / Design

Based on the well-defined epitopes of PLA2R, multiple PLA2R CAARs have been designed to incorporate key antigenic regions and to evaluate epitope conformation.

The engineering of preliminary PLA2R CAAR constructs is being led by Dr.

Payne, one of our scientific co-founders.

In Vitro Studies

Preclinical & Clinical Development Plan

As presented at the American Society of Nephrology Kidney Week in the fourth quarter of 2021, in vitro cytotoxicity and patient IgG adsorption assays have established the preliminary activity of PLA2R-CAART cells for antigen-specific B cell depletion in PLA2R MN.

Multiple PLA2R-CAART cells caused specific lysis of anti-PLA2R hybridomas, and PLA2R CAARS adsorbed the majority (>95%) of anti-PLA2R IgG autoantibodies in MN sera.

As depicted below, PLA2R-CAART cytotoxicity was preserved over time with physiologic levels of PLA2R MN plasma IgG.

PLA2R-CAART cytotoxicity was preserved over time with physiologic levels of PLA2R MN plasma IgG.

Though PLA2R MN IgG inhibited PLA2R-CAART cytotoxicity initially, the cytotoxicity increased with time, likely due to CAART cell proliferation and/or new CAAR synthesis.

Figure illustrating PLA2R-CAART cells were able to maintain cytotoxicity against anti-PLA2R hybridomas in the presence of physiologic concentrations of PLA2R MN plasma IgG.

Though PLA2R MN IgG had some short-term inhibition of PLA2R-CAART cells, cytotoxicity increased with time, likely due to CAART cell proliferation and/or new CAAR synthesis.

Cells expressing desmocollin-1 were used as a negative control.

To evaluate for preclinical signals of safety, high throughput screening for off-target PLA2R CAAR interactions was performed, and no off-target binding interactions were identified.

Development Plan

We anticipate that many of the learnings from our more advanced CAART programs will provide expertise in developing a clinical and regulatory strategy for PLA2R-CAART, and we plan to employ therapeutic area-specific strategies, such as the fact that PLA2R antibody levels correlate with proteinuria, a commonly used surrogate endpoint in clinical trials.

We conducted a pre-IND interaction with the FDA to discuss the development path for PLA2R-CAART in the fourth quarter of 2021.

FVIII-CAART for Hemophilia A with Factor VIII Alloantibodies

While our CABA™ platform is primarily directed towards the treatment of B cell-mediated autoimmune diseases, we believe the approach may be applicable in other instances where B cell antibody production is implicated.

Specifically, we have identified an opportunity to apply the CABA™ platform to develop potential CAAR adjunctive therapies in cases where the immune system has or produces antibodies against potential therapies, which is known as an alloimmune response.

These alloantibodies can prevent a particular therapy from being delivered effectively because the therapy is degraded by the immune response due to alloantibody binding.

We believe our approach has the potential to address the alloantibody response by specifically ablating the B cells responsible for producing the alloantibodies through a similar mechanism seen in autoimmune disease.

With the alloantibody producing cells ablated, the treatment could then be provided.

Scientific, Clinical and Commercial Assessment

Hemophilia A is an X-linked bleeding disorder caused by mutations in the FVIII gene resulting in a deficiency of functional FVIII, a critical factor in blood coagulation.

It affects about 1:5,000 male births.

Severe Hemophilia A, where FVIII levels are less than 1% of normal, accounts for about 60% of all cases and is characterized by frequent spontaneous bleeds.

Currently, Hemophilia A is treated with FVIII replacement via intravenous administration.

The main complication of FVIII replacement therapy is that 20% to 30% of patients with severe disease develop neutralizing alloantibodies against the FVIII protein.

These alloantibodies decrease the levels of FVIII and at high titers, render attempts to replace or stimulate the production of FVIII ineffective.

The risk of alloantibody development for patients with severe Hemophilia A is highest during their initial FVIII exposures.

The standard treatment to reverse alloantibody formation consists of repeated high-dose infusions of FVIII, which has limited efficacy, a high cost and is difficult to titrate to an appropriate therapeutic level for the patient.

We believe FVIII-CAART could be effective in addressing patients with Hemophilia A who have developed FVIII antibodies that require repeated, high-dose administrations of FVIII.

Epitope Mapping

The following image depicts FVIII, which is a large glycoprotein consisting of six domains that interact with each other to form the full complex.

Studies conducted in patients with Hemophilia A have revealed that acquired FVIII alloantibodies following exogenous FVIII administration are typically directed against A2, C1 and C2 domains of FVIII.

CAAR Construct and Design

Preliminary FVIII CAAR and CAAR-like constructs have been engineered that target key parts, but not all, of the FVIII domains.

Milone, one of our scientific co-founders, has led the development of multiple constructs to evaluate the impact on safety and potency.

Development Plan

We are conducting additional studies to optimize our FVIII-CAART development.

The focus of these ongoing studies is to fully characterize the safety and potency of candidate constructs in vitro and in vivo .

Given the size of the FVIII protein, this may require us to utilize alternate gene transfer technology to accommodate the size of the final CAAR construct.

Proof of concept studies targeting this objective are ongoing.

Manufacturing

3 unchanged sentences

We believe partnering with proven and reputable manufacturing partners will allow us to efficiently deploy financial and personnel resources.

Stage 1 of this plan is in place and utilizes the deep expertise in cell and vector manufacturing from our partners at Children’s Hospital of Philadelphia, or CHOP, and Penn.

This included early development work, support of the DSG3-CAART IND, and cell and vector product manufacturing for our DesCAARTes TM trial.

6 unchanged sentences

We believe this allows us to make one change in our supply partners during an early period of clinical development to facilitate in vitro comparability testing and clinical validation, prior to controlled clinical studies.

As part of this strategy, in January 2021, we initiated a collaboration with WuXi to serve as our cell processing manufacturing partner for our planned MusCAARTes TM trial.

Engineering runs confirming successful technology transfer of our manufacturing process have been completed in preparation for the planned MusCAARTes TM trial initiation in 2022.

As part of this strategy, in January 2021, we initiated a collaboration with WuXi to serve as our cell processing manufacturing partner for our MusCAARTes TM trial.

Engineering runs confirming successful technology transfer of our manufacturing process have been completed in preparation for the MusCAARTes TM trial.

In December 2021, we entered into a license and supply agreement with Oxford Biomedica to supply lentiviral vector for the clinical and commercial development of our DSG3-CAART candidate.

By licensing the cell manufacturing process used for our planned Phase 1 DSG3-CAART first-in-human study from Penn.

By licensing the cell manufacturing process used for our Phase 1 DSG3-CAART first-in-human study from Penn.

This is allowing us the time to understand the process used in order to reduce the chance of changes that may impact comparability.

In addition to Stage 2, and contingent on sufficient clinical evidence from our planned DesCAARTes TM trial, we are further planning to pursue Stage 3 in manufacturing supply.

During Stage 3, we plan to lease, build, qualify and run our own manufacturing facility.

In addition to Stage 2, and contingent on sufficient clinical evidence from our planned clinical trials, we are further planning to pursue Stage 3 in manufacturing supply.

During Stage 3, we plan to lease, build, qualify and run our own manufacturing facility, or establish a strategic partnership to leverage the partner’s manufacturing expertise.

We believe this additional stage will enable full control of continuous improvement, product development and commercial supply for products arising from our CABA platform.

Our Chief Executive Officer and our President, Science and Technology have both, in prior roles, built and led organizations that have constructed and commissioned cell therapy facilities.

Vector Manufacturing

The lentiviral vector that we plan to use in the initial subjects in our DesCAARTes TM trial was manufactured at CHOP.

We have also reserved multiple vector manufacturing slots at Penn and CHOP, which we may use in our DSG3-CAART or subsequent clinical trials.

The lentiviral vector that we have used in the initial subjects in our DesCAARTes TM trial was manufactured at CHOP.

The lentiviral vector that we plan to use in the initial subjects in our MusCAARTes TM trial, and for CABA-201, was manufactured at Penn.

We have reserved additional vector manufacturing slots at Penn and CHOP, which we may use in our subsequent clinical trials.

In parallel, we have engaged in development work with multiple CMOs to secure production slots for vector which may be used in our DSG3-CAART or subsequent clinical trials.

2 unchanged sentences

Cell Manufacturing

We have entered into a collaboration with the Clinical Cell and Vaccine Production Facility, or CVPF, at Penn, to provide focused scientific, technical and regulatory support for CAAR T cell manufacture.

CVPF is accredited by the Foundation for the Accreditation of Cellular Therapy and is capable of and experienced at supporting manufacture for early-phase clinical trials of novel cell therapy products in first-in-man clinical trials.

We expect to rely upon CVPF to provide initial Phase 1 clinical trial drug supply for DSG3-CAART.

Penn’s manufacturing process for DSG3-

CAART is directly related to the process developed at Penn for early clinical trials of CART19, which subsequently became known commercially as Kymriah.

We expect to rely upon CVPF to provide initial Phase 1 clinical trial drug supply for CABA-201 and DSG3-CAART.

Penn’s manufacturing process for DSG3-CAART is directly related to the process developed at Penn for early clinical trials of CART19, which subsequently became known commercially as Kymriah.

The process was later transferred to Novartis Pharmaceuticals Corporation and further modified for the Kymriah program.

2 unchanged sentences

We believe the use of contract manufacturing for our pipeline programs will be cost-effective and allow us to rapidly prepare for clinical trials in accordance with our development plans.

In preparation for this transition, we have engaged multiple third-party contractors to manufacture clinical grade viral vector used to deliver the applicable CAAR gene into the T cells.

In preparation for this transition, we have engaged multiple third-party contractors to manufacture clinical grade viral vector used to deliver the applicable CAAR or CAR gene into the T cells.

We have also initiated development work with certain contractors for cGMP and commercial vector production.

We expect third-party manufacturers will be capable of providing and processing sufficient quantities of our product candidates to meet anticipated clinical trial demands and commercial need.

In January 2021, we initiated a collaboration with WuXi to serve as our cell processing manufacturing partner for our planned MusCAARTes TM trial.

Once we have sufficient clinical data from subjects in our DSG3-CAART study, we intend to begin the process of engineering and then establishing our own commercial scale GMP-compliant manufacturing facility.

We believe this will allow us to enhance supply chain control, increase supply capacity and help ensure clinical and commercial demand for our pipeline programs is met in the event that DSG3-CAART receives marketing approval.

Informed by our experience in building cell therapy facilities and creating supply chains, we plan to develop a robust supply chain with alternative sources to maintain continuous supply.

In parallel with these activities, we are evaluating and executing proof-of-concept studies to test advanced manufacturing and automation technologies to continuously improve the manufacturing process and meet commercial and scalability targets.

In January 2021, we initiated a collaboration with WuXi to serve as our cell processing manufacturing partner for our ongoing MusCAARTes TM trial, which collaboration was amended in August 2022.

Commercialization

Our aim is to become a fully integrated cellular therapy company in order to improve the lives of patients with B cell-mediated autoimmune diseases.

We have designed a strategic approach to move forward with our lead product candidate, DSG3-CAART, while at the same time having a number of product candidates in development.

The product candidates from our CABA™ platform address clinical indications where there is a compelling opportunity to improve clinical outcomes in comparison with the current standard of care in an easily identified patient population.

Our initial product candidates are focused on rare disease populations where we believe there is potential to commercialize independently.

This is due to a concentration of treatment paradigms and limited but easily identified patient populations.

Our plan is to focus commercialization and launch efforts initially in the United States, and eventually in the European Union and Asia-Pacific geographies.

Our aim is to become a fully integrated cellular therapy company focused on improving the lives of patients with autoimmune diseases.

The product candidates from our CABA platform are designed to address autoimmune indications where there is a compelling opportunity to improve clinical outcomes in comparison with the current standard of care.

Our lead CARTA product candidate, CABA-201, is under development for autoimmune diseases with serious unmet medical need.

Based on the differentiated expertise of Cabaletta’s team members and our years of experience in conducting cell therapy clinical trials in autoimmunity, we are focused on being the first company to launch a cell therapy product for patients with autoimmune diseases, while continuing to innovate on next-generation approaches and differentiation strategies to deliver an optimal product candidate profile.

Our CAART product candidates are focused on rare disease populations where we believe there is potential to commercialize independently due to the concentration of treatment paradigms and limited but easily identified patient populations.

We aim to achieve full manufacturing independence through establishment of our own manufacturing facilities and/or through a strategic partnership.

Our development and commercialization efforts will focus initially on the United States, with expansion to the European Union and Asia-Pacific geographies, potentially with the support of strategic partners.

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong focus on intellectual property.

1 unchanged sentence

Any therapeutic candidates we successfully develop and commercialize will compete with the existing standard of care as well as any novel therapies that may gain regulatory approval in the future.

There are multiple companies with marketed CAR T therapies for the treatment of hematologic cancers, including Novartis Pharmaceuticals Corporation, Gilead Sciences, Inc., Bristol Myers Squibb, Johnson and Johnson, Inc.

and Legend Biotech Corporation.

A subset of these companies along with other biopharmaceutical companies have announced CD19-targeting therapies in development for the treatment of autoimmune diseases.

There are also a number of companies with leading autoimmune franchises but without disclosed cell therapy platforms who may become competitors.

Existing treatment options for PV are limited.

3 unchanged sentences

Additionally, multiple biopharmaceutical companies have therapies in clinical development.

Competition in the MuSK MG autoimmune space is currently dominated by the current standard of care, rituximab.

Competition in the MuSK MG autoimmune space is currently dominated by the current

standard of care, rituximab.

A second approved approach to treating patients is IVIG, which is available through CSL Behring LLC, Grifols, S.A., and Mitsubishi Tanabe Pharma Corporation.

Additionally, multiple biopharmaceutical companies have therapies in clinical development.

Multiple therapies are approved or in development for the treatment of Hemophilia A patients who develop alloantibodies against FVIII.

Standard of care is typically immune tolerance induction, or ITI, therapy with higher doses of FVIII.

Available treatments for those who do not respond to ITI include anti-inhibitor coagulation complexes, recombinant factor VIIa, and bispecific factor IXa- and factor X-directed antibodies.

Companies who market products or are developing product candidates within these categories of medicine include Catalyst Pharmaceuticals, Inc., Novo Nordisk A/S, OPKO Health, Inc., Roche Holding AG , and Takeda Pharmaceutical Company.

We believe we are the first and only company developing CAAR T drug candidates for the treatment of B cell-mediated autoimmune diseases.

However, despite the significant differences in discovery, development and target populations between oncology and autoimmune targets, we recognize that companies with an investment and expertise in CAR T cell development for oncology indications could attempt to leverage their expertise into B cell-mediated autoimmune disease-affected populations.

We are aware of biotechnology companies that are exploring other methods of engineering T cells for the treatment of autoimmune conditions.

In addition, some biotechnology companies are engineering red blood cells to incorporate self-antigens with the goal of tolerizing the immune system to treat autoimmune and alloimmune conditions.

Within the CAR T field we recognize that a subset of companies with an investment and expertise in CAR T cell development for oncology indications have announced they intend to leverage their technology in autoimmune disease-affected populations.

We are aware of other pharmaceutical and biotechnology companies that are exploring CART-19 as well as other methods of engineering T cells, natural killer (NK) cells or bispecific antibodies for the treatment of autoimmune conditions.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do.

15 unchanged sentences

Any patents that we hold may be challenged, circumvented or invalidated by third parties.

As of March 1, 2022, our patent estate (all of which has been in-licensed) included one issued U.S.

patent, two granted foreign patents, nine pending U.S.

As of March 1, 2023, our patent estate (all of which has been in-licensed) included five issued U.S.

patents, two granted foreign patents, seven pending U.S.

patent applications, and 50 pending foreign patent applications.

Our Material Agreements—Amended and Restated License Agreement with the Trustees of the University of Penn sylvania and the Children’s Hospital of Philadelphia .”

With regard to our DSG3-CAART and DSG3/1-CAART product candidates, we have one issued U.S.

patent with claims directed to a genetically modified cell containing a chimeric autoantibody receptor containing an extracellular domain containing DSG3, DSG1 or fragments thereof, which is scheduled to expire in 2035, without taking a potential patent term extension into account.

We also have four pending U.S.

patent applications and counterpart patents granted in Europe and China, which are scheduled to expire in 2035, and patent applications pending in Canada, China and Europe.

See “—Our Material Agreements—IASO Agreement”

and “—Our Material Agreements—Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia.”

With regard to our CABA-201 product candidate, we have one pending U.S.

patent application and counterpart patent applications pending in Australia, Canada, China, Europe, Hong Kong and Japan, which are directed to a CD19 specific chimeric antigen receptor and a CD19-specific antibody binding site.

These patent applications, if issued, would be expected to expire in 2040.

This patent family is owned by IASO and is exclusively licensed to us in the field of the license.

With regard to our DSG3-CAART and DSG3/1-CAART product candidates, we have five issued U.S.

patents with claims directed to a CAAR containing an extracellular domain containing DSG3, DSG1 or fragments thereof, nucleic acids encoding the CAAR, genetically modified cells comprising the CAAR, and methods of treatment using the same.

These patents are scheduled to

expire between 2035 and 2037, without taking potential patent term extensions into account.

We also have one pending U.S.

patent application and counterpart patents granted in Europe and China, which are scheduled to expire in 2035, and patent applications pending in Canada, China, Europe and Hong Kong.

This patent family is owned by Penn and exclusively licensed to us in the field of the license.

With regard to our MuSK-CAAR T cell product candidate, we have one pending U.S.

patent application and counterpart patent applications pending in Australia, Canada, China, Europe, Israel, Japan, Korea, Mexico, New Zealand, and Russia, which if issued, would be expected to expire in 2039.

This patent family is owned by Penn and exclusively licensed to us in the field of the license.

patent application and counterpart patent applications pending in Australia, Canada, China, Europe, Hong Kong, Israel, Japan, Korea, Mexico and New Zealand, which if issued, would be expected to expire in 2039.

We have one pending international patent application filed under the patent cooperation treaty.

Any patents claiming priority to the international patent application would be expected to expire in 2042.

These patent families are owned by Penn and exclusively licensed to us in the field of the license.

With regard to our PLA2R-CAAR T cell product candidate, we have two pending U.S.

1 unchanged sentence

This patent family is owned by Penn and exclusively licensed to us in the field of the license.

With regard to our FVIII-CAAR T cell product candidate, we have one pending U.S.

patent application and counterpart patent applications pending in Australia, Canada, China, Europe, Japan, Hong Kong, Korea, Mexico, New Zealand, and Russia, which if issued, would be expected to expire in 2037.

This patent family is co-owned by Penn and CHOP and is exclusively licensed to us in the field of the license.

The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

13 unchanged sentences

In addition, we plan to rely on regulatory protection based on orphan drug exclusivities, data exclusivities, and market exclusivities.

See “—Government Regulation” for additional information.

See “—Government Regulation”

for additional information.

Our Material Agreements

Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia

In July 2019, we entered into an amended and restated license agreement, or the License Agreement, as further amended in May 2020 and October 2021, with Penn and CHOP, collectively the Institutions, pursuant to which we obtained (a) a non-exclusive, non-sublicensable, worldwide research license to make, have made and use products in two subfields of use, (b) effective as of October 2018, an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain patent rights of the Institution to make, use, sell, offer for sale and import products in the same two subfields of use, and (c) effective as of October 2018, a non-exclusive, worldwide, royalty-bearing license, with limited rights to sublicense, under certain of Penn’s know-how, which know-how satisfies certain criteria and is listed on a mutually agreed-to schedule, to make, have made, use, sell, offer for sale, import and have imported products in the same two subfields of use.

IASO Agreement

On October 7, 2022, we entered into an Exclusive License Agreement (the IASO Agreement) with IASO.

Pursuant to the IASO Agreement, we received an exclusive, worldwide license under certain IASO intellectual property to use a novel clinical-stage anti-CD19 binder to develop, manufacture, commercialize and otherwise exploit T cell products directed to CD19 for the purpose of diagnosis, prevention or treatment of any autoimmune or alloimmune indications in humans.

IASO has the right of first negotiation if we desire to grant a third party an exclusive license to develop, manufacture, commercialize or otherwise exploit the licensed products in the Greater China region.

Pursuant to the IASO Agreement, we and IASO have agreed, subject to certain exceptions, to refrain from engaging in certain competitive activities with respect to certain programs.

As partial consideration for the exclusive license, IASO received an upfront payment of $2.5 million.

IASO is also eligible to receive up to mid double digit millions in milestone payments based upon the achievement of specified pre-clinical, development and regulatory milestones, and up to an additional low triple digit millions in milestone payments based upon achievement of specified sales milestones, for a total consideration, inclusive of the upfront payment, of up to $162 million, along with tiered mid-single digit royalties on future net sales for licensed products that may result from the IASO Agreement.

We also may sublicense through multiple tiers the rights granted to it by IASO under the IASO Agreement at any time, however, we must pay IASO a low double-digit percentage of any revenue obtained from sublicenses or options to third parties, subject to certain customary exclusions.

The IASO Agreement will continue on a country-by-country, licensed product-by-licensed product basis until the expiration of the royalty term as identified in the IASO Agreement, unless earlier terminated.

We and IASO may terminate the IASO Agreement for a material, uncured breach or insolvency of the other party.

We may also terminate the IASO Agreement at will upon advance written notice and in the event IASO rejects the IASO Agreement due to bankruptcy-related matters.

IASO may also terminate the IASO Agreement if we fail to achieve certain specified diligence milestones in a timely manner and/or if we commence any patent challenges with respect to the patents and patent applications relating to the licensed sequence, in each case upon advance written notice .

Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia

Our rights are subject to the rights of the U.S.

4 unchanged sentences

In the event of an uncured, material breach, Penn may terminate the License Agreement upon 60 days written notice.

Penn maintains control of all filing, prosecution and maintenance of the Institutions’ patent rights licensed by us, and we are responsible for all ongoing patent costs during the term of the agreement.

Penn maintains control of all filing, prosecution and maintenance of the Institutions’

patent rights licensed by us, and we are responsible for all ongoing patent costs during the term of the agreement.

We also reimbursed Penn for its out-of-pocket expenses incurred prior to the effective date of the agreement with respect to the filing, prosecution and maintenance of the patent rights licensed by us.

1 unchanged sentence

Milone and Payne.

See “—Sponsored Research Agreements with the Trustees of the University of Pennsylvania.”

Under the License Agreement, we must use commercially reasonable efforts to develop and commercialize a product in each subfield.

1 unchanged sentence

We are required to pay certain milestone payments upon the achievement of specified clinical and commercial milestones.

Milestone payments are reduced by a certain percentage for the second product that achieves a milestone, by an additional percentage for the third product that achieves a milestone, and so on, for each subsequent product that achieves a milestone.

Milestone payments are reduced by a certain percentage for

the second product that achieves a milestone, by an additional percentage for the third product that achieves a milestone, and so on, for each subsequent product that achieves a milestone.

In the event that we are able to successfully develop and launch multiple products under the License Agreement, total milestone payments could be approximately $21.0 million.

7 unchanged sentences

Milone, or the Milone SRA, pursuant to which we agreed to sponsor certain research related to the development of (i) T cell based immunotherapies for autoimmune and alloimmune antibodies of pathologic significance and (ii) a clinical grade microfluidic device designed for single step selection and activation of T cells from blood samples to be conducted in Dr.

Milone’s laboratory at Penn.

Under the Milone SRA, Penn granted us a perpetual, irrevocable, non-transferable, non-exclusive license to use all intellectual property resulting from the research sponsored by us for internal research purposes.

In addition, Penn granted us an option to include, in exchange for a fee, any intellectual property resulting from the research sponsored by us that relates to CAAR T cell therapies for hemophilia and/or pemphigus within the

scope of the License Agreement.

Penn also granted us an option to negotiate a license to all other intellectual property resulting from the research sponsored by us.

In April 2021 and October 2021, the Milone SRA was amended to extend the term of the original research plan.

Unless earlier terminated, the Milone SRA will expire in November 2022.

The Milone SRA expired in November 2022.

In April 2018, we entered into a Sponsored Research Agreement, or SRA, with Penn for the laboratory of Dr.

Payne, or the Payne SRA, pursuant to which we agreed to sponsor certain research related to the development of T cell based immunotherapies for autoimmune and alloimmune antibodies of pathologic significance to be conducted in Dr.

Payne’s laboratory at Penn.

In May 2020, the Payne SRA was amended to include CAAR design and optimization efforts in three additional B cell-mediated autoimmune diseases.

1 unchanged sentence

In December 2021, we further amended the Payne SRA to extend the term and expand the workplan to include additional correlative studies related to the DesCAARTes TM trial.

Unless earlier terminated, the Payne SRA will expire in December 2024.

In December 2022, we signed a budget amendment for the Payne SRA.

Under the Payne SRA, Penn granted us a perpetual, irrevocable, non-transferable, non-exclusive license to use all intellectual property resulting from the research sponsored by us for internal research purposes.

1 unchanged sentence

Penn also granted us an option to negotiate a license to all other intellectual property resulting from the research sponsored by us.

Unless earlier terminated, the Payne SRA will expire in December 2024.

We have estimated the total cost of the two SRAs to be $12.5 million, which satisfies the $2.0 million annual obligation under the License Agreement.

As of December 31, 2021, $9.9 million of cost has been incurred pursuant to the Milone and Payne SRAs.

Drew Weissman

In December 2021, we entered into a SRA with Penn for the laboratory of Dr.

Drew Weissman, or the Weissman SRA.

Under the Weissman SRA, discovery-stage proof of concept studies for lipid nanoparticle mRNA for the delivery and/or enhancement of CAAR technology is being conducted.

Under the Weissman SRA, Penn granted us a non-transferable, non-exclusive license to use certain intellectual property for specific internal research purposes and further grants us the first option to negotiate to acquire, subject to agreement on commercial terms, an exclusive or non-exclusive worldwide license to certain patent rights for specific CAAR products developed under the Weissman SRA.

Unless earlier terminated, the Weissman SRA will expire in December 2023.

Pursuant to the Weissman SRA, we also entered into an Option Agreement with Penn, or the Weissman Option, which grants us the option to negotiate to acquire a non-exclusive worldwide license to certain patent rights in connection with the Weissman SRA.

The total cost of the two SRAs was $12.6 million, which satisfies the $2.0 million annual obligation under the License Agreement.

As of December 31, 2022, the activities under the Payne and Milone SRAs have been completed and the full cost has been incurred.

Master Translational Research Services Agreement with Penn

1 unchanged sentence

The Services Agreement will expire on the later of (i) October 19, 2021 or (ii) completion of the services for which we have engaged Penn under the Services Agreement.

Either party may terminate this agreement with or without cause upon a certain number of days’ prior written notice.

Either party may terminate this agreement with or without cause upon a certain number of days’

prior written notice.

The services encompassed by the Services Agreement are performed by different organizations at Penn pursuant to certain addenda to the Services Agreement, including the Center for Advanced Retinal and Ocular Therapeutics, or CAROT, Addendum, as amended in May 2020, and the CVPF Addendum.

3 unchanged sentences

In the event that certain materials owned by Penn are incorporated into a product developed for us, Penn has agreed to grant us a limited license to use those materials.

Further, Penn agreed to grant us an exclusive, paid-up, royalty-free, transferable, irrevocable, perpetual exclusive license to any deliverables produced under the CAROT Addendum, except with respect to certain technical information of Penn that is contained or

incorporated in the deliverables, to which Penn agreed to grant us a limited nonexclusive license.

However, any necessary technology transfer would be pursuant to the subscription and technology transfer agreement described above.

3 unchanged sentences

Any necessary technology transfer would be pursuant to the subscription and technology transfer agreement described above.

Oxford Biomedica

In December 2021, we entered into a Licence and Supply agreement, or LSA, with Oxford Biomedica (UK) Limited wherein the LSA grants us a non-exclusive license to Oxford’s LentiVector® platform for its application in our DSG3-CAART program and puts in place a multi-year vector supply agreement.

Under the terms of the agreement, we were required to pay Oxford an upfront fee, as well as costs associated with initial vector manufacturing activities for a total cost of up to approximately $4.0 million.

Oxford is eligible to receive regulatory and sales milestones in the low tens of millions and royalties in the low single digits on net sales of products that incorporate the Oxford technology.

We can terminate the agreement at will upon advance written notice and subject to certain manufacturing slot cancellation fees.

Wuxi Agreement

In January 2021, we entered into an agreement with WuXi, or the Wuxi Agreement, to serve as our cell processing manufacturing partner for the MuSK-CAART Phase 1 clinical trial, or MusCAARTes TM trial.

The WuXi Agreement will expire the later of January 2024, or upon completion of WuXi’s services related to the MusCAARTes TM trial.

We have the right to terminate the WuXi Agreement for convenience or other reasons specified in the WuXi Agreement upon prior written notice.

If we terminate the WuXi Agreement, we will be obligated to pay an early termination fee of up to $1,500.

Government Regulation

8 unchanged sentences

Additionally, some significant aspects of regulation in Europe are addressed in a centralized way, but country-specific regulation remains essential in many respects.

The process for obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

The process for

obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

Biological Product Development

4 unchanged sentences

requirements at any time during the product development process, approval process or after approval, may result in delays to the conduct of a study, regulatory review and approval or subject an applicant to administrative or judicial sanctions.

These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, license suspension or revocation, refusal to allow an applicant to proceed with clinical trials, imposition of a clinical hold, issuance of untitled or warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations or penalties.

Any agency or judicial enforcement action could have a material adverse effect on us.

1 unchanged sentence

The process required by the FDA before a biologic may be marketed in the United States generally involves the following:

completion of extensive nonclinical, sometimes referred to as preclinical, laboratory tests, animal studies and formulation studies in accordance with applicable regulations, including the FDA’s Good Laboratory Practice, or GLP, regulations and standards;

submission to the FDA of an IND which must become effective before human clinical trials may begin;

2 unchanged sentences

submission to the FDA of a BLA, which includes not only the results of the clinical trials, but also, detailed information on the chemistry, manufacture and quality controls for the product candidate and proposed labeling;

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the product is produced to assess compliance with the FDA’s current good manufacturing practice, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality, purity and potency;

potential FDA audit of the preclinical trial sites and/or clinical trial sites that generated the data in support of the BLA;

11 unchanged sentences

Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that could cause the trial to be suspended or terminated.

In addition to the submission of an IND to the FDA before initiation of a clinical trial in the United States, certain human clinical trials involving recombinant or synthetic nucleic acid molecules are subject to oversight of institutional biosafety committees, or IBCs, as set forth in the NIH Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines.

or IBCs, as set forth in the NIH Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines.

Under the NIH Guidelines, recombinant and synthetic nucleic acids are defined as:

4 unchanged sentences

The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial.

While the NIH Guidelines are not mandatory unless the research in question is being

conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.

The clinical stage of development involves the administration of the drug product candidate to healthy volunteers and patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial.

While the NIH Guidelines are not mandatory unless the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety and assess efficacy.

14 unchanged sentences

Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of a BLA.

In certain instances, FDA may condition approval of a BLA on the sponsor’s agreement to conduct additional clinical trials to further assess the biologic’s safety and effectiveness after BLA approval.

Such post-approval trials are sometimes referred to as Phase 4 clinical trials.

4 unchanged sentences

The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee.

This group provides authorization for whether or not a trial may move forward at designated intervals based on access to certain data from the trial and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as interim data suggesting a lack of efficacy.

there is an unacceptable safety risk for subjects or other grounds, such as interim data suggesting a lack of efficacy.

We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the drug product candidate and, among other things, must develop methods for testing the identity, strength,

quality, potency and purity of the final product.

The manufacturing process must be capable of consistently producing quality batches of the drug product candidate and, among other things, must develop methods for testing the identity, strength, quality, potency and purity of the final product.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug product candidate does not undergo unacceptable deterioration over its shelf life.

10 unchanged sentences

Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Once a BLA has been accepted for filing, which occurs, if at all, sixty days after the BLA’s submission, the FDA’s goal is to review BLAs within 10 months of the filing date for standard review or six months of the filing date for priority review, if the application is for a product intended for a serious or life-threatening condition and the product, if approved, would provide a significant improvement in safety or effectiveness.

The FDA has substantial discretion in the approval process and may refuse to accept any application or decide that the data is insufficient for approval, and may require additional preclinical, clinical or other studies before it accepts the filing.

Additionally, the review process is often significantly extended by FDA requests for additional information or clarification.

After the BLA submission is accepted for filing, the FDA reviews the BLA to determine, among other things, whether the proposed drug product candidate is safe and effective for its intended use, and whether the drug product candidate is being manufactured in accordance with cGMP to assure and preserve the drug product candidate’s identity, strength, quality, purity and potency.

The FDA may refer applications for novel drug product candidates or drug product candidates which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

9 unchanged sentences

A Complete Response Letter usually describes all of the specific deficiencies in the BLA identified by the FDA.

The Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, withdraw

the application or request a hearing.

The Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related

to clinical trials, preclinical studies or manufacturing.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, withdraw the application or request a hearing.

Even if such data and information is submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval.

3 unchanged sentences

Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may condition the approval of the BLA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products.

For example, the FDA may require Phase 4 testing which involves clinical trials designed to further assess the product’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.

The FDA may also place other conditions on approvals including the requirement for a Risk Evaluation and Mitigation Strategy, or REMS, to assure the safe use of the product.

13 unchanged sentences

Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication but that could be used off-label in the orphan indication.

Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are seeking approval, or if our product is determined to be contained within the scope of the competitor’s product for the same indication or disease.

If we pursue marketing approval for an indication broader than the orphan drug designation we have received, we may not be entitled to orphan drug exclusivity.

2 unchanged sentences

The FDA has a fast track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria.

Specifically, new drugs and biological products are eligible for fast

t rack designation if they are intended to treat a serious or life-threatening condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the condition.

Fast t rack designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a f ast t rack product concurrently with, or at any time after, submission of an IND, and the FDA must determine if the product qualifies for f ast t rack designation within 60 days of receipt of the sponsor’s request.

Under the f ast t rack designation, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Specifically, new drugs and biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the condition.

Fast track designation applies to the combination of the product and the specific indication for which it is being studied.

The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a fast track product concurrently with, or at any time after, submission of an IND, and the FDA must determine if the product qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

Under the fast track designation, the FDA may consider for

review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

3 unchanged sentences

An investigational drug may obtain accelerated approval if it treats a serious or life-threatening condition and generally provides a meaningful advantage over available therapies and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on IMM or other clinical benefit.

As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials.

If the FDA concludes that a drug shown to be effective can be safely used only if distribution or use is restricted, it will require such post-marketing restrictions as it deems necessary to assure safe use of the drug, such as:

distribution restricted to certain facilities or physicians with special training or experience;

distribution conditioned on the performance of specified medical procedures.

The limitations imposed would be commensurate with the specific safety concerns presented by the product.

As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials and, under the Food and Drug Omnibus Reform Act of 2022, or FDORA, the FDA is now permitted to require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval.

Under FDORA, the FDA has increased authority for expedited procedures to withdraw approval of a drug or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

2 unchanged sentences

A product can be designated as a breakthrough therapy if it is intended to treat a serious or life-threatening condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.

A sponsor may request that a drug product candidate be designated as a breakthrough therapy concurrently with, or at any time after, the submission of an IND, and the FDA must determine if the drug product candidate qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request.

If so designated, the FDA shall act to expedite the development and review of the product’s marketing application, including by meeting with the sponsor throughout the product’s development, providing timely advice to the sponsor to ensure that the development program to gather preclinical and clinical data is as efficient as practicable, involving senior managers and experienced review staff in a cross-disciplinary review, assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable.

Accelerated Approval for Regenerative Medicine Advanced Therapies

FDA’s regenerative medicine advanced therapy (RMAT) program is intended to facilitate efficient development and expedite review of regenerative medicine advanced therapies, which are intended to treat, modify, reverse, or cure

a serious or life-threatening disease or condition.

A drug sponsor may request that FDA designate a drug as an RMAT concurrently with or at any time after submission of an IND.

2 unchanged sentences

Benefits of such designation also include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval.

A n RMAT that is granted accelerated approval and is subject to post approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records;

An RMAT that is granted accelerated approval and is subject to post approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records;

the collection of larger confirmatory data sets;

8 unchanged sentences

Post-Marketing Requirements

Following approval of a new product, a manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling, distribution, and tracking and tracing requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet.

Although physicians may prescribe legally available drugs and biologics for off-label uses, manufacturers may not market or promote such off-label uses.

7 unchanged sentences

Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

These regulations also impose certain

organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities.

These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities.

BLA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms.

3 unchanged sentences

Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, untitled or warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others.

Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures.

Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.

Other Regulatory Matters

21 unchanged sentences

The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence.

8 unchanged sentences

A reference biological product is granted twelve years of exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after first licensure.

“First licensure” typically means the initial date the particular product at issue was licensed in the United States.

“First licensure”

typically means the initial date the particular product at issue was licensed in the United States.

This does not include a supplement for the biological product or a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or other related entity) for a change that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength, unless that change is a modification to the structure of the biological product and such modification changes its safety, purity, or potency.

Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

Whether a subsequent application, if approved, warrants exclusivity as the “first licensure”

of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

Pediatric exclusivity is another type of regulatory market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which attaches to the twelve-year exclusivity period for reference biologics, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.

for such a trial.

Pricing and Reimbursement

6 unchanged sentences

Whether or not we conduct such studies, our drug product candidates may not be considered medically necessary or cost-effective.

A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

Third party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development.

2 unchanged sentences

However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can differ significantly from payor to payor.

Additionally, one third-party payor’s decision to cover a particular product or service does not ensure that other payors will also provide coverage for the product or service, and the level of coverage and reimbursement can differ significantly from payor to payor.

As a result, the coverage determination process will often require us to provide scientific and clinical support for the use of our products to each payor separately and can be a time-consuming process, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

13 unchanged sentences

Efforts to control prices and utilization of pharmaceutical products will likely continue as countries attempt to manage healthcare expenditures.

Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.

Other Healthcare Laws and Compliance Requirements

7 unchanged sentences

Moreover, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other.

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution.

Although we would not submit claims directly to payors, drug manufacturers can be held liable under the federal civil False Claims Act, which imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs and, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes.

The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off- label.

The government may deem manufacturers to have “caused”

the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off- label.

Claims which include items or services resulting from a violation of the federal Anti-Kickback Statute are false or fraudulent claims for purposes of the False Claims Act.

The federal False Claims Act also permits a private individual acting as a “whistleblower”

to bring actions on behalf of the federal government alleging violations of the federal False Claims Act and to share in any monetary recovery.

Our future marketing and activities relating to the reporting of wholesaler or estimated retail prices for our products, if approved, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our product candidates, are subject to scrutiny under this law.

3 unchanged sentences

Like the federal Anti-Kickback Statute a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

HIPAA, as amended by HITECH, and their implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information.

Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as independent contractors or agents of covered entities, which include certain health care providers, health plans, and healthcare clearinghouses, that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity.

HITECH also increased the civil and criminal penalties that may be imposed against covered entities and business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and its implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information.

In addition, certain state laws govern the privacy and security of health information and other personal data in certain circumstances, some of which are more stringent or otherwise different than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and criminal penalties.

Further, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, physicians, certain other healthcare professionals, and teaching hospitals and to report annually certain ownership and investment interests held by physicians, certain other healthcare professionals, and their immediate family members.

Effective January 1, 2022, these reporting obligations extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners.

Further, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health care practitioners and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members.

In addition, many states also govern the reporting of payments or other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.

3 unchanged sentences

Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant federal government compliance guidance, and require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state.

7 unchanged sentences

If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource- consuming and can divert a company’s attention from the business.

Current and Future Legislation

In the United States and some foreign jurisdictions, there have been, and likely will continue to be, a number of legislative and regulatory changes and proposed changes regarding the healthcare system directed at broadening the availability of healthcare, improving the quality of healthcare, and containing or lowering the cost of healthcare.

For example, in March 2010, the ACA was enacted in the United States.

For example, in 2010, the ACA was enacted in the United States.

The ACA includes measures that have significantly changed, and are expected to continue to significantly change, the way healthcare is financed by both governmental and private insurers.

Among the provisions of the ACA of greatest importance to the pharmaceutical industry are that the ACA:

made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on average manufacturer price, or AMP, on most branded prescription drugs and adding a new rebate calculation for “line extensions” ( i.e.

made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’

rebate liability by raising the minimum basic Medicaid rebate on average manufacturer price, or AMP, on most branded prescription drugs and adding a new rebate calculation for “line extensions”

, new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP;

imposed a requirement on manufacturers of branded drugs to provide a 50% point-of-sale discount (increased to 70% pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) off the negotiated price of branded drugs dispensed to Medicare Part D beneficiaries in the coverage gap ( i.e.

, “donut hole”) as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D;

extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

imposed a requirement on manufacturers of branded drugs to provide a 70% point-of-sale discount as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D;

extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expanded the entities eligible for discounts under the 340B Drug Discount Program;

established a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs, and

established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

established a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

The research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.

The ACA established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation through 2019.

Since its enactment, there have been judicial, Congressional and executive challenges to certain aspects of the ACA.

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact our business.

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted:

In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, which went into effect in April 2013, following passage of the Bipartisan Budget Act of 2013 and subsequent legislation, and will remain in effect through 2030 unless additional congressional action is taken.

However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.

Following the temporary suspension, a 1% payment reduction will occur beginning April 1, 2022 through June 30, 2022, and the 2% payment reduction will resume on July 1, 2022.

In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

The Budget Control Act of 2011 and subsequence legislation, among other things, created measures for spending reductions by Congress that include aggregate reductions of Medicare payments to providers of 2% per fiscal year, which remain in effect through 2031.

Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to providers will be further reduced starting in 2025 absent further legislation.

The American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

On May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or the Right to Try Act, was signed into law.

On May 30, 2018, the Right to Try Act was signed into law.

The law, among other things, provides a federal framework for certain patients to request access to certain IND products that have completed a Phase I clinical trial and that are undergoing investigation for FDA approval.

1 unchanged sentence

On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.

On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

On December 20, 2019, former President Trump signed into law the Further Consolidated Appropriations Act (H.R.

1865), which repealed the Cadillac tax, the health insurance provider tax, and the medical device excise tax.

It is impossible to determine whether similar taxes could be instated in the future.

On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

In addition, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

1 unchanged sentence

Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient assistance programs, and reform government program reimbursement methodologies for drugs.

At the federal level, President Biden signed an Executive Order on July 9, 2021 affirming the administration’s policy to (i) support legislative reforms that would lower the prices of prescription drug and biologics, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and, by supporting the development and market entry of lower-cost generic drugs and

and (ii) support the enactment of a public health insurance option.

Among other things, the Executive Order also directs HHS to provide a report on actions to combat excessive pricing of prescription drugs, enhance the domestic drug supply chain, reduce the price that the Federal government pays for drugs, and address price gouging in the industry;

and directs the FDA to work with states and Indian Tribes that propose to develop section 804 Importation Programs in accordance with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and the FDA’s implementing regulations.

FDA released such implementing regulations on September 24, 2020, which went into effect on November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada.

On September 25, 2020, CMS stated drugs imported by states under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for “best price” or Average Manufacturer Price purposes.

Since these drugs are not considered covered outpatient drugs, CMS further stated it will not publish a National Average Drug Acquisition Cost for these drugs.

If implemented, importation of drugs from Canada may materially and adversely affect the price we receive for any of our product candidates.

Further, on November 20, 2020 CMS issued an Interim Final Rule implementing the Most Favored Nation, or MFN, Model under which Medicare Part B reimbursement rates would have been be calculated for certain drugs and biologicals based on the lowest price drug manufacturers receive in Organization for Economic Cooperation and Development countries with a similar gross domestic product per capita.

However, on December 29, 2021 CMS rescinded the Most Favored Nations rule.

Additionally, on November 30, 2020, HHS published a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

Pursuant to court order, the removal and addition of the aforementioned safe harbors were delayed and recent legislation imposed a moratorium on implementation of the rule until January 1, 2026.

President Biden has issued multiple executive orders that have sought to reduce prescription drug costs.

In February 2023, HHS issued a proposal in response to an October 2022 executive order from President Biden that includes a proposed prescription drug pricing model that will test whether targeted Medicare payment adjustments will sufficiently incentivize manufacturers to complete confirmatory trials for drugs approved through FDA’s accelerated approval pathway.

Although a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs.

The Inflation Reduction Act of 2022, or IRA includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap;

impose new manufacturer financial liability on certain drugs under Medicare Part D, allow the U.S.

government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition;

require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation;

and delay until January 1, 2032 the implementation of the HSS rebate rule that would have limited the fees that pharmacy benefit managers can charge.

Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one rare disease designation and for which the only approved indication is for that disease or condition.

If a product receives multiple rare disease designations or has multiple approved indications, it may not qualify for the orphan drug exemption.

The effects of the IRA on our business and the healthcare industry in general is not yet known.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing.

19 unchanged sentences

Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

In the EU, for example, a clinical trial application must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively.

Once the clinical trial application is approved in accordance with a country’s requirements, clinical trial development may proceed.

In the EU, for example, a clinical trial application must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively.

Once the clinical trial application is approved in accordance with a country’s requirements, clinical trial development may proceed.

Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.

7 unchanged sentences

European Union General Data Protection Regulation

In addition to EU regulations related to the approval and commercialization of our products, we may be subject to the EU’s General Data Protection Regulation, or GDPR.

The GDPR imposes stringent requirements for controllers and processors of personal data of persons in the EU, including, for example, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to special categories of data, such as health data, and additional obligations when we contract with third-party processors in connection with the processing of the personal data.

In addition to EU regulations related to the approval and commercialization of our products, we may be subject to the EU’s General Data Protection Regulation, or GDPR.

connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States and other third countries.

1 unchanged sentence

The GDPR applies extraterritorially, and we may be subject to the GDPR because of our data processing activities that involve the personal data of individuals located in the European Union, such as in connection with our EU clinical trials.

Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

GDPR regulations may impose additional responsibility and liability in relation to the personal data that we process and we may be required to put in place additional mechanisms to ensure compliance with the new data protection rules.

Human Capital Management

As of December 31, 2021, we had 54 employees, 53 of whom were full-time and one who was part-time.

Human Capital Resources

As of December 31, 2022, we had 60 employees, 58 of whom were full-time and two who were part-time.

Of those, 51 were engaged in research and development activities.

19 unchanged sentences

This Annual Report on Form 10-K may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners.

Our use or display of third parties’ trademarks, service marks, trade names or products in this Annual Report on Form 10-K is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us.

Our use or display of third parties’

trademarks, service marks, trade names or products in this Annual Report on Form 10-K is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us.

Solely for convenience, the trademarks, service marks and trade names referred to in this Annual Report on Form 10-K may appear without the ®, or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

1 unchanged sentence

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website located at www.cabalettabio.com as soon as reasonably practicable after they are filed with or furnished to the SEC.

These reports are also available at the SEC’s Internet website at www.sec.gov.

A copy of our Corporate Governance Guidelines, Code of Conduct and Business Ethics and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are posted on our website, www.cabalettabio.com, under the heading “Investors & Media.”

These reports are also available at the SEC’s Internet website at www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business