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Item 1. Business

2023-03-30 compared with 2022-03-29 · 553 added, 668 removed, 557 unchanged (69% of the section changed)

We are a late clinical stage biopharmaceutical company focused on helping patients fight cancer with oncolytic viral immunotherapies.

Our engineered viruses are designed to induce immunogenic death through direct viral-mediated cytotoxicity in cancer cells, thus releasing tumor neo-antigens and creating a pro-inflammatory microenvironment at the site of injection.

Our approach combines an in-depth knowledge of viral immunotherapy with extensive clinical experience across a wide range of indications.

Based on the broad range of data that we have generated from our preclinical models and clinical trials using our approach, we have observed what we believe to be systemic immune response against locally injected tumors and their distant metastases.

We have established two oncolytic viral immunotherapy platforms based on novel, genetically modified adenovirus and herpes simplex virus (HSV) constructs.

In our clinical results to date from CAN-2409, our lead product candidate from our adenovirus platform, and CAN-3110, our lead product candidate from our HSV platform, we have observed that these candidates may have the potential to address significant unmet patient need and improve clinical outcomes in novel indications across broader patient populations.

In non-small cell lung cancer (NSCLC), we have observed monotherapy activity of CAN-2409 in a Phase 1 biomarker focused window of opportunity trial.

In 2020, we initiated a Phase 2 clinical trial evaluating CAN-2409 in combination with PD-(L)1 checkpoint inhibitors for patients with inadequate response to PD-(L)1 checkpoint inhibitors.

This open label trial is targeting enrollment of approximately 96 patients with stage III/IV NSCLC in three separate cohorts.

The cohorts are defined based on response to checkpoint inhibitors at the time of enrollment.

Patients will continue treatment with their initial checkpoint inhibitor and CAN-2409 will be added to their regimen.

The primary efficacy endpoint for this trial is response rate meas ured by response evaluation criteria in solid tumors (RECIST) and we expect to report safety and initial clinical activity in the second quarter of 2022.

We are also evaluating CAN-2409 in newly diagnosed high-grade glioma.

The FDA has granted CAN-2409 fast track designation for use in this setting in combination with standard of care surgery and chem oradiation.

We intend to initiate a potential registrational Phase 3 trial in this indication in the middle of 2022.

Our most advanced product candidate, CAN-2409, is an off-the-shelf adenovirus product candidate (intended to be available as needed via prescription) combined with the prodrug valacyclovir that has generated promising clinical activity across a range of solid tumor indications, including our lead indication of prostate cancer.

We are currently conducting, as part of our most advanced CAN-2409 program, a Phase 3 clinical trial in the United States under a Special Protocol Assessment, or SPA, with the U.S.

Food and Drug Administration (FDA) for CAN-2409 in patients with newly diagnosed localized prostate cancer who have an intermediate- or high-risk for progression.

We completed enrollment for this trial in September 2021 and we expect a final data readout in 2024.

In addition, we are advancing development of our HSV platform product candidates for solid tumor indications.

Our lead HSV product candidate, CAN-3110, is currently in an ongoing investigator-initiated Phase 1 clinical trial in our initial target indication of recurrent high-grade glioma, and we reported additional biomarker results in November 2021.

We are also designing novel candidates based on our HSV platform for the treatment of solid tumors.

Our oncolytic viral immunotherapy approach utilizes intratumoral administration of genetically engineered viruses to selectively induce tumor cell death and elicit an innate and adaptive anti-tumor immune response.

We are a clinical stage biopharmaceutical company focused on developing and commercializing viral immunotherapies to help patients fight cancer.

Our engineered viruses are designed to induce a systemic anti-tumor response due to immunogenic cell death through direct viral-mediated cytotoxicity in cancer cells, thus releasing tumor neo-antigens and creating a pro-inflammatory microenvironment.

Our viral immunotherapy approach utilizes intratumoral administration of genetically engineered viruses to induce tumor cell death and elicit a systemic anti-tumor response.

Local delivery enables us to achieve these effects while aiming to minimize systemic toxicity.

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tumors with limited immune response into “hot”

In our data from our clinical studies in patients with cancer, we have observed increases in the expression of immune checkpoints PD-1, PD-L1 and CTLA-4 following treatment with CAN-2409 supporting the evaluation of combinations with immune checkpoint inhibitors (ICI) such as anti-PD-(L)1 that, typically, are only efficacious in patients with immunologically “hot”

While our product candidates are administered directly into the tumor, we have observed systemic immune response in our preclinical studies and clinical trials that may indicate the potential of CAN-2409 and CAN-3110 to induce systemic immune response against distal, uninjected tumors, also known as an “abscopal”

We believe oncolytic viral immunotherapy is among the most promising cancer treatment modalities today.

Treatment with oncolytic viral immunotherapy has already been clinically validated through talimogene laherparepvec (Imlygic, Amgen), the first FDA-approved intratumoral oncolytic virus.

Our goal is to further improve patient outcomes from oncolytic viral immunotherapies by selecting the optimal vector, specific transgenes and clinical indications for each

tumor type while optimizing product candidate attributes, such as high-titer formulation, intratumoral administration, and storage conditions that could potentially lower logistical barriers for patients and clinicians.

Impact of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus, or COVID-19, a global pandemic, or the COVID-19 pandemic, which continues to spread throughout the United States and worldwide.

The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations is highly uncertain and will depend on future developments that cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and actions taken by government authorities and businesses to contain or prevent the further spread of COVID-19.

For instance, a recurrence or continuation of COVID-19 cases, including new variants, could cause a more widespread or severe impact on commercial activity depending on where infection rates are highest.

If we or any of the third parties with whom we engage were to experience any additional shutdowns or other prolonged business disruptions as a result of the ongoing COVID-19 pandemic, our ability to conduct our business in the manner and on the timelines presently planned could be materially or negatively affected, which could have a material adverse impact on our business, results of operations and financial condition.

We have been carefully monitoring the ongoing COVID-19 pandemic and its impact on our business and have taken important steps to help ensure the safety of our employees and their families and to reduce the spread of COVID-19.

We have established a flexible work policy for all employees under which we encourage all of our employees to work from the office or home as they feel appropriate.

Those employees performing or supporting business-critical operations, such as certain members of our laboratory and facilities staff are working on site on a daily basis.

For those employees, who come to work at our facility, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic.

We have also maintained efficient communication with our partners and clinical sites during the COVID-19 pandemic.

We have taken these precautionary steps while maintaining business continuity so that we can continue to make progress on our programs.

While we have experienced delays in enrollment and site closures at certain of our third-party clinical trial sites, these delays have not had a material impact on our development timelines for our product candidates.

We will continue to monitor developments as we address the disruptions and uncertainties relating to the COVID-19 pandemic.

See the “Risk Factors”

section for a discussion of the potential adverse impact of the COVID-19 pandemic on our business, financial condition and results of operations.

We have an advanced pipeline comprised of seven clinical trials based on our two lead product candidates, CAN-2409 and CAN-3110.

In addition, we own exclusive development and commercial rights for our product candidates in major territories including the United States, Europe and Asia.

Our pipeline is set forth below:

CAN-2409, formerly known as gene mediated cytotoxic immunotherapy, or GMCI, is our most advanced product candidate.

It is a replication deficient adenovirus that has been genetically modified to encode the enzyme thymidine kinase.

This enzyme activates an orally administered prodrug, valacyclovir, a widely available, generally well-tolerated antiviral at the site of the tumor, generating a powerful patient-specific anti-tumor immune response.

We believe there are three key aspects of the mechanism of action.

First, the direct, cellular killing activity is based on the transformation of valacyclovir into a toxic nucleotide analogue that disrupts DNA synthesis and repair.

This phenomenon occurs preferentially in actively dividing cancer cells, thereby providing tumor specificity.

This DNA repair inhibition is also hypothesized to be the mechanistic explanation behind the encouraging pre-clinical and clinical activity of CAN-2409 in combination with radiotherapy, a treatment known to cause DNA breaks requiring repair for continued cellular survival.

Second, adenoviral capsid proteins themselves also directly trigger an immunologic response through the establishment of a proinflammatory tumor microenvironment, releasing important cytokines such as GM-CSF and IL-6.

We believe this contributes to the potent activation of the patient’s own immune system that plays a critical role in the CAN-2409 mechanism of action.

Finally, the localized death of tumor cells releases numerous antigens that can be recognized by the patient’s own immune system, thereby training the immune system to target and destroy similar cancer cells that have spread to other sites in the body.

CAN-2409 has been administered to over 700 patients with cancer to date, over 500 of whom are in ongoing, placebo-controlled randomized trials.

In total, we have conducted more than 10 clinical trials with CAN-2409 in a range of solid tumor indications.

We have seen encouraging clinical activity and a favorable tolerability profile with CAN-2409 in both monotherapy and combination settings with radiotherapy, immune checkpoint inhibitor therapy, androgen deprivation therapy (ADT), chemotherapy and surgery.

Based on the totality of our clinical data generated to date, we are currently pursuing indications in lung, pancreatic, brain, and prostate cancer, which we believe all have great potential to address unmet need.

In NSCLC, we have observed monotherapy activity of CAN-2409 in a Phase 1 biomarker focused, window of opportunity trial.

In 2020, we initiated a Phase 2 clinical trial evaluating CAN-2409 in combination with PD-(L)1 checkpoint inhibitors for patients with inadequate response to PD-(L)1 checkpoint inhibitors.

This open label trial is targeting enrollment of approximately 96 patients with stage III/IV NSCLC in three separate cohorts.

The cohorts are defined based on response to checkpoint inhibitors at the time of enrollment.

Cohort 1 addresses patients with stable disease.

Cohort 2 enrolls patients with progressive disease after at least 18 weeks of checkpoint treatment.

Cohort 3 enrolls patients whose tumors are refractory to checkpoint therapy, with progressive disease observed at their first evaluation.

Patients will continue treatment with their initial checkpoint inhibitor and CAN-2409 will be added to their regimen.

The primary efficacy endpoint for this trial is response rate measured by RECIST, and we expect to report safety and initial clinical activity in the second quarter of 2022.

We have also completed a Phase 1b/2 clinical trial evaluating CAN-2409 in patients with high-grade glioma.

Our results demonstrated a statistically significant improvement in overall survival of approximately 3.6 months over standard of care alone (17.1 months versus 13.5 months, p=0.0417) in the overall trial population of high-grade glioma.

Additionally, in a pre-specified subgroup of patients diagnosed with glioblastoma who underwent gross total surgical resection, a procedure consisting of the removal of more than 95% of the tumor, an improvement of overall survival of approximately 8.8 months over standard of care alone was demonstrated (25.1 months versus 16.3 months, p=0.0120).

We are currently planning a Phase 3 trial in this indication and anticipate commencement in the middle of 2022.

CAN-2409 has also received Fast Track designation for use in combination with standard of care surgery and chemoradiation to improve overall survival in adults with newly diagnosed glioblastoma.

We have also received Orphan drug designation for the use of CAN-2409 for treatment of malignant brain tumors, including high-grade glioma.

In addition, we have established a clinical collaboration with both Bristol-Myers Squibb Company (BMS) and the Adult Brain Tumor Consortium (ABTC), a National Cancer Institute funded cooperative group of leading brain cancer centers that facilitates the execution of novel, early-stage trials at some of the leading brain cancer treatment centers.

This collaboration has provided support for our ongoing Phase 1 clinical trial in high-grade glioma patients, testing the combination of CAN-2409 and nivolumab (Opdivo, BMS).

We anticipate reporting safety and initial efficacy data from this trial by the end of 2022.

We are conducting a Phase 3 clinical trial with CAN-2409 under agreement with the FDA through the SPA process in newly diagnosed localized prostate cancer in intermediate- and certain high-risk patients in combination with the standard of care that comprises radiotherapy and optional ADT.

Our SPA provides FDA concurrence that our key endpoints and specific critical elements of our trial design are adequate to support a future marketing application if, among other things, we achieve the primary endpoint in the trial.

The clinical trial is randomized, triple-blinded and placebo-controlled.

It targeted enrollment of approximately 700 patients and was fully enrolled in September 2021 with final data readout anticipated in 2024.

We have also received Fast Track designation by the FDA for the development of CAN-2409 for the treatment of localized, primary prostate cancer in combination with radiotherapy to improve the local control rate, decrease recurrence and improve disease-free survival.

We expect that if the trial is successful and if we obtain FDA approval, CAN-2409 could be the first new FDA approved pharmacologic treatment available in over 30

years as a first line therapeutic for the over 100,000 patients who are newly diagnosed with localized prostate cancer each year in the United States.

We have also completed enrollment for a Phase 2 clinical trial with CAN-2409 as monotherapy in newly diagnosed prostate cancer patients under active surveillance.

This trial has recruited 187 patients with low-, intermediate- and certain high-risk localized prostate cancer.

We expect to announce top line data in 2023.

We believe that this trial, if successful, could position CAN-2409 as a first line monotherapy treatment of patients with low- and intermediate-risk prostate cancer, thereby meaningfully expanding the addressable patient population.

Our second oncolytic viral immunotherapy platform is based on a novel, next generation, genetically modified HSV that induces tumor specific oncolysis.

The HSV platform enables generation of both replication-competent and replication-deficient viral product candidates as well as capacity to clone, in the vector, up to five transgenes that will allow us to optimize our virus profile for different tumor settings.

CAN-3110, our first HSV product candidate, has been engineered for enhanced specificity and tumor cell killing, while minimizing toxicity on healthy tissue.

CAN-3110 was formerly known as rQNestin34.5v.2.

An investigator-initiated Phase 1 clinical trial is ongoing with CAN-3110 in our initial target indication of recurrent high-grade glioma and we reported additional biomarker results in November 2021.

Based on the molecular targeting of CAN-3110, we believe that it could be evaluated in an expanded range of indications in the future, such as other neurologic tumors, melanoma, gastrointestinal stromal tumors, thyroid tumors and breast cancer.

In addition, we are pursuing novel solid tumor discovery programs based on our HSV platform.

Corporate History and Our Team and Investors

While our product candidates are administered directly into the tumor, we have observed a systemic immune response in our preclinical studies and clinical trials that may indicate the potential of our product candidates to induce a systemic immune response against distal, uninjected tumors, also known as an “abscopal”

We believe viral immunotherapy is among the most promising cancer treatment modalities today.

Our goal is to further improve patient outcomes through viral immunotherapies by selecting the optimal vector, specific transgenes and clinical indications for each tumor type while optimizing product candidate attributes, such as high-titer formulation, intratumoral administration to induce systemic anti-tumor immunity, and storage conditions that could potentially lower logistical barriers for patients and clinicians.

We have established two clinical stage viral immunotherapy platforms based on novel, genetically modified adenovirus and herpes simplex virus (HSV) constructs, respectively.

Our most advanced product candidate, CAN-2409, is an off-the-shelf adenovirus product candidate which is combined with the prodrug, valacyclovir, that has generated promising clinical activity across a range of solid tumor indications.

CAN-2409 is currently being studied in the following ongoing clinical trials:

Prostate Cancer

o a Phase 3 randomized, triple-blinded and placebo-controlled clinical trial in the United States under a Special Protocol Assessment (SPA), with the U.S.

Food and Drug Administration (FDA) evaluating 711 patients with newly diagnosed, localized prostate cancer who have an intermediate or high-risk for progression.

We completed enrollment of this trial in September 2021 and we expect to present topline data at the end of 2024.

o a Phase 2 randomized, double blind, placebo-controlled clinical trial in the United States evaluating 187 patients with low-to-intermediate risk localized prostate cancer undergoing active surveillance.

We completed enrollment of this trial in May 2019 and we expect topline data from this clinical trial to be available in the fourth quarter of 2024.

Non-small Cell Lung Cancer (NSCLC) –

an open-label Phase 2 clinical trial in the United States evaluating CAN-2409 plus valacyclovir in combination with continued PD-(L)1 checkpoint inhibitors in 80 patients with stage III/IV NSCLC who have inadequate response to PD-(L)1 checkpoint inhibitors.

We reported initial data from this trial at the American Society for Clinical Oncology (ASCO) Annual Meeting in June 2022 and an update during our Research and Development Day in December 2022, demonstrating the following:

o Evidence of local and systemic anti-tumor activity

o Disease control rate of 77% (20/26) in patients entering trial with disease progression (cohort 2)

o Sustained and ongoing clinical responses greater than 1 year

o Favorable change in trajectory of tumor progression

o Decreased tumor size of RECIST target lesions in most patients

o Reduced uninjected tumor size in 14/21 patients (67%)

o Overall response rate of 13% (4/30) across cohorts 1 and 2

o Durable disease stabilization translating into encouraging preliminary evidence of progression-free survival

o Consistent induction of local and systemic cytotoxic T cell response

o Increased infiltration of CD8+ T cells in the tumor microenvironment

o Systemic expansion of effector T cells and increase in soluble granzyme B levels in peripheral blood

o Favorable safety/tolerability data with most treatment-related adverse events being grade 1/2

We anticipate presenting additional updated clinical data from this ongoing clinical trial in the third quarter of 2023.

Pancreatic Cancer –

we have initiated a randomized Phase 2 clinical trial in the United States evaluating CAN-2409 in borderline resectable pancreatic adenocarcinoma.

In March 2023, in connection with our cost management and dynamic portfolio management initiatives, we paused new enrollment in this randomized Phase 2 clinical trial, subject to additional funding.

Despite the pause in patient enrollment, we continue to expect to present initial clinical data in the fourth quarter of 2023.

In a previous Phase 1b trial, patients with pancreatic cancer treated with CAN-2409 in addition to standard of care demonstrated a greater survival duration over the expected survival of the patients treated with the existing standard of care alone in a comparison to historical trial results.

Furthermore, in the group of patients where pre- and post-treatment tumor biopsies were available, a statistically significant increase in the number of CD8+ tumor infiltrating lymphocytes was observed.

Our lead HSV-based product candidate, CAN-3110, is currently in an ongoing investigator-sponsored Phase 1 clinical trial in our initial target indication of recurrent high-grade glioma (HGG).

These patients have failed standard of care treatment and have a poor prognosis.

Initial clinical data from this trial was presented in an oral presentation at the ASCO Annual Meeting in June 2021, and additional biomarker data was reported in November 2021.

During our Research and Development Day in December 2022, we presented updated data demonstrating that CAN-3110 was well tolerated with no observed dose-limiting toxicity, achieved 11.6 months mOS with a single dose, and showed evidence of persistent HSV-1 antigen and HSV-1 replication consistent with mechanism of action

as well as robust evidence of immune activation.

We are currently evaluating the effects of multiple doses of CAN-3110 in recurrent HGG supported by the Break Through Cancer foundation.

We are also designing other novel viral immunotherapy candidates using our proprietary enLIGHTEN Discovery Platform, the first systematic, iterative HSV-based discovery platform leveraging human biology and advanced analytics to create new viral immunotherapy candidates for solid tumors.

In October 2022, we entered into a collaboration with the University of Pennsylvania (UPenn) Center for Cellular Immunotherapies to study the impact of novel viral immunotherapy candidates based on Candel’s enLIGHTEN Discovery Platform to strengthen the activity of UPenn’s investigational CAR-T cell therapies in difficult to treat solid tumors.

We currently own development and commercialization rights for our programs in major markets, including the United States, Europe and Asia, allowing us to control development and seek approval in those areas as we prepare our commercialization efforts.

We were incorporated in Delaware in June 2003 as Advantagene, Inc.

(Advantagene).

Advantagene was built on a strong scientific foundation and developed CAN-2409 over years of research and development.

In December 2019, Advantagene acquired substantially all the assets of Periphagen and in September 2020, licensed CAN-3110 from MGB.

Following the combination of Advantagene with the HSV discovery platform assets acquired from Periphagen, a company focused on engineering HSV as a gene therapy vector, we formally changed our name to Candel Therapeutics, Inc.

in December 2020.

We were founded and are now led by a team of renowned drug developers, oncolytic viral immunotherapy experts, oncologists, immunologists and biotech business leaders.

Paul Peter Tak, M.D., Ph.D ., FMedSci .

Tak, our President and CEO, joined us in September 2020 and most recently served as President and CEO of Kintai Therapeutics, which later merged with Senda Bioscience.

Prior to his position at Kintai, he served as Senior Vice President, Chief Immunology Officer, and Global Development Leader at GlaxoSmithKline, where he created a pipeline of medicines in immunology and oncology.

He has also trained as an internist, immunologist, and rheumatologist at Leiden University Medical Center and served as a clinical associate professor of medicine at UCSD and professor of medicine at the AMC/University of Amsterdam.

Tak also founded the gene therapy company Arthrogen and the immunometabolism company Sitryx.

Francesca Barone, M.D., Ph.D.

Barone is our Chief Scientific Officer.

Barone previously served as our Vice President, Head of Research.

Prior to starting at Candel, she was Vice President and Head of Experimental Medicine at Kintai Therapeutics, which later merged with Senda Bioscience.

Prior to her position at Kintai, Dr.

Barone held the academic position of Reader in Translational Rheumatology and Academic Director of Business Engagement for the College of Medical and Dental Sciences at the University of Birmingham.

While there, she was also the Director of the laboratories for Immuno-phenotyping in the Institute of Translational Medicine.

Barone earned her M.D.

and completed a specialization in Rheumatology from the University of Rome, Sapienza, with merit and her Ph.D.

from King’s College London.

Nathan Caffo .

Caffo is our Chief Business Officer.

He was most recently the Chief Business Officer of ALX Oncology where he played a key role in the company’s initial public offering.

Prior to ALX Oncology, he was the President and CEO of Presage Biosciences, a company focused on intratumoral delivery of oncology agents.

Caffo has raised over $300 million in equity financing over his career.

John Canepa .

Canepa is our Chief Financial Officer.

He was most recently Senior Advisor, Acting CFO at Frequency Therapeutics, where he completed several public and private financings including the company’s initial public offering.

Prior to his position at Frequency Therapeutics, Mr.

Canepa served as CFO of Agilis Pharmaceuticals and was instrumental in its sale to PTC Therapeutics.

Prior to that, he was COO and CFO of Asterand Bioscience and led its sale to a private equity group.

Canepa was an audit partner at Arthur Andersen for 23 years where he led the firm’s worldwide life sciences practice.

We believe in the power of collective intelligence when tackling important challenges.

We have therefore sought to involve external perspectives through the formation of our Research Advisory Board that includes eminent immunologists, drug development and oncology experts.

Members of the Research Advisory Board are selected based on their ability to contribute meaningful viewpoints to Candel’s internal scientific, clinical and strategic discussions in

which they directly participate.

There is no fixed term of service for Research Advisory Board members.

Some Research Advisory Board members are compensated as described below.

The current members of our Research Advisory Board are as follows:

James Allison, Ph.D., Chair of the Department of Immunology, MD Anderson Cancer Center, Director of the Parker Institute for Cancer Research, Awardee of 2018 Nobel Prize in Physiology or Medicine

Benz, Jr., M.D., President and CEO Emeritus, Dana-Farber Cancer Institute

Henry Brem, M.D., Director, Department of Neurosurgery, Professor of Neurosurgery, Johns Hopkins University

Roy Herbst, M.D., Ph.D., Chief of Medical Oncology, Yale Cancer Center

Philip Kantoff, M.D., Former Chair, Department of Medicine, Memorial Sloan Kettering Cancer Center

Padmanee Sharma, M.D., Ph.D., Professor of Genitourinary Medical Oncology and Immunology, MD Anderson Cancer Center

Benz is also a member of our Board of Directors.

Our Strengths

We believe our experience and capabilities in oncolytic viral immunotherapy will bring significant benefit to cancer patients who are underserved by the current standard of care, particularly in prostate and brain cancer.

We believe our key strengths are:

Deep clinical and development experience in innovative oncolytic viral immunotherapy.

We are leveraging more than 20 years of development history, and have deployed our lead product candidate CAN-2409 in a range of oncology indications.

These efforts have generated extensive clinical data in hundreds of patients and has driven our current development focus.

We continue to leverage this depth of clinical data to select new indications of interest and to efficiently execute on our clinical development strategy.

We are currently developing our two product candidates in seven clinical trials.

Two potentially registrational trials for our CAN-2409 programs in localized prostate and high-grade glioma, indications with significant unmet need supported by its safety and tolerability profile and encouraging Phase 2 data.

Localized prostate cancer:

Current therapeutic options for early treatment of localized prostate cancer are limited and generally characterized by poor tolerability.

A significant proportion of patients experience disease progression after receiving standard of care treatment.

Based on our Phase 2 trial, intermediate-risk patients receiving CAN-2409 demonstrated failure rates which were 75% lower than the outcomes reported in four large, contemporaneous clinical trials in patients with comparable disease status who were treated with similar radiotherapy protocols, although this is limited because we have not conducted head-to-head studies.

Based on the strength of this Phase 2 data, we are currently conducting a Phase 3 potentially registrational trial in localized prostate cancer under an SPA agreement with the FDA and expect a final data readout in 2024.

High-grade glioma:

There is presently a large unmet need in the first line patient population with current treatment options, such as temozolomide, demonstrating an overall survival benefit of only 2.5 months over radiotherapy alone.

In our Phase 1b/2 clinical trial of patients with newly diagnosed high-grade glioma, we compared the administration of CAN-2409 combined with standard of care to the effects of standard of care alone.

In this overall population, we demonstrated a statistically significant increase in median overall survival (mOS) of 17.1 months compared to 13.5 months observed in the standard of care arm.

We believe that the beneficial effect of CAN-2409 can be further improved in the context of a precision medicine approach based on the pre-specified subgroup of patients with glioblastoma whose surgery achieved a gross total resection.

In this population, CAN-2409 with standard of care demonstrated a mOS of 25.1 months compared to 16.3 months in the standard of care arm.

We are pursuing this precision strategy and expect to commence our Phase 3 potentially registrational clinical trial in high-grade glioma in the middle of 2022.

Phase 2 trial of CAN-2409 in combination with immune checkpoint inhibitors in NSCLC:

Immune checkpoint inhibitors have become standard of care in NSCLC.

However, a majority of patients ultimately progress on these treatments.

New treatment options that improve the number of patients who respond and that increase the durability of these responses are urgently needed.

We have an ongoing Phase 2 trial that combines CAN-2409 with immune checkpoint inhibitors in patients with NSCLC and expect safety and initial efficacy data by the end of 2022.

Two oncolytic viral immunotherapy platforms provide versatility and optionality to pursue a range of solid tumor indications.

With our clinical stage engineered adenovirus and HSV platforms, we can

approach indications of interest through multiple modalities, expanding our potential to address patients in areas with high unmet need.

For example, we are currently conducting clinical trials in two different brain cancer indications with product candidates engineered from our adenovirus and HSV platforms, CAN-2409 and CAN-3110, respectively.

Attractive commercial profile and ownership of our programs.

For each investigational product, there is an opportunity to expand into new indications ('pipeline in a product').

Manufacturing strategy .

We expect that our cost-of-goods will be substantially lower than cell- and antibody-based therapies because of our high-yield manufacturing process.

We plan to manufacture our therapeutics for commercialization using third-party manufacturers.

Our goal is to develop best-in-class oncolytic viral immunotherapies to transform the lives of cancer patients.

In December 2019, Advantagene licensed substantially all the assets of Periphagen, a company focused on engineering HSV as a gene therapy vector, and in September 2020, licensed CAN-3110 from Mass General Brigham (MGB).

In December 2020, we formally changed our name from Advantagene to Candel Therapeutics, Inc.

We completed our initial public offering in July 2021.

Our goal is to develop best-in-class viral immunotherapies to transform the lives of cancer patients.

We plan to develop and commercialize our two lead product candidates, CAN-2409 and CAN-3110, for the treatment of a broad range of solid tumor indications, while continuing to build our pipeline through our discovery platform .

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If approved, we believe CAN-2409 could be a first-in-class drug for localized prostate cancer patients with the potential to reduce disease progression and recurrence.

Advance the development of, and seek regulatory approval for, CAN-2409 in both monotherapy and combination therapy for high-grade glioma.

We have completed a Phase 2 clinical trial that showed a statistically significant overall survival benefit of approximately 8.8 months in first line glioblastoma patients who underwent gross total resection.

We plan to initiate a Phase 3 trial employing a precision medicine approach in this indication in the middle of 2022.

We have also entered into a collaboration with BMS and ABTC for a Phase 1b clinical trial in high-grade glioma patients testing the combination of CAN-2409 and nivolumab (Opdivo, BMS), with safety and initial efficacy data expected by the end of 2022.

Advance the clinical development of CAN-3110, an oncolytic HSV with tumor-specific enhanced replication potency.

An investigator-initiated Phase 1 clinical trial is ongoing in recurrent glioblastoma with additional biomarker data received in November 2021.

This trial will evaluate the activity of CAN-3110 in later stage disease, where we believe a replicating virus may present therapeutic advantages.

Advance the development of CAN-2409 in patients with inadequate responses to standard of care immune checkpoint inhibitors.

A phase 2 trial that evaluates CAN-2409 in combination with immune checkpoint inhibitors is currently underway, with initial data from this open label trial expected in the second quarter of 2022.

Advance the clinical development of CAN-3110 from our HSV platform with tumor-specific enhanced replication potency.

An investigator-sponsored Phase 1 clinical trial is ongoing in recurrent HGG.

This trial is evaluating the activity of CAN-3110 in therapy-resistant disease, where we believe a replicating virus may present therapeutic advantages.

Advance the development of CAN-2409 in stage III/IV NSCLC patients with inadequate responses to standard of care immune checkpoint inhibitors (ICI).

A Phase 2 trial that evaluates CAN-2409 in combination with ICI is currently underway in NSCLC.

Continue to expand the development of CAN-2409 in other solid tumor indications, such as pancreatic cancer.

We believe we can leverage our broad clinical experience to expand the development of CAN-2409 in other indications.

We have initiated a Phase 2 clinical trial in patients with advanced non-metastatic pancreatic adenocarcinoma.

Our experience in these indications may enable us to expand in the future into other indications.

Leverage our HSV oncolytic viral immunotherapy platform to develop additional HSV product candidates.

Our platform enables rapid vector engineering and generation of new candidates.

Key attributes of HSV that allow targeted modifications to the virus are high capacity for genetic cargo, and the ability of our platform to generate both replication incompetent and competent agents depending on the demands of a particular application.

Develop strategic partnerships to maximize the value of our current and future product candidates.

We believe we can leverage our broad clinical experience to expand the development of CAN-2409

in other indications.

We have initiated a randomized Phase 2 clinical trial in patients with borderline resectable pancreatic adenocarcinoma.

However, in March 2023, in connection with our cost management and dynamic portfolio management initiatives, we elected to pause new enrollment in this randomized Phase 2 clinical trial, subject to additional funding.

Leverage our HSV viral immunotherapy platform to develop additional HSV-based product candidates.

Our new enLIGHTEN Discovery Platform enables rapid vector engineering to generate a range of new candidates in a data driven and indication specific manner.

We utilize a key attribute of HSV, a high capacity for genetic cargo, to seek to enable targeted modifications and deploy indication specific genes to the tumor microenvironment.

Our platform is designed to generate both replication-defective and replication-competent agents depending on the demands of a particular application.

Establish strategic partnerships to maximize the value of our current and future product candidates.

In order to advance treatment options for a large number of patients, we may partner with other companies with complementary resources to maximize the value of our current and future product candidates.

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We intend to maintain significant economic interest in our product candidates and selectively consider partnership opportunities.

Develop commercial scale manufacturing of CAN-2409 at a contract manufacturer and complete our planned cGMP manufacturing facility for the manufacture of CAN-3110 .

Ensure commercial-scale manufacturing of our product candidates .

We will rely on third party contract manufacturers for commercial-scale manufacturing of our adenovirus product candidate, CAN-2409.

We expect to develop clinical scale, fully integrated manufacturing capabilities at our facility in Needham, Massachusetts for clinical trial product supplies.

Our Market Opportunities in Localized Prostate Cancer, Non-Small Cell Lung Cancer and High-Grade Glioma

The three indications where we have the most advanced clinical trials are localized prostate cancer, non-small cell lung cancer, and high-grade glioma.

These types of cancer present substantial market opportunities.

Prostate cancer is the second leading cause of cancer death among men in the United States.

The prostate cancer therapy market is estimated to be approximately $9.9 billion in 2019 growing to over $16.1 billion by 2026.

Although most deaths occur in patients with later stage metastatic disease, the majority of prostate cancer patients roughly 150,000 annually in the United States are initially diagnosed in the early stage of disease.

Standard of care in this early, localized setting, leaves substantial need unaddressed.

The primary interventions are surgery, radiotherapy and androgen deprivation therapy, also known as chemical castration.

These treatments have high incidence of potentially life altering side effects, including incontinence and erectile dysfunction.

There is therefore a significant unmet need for a novel treatment able to forestall or prevent progression to later stages of disease without the burdensome side effects associated with the current standard of care.

In recent years, immune checkpoint inhibitors (ICIs), specifically PD-1 directed agents, have transformed the treatment paradigm of NSCLC and become a backbone therapy for this indication.

Over a half dozen immune checkpoint inhibitor products have been approved in a number of cancer indications, and there are numerous other related drug candidates in preclinical and clinical development.

Global sales for ICIs in 2019 were approximately $23 billion with NSCLC, accounting for between 50% and 55% of overall sales.

The commercial opportunity in NSCLC is significant.

Drug treated patient populations in the US for 2020 are estimated at 75,160;

47,920 and 21,990 in first-, second- and third-line treatment, respectively.

ICI use in NSCLC has become standard of care with approximately 49% of first-line patients in the United States being treated with an ICI alone or in combination with other agents.

Glioblastoma is the most common form of brain cancer, comprising approximately 90% of high-grade gliomas, and has an extremely poor prognosis.

Fewer than 10% of patients survive longer than 5 years, with a median overall survival of less than 15 months.

The primary standard of care treatments are surgery, radiotherapy and chemotherapy.

None of these treatments offer the potential of a cure, with nearly all patients eventually succumbing to their cancer.

While the annual number of drug-treatable patients with glioblastoma in the United States is approximately 16,000, limited treatment options and the substantial unmet need present a significant market opportunity.

One illustrative example is the agent temozolomide, which demonstrated improvement in median overall survival of less than three months compared to standard of care, yet still generated peak annual revenue of over $1 billion.

We expect that our cost-of-goods will be substantially lower than cell- and antibody-based therapies because of our high-yield manufacturing process.

Conventional cancer therapies (chemotherapy, radiotherapy and surgery) often do not eradicate 100% of the tumor cells, which often leads to tumor progression or recurrence.

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Immunotherapy is a relatively new treatment modality that has expanded the anti-cancer treatment paradigm.

FDA-approved immunotherapies include cytokines, cell therapies and antibodies, including checkpoint inhibitors.

FDA-approved immunotherapies include cytokines, cell therapies and antibodies, including ICIs.

Much focus has been placed on harnessing the effector T cell arm of the immune system for tumor specific immunity.

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Cellular vaccines are not easily scalable and allogeneic vaccines may not bear the relevant antigens expressed by a patient’s tumor.

Immune checkpoint inhibitors, or ICI, such as anti-PD-1 and anti-PD-L1 antibodies, have transformed the treatment paradigm for different cancer indications.

However, only approximately 15 to 40% of patients overall respond to such treatment.

We are focused on the development of oncolytic viral immunotherapy approaches, which are based on an extensive history of research.

ICIs such as anti-PD-1 and anti-PD-L1 antibodies, have transformed the treatment paradigm for different cancer indications.

However, only approximately 15% to 40% of overall patients respond to such treatment.

We are focused on the development of viral immunotherapy approaches, which are based on an extensive history of research.

Originally, the mechanism of action of those agents was believed to be based only on the ability of the virus to induce cancer cell lysis and to resolve tumors.

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With the dramatic emergence of ICIs and immunotherapy as a core treatment modality, the importance of the immunostimulatory aspect of viral-mediated approaches became more widely evident.

The currently understood

generalized mechanism of action of oncolytic viral immunotherapies is unique in combining both an anti-tumor cytotoxic component and an immune-stimulatory component.

Together, these modalities lead to an “

in-situ vaccination”

The currently understood generalized mechanism of action of viral immunotherapies is unique in combining both an anti-tumor cytotoxic component and an immune-stimulatory component.

Together, these modalities lead to an “in-situ vaccination”

effect against the injected tumor followed by an effect on uninjected distant metastases.

Pairing this therapeutic approach with ICI treatment is based on a strong mechanistic rationale and has shown promise in experimental models of cancer.

Pairing this therapeutic approach with ICI treatment or with radiotherapy is based on a strong mechanistic rationale and has shown promise in experimental models of cancer.

It has been observed that tumors that are least responsive to ICI are commonly characterized by low levels of lymphocytic infiltration and low or no PD-L1 expression levels;

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tumors into immunologically active “hot”

tumors, thereby increasing their responsiveness to ICI.

Specific aspects of the mechanism of action of viral immunotherapy include the following:

tumors, thereby increasing their responsiveness to ICI or other therapies, such as radiotherapy.

The Mechanism of Action of Viral Immunotherapy:

Direct anti-tumor cytotoxic activity.

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Viral immunotherapy has attributes that are important for a cancer therapeutic.

The agents are off-the-shelf, and while they have been shown to stimulate immune responses in certain patients, there is no requirement to modify them for each patient, unlike other cellular therapy approaches.

The first viral immunotherapy (Imlygic, Amgen) was approved by the FDA in 2015, providing support that additional agents in this class may have similar potential.

Furthermore, safety data shown in the clinical trials and the ultimate approval of Imlygic, supports the ability to combine viral immunotherapy with other agents due to the potential for fewer overlapping side effects.

Our Product Candidates:

Two platforms and two clinical candidates to address diverse clinical needs

The agents are off-the-shelf, and while they have been shown to stimulate immune responses in most patients, there is no requirement to modify them for each patient, unlike other cellular therapy approaches.

The first viral immunotherapy was approved by the FDA in 2015, providing support that additional agents in this class may have similar potential.

Furthermore, safety data shown in several clinical trials of various immunotherapies supports the ability to combine viral immunotherapy with other agents due to the potential for fewer overlapping side effects.

Our Immunotherapy Platforms.

Our two platforms, one based on adenovirus and the other based on HSV, provide different and complementary sets of attributes, which allows us to utilize the product candidate that is best suited for a particular clinical application.

Key attributes across our oncolytic viral immunotherapy platforms include:

Key attributes across our viral immunotherapy platforms include:

Targeting a Wide Range of Cell Types.

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This aims to maximize immune stimulation and minimize systemic toxicity, factors that are believed to be suboptimal with intravenous administration.

For the indications that we selected, this is a straightforward procedure, leveraging standard of care medical procedures, such as intra-prostate injection or delivery during diagnostic (bronchoscopy) or therapeutic (neurosurgery) procedures.

We believe that directly injecting these viral immunotherapies into a patient’s cancerous tissue helps to optimize the benefit/risk for these agents to be highly immunostimulatory at the site of the tumor, whereas systemically administered agents would need to avoid detection by the body’s immune surveillance mechanisms to avoid rapid destruction before getting to the target tumor.

While our product candidates are administered directly into the tumor, we have observed a systemic immune response in our preclinical studies and clinical trials that may indicate the potential of our product candidates to induce systemic immune response against distal, uninjected tumors, also known as an “abscopal”

For the indications that we selected, intratumoral administration is a straightforward procedure that is aligned with clinical practice, leveraging standard of care medical procedures, such as intra-prostate injection or delivery during diagnostic (bronchoscopy) or therapeutic (neurosurgery) procedures.

Cost-efficient Manufacturing.

Both product candidates are relatively inexpensive to manufacture, particularly when compared to other biologic or cellular therapy treatments.

We believe that there are several qualified contract manufacturers with experience manufacturing adenovirus and HSV products.

Key attributes of our Adenoviral platform include:

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High-Titer Formulation.

Adenovirus can be formulated at high titers, facilitating the administration of low volume doses sufficiently potent to induce strong activity, particularly in volume sensitive indications such as brain cancer.

Adenovirus can be formulated at high titers, facilitating the administration of low volume doses sufficiently potent to induce strong activity.

Product Stability.

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There is no need for in vivo amplification as the virus is highly immunogenic and can be administered at high titers.

Key Attributes of our HSV platform include:

Key attributes of our CAN-3110 platform include:

Capacity for selective replication in the tumor.

There is a strong rationale for use of a replication-competent virus that is designed to provide potent oncolysis and viral amplification in tumors characterized by high volume or located in less anatomically accessible areas, such as recurrent HGG.

We have engineered CAN-3110 to selectively replicate only within tumors.

This tumor specific replication ability of CAN-3110 is regulated by the expression of ICP34.5, a gene encoding for a protein that permits viral replication even in the presence of the interferon response that is normally able to quell viral infection.

In the CAN-3110 construct, ICP34.5 expression is driven by the expression of Nestin, a protein largely expressed in certain tumors, like gliomas, but not in healthy brain tissue, thereby enabling replication specifically in the context of brain tumors.

We believe our HSV-based platform will allow us to implement additional genetic modifications to leverage the use of CAN-3110 in recurrent HGG and in other tumor types expressing Nestin.

Oncolytic activity combined with immunostimulatory properties.

CAN-3110 is designed to persist and replicate at the site of the tumor.

Viral replication is accompanied by tumor oncolysis, with release of tumor antigens in the microenvironment and activation of local systemic immune response.

Key attributes of the enLIGHTEN Discovery Platform include:

Strong focus on human biology, including deep phenotyping of human tumors, to increase probability of success

Data driven selection of the payload.

The use of advanced analytics on proprietary and publicly available datasets enables us to select what we believe is the best payload for combinatory strategy in a specific indication, rationalizing our payload selection, de-risking development and maximizing our probability of success .

Use of HSV based on its high capacity for genetic cargos .

Our HSV-based platform allows the introduction of large genetic cargos, such as multiple immunomodulatory genes that may further enhance the anti-tumor immune response.

Amenable to engineered modifications.

Our knowledge of virus biology allows us to make modifications, such as those already present in CAN-3110 to target certain tumor types.

The tumor specific replication ability of CAN-3110 is regulated by the expression of ICP34.5, a gene encoding for a protein that permits viral replication even in the presence of the interferon response that is normally able to quell viral infection.

In the CAN-3110 construct, ICP34.5 expression is driven in gliomas, but not in healthy brain tissue, thereby enabling replication specifically in the context of brain tumors.

We believe our HSV platform will allow us to implement additional genetic modifications to leverage the use of CAN-3110 in high-grade glioma and in other tumor types.

Capacity for Replication.

There is a strong rationale for use of a replication-competent virus that is designed to provide potent oncolysis and in vivo virus amplification in high tumor volume or less anatomically accessible tumors, such as recurrent high-grade glioma.

Lower Immunostimulatory Potency.

The engineered HSV viral particle is able to persist and replicate at the site of the tumor.

This is particularly important in larger tumors formed in immune privileged, highly immunosuppressive sites;

supporting the use of CAN-3110 in recurrent high-grade glioma.

High Capacity for Genetic Cargos .

Our HSV platform allows the introduction of large genetic cargos, such as multiple immunomodulatory genes that may further enhance the anti-tumor immune response.

Our Lead Product Candidate:

Leveraging these modifications, we can select the best viral vector to deliver the selected payload in a specific indication.

We have an advanced pipeline of late-stage and early-stage clinical trials with our two lead product candidates, CAN-2409 and CAN-3110.

CAN-2409, formerly known as gene mediated cytotoxic immunotherapy (GMCI), is our most advanced product candidate.

It is a replication defective adenovirus that has been genetically modified to express the gene encoding the HSV-thymidine kinase enzyme.

This enzyme activates the prodrug, valacyclovir, a widely available, generally well-tolerated antiviral at the site of the tumor, generating a powerful patient-specific anti-tumor immune response.

We believe there are three key aspects of the mechanism of action.

First, the direct, cellular killing activity is based on the transformation of valacyclovir into a toxic nucleotide analogue that disrupts DNA synthesis and repair.

This phenomenon occurs preferentially in actively dividing cancer cells, thereby providing tumor specificity.

Second, adenoviral capsid proteins themselves also directly trigger an immuno-inflammatory response through the establishment of a proinflammatory tumor microenvironment, resulting in the expression of proinflammatory cytokines, chemokines, and adhesion molecules that contribute to the optimal conditions to immunize against the tumor antigens that are released in the tumor microenvironment as a direct result of the formed toxic nucleotide analogues.

Together, this results in the recruitment, activation and proliferation of anti-tumor effector cells, in particular CD8+ cytotoxic T cells.

Consequently, the localized death of tumor cells releases numerous antigens that can be recognized by the patient’s own immune system, thereby training the immune system to recognize, target and destroy cancer cells bearing the same antigens that have spread to other sites in the body.

To date, CAN-2409 has been administered to over 950 patients with cancer, who are in ongoing, placebo-controlled randomized trials.

In total, we have conducted more than 10 clinical trials with CAN-2409 in a range of solid tumor indications.

We have seen encouraging clinical activity and a favorable tolerability profile with CAN-2409 in both monotherapy and combination settings with radiotherapy, ICI therapy, androgen deprivation therapy (ADT), chemotherapy and surgery.

Based on the totality of our clinical data generated to date, we are currently pursuing indications in lung, pancreatic, and prostate cancer, which we believe all have great potential to address unmet need.

The clinical trial is randomized, triple-blinded and placebo-controlled.

It targeted enrollment of approximately 700 patients and was fully enrolled with 711 patients in September 2021 with topline data anticipated at the end of 2024.

We have also received fast track designation by the FDA for the development of CAN-2409 for the treatment of localized, primary prostate cancer in combination with radiotherapy to improve the local control rate, decrease recurrence and improve disease-free survival.

We expect that if the trial is successful and if we obtain FDA approval, CAN-2409 could be the first new FDA approved pharmacologic treatment available in over 30 years as a first-line therapeutic for the over 100,000 patients who are newly diagnosed with localized prostate cancer each year in the United States.

We have also completed enrollment for a Phase 2 clinical trial with CAN-2409 as monotherapy in newly diagnosed prostate cancer patients under active surveillance.

This trial has recruited 187 patients with low-, intermediate- and certain high-risk localized prostate cancer.

We expect to announce topline data in the fourth quarter of 2024.

We believe that this trial, if successful, could position CAN-2409 as a first-line monotherapy treatment for patients with low- and intermediate-risk prostate cancer, thereby meaningfully expanding the addressable patient population.

In NSCLC, we have observed monotherapy activity of CAN-2409 in a Phase 1 biomarker focused, window of opportunity clinical trial.

In 2020, we initiated a Phase 2 clinical trial evaluating CAN-2409 in combination with PD-(L)1 checkpoint inhibitors for patients with inadequate response to PD-(L)1 ICI.

This open label trial, as amended, is targeting enrollment of approximately 80 patients with stage III/IV NSCLC in two separate cohorts.

The cohorts are defined based on response to ICI at the time of enrollment.

Cohort 1 addresses patients with stable disease at enrollment.

Cohort 2 enrolls patients with progressive disease after at least 18 weeks of ICI treatment.

Patients will continue treatment with their initial checkpoint inhibitor and CAN-2409 will be added to their regimen.

The primary efficacy endpoint for this trial is tumor response as measured by RECIST criteria including overall response rate (ORR) and/or disease control rate (DCR).

We reported initial data from this trial at the ASCO Annual Meeting in June 2022 and during our Research and Development Day in December 2022, we presented updated data showing evidence of local and systemic anti-tumor activity;

a DCR of 77% (20/26) in patients entering the trial with disease progression (cohort 2);

sustained and ongoing clinical responses greater than 1 year;

favorable change in the trajectory of tumor progression;

decreased tumor size of RECIST target lesions in most patients;

reduced uninjected tumor size in 14/21 patients (67%);

an overall response rate of 13% (4/30) across cohorts 1 and 2;

durable disease stabilization translating into encouraging preliminary evidence of progression-free survival;

consistent induction of local and systemic cytotoxic T cell response;

increased infiltration of CD8+ T cells in the tumor microenvironment;

systemic expansion of effector T cells and increase in soluble granzyme B levels in the peripheral blood;

and a favorable safety/tolerability data with most treatment-related adverse events being grade 1/2.

We anticipate presenting additional updated data from this ongoing clinical trial in the third quarter of 2023.

We have initiated a randomized Phase 2 clinical trial evaluating CAN-2409 in borderline-resectable pancreatic adenocarcinoma.

In March 2023, in connection with our cost management and dynamic portfolio management initiatives, we elected to pause new enrollment in this randomized Phase 2 clinical trial, subject to additional funding.

Despite the pause in patient enrollment, we continue to expect to present initial clinical data in the fourth quarter of 2023.

Our second viral immunotherapy platform is based on a novel, next generation, genetically modified HSV that induces tumor specific oncolysis.

The HSV-based platform enables generation of both replication-competent and replication-defective viral product candidates as well as capacity to clone, in the vector, up to five transgenes that will allow us to optimize our virus profile for different tumor settings.

CAN-3110, our first HSV-based product candidate, has been engineered for enhanced specificity and tumor cell killing, while minimizing toxicity on healthy tissue.

CAN-3110 was formerly known as rQNestin34.5v.2.

An investigator-sponsored Phase 1 clinical trial is ongoing with CAN-3110 in our initial target indication of recurrent HGG and we reported additional biomarker results in November 2021.

During our Research and Development Day in December 2022, we presented updated data demonstrating that the treatment was well tolerated, with no observed dose-limiting toxicity;

produced a median overall survival (mOS) of 11.6 months with a single dose;

showed evidence of immune activation

and persistent HSV-1 antigen and HSV-1 replication consistent with the mechanism of action.

We are currently evaluating the effects of multiple doses of CAN-3110 in recurrent HGG supported by the Break Through Cancer foundation.

In addition, we are pursuing novel discovery programs based on our enLIGHTEN Discovery Platform.

Market Opportunity

The four indications where we have the most advanced clinical trials are localized prostate cancer, NSCLC, pancreatic cancer, and recurrent HGG.

These types of cancer present substantial market opportunities and are also enabling indications for future expansion into other solid tumors.

Localized Prostate Cancer

Prostate cancer is the second leading cause of cancer deaths in men in the United States, representing a high level of medical burden and unmet need.

The prostate cancer therapy market is estimated to grow to over $16.1 billion by 2026.

Approximately 200,000 men in the United States are diagnosed with prostate cancer annually, with more than 30,000 deaths each year.

Although most deaths occur in patients with later stage metastatic disease, most prostate cancer patients roughly 150,000 annually in the United States are initially diagnosed in the early stage of disease, of which roughly 105,000 are considered to have intermediate- or high-risk of progression and approximately 45,000 are considered to be low-risk.

For the intermediate- and high-risk patients, the standard of care is radical prostatectomy and radiotherapy often in conjunction with androgen deprivation therapy or chemical castration.

These treatments have a high incidence of

potentially life altering side effects, including incontinence and erectile dysfunction.

Weighing the balance between therapeutic efficacy and side effects linked to therapy, about 10% of the intermediate-risk patients, and approximately 40% of the low-risk patients decide, in consultation with their physicians, to adopt a close monitoring approach known as active surveillance that involves periodic imaging, biomarker evaluation and biopsies.

Standard of care in this early, localized setting, leaves substantial need unaddressed.

As a result of PSA screening programs, most patients are diagnosed at early stages of disease with low grade, low volume, asymptomatic prostate cancer.

Current screening methods are inadequate to definitively identify which patients are most likely to progress.

As a result of these side effects, there is a large desire to delay or prevent the need for radical treatment.

As a result, many men with prostate cancer meeting the National Comprehensive Cancer Network (NCCN) guidelines for low-risk prostate cancer choose not to be treated and to undergo an intense monitoring program, known as Active Surveillance (AS), as their preferred initial course of treatment.

However, within 10 years of diagnosis, between 21% and 38% of men will have developed progressive cancer and require invasive treatments.

It has been reported that 21% and 41% of patients initially under AS convert to active treatment based on progression of their disease within two and five years, and approximately 17% of men undergoing AS choose to move to active treatments within 10 years of diagnosis, even in the absence of any evidence of progression, underscoring the level of concern around progression and the significant unmet need in this early line of treatment.

To our knowledge, the only FDA-approved pharmacologic intervention indicated for newly diagnosed localized prostate cancer is chemical castration therapy, also known as ADT.

Standard of care for localized disease is primarily surgery, radiotherapy and/or ADT.

Because ADT has a potentially severe side effect profile, including impotence, hot flashes, mood changes, depression and others, these hormone treatments are reserved only for those patients that present the highest risk of localized or metastatic prostate cancer.

Similarly, surgical prostatectomy can often cause urinary dysfunction and sexual dysfunction that can last years and sometimes be permanent.

Approximately one-third of men with normal baseline function will report some increase in urinary symptoms and urgency after prostatectomy and most men will experience some erectile dysfunction after treatment with either surgery or radiation.

We believe CAN-2409 provides a significant commercial opportunity for therapeutic use in the newly diagnosed, localized prostate cancer patient population, with the goal of reducing progression or recurrence of disease without significant toxicities and with a product that can be administered at outpatient facilities.

Non-Small Cell Lung Cancer

In recent years ICI, specifically PD-1 directed agents, have transformed the treatment paradigm of NSCLC and become a backbone therapy for this indication.

Over a half dozen ICI products have been approved in various cancer indications, and there are numerous other related drug candidates in preclinical and clinical development.

Global sales for ICIs in 2019 were approximately $23 billion with NSCLC accounting for 50% to 55% of overall sales.

The commercial opportunity in NSCLC is significant.

Drug treated patient populations in the US for 2020 are estimated at 75,160;

47,920 and 21,990 in first-, second- and third-line treatment, respectively.

ICI use in NSCLC has become standard of care with approximately 49% of first-line patients in the United States being treated with an ICI alone or in combination with other agents.

Nonetheless, 60% of these patients will have an inadequate response after one year of ICI treatment, and 80% after three years.

Pancreatic Cancer

The American Cancer Society estimates that approximately 64,050 people in the United States (33,130 men and 30,920 women) will be diagnosed with pancreatic cancer in 2023;

about 50,550 people (26,620 men and 23,930 women) will die of pancreatic cancer this year.

Treatment is with surgery in cases where tumors are resectable, followed by adjuvant chemoradiation;

there is increasing use of neoadjuvant chemoradiation in borderline resectable or even resectable disease in order to better reduce the risk of recurrence.

For resected patients, while surgery and adjuvant approaches (e.g.

FOLFORINOX) have improved median overall survival, 5 year survival rates remain modest (20-30%) and most tumors will recur (median recurrence free survival ~1.5 years).

While there is a high level of total clinical research and development activity across pancreatic cancer settings (over 150 investigational products in Phase 2 or later development), the majority are targeting metastatic disease.

Physicians have identified a continued unmet need for more effective treatment options across the pancreatic cancer setting, including a need for further approaches which can increase the resectability of borderline / locally advanced patients, and improving cure rates in resected patients.

There are an estimated 18,510 patients with resectable disease, with a sizeable proportion receiving surgery and adjuvant therapy;

there are 12,340 patients with borderline resectable disease and 30,850 with locally advanced tumors (with the majority undergoing neoadjuvant / induction treatment) in the US/EU5.

High-Grade Glioma

Glioblastoma, the most common form of HGG, is a relatively rare cancer with first-line drug treated prevalent population in the United States of approximately 16,113 patients.

Treatment in the upfront setting is surgical resection, if possible, coupled with temozolomide and/or radiotherapy;

however, virtually all patients eventually develop recurrent disease.

The prognosis for glioblastoma that has recurred is dire;

median overall survival with second line chemotherapy such as lomustine is associated with median overall survival of 6-9 months.

Few pharmaceutical treatment options exist for patients with recurrent HGG, with the last significant FDA approval over a decade ago.

Avastin was approved in 2009, specifically for patients with recurrent glioblastoma, and approval was granted despite the absence of a survival benefit in the registrational studies.

New agents to treat patients with recurrent HGG are urgently needed.

Our Product Candidates

Lead Product Candidate - CAN-2409

We believe the adenovirus-based CAN-2409 has advantageous properties that differentiate from other viral immunotherapies.

Namely, CAN-2409:

Has shown activity in a range of solid tumor types and in late-stage clinical trials.

Has been dosed in hundreds of patients and has shown a favorable tolerability profile.

Is engineered to be potently immunogenic but non-replicating with the goal of maximizing the immune response while minimizing the risk for local and systemic toxicity.

Has consistently shown activity in clinical trials across a range of solid tumor types.

Has been dosed in hundreds of patients and has generated favorable tolerability and safety data.

Is engineered to be potently immunogenic but non-replicating with the goal of maximizing the anti-tumor immune response while minimizing the risk for local and systemic toxicity.

Can be stored at 4°C, facilitating the use of CAN-2409 in out-patient clinics.

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CAN-2409 (international non-proprietary name:

aglatimagene besadenovec) is an adenovirus-based replication-deficient engineered gene construct encoding the thymidine kinase gene derived from the herpes simplex virus.

aglatimagene besadenovec) is an adenovirus-based replication-defective engineered gene construct encoding the thymidine kinase gene derived from the herpes simplex virus.

It is injected directly into the tumor or target tissue.

Localized injection is intended to minimize systemic toxicities associated with systemic intravenous administration, eliminating the requirement for complex immune evasion or tumor-specific targeting mechanisms, and focuses the immune response locally against the tumor, while also activating the desired systemic anti-tumoral response.

The adenoviral construct is used as a vector to transport the thymidine kinase gene into the tumor cells at the site of injection.

Thymidine kinase converts generic, FDA-approved anti-herpes drugs, such as ganciclovir, acyclovir and valacyclovir, which we use as prodrugs, into a toxic nucleotide analogue.

The adenoviral vector is used to transport the thymidine kinase gene into the tumor cells at the site of injection.

HSV-thymidine kinase converts generic, FDA-approved anti-herpes drugs, such as ganciclovir, acyclovir and valacyclovir, which we use as prodrugs, into a toxic nucleotide analogue.

These agents are widely available, inexpensive and are generally well-tolerated.

Cells transduced with thymidine kinase gene undergo immunogenic cell death after exposure to these systemically administered prodrugs.

Cells transduced with the thymidine kinase gene as well as neighboring cells that are replicating or exhibit DNA damage undergo immunogenic cell death after exposure to these systemically administered prodrugs that are converted in the tumor microenvironment into toxic metabolites.

The prodrug-derived cytotoxic nucleotide analogs are designed to inhibit DNA replication and repair, leading to the death of multiplying tumor cells, and in particular of cells undergoing repair from radiation or chemotherapy damage.

This oncolytic activity is immunogenic and exposes tumor antigens that can elicit a further tumor-specific immune response.

Additionally, the virus itself stimulates a marked immune response.

Mechanism of action - local immune activation

Key pro-inflammatory cytokines such as GM-CSF and IL-6 as well as chemokines, adhesion molecules and costimulatory molecules are locally upregulated, resulting in an inflamed (hot) tumor microenvironment, able to further enhance T cell activation.

This local effect provides a strong mechanistic rationale for the combination of oncolytic viral immunotherapy with T cell checkpoint inhibitors such as PD-1 or PD-L1 targeting antibodies.

This form of cell death is immunogenic and exposes tumor antigens that can elicit a further tumor-specific immune response.

Additionally, the virus itself stimulates a marked immuno-inflammatory response.

Key pro-inflammatory cytokines as well as chemokines, adhesion molecules and costimulatory molecules are locally upregulated, resulting in an inflamed (hot) tumor microenvironment, able to further enhance CD8+ cytotoxic T cell activation and immunization against released tumor antigens.

This local effect provides a strong mechanistic rationale for the combination of viral immunotherapy with ICIs such as PD-1 or PD-L1 targeting antibodies.

ICI agents work by unmasking the inhibitory signals provided by PD-L1 ligands on tumor cells when bound to PD-1 receptors on T cells.

By blocking this suppressive signal pharmacologically, it has been demonstrated that T cells can be unleashed to attack cancer cells and that profound clinical benefit can be achieved, but this benefit accrues only to a minority of patients.

It has been hypothesized that treatment results can be significantly improved by optimizing recognition of the specific tumor antigens by the patient’s adaptive immune system using oncolytic viral immunotherapy combined with the non-specific stimulation of T cells induced by ICI treatment.

It has been hypothesized that treatment results can be significantly improved by optimizing recognition of the specific tumor antigens by the patient’s adaptive immune system using viral immunotherapy combined with the non-specific stimulation of T cells induced by ICI treatment.

It appears that a duality of signals is required:

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The efficient presentation of tumor specific antigens by MHC class I molecules to the immune system provides just such a specific, stimulatory signal.

Oncolytic viral immunotherapies have been shown to facilitate such cross presentation of tumor antigens and are therefore an attractive complement to PD-1 or PD-L1 checkpoint blockade.

Viral immunotherapies have been shown to facilitate such cross presentation of tumor antigens and are therefore an attractive complement to PD-1 or PD-L1 checkpoint blockade.

The immune system is highly dynamic, with continuous trafficking of different populations of immune cells throughout the body.

One outcome of this is that when T cells are locally activated against tumor-specific antigens, they can act systemically to drive an efficient immune response at sites distant from the original tumor, as is illustrated schematically in the figure above.

This abscopal effect may explain the significant effects observed at distant, uninjected sites demonstrated in experimental model of cancers.

One outcome of this is that when T cells are locally activated and trained to recognize tumor-specific antigens, they can act systemically to drive an efficient immune response at sites distant from the original tumor.

This abscopal effect may explain the significant effects observed at distant, uninjected sites demonstrated in experimental models of cancers.

Abscopal effect has been shown with CAN-2409 in a mouse model of prostate cancer.

The model employed RM-1, a syngeneic prostate cell line, that was implanted both in the flanks of the mice as well as systemic, via a tail vein injection to mimic metastatic disease, resulting in the emergence of lung tumor nodules.

The model employed

RM-1, a syngeneic prostate cell line, that was implanted both in the flanks of the mice as well as systemic, via a tail vein injection to mimic metastatic disease, resulting in the emergence of lung tumor nodules.

After intratumor treatment of the flank tumor masses with either CAN-2409 and systemic prodrug, alone or in combination with radiotherapy, we observed a beneficial response in both injected and uninjected metastatic tumor.

of CAN-2409 resulted in a 38% mean reduction in tumor volume and, in the combination arm, a reduction of 61% in tumor volume.

Notably, the number of lung nodules was reduced from 20.5 in the control arm and 22.4 in the mice that received radiotherapy to 13.0 in the CAN-2409 arm, to 6.6 when CAN-2409 was combined with radiotherapy.

CAN-2409 treatment teaches the immune system how to fight cancer in injected tumor and uninjected metastases

The activity of CAN-2409 treatment has been shown to be dependent on CD8+ T cell involvement in mouse studies that evaluated permutations of CAN-2409 treatment and T cell depletion.

In the figure below, experimental data show that in mice bearing AKR flank xenografts that were treated with CAN-2409 and prodrug, significant tumor growth inhibition was observed.

In contrast, mice treated with the prodrug and a negative control vector showed significantly less tumor growth inhibition, providing evidence that the specific adenoviral construct of CAN-2409 is a key factor in anti-tumor activity.

Moreover, when two additional arms were treated as just described but with the addition of an antibody that depleted CD8+ T cells, very little tumor growth inhibition was observed.

This supports the contention that the activity of CAN-2409 treatment is directly dependent on CD8+ T cells.

Use of CAN-2409 resulted in a 38% mean reduction in tumor volume and, in the combination arm, a reduction of 61% in tumor volume.

Notably, the average number of lung nodules was reduced from 20.5 in the control arm and 22.4 in the mice that received radiotherapy to 13.0 in the CAN-2409 arm, and to 6.6 when CAN-2409 was combined with radiotherapy.

We have also observed the abscopal response in connection with the experimental treatment of CAN-2409 in patients with NSCLC.

The activity of CAN-2409 treatment has been shown to be dependent on CD8+ T cell involvement in studies in mouse models that evaluated permutations of CAN-2409 treatment and T cell depletion.

Furthermore, T cells from mice that were successfully treated with CAN-2409 and prodrug were shown to be sufficient to inhibit tumor growth when mixed with AKR tumor model cells and implanted subcutaneously in mouse flanks.

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These data are consistent with a T cell dependent mechanism of action of CAN-2409.

CAN-2409 Mechanism of action –

T cell dependent anti-tumor activity

CAN-2409 Mechanism of action –

Response to CAN-2409 treatment is

transferable via CD8+ T cells in mouse models of cancer

CAN-3110 and the HSV platform technology

Additionally, we have shown the induction of CD8+ T cell infiltration at the site of the tumor in patients with prostate cancer, pancreatic cancer, and NSCLC.

Second Product Candidate - CAN-3110

CAN-3110 is a modified HSV with specific properties that can be leveraged in diverse clinical indications.

Namely, CAN-3110:

Is engineered to provide oncolysis through tumor replication specifically in Nestin expressing cancer cells.

Is engineered to provide oncolysis through replication specifically in Nestin expressing cancer cells.

Has demonstrated statistically significant survival benefit in preclinical models of brain cancer.

Has demonstrated a favorable tolerability profile, not reaching a dose limiting toxicity in the dose range tested in our Phase 1 trial.

Has shown a preliminary clinical signal in a difficult to treat brain cancer population, critically defined by a highly immunosuppressive environment.

Has generated favorable tolerability and safety data, not reaching a dose limiting toxicity in the dose range tested in an ongoing investigator-sponsored Phase 1 trial.

Has shown a clinical signal in a difficult to treat brain cancer population, critically defined by a highly immunosuppressive environment.

Has been engineered to replicate in a range of other indications characterized by Nestin expression.

Is derived from the HSV platform that also provides the potential to support expansion of our pipeline with novel agents.

CAN-3110 is an engineered oncolytic HSV where the expression of ICP34.5, the gene responsible for viral replication, has been placed under the control of a tumor-specific Nestin promoter.

This modification of the viral genome enables us to maintain the function of ICP34.5, an HSV protein that allows virus replication even in the presence of a suppressive interferon response, under a strict control and only in tumor cells.

ICP34.5 is often deleted in other HSV oncolytic viruses that may be less tumor selective with an intent of achieving favorable safety profile, but this often results in weak viruses characterized by poor replication ability and an ability to generate limited immune response.

Is derived from our HSV-based platform that also provides the potential to support expansion of our pipeline with novel agents.

CAN-3110 is an engineered HSV where the expression of ICP34.5, the gene responsible for viral replication, has been placed under the control of a tumor-specific Nestin promoter.

Nestin is a cytoskeletal protein that is overexpressed in glioma cells, but it is absent in the healthy adult brain.

In CAN-3110, ICP34.5 expression is controlled by the Nestin promotor enabling viral replication selectively in tumor cells.

This replication-competent HSV construct provides tumor-specific cytolytic activity in animal models, while sparing healthy cells.

As set forth below, data with a tool analogue of CAN-3110 in a mouse model of glioma has shown survival benefit over control vectors when the agent is administered to mice at both early and late stages of tumor growth, even after tumor implantation has led to neuropathology.

HSV “Nestin 34.5”

Shown Survival Benefit after rQNestin (CAN-3110 tool compound) treatment in mouse model of high-grade glioma

Our technology platform enables rapid HSV vector engineering and generation of new therapeutic candidates.

Our platform allows rapid and precise modifications to the virus including the insertion of high cargo capacity DNA cargo cassettes, generation of both replication incompetent and competent agents, and other attributes which provide the opportunity to optimally design HSV technologies for specific therapeutic applications in oncolytic and immunotherapeutic indications.

Our team has produced and released HSV vectors for multiple human clinical trials.

Our HSV discovery platform allows us to feed and fill our pipeline, building on our vast experience in developing oncolytic viral immunotherapies.

Intratumoral administration

Both CAN-2409 and CAN-3110 are intentionally administered intratumorally.

We believe that directly injecting these oncolytic viral immunotherapies into a patient’s cancerous tissue helps to optimize the benefit/risk for these agents to be highly immunostimulatory at the site of the tumor, whereas systemically administered agents would need to avoid detection by the body’s immune surveillance mechanisms to avoid rapid destruction before getting to the target tumor.

Intratumoral administration is straightforward and feasible in the indications that we have selected.

The first FDA approved oncolytic virus, Imlygic, is intratumorally administered.

Although approved, this agent has had modest commercial success, with annual peak worldwide sales under $100M.

These commercial results can be explained by a variety of factors.

First, Imlygic treatment missed the endpoint of improved survival.

Second, at the time of Imlygic’s approval, other successful treatments became available, such as immune check point inhibitors, and BRAF/MEK inhibitors.

Third, Imlygic requires -70°C storage, which necessitates specialized and expensive equipment.

CAN-2409, in contrast, is stable at 4°C, which is compatible with inexpensive storage refrigerators.

In summary, CAN-2409 injection is aligned with clinical practice, can be stored at regular refrigerator temperatures, and cost of goods are expected to be low.

Our CAN-2409 Programs

Localized Prostate Cancer

Prostate cancer is the second leading cause of cancer deaths in men in the United States, representing a high level of medical burden and unmet need.

Approximately 200,000 men in the United States are diagnosed with prostate cancer annually, with more than 30,000 deaths each year.

As shown in the chart below, of the approximately 150,000 men in the United States who were diagnosed in 2020 before their prostate cancer had metastasized, roughly 105,000 are considered intermediate- or high-risk of progression and approximately 45,000 are considered to be low-risk.

For the intermediate- and high-risk patients, the standard of care is radical prostatectomy and radiotherapy often in conjunction with androgen deprivation therapy or chemical castration.

CAN-2409 current target patient populations in localized prostate cancer

To our knowledge, the only FDA-approved pharmacologic intervention indicated for newly diagnosed localized prostate cancer is chemical castration therapy, also known as ADT.

Standard of care for localized disease is primarily surgery, radiotherapy and/or ADT.

Similarly, surgical prostatectomy can often cause urinary dysfunction and sexual dysfunction that can last years and sometimes be permanent.

Approximately one-third of men with normal baseline function will report some increase in urinary symptoms and urgency after prostatectomy and the majority of men will experience some erectile dysfunction after treatment with either surgery or radiation.

As a result of PSA screening programs, a majority of patients are diagnosed at early stages of disease with low grade, low volume, asymptomatic prostate cancer.

Current screening methods are inadequate to definitively identify which patients are most likely to progress.

As a result of these side effects, there is a large desire to delay or prevent the need for radical treatment.

However, within 10 years of diagnosis, between 21 and 38% of men will have developed progressive cancer and require invasive treatments.

It has been reported that 21 and 41% of patients initially under AS convert to active treatment based on progression of their disease within two and five years, and approximately 17% of men undergoing AS choose to move to active treatments within 10 years of diagnosis, even in the absence of any evidence of progression, underscoring the level of concern around progression and the significant unmet need in this early line of treatment.

Clinical Experience with CAN-2409 for Prostate Cancer

We have completed multiple Phase 1 clinical trials in non-metastatic prostate cancer using CAN-2409 as monotherapy and in combination with standard of care.

The results of these trials provide evidence to support CAN-2409 immune activation, dosing levels and schedules as well as a favorable tolerability profile.

We have administered CAN-2409 to over 700 patients with localized prostate cancer to date, of which approximately 500 are in currently ongoing, placebo-controlled randomized trials.

This replication-competent HSV construct provides tumor-specific cytolytic activity, while sparing healthy cells that do not express Nestin.

This modification of the viral genome of CAN-3110 enables us to maintain the function of ICP34.5, an HSV protein that allows virus replication even in the presence of a suppressive interferon response, under strict control and only in tumor cells.

ICP34.5 is deleted in other HSV oncolytic viruses that may be less tumor selective with an intent of achieving a favorable safety profile, which may result in viruses characterized by poor replication ability and a limited ability to generate an effective anti-tumor immune response.

Our Clinical Trials

CAN-2409 for Prostate Cancer

We have completed multiple Phase 1 and Phase 2 clinical trials in non-metastatic prostate cancer using CAN-2409 as monotherapy and in combination with standard of care.

These trials generated favorable tolerability and safety data and also provide evidence to support CAN-2409 immune activation, dosing levels and schedules.

We have administered CAN-2409 to about 900 patients with localized prostate cancer to date, most of whom are currently in ongoing, placebo-controlled randomized trials.

Monotherapy Activity

We have observed what we believe to be a clinical response with CAN-2409 as monotherapy in our Phase 1 trials.

These responses have been observed in patients with prostate cancer, including patients with newly diagnosed, localized disease, as well as those whose cancer was progressing even after radiotherapy.

These responses have been consistently observed in patients with prostate cancer, including patients with newly diagnosed, localized disease, as well as those whose cancer was progressing even after radiotherapy.

In newly diagnosed patients with localized prostate cancer, analysis of biopsies following monotherapy CAN-2409 treatment revealed change in glandular architecture, necrosis and increased immune cell infiltration as compared to baseline biopsy.

We observed in treated samples a 4-fold increase in the number of CD8 positive T cells and a 3-fold increase in the number of CD68+ macrophages, demonstrating immune response to CAN-2409.

Induction of CD8+ tumor-infiltrating lymphocytes in Phase 1/2 prostate cancer trial

In another of our Phase 1 trials, patients whose prostate cancer had progressed following radiotherapy and that presented a persistently rising PSA level, were treated with CAN-2409 as monotherapy using six dose levels, ranging from 1x10 8 –1x10 11 viral particles.

We observed in treated samples a 4-fold increase in the number of CD8+ T cells and a 3-fold increase in the number of CD68+ macrophages, demonstrating immune response after CAN-2409 administration.

In another Phase 1/2 clinical trial, patients whose prostate cancer had progressed following radiotherapy and that presented a persistently rising PSA level, were treated with CAN-2409 as monotherapy using six dose levels, ranging from 1x10 8 –1x10 11 viral particles.

In 27 of the 36 patients recruited, a decrease in PSA levels was observed following a single cycle of CAN-2409, as measured by the best PSA decrease in serial assessments within the first 3 months after treatment.

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A subset of the patients in this trial also received second or third injection courses of CAN-2409.

In the majority of those patients, a decrease from pre-administration PSA levels was again observed upon repeated injection.

This dynamic is illustrated below in the inset PSA graph of “patient 19”

in this trial.

The orange datapoints represent PSA levels immediately prior to CAN-2409 administration.

After a first dose, the patient’s PSA level dropped below baseline levels for over 10 months, at which point serial increases were observed, as expected in recurrent prostate cancer.

Upon a second injection course of CAN-2409, a sequential drop in PSA was again induced, indicating potentially repeated CAN-2409 activity even in recurrent disease subsequent to an initial response.

Phase 1 trial of CAN-2409 monotherapy in prostate cancer - Best response to first injection (n=36)

Use of CAN-2409 in combination therapy

In most of those patients, a decrease from pre-administration PSA levels was again observed upon repeated injection.

Combination Therapy

Because of the increasing prevalence of combination therapy for cancer patients, the ability to combine novel agents with standard of care treatments without overlapping toxicity is of increasing importance.

We believe that the favorable tolerability profile of CAN-2409 demonstrated in our clinical trials is encouraging for our current and future development plans, in combination with other agents but also as a monotherapy in lower risk patient populations that are not willing to undergo more aggressive forms of treatment.

The safety data from our Phase 2 clinical trial in prostate cancer patients treated with CAN-2409 in combination with standard of care are summarized in the table below.

Of note is the absence of reported grade 4 treatment related adverse events and only single-patient incidence of grade 3 treatment related adverse events.

We believe that the favorable tolerability and safety data generated for CAN-2409 in our clinical trials is encouraging for our current and future development plans, in combination with other agents but also as a monotherapy in lower risk patient populations that are not willing to undergo more aggressive forms of treatment.

The safety data from our Phase 2 clinical trial in prostate cancer patients treated with CAN-2409 in combination with standard of care of radiotherapy or androgen deprivation therapy, reported no grade 4 treatment-related adverse events and only single-patient incidence of grade 3 treatment related adverse events.

It was anticipated that flu-like symptoms would be evident, because CAN-2409 is an adenoviral gene construct known to induce a systemic immune response.

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The rates of the gastrointestinal adverse events are consistent with those typically reported by patients undergoing radiotherapy, which is a component of standard of care in this population.

Phase 2 prostate cancer safety data for prostate cancer patients treated with CAN-2409 in combination with standard of care

Our Phase 2 trial data informed our agreement with the FDA under the SPA for our ongoing Phase 3 clinical trial.

In our Phase 2 clinical trial, we observed that intermediate-risk patients who received CAN-2409 in combination with radiotherapy had failure rates that were 75% lower than those reported in four other contemporaneous trials of similar

patient populations as shown in the table below, although this is limited because we have not conducted head-to-head studies.

Our previous Phase 2 clinical trial data informed our agreement with the FDA under the SPA for our ongoing Phase 3 clinical trial.

Although the data is limited as we have not conducted head-to-head studies, in our Phase 2 clinical trial we observed that intermediate-risk patients who received CAN-2409 in combination with radiotherapy had failure rates that were 75% lower than those reported in four other contemporaneous trials of similar patient populations.

Where these other clinical trials reported freedom from failure rates of between 75%-79%, corresponding to cumulative recurrence rates of 21%-25%, CAN-2409 resulted in a 5% recurrence rate in patients with intermediate-risk prostate cancer.

The median follow-up for the clinical trial of CAN-2409 was 5.7 years.

The median follow-up of patients who received CAN-2409 in this clinical trial was 5.7 years.

Similarly, results in this clinical trial also demonstrated reduced recurrence rates in the low- and high-risk patients enrolled when compared to these other trials.

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In this trial, low-risk patients achieved a PSA of < 2ng/ml in 77% of CAN-2409 treated patients versus 58% in control populations.

The schema for this trial is shown below.

Completed phase 2 clinical trial of CAN-2409 combined with radiotherapy +/- androgen deprivation therapy

Freedom from failure in varying risk populations of localized prostate cancer

These were not head-to-head studies, which limits the ability to compare results.

The endpoint used in our Phase 2 trial is freedom from failure (FFF), defined by the period of time between treatment and the occurrence of a clinical or biochemical failure.

The endpoint used in our Phase 2 trial was freedom from failure (FFF), defined by the period of time between treatment and the occurrence of a clinical or biochemical failure.

Under the SPA agreement, we have selected disease-free survival (DFS) as the endpoint for our Phase 3 clinical trial.

The DFS definition requires an objective detection of tumor progression.

This largely overlaps with FFF as it is often triggered by detection of an increased PSA levels (i.e., biochemical failure).

We have also reanalyzed our Phase 2 data using DFS parameters, supporting the implementation of DFS as endpoint in our Phase 3 trial.

Our Potentially Registrational Phase 3 Clinical Trial for Localized Prostate Cancer

This largely overlaps with FFF as it is often triggered by detection of increased PSA levels (i.e., biochemical failure).

We have also reanalyzed our previous Phase 2 data using DFS parameters, supporting the implementation of DFS as endpoint in our Phase 3 trial.

Potentially Registrational Phase 3 Clinical Trial for Localized Prostate Cancer

We are developing CAN-2409 as a potential therapeutic option that avoids the long-term severe side effects of hormone therapy or surgical interventions.

Based on the data from our clinical trials to date, we believe that CAN-2409 has the potential, if approved, to be the first product candidate approved for patients with localized prostate cancer in over 30 years.

Based on the data from our clinical trials to date, we believe that CAN-2409 has the potential, if approved, to be the first new first-line product candidate approved for patients with localized prostate cancer in over 30 years.

We are currently conducting a potentially registrational Phase 3 trial for CAN-2409, with agreement, under an SPA with the FDA for a single pivotal trial in newly diagnosed localized prostate cancer in intermediate and high-risk patients in combination with the standard of care, radiotherapy.

The clinical trial is targeting evaluating of over 700 patients, who are randomized 2:1.

Patients will receive three investigational treatment courses of CAN-2409, each consisting of four concurrent injections of transrectal ultrasound guided administration of CAN-2409 followed by a course of oral valacyclovir.

As illustrated schematically below, the first injection course is given at least 15 days but not more than 8 weeks before starting radiation.

This Phase 3 clinical trial is fully enrolled with 711 patients, randomized 2:1.

Patients receive three investigational treatment courses of CAN-2409, each consisting of four concurrent injections of transrectal ultrasound guided administration of CAN-2409 followed by a course of oral valacyclovir.

The first injection course is given at least 15 days but not more than 8 weeks before starting radiation.

The second injection course is given 0-3 days prior to radiotherapy.

The third and final injection course is delivered 15-22 days after the second injections.

A fixed dose of valacyclovir is given for 14 days after each injection course.

Standard of care external beam radiotherapy will be administered to patients throughout the course of the trial with optional ADT as determined by the treating physician.

Dosing scheme for CAN-2409 Phase 3 prostate cancer trial

A fixed dose of valacyclovir is

given for 14 days after each CAN-2409 administration.

Standard of care external beam radiotherapy is administered to patients throughout the course of the trial with optional ADT as determined by the treating physician.

Trial inclusion criteria are based on patients with localized prostate cancer meeting the NCCN criteria of intermediate-risk or patients presenting only one NCCN high-risk feature.

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Patients may also exhibit one high-risk characteristic that may consist of a PSA of 20+ ng/ml, a Gleason Score of 8-10, or a cancer that is up to stage T3a, but not more than one of these high-risk factors.

The SPA agreement specifically defines agreement with the FDA on the statistical design and power of the phase 3 trial, as well as the specifics of the primary endpoint definition.

The SPA states that the study is adequately designed to provide the necessary data that, depending on the outcome, could support a biologics license application submission.

The SPA does note the general point for all SPAs, that BLA filability and approvability are review issues and that a BLA approval will depend on the quality of actual clinical trial data, the robustness of the effect on the stated primary endpoint, the impact on the secondary endpoints, a favorable assessment of the study conduct, and analysis of safety information and other supportive data.

We have approximately 50 active clinical sites for this clinical trial, and have enrolled over 700 patients, with enrollment completed in September 2021.

The SPA agreement specifically defines agreement with the FDA on the statistical design and power of the Phase 3 trial, as well as the primary endpoint definition.

The SPA states that the trial is adequately designed to provide the necessary data that, depending on the outcome, could support a Biologics License Application (BLA) submission.

The SPA does note the general point for all SPAs, that BLA acceptance and approvability are review issues and that a BLA approval will depend on the quality of actual clinical trial data, the robustness of the effect on the stated primary endpoint, the impact on the secondary endpoints, a favorable assessment of the study conduct, and analysis of safety information and other supportive data.

We have approximately 50 active clinical sites for this clinical trial and have completed enrollment in September 2021 with 711 patients.

The primary endpoint for the clinical trial is DFS.

Final results are expected in 2024.

This trial has been designed to have 90% power, a hazard ratio of 0.5 and an alpha of 0.05.

We are assuming a 15% improvement in the active arm (CAN-2409) as compared to placebo in the rate of events measured according to the DFS definition provided above.

A schema of this trial is set forth below.

Ongoing Phase 3 clinical trial of CAN-2409 in newly diagnosed, intermediate- and high-risk prostate cancer

We expect topline data from this Phase 3 trial at the end of 2024.

Phase 2 Clinical Trial for Active Surveillance

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In the AS setting, we will assess whether CAN-2409 has the potential to delay or prevent tumor progression to a later stage that demands radical treatment.

The Phase 2 clinical trial is a randomized, double blind, placebo-controlled study evaluating 187 patients with localized prostate cancer undergoing AS.

The trial completed enrollment in June 2019.

Patients in this clinical trial were randomized 2:1, active to placebo.

Patients randomized to the active arm received two investigational treatment courses of CAN-2409.

The primary endpoint will assess patients’

risk of progression employing validated endpoints.

We expect top line data from this clinical trial to be available in 2023.

A schema of this trial is set forth below.

Fully accrued ongoing Phase 2 clinical trial of CAN-2409 in patients with prostate cancer being managed by active surveillance

High-Grade Glioma

Glioblastoma, the most common form of high-grade glioma, is a relatively rare cancer with first-line drug treated prevalent population in the United States of approximately 16,113 patients.

In second- and third-line population, this number drops to 11,642 and 6,548, respectively.

Fewer than 10% of patients survive more than five years past their

initial diagnosis.

The median survival is under 15 months with the current standard of care.

Treatment in the upfront setting is surgical resection, if possible, coupled with temozolomide and/or radiotherapy.

Over half of patients are candidates for maximal surgical resection and a portion succeed, achieving removal of all visible tumor mass.

This outcome is known as gross total resection.

Few pharmaceutical treatment options exist for patients with high-grade glioma, with the last significant FDA approval over a decade ago.

Avastin was approved in 2009, specifically for patients with recurrent glioblastoma, and approval was granted despite the absence of a survival benefit in the registrational studies.

Temozolomide was approved over 20 years ago, in 1999, with no new agent significantly supplanting its use since then, further underscoring the profound unmet medical need in this condition.

In the registrational clinical trials, temozolomide use only demonstrated 2.5-month overall survival benefit, yet still saw global annual sales of over $1 billion at its peak in 2010, shortly before generic products entered the market.

The prognosis for glioblastoma that has recurred is even more dire.

Patients have scarce treatment options.

Current standard of care mainly consists of repeating first line treatment approaches or participating in a clinical trial of investigational agents.

Median survival in the recurrent setting is approximately six months.

CAN-2409 for High-Grade Glioma

In our Phase 1b/2 clinical trial in newly diagnosed patients with high-grade gliomas, including the difficult-to-treat glioblastoma, CAN-2409 demonstrated a statistically significant increase in patient survival when combined with current standard of care over the current standard of care alone (surgery, radiation and temozolomide).

The trial compared the overall survival of 48 enrolled patients treated at 4 clinical sites with CAN-2409 plus standard of care against a matched controlled set of 134 patients enrolled at MGB who received only standard of care.

The results demonstrated that the median overall survival of patients receiving standard of care alone was 13.5 months while patients receiving CAN-2409 plus standard of care was 17.1 months (p=0.0417) (left panel in the figure below).

Importantly, a pre-planned analysis on a subset of patients treated surgically with gross total resection (>95% of tumor removed) during surgery (18 patients compared to 44 in the control arm), demonstrated a median overall survival of 25.1 months in the CAN-2409 arm versus 16.3 months in the standard of care group, with approximately a 50% improvement (p=0.0120) (right panel in the figure below).

In this patient population, after three years, one in three patients was alive in the CAN-2409 arm compared to 1 in 20 patients in the standard of care group.

At the end of the study, three of the patients who received CAN-2409 were alive without progression after 43, 62.1 and 88.5 months.

Completed Phase 1b/2 clinical trial of CAN-2409 combined with standard of care in high-grade glioma

Overall survival of CAN-2409 combined with standard of care in high-grade glioma

In our Phase 1/2 trials in high-grade glioma, CAN-2409 was generally well tolerated, with the majority of treatment-related adverse events being grade 1 or 2, and few reports of grade 3 or 4 events.

Treatment related adverse events from the Phase 1/2 trial in high-grade glioma

We are planning a potentially registrational Phase 3 clinical trial in patients with untreated high-grade glioma.

The current trial design for this Phase 3 is planned to enroll patients with glioblastoma (WHO Grade IV) intended to undergo gross total resection and standard of care chemoradiation.

The primary efficacy endpoint will be overall survival, powered to 90% with a hazard ratio of 0.65 and a type I error assumption of 2.5.

We anticipate the trial to commence in the middle of 2022.

CAN-2409 Checkpoint Combination Therapy for High-Grade Glioma

Based on the clinical outcomes in glioma patients treated with CAN-2409 and the biomarker evidence for CAN-2409-mediated immune stimulation, we performed preclinical studies to examine whether CAN-2409 treatment of high-grade glioma would be enhanced if combined with immune checkpoint inhibitors to increase antitumor T cell responses.

Use of either an anti-PD-1 antibody or CAN-2409 alone resulted in 30%-50% long-term survival in a murine glioma model.

This percentage increased to 88% when CAN-2409 and anti-PD-1 were administered together.

Analysis of infiltrating T cells indicated that CAN-2409 increases the activation of tumor-infiltrating CD8+ T cells, suggesting that the activity of this combination is due to a complementary biological mechanism of the two treatment modalities.

A Phase 1 clinical trial for patients with newly diagnosed high-grade glioma examining the combination of CAN-2409 and anti-PD-1 nivolumab (Opdivo, BMS) in collaboration with BMS and ABTC has now completed enrollment.

This is the first clinical trial to evaluate the combination of CAN-2409 and nivolumab in high-grade glioma patients.

Combining CAN-2409 with an ICI such as anti-PD-1 may enhance anti-tumor T cell activation and expansion, with the potential for better clinical outcome.

Ongoing Phase 1 clinical trial of CAN-2409 with Opdivo in high-grade glioma

Oncolytic Viral Immunotherapy in High-Grade Glioma

Oncolytic viral immunotherapy is a description of a therapeutic modality that encompasses multiple different constructs and divergent pharmacologic strategies.

Some other viral approaches in high-grade glioma have previously failed, notably the investigational oncolytic viral immunotherapy agent Toca 511 that was evaluated in a Phase 2/3 trial in glioblastoma conducted by the company Tocagen.

In the case of Toca 511, we believe the similarities to CAN-2409 in glioblastoma are very limited.

Toca 511 was a retroviral construct that used a different transgene, was paired with a different prodrug, and had a different development program.

There are significant differences between the programs.

Of note, serotype 5 adenoviral gene constructs like CAN-2409 have been demonstrated to be highly immunogenic, whereas retroviruses are less immunogenic and therefore less likely to induce a strong innate immune response.

Critically, in the single arm Phase 1 trial of Toca 511 in glioblastoma, the data from the investigational agent was compared to a non-concurrently treated external control group that was poorly matched to the demographics of the investigational cohort.

For example, 74% of patients in the Toca 511 cohort had a Karnofsky performance score greater than 90, whereas only 51% of patients in the comparator group had such good clinical baseline status.

The result was a (false) positive comparison in the Phase 1 trial in favor of the Toca 511 treated group.

Further complicating interpretation of the Phase 2/3 trial, patients received only a median of two courses of prodrug commencing 6 weeks after virus dosing.

With such significant differences between programs and in the conduct of clinical trials, we believe that such failures of other oncolytic viral immunotherapies in high-grade glioma and other indications have limited bearing on the probability of success of our planned Phase 3 trial of CAN-2409 in glioblastoma.

Lung Cancer (NSCLC)

In recent years, immune checkpoint inhibitors specifically PD-1 directed agents have transformed the treatment paradigm of NSCLC and become a backbone therapy for this indication.

To date, seven immune checkpoint inhibitor products have been approved in a number of cancer indications, and there are numerous other related drug candidates in preclinical and clinical development.

Global sales for ICIs in 2019 were approximately $23 billion with NSCLC, accounting for between 50 and 55% of overall sales.

The commercial opportunity in NSCLC is significant.

Drug treated patient populations in the US for 2020 are estimated at 75,160;

47,920 and 21,990 in first-, second- and third-line treatment, respectively.

ICI use in NSCLC has become standard of care with approximately 49% of first-line patients in the US being treated with an ICI alone or in combination with other agents.

Nonetheless, the median overall survival is approximately 22 months.

To assess the potential for CAN-2409 to trigger immune activation and produce a “hot”

In May 2019, the Company completed enrollment of 187 patients in its Phase 2 clinical trial of CAN-2409 in patients with low-to-intermediate-risk, localized, non-metastatic prostate cancer, randomized 2:1.

The primary endpoint is biopsy-proven progression-free survival (PFS).

Progression is defined as an increase in Gleason grade or increase in tumor volume to > 33%.

As the primary endpoint is event-driven, in February 2023, based on a blinded review of the event rate, the Company determined that additional time is required for patient follow up in order to collect a sufficient number of events.

Based on the current rate of events, the Company currently anticipates topline data to be available in the fourth quarter of 2024.

CAN-2409 for Non-Small Cell Lung Cancer (NSCLC)

To assess the potential for CAN-2409 to trigger local and systemic immune activation and produce a “hot”

tumor phenotype, we designed and completed a clinical trial in patients with surgically resectable lung cancer.

In this Phase 1 trial, dose escalation of intratumoral neoadjuvant CAN-2409 was followed by tumor resection three weeks later.

In this proof of mechanism Phase 1 clinical trial, dose escalation of intratumoral neoadjuvant CAN-2409 was followed by tumor resection three weeks later.

The specific goal was to obtain biological data to better understand the impact of CAN-2409 on the tumor microenvironment, with a specific focus on intratumoral CD8+ T cell activation and function while assessing effects on the systemic immune response.

The effects of CAN-2409 were evaluated by comparing post-injection specimens to an internal control consisting of each patient’s own pre-treatment needle biopsy and blood samples, and an external cohort of matched patients who underwent standard surgical resection without CAN-2409.

The results showed evidence of significant intratumoral and systemic immune activation.

Selected analyses are set forth in the chart below.

Analysis of peripheral blood mononuclear cells, both before and after CAN-2409 administration, demonstrate a significant increase in expression of proliferation and activation markers including HLA-DR, CD38 and Ki67 three weeks after CAN-2409 initiation.

Other relevant findings in this clinical trial included an increase in some markers of T cell activation such as PD-1 and CTLA-4, which are targets of immune checkpoint inhibitors that have been approved for use in NSCLC.

CAN-2409 stimulated local and systemic T cell response in patients with NSCLC

In our NSCLC Phase 1 clinical trial, two patients experienced grade 3 dehydration with renal insufficiency, two patients presented grade 3 urinary retention and six patients were observed to have a grade 4 low lymphocyte count.

The results showed evidence of significant intratumoral and systemic immune activation after experimental CAN-2409 monotherapy treatment.

Analysis of peripheral blood mononuclear cells, both before and after CAN-2409 administration, demonstrated a significant increase in expression of proliferation and activation markers including HLA-DR, CD38 and Ki67 three weeks after CAN-2409 initiation.

Other relevant findings in this clinical trial included an increase in markers of T cell activation such as PD-1 and CTLA-4, which are targets of ICI that have been approved for use in NSCLC.

In this NSCLC Phase 1 clinical trial, two patients experienced grade 3 dehydration with renal insufficiency, two patients presented grade 3 urinary retention and six patients were observed to have a grade 4 low lymphocyte count.

Of significant interest, one patient, a 70 year-old male with a 14.8cm stage IIIA sarcomatoid carcinoma, exhibited a nearly 50% decrease in tumor volume at 3 weeks after CAN-2409 monotherapy treatment.

Scans from this patient are shown below.

Collectively, these results lead us to believe that CAN-2409 could provide an opportunity to improve ICI response rates in patients with NSCLC by eliciting additional immune activation in lung cancer patients.

Monotherapy activity of CAN-2409 in NSCLC

CAN-2409 and Checkpoint Combination Phase 2 Clinical Trial for NSCLC in Patients with Inadequate Response to ICI

We have initiated a Phase 2 clinical trial in NSCLC patients with inadequate response to ICI that will enroll patients receiving standard of care immune checkpoint inhibitors (plus chemotherapy if indicated) across three cohorts in combination with two courses of CAN-2409 plus ICI.

We believe there is an opportunity to utilize CAN-2409 immune activation to improve ICI response rates with a short-term readout.

Our open label Phase 2 trial will enroll 96 patients and we expect initial safety data, translational biomarkers and efficacy data to be presented in the second quarter of 2022.

The trial schema is set forth below.

Ongoing Phase 2 trial of CAN-2409 plus ICI and standard of care chemotherapy for stage III/IV NSCLC Patients

Additional Solid Tumor Opportunity

Pancreatic Cancer

We are currently conducting an exploratory Phase 2 clinical trial for CAN-2409 in pancreatic cancer, with enrollment ongoing.

We anticipate presenting interim data in 2023.

Furthermore, in a number of patients where pre- and post-treatment tumor biopsies were available, a statistically significant increase in the number of CD8+ tumor infiltrating lymphocytes was observed.

In addition, the study concluded that CAN-2409 was generally well-tolerated in combination with standard of care.

CAN-2409 induced of CD8+ tumor-infiltrating lymphocytes

Other Cancer Indications

In addition to patients with prostate, brain, lung and pancreatic cancer, CAN-2409 has been dosed in small early-stage exploratory clinical trials in patients with ovarian cancer, malignant pleural effusion, pediatric brain cancer and retinoblastoma, supporting the tolerability profile described above.

Our CAN-3110 Program:

Recurrent Glioma

Our first HSV-based product candidate, CAN-3110, is now in an investigator-initiated Phase 1 clinical trial in recurrent glioblastoma.

This clinical trial is assessing CAN-3110 and is an open-label, single center, dose-escalation clinical trial.

The primary endpoint of this clinical trial is to analyze the safety of CAN-3110 use, in patients with recurrent high-grade glioma.

In 2020, we initiated a Phase 2 clinical trial in NSCLC patients with inadequate response to ICI that will enroll patients receiving standard of care ICI (plus chemotherapy if indicated) in combination with two courses of CAN-2409 plus continued ICI.

This open label clinical trial, as amended, is targeting enrollment of approximately 80 patients with stage III/IV NSCLC in two separate cohorts.

The cohorts are defined based on response to ICIs at the time of enrollment.

Cohort 1 addresses patients with stable disease and Cohort 2 enrolls patients with progressive disease after at least 18

weeks of ICI treatment.

Patients will continue treatment with their initial ICI and CAN-2409 will be added to their regimen.

The primary efficacy endpoint for this trial is response rate measured by RECIST and/or Disease Control Rate.

We reported initial data from this trial at the ASCO Annual Meeting in June 2022.

During our Research and Development Day in December 2022, we presented updated data demonstrating evidence of local and systemic anti-tumor activity;

a disease control rate of 77% (20/26) in patients entering trial with disease progression (cohort 2);

sustained and ongoing clinical responses greater than 1 year;

favorable change in the trajectory of tumor progression;

decreased tumor size of RECIST target lesions in most patients;

reduced uninjected tumor size in 14/21 patients (67%);

an overall response rate of 13% (4/30) across cohorts 1 and 2;

durable disease stabilization translating into encouraging preliminary evidence of progression-free survival;

consistent induction of local and systemic cytotoxic T cell response;

increased infiltration of CD8+ T cells in the tumor microenvironment;

systemic expansion of effector T cells and increase in soluble granzyme B levels in the peripheral blood;

and favorable safety/tolerability data with most treatment-related adverse events being grade 1/2.

We anticipate presenting additional updated data from this ongoing Phase 2 clinical trial in the third quarter of 2023.

CAN-2409 for Pancreatic Cancer

We are currently conducting a randomized Phase 2 clinical trial for CAN-2409 in borderline resectable pancreatic cancer, with a target enrollment of up to 54 patients.

Despite the pause in patient enrollment, we continue to expect to present initial clinical data in the fourth quarter of 2023.

In a previous Phase 1b clinical trial, patients with pancreatic cancer treated with CAN-2409 in addition to standard of care demonstrated a greater survival duration over the expected survival of the patients treated with the existing standard of care alone in a comparison to historical trial results.

Furthermore, in the subset of patients where pre- and post-treatment tumor biopsies were available, a statistically significant increase in the number of CD8+ tumor infiltrating lymphocytes was observed.

In addition, the study demonstrated that CAN-2409 was generally well-tolerated in combination with standard of care.

CAN-2409 for High-Grade Glioma

Phase 3 Clinical Trial of CAN-2409 in High-Grade Glioma

At our Research & Development Day in December 2022 we announced that we have made a portfolio and resource prioritization decision to pursue CAN-3110 in recurrent HGG, but not to pursue a Phase 3 clinical trial of CAN-2409 in high-grade glioma.

The CAN-3110 program in recurrent HGG may serve as an enabling clinical trial for future expansion into earlier stages of HGG as well as other solid tumors outside the brain that are characterized by Nestin expression.

Phase 1 Clinical Trial of CAN-2409 With Opdivo in High-Grade Glioma

We conducted a Phase 1 clinical trial in patients with newly diagnosed HGG examining the combination of CAN-2409 and anti-PD-1 nivolumab (Opdivo, BMS) in collaboration with BMS and Adult Brain Tumor Consortium.

This was the first clinical trial to evaluate the combination of CAN-2409 and nivolumab in HGG patients with the goal of enhancing anti-tumor T cell activation and expansion and the potential for better clinical outcome.

Data for this Phase 1 clinical trial were presented at the 37th Annual Meeting of Society for Immunotherapy of Cancer (SITC) in Boston in November 2022.

In the trial involving 35 evaluable patients, extensive biomarker analyses demonstrated that the combination of CAN-2409 and nivolumab resulted in a statistically significant expansion of activated tumor-fighting CD4+ and CD8+ T cells effector cells as well as decreased markers of exhaustion on effector cells.

Proteomic analysis by OLINK revealed an increase in pro-inflammatory cytokines, including interferon-gamma, the chemokines CXCL9/10 and CXCL11, MCP-1, MCP-3, and granzyme A.

Systemic immune activation was observed after the single administration of CAN-2409, prior to initiation of nivolumab (week 3 post treatment).

Median overall survival (mOS) for patients with methylated MGMT promoter was 30.6 months for those who underwent gross total resection (GTR) (n=10) and 12.6 months for those who underwent sub-total resection (STR) (n=5).

mOS for patients with unmethylated MGMT was 13.2 months (GTR) (n=16) and 15.9 months (STR) (n=4), respectively.

Phase 1b/2 Clinical Trial of CAN-2409 Combined with Standard of Care in High-Grade Glioma

In our Phase 1b/2 clinical trial in newly diagnosed patients with HGGs, including the difficult-to-treat glioblastoma, CAN-2409 demonstrated a statistically significant increase in patient survival when combined with current standard of care over the current standard of care alone (surgery, radiation and temozolomide).

Importantly, a pre-planned analysis on a subset of patients treated surgically with gross total resection (>95% of tumor removed) during surgery (18 patients compared to 44 in the control arm),

demonstrated a median overall survival of 25.1 months in the CAN-2409 arm versus 16.3 months in the standard of care group, with approximately a 50% improvement (p=0.0120).

In this patient population, after three years, one in three patients was alive in the CAN-2409 arm compared to 1 in 20 patients in the standard of care group.

At the end of the study, three of the patients who received CAN-2409 were alive without progression after 43, 62.1 and 88.5 months.

CAN-2409 was generally well tolerated, with most treatment-related adverse events being grade 1 or 2, and few reports of grade 3 or 4 events.

Opportunities for CAN-2409 in Other Cancer Indications

In addition to patients with prostate, lung, pancreatic, and brain cancer, CAN-2409 has been dosed in small early-stage exploratory clinical trials in patients with ovarian cancer, malignant pleural effusion, pediatric brain cancer and retinoblastoma, supporting the tolerability and safety profile described above.

CAN-3110 for Recurrent High-grade Glioma

Our first HSV-based product candidate, CAN-3110, is in an ongoing investigator-sponsored Phase 1 clinical trial in recurrent HGG.

This is an open-label, single center, dose-escalation clinical trial in patients who have failed standard of care.

The primary endpoint of this clinical trial is to analyze the safety of CAN-3110 use in patients with recurrent HGG.

No dose-limiting toxicities were observed in doses ranging from 1x10 6 to 1x10 10 PFU in half-log increments.

30 patients have been treated in the initial dose escalation phase and 12 additional patients had been dosed in a dose expansion phase as of April 30, 2021.

Immunohistologic studies showed persistent presence of HSV antigen and infiltration by CD8 + cytotoxic tumor infiltrating lymphocytes post treatment, providing support for the expected mechanism of action of CAN-3110.

Oncolytic HSV infection and CD8+ T cell infiltration after CAN-3110 treatment in patients with recurrent high-grade glioma

We are particularly encouraged by the clinical course of a patient who received CAN-3110 as a monotherapy upon recurrence of glioblastoma.

The patient was diagnosed with multicentric glioblastoma and initially treated with standard of care surgical resection followed by temozolomide and radiotherapy.

The patient later recurred with two lesions visualized on MRI.

One, in the frontal region, was at the site of the initially resected mass and is labelled “Secondary lesion”

in the MRI images below.

The second, larger mass was a new lesion and is labeled as “Injected lesion”

in the MRI images below.

51 patients have been treated.

Immunohistology studies showed persistent presence of HSV antigen and infiltration by CD8+ cytotoxic tumor infiltrating lymphocytes post treatment, providing support for the expected mechanism of action of CAN-3110.

We are particularly encouraged by the clinical course of a few patients who received a single injection with CAN-3110 as monotherapy upon recurrence of glioblastoma.

One patient, originally diagnosed with multicentric glioblastoma and initially treated with standard of care surgical resection followed by temozolomide and radiotherapy has been treated with CAN-3110 monotherapy, upon recurrency with development of two lesions visualized on MRI.

One lesion, in the frontal region, had developed at the site of the initially resected mass.

The second, larger mass was a new lesion.

The patient received CAN-3110 via stereotactic administration into the injected lesion.

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By day 112 post-injection, the volume of both masses was further reduced and the patient was able to go back to work.

The patient eventually developed a third tumor and, following a stroke secondary to a diagnostic procedure, refused further treatment, dying approximately 15 months after participation in the trial.

We find this to be an encouraging case report because of the unusually favorable disease course experienced by this patient in absence of concurrent therapies.

Additionally, we have observed a median overall survival of 11.7 months in our Phase 1 trial in the first 30 patients as of the cutoff date of April 21, 2021.

Given the median overall survival of 6-9 months in historical clinical trials of other investigational agents in patients with recurrent high grade glioma, we believe this is encouraging evidence of clinical activity.

We received additional data from this open-label trial in November 2021 and will continue to assess CAN-3110 in this clinical trial.

Ongoing Phase 1 clinical trial of CAN-3110 in patients with recurrent high-grade glioma

MRI images of patient from Phase 1 high-grade glioma trial of CAN-3110 with abscopal effect

Clinical effect on injected and uninjected lesions.

56 YOM, IDH wild-type, MGMT partially methylated, right frontal mesial lesion initially treated with gross total resection, chemoradiation.

Recurrences at two sites.

This trial is complementary to our work in the first line treatment setting of high-grade glioma with CAN-2409, a non-replicating viral construct.

We believe that with the larger tumor burden frequently observed in the recurrent setting and more infrequent use of surgery in this population, a replication competent viral construct such as CAN-3110 may be a more appropriate approach.

The patient eventually developed a third lesion, experienced a stroke secondary to a diagnostic procedure, and refused further treatment, dying approximately 15 months after entering the trial.

A second patient initially diagnosed with methylated grade IV HGG located in the temporal lobe underwent 2 consecutive resections and treatment with chemoradiation for rapid progressive disease.

The patient was injected with CAN-3110 (10E8 pfus), at the site of the original lesion.

An MRI scan performed at day 91 showed increased enhancement at the site of injection.

The patient underwent an additional resection, but, importantly, histological report showed mainly inflammatory tissue with high density of tumor infiltrating lymphocytes.

The patient did not have detectable disease, in absence of any additional treatment for more than 2 years and passed away as passenger of a motor vehicle accident on day 717 post CAN-3110 treatment.

Another patient, originally diagnosed with grade IV astrocytoma, was treated with CAN-3110 for a recurrence following first-line therapy with subtotal resection, chemoradiation and adjuvant temozolomide.

At time of recurrence, a mass was evident in the left frontal lobe.

The patient was enrolled in arm B of the Phase 1 clinical trial which includes treatment with Cytoxan (24 mg/kg one dose day -2) prior to CAN-3110 injection.

Post-treatment scan demonstrated progressive reduction in enhancement with cavitary necrosis at the site of injection.

The patient remains clinically stable as of February 2023 and has not required additional therapies up to day 350 post CAN-3110.

We find these case reports to be encouraging because of the unusually favorable disease course experienced by these patients with recurrent HGG who had previously failed standard of care treatment, in absence of concurrent therapies.

Additionally, we have observed a median overall survival of 11.6 months in the Phase 1 trial in the first 41 patients as of the cutoff date of October 2022.

Given the median overall survival of 6-9 months in historical clinical trials of other investigational agents in patients with recurrent HGG, who have failed standard of care treatment we believe this is encouraging evidence of clinical activity.

We will continue to assess CAN-3110 in this clinical trial.

Collaborations and Other Transactions

We are a party to a number of license and collaboration agreements under which we license patents, patent applications and other intellectual property to and from third parties.

We are a party to various license and collaboration agreements under which we license patents, patent applications and other intellectual property to and from third parties.

These licenses impose various diligence and financial payment obligations on us.

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On December 9, 2019, we entered into a series of agreements, including an exclusive license agreement, a novation agreement, an equipment purchase agreement and an intellectual property assignment agreement, collectively the Periphagen Agreements, with Periphagen, whereby we acquired certain assets and licensed certain rights (including specified patent rights and know-how, or the Licensed IP Rights) of Periphagen, primarily consisting of exclusive rights to their technology platform and a portfolio of pre-clinical, development stage virus vectors, as well as certain physical property and equipment.

The primary classes of assets are HSV-derived assets expressing neurotrophin-3 (or NT-3 Assets) and other HSV-derived assets (Gene Transfer Neuro-Assets).

The primary classes of assets are HSV-derived assets expressing

neurotrophin-3 (or NT-3 Assets) and other HSV-derived assets (Gene Transfer Neuro-Assets).

Under the license agreement, Periphagen granted us a worldwide exclusive license with the right to grant sublicenses through multiple tiers under the Licensed IP Rights to conduct research and to develop, make, have made, use, have used, offer for sale, have sold, export and import products incorporating the Licensed IP Rights in all fields of use except the treatment, diagnosis, and prevention of nononcologic skin diseases and conditions (including use as an aesthetic).

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If we are required to pay royalties to a third party on any product covered under the Periphagen Agreements, we may credit such royalty payments against the royalties owed to Periphagen in the applicable country, up to a percentage reduction in the mid-2nd decile.

The exclusive license agreement with Periphagen, or the Periphagen License Agreement, requires us to use commercially reasonable efforts to complete a human proof of concept clinical trial of an NT-3 Asset, which includes certain specified clinical milestones.

The exclusive license agreement with Periphagen (the Periphagen License Agreement) requires us to use commercially reasonable efforts to complete a human proof of concept clinical trial of an NT-3 Asset, which includes certain specified clinical milestones.

If we fail to use such efforts, subject to dispute and escalation provisions in the Periphagen License Agreement, then we may submit a specified payment in lieu of satisfying such obligations.

If we fail to do so, Periphagen may terminate the Periphagen License Agreement for material breach.

On December 15, 2022, Periphagen provided notice purporting to terminate the Periphagen License Agreement claiming we failed to use commercially reasonable efforts to complete a human proof of concept clinical trial of an NT-3 Asset.

We have denied Periphagen’s claim and the parties are engaged in the dispute and escalation provisions under the Periphagen License Agreement.

See Part I, Item 3 “Legal Proceedings”.

The Periphagen License Agreement expires on the later of December 9, 2069 or the end of the Royalty Term.

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prior written notice to Periphagen, (ii) by Periphagen if we remain in breach of the Periphagen Agreement following a cure period to remedy the breach or (iii) by Periphagen if we become bankrupt, file for bankruptcy or otherwise become insolvent or are placed in receivership.

On January 20, 2018, we entered into an exclusive option agreement, or the Option Agreement, with MGB.

Pursuant to the Option Agreement, we obtained the exclusive right from MGB to negotiate an exclusive worldwide, royalty-bearing license to develop and commercialize products covered by certain MGB patents, including those patents covering CAN-3110, in the field of gene therapy and oncolytic vector therapy for the treatment or prevention of cancerous tumors in humans or animals, as such field is further detailed in the Option Agreement, or the Licensed Field.

Mass General Brigham (MGB).

On January 20, 2018, we entered into an exclusive option agreement (the Option Agreement) with MGB.

prevention of cancerous tumors in humans or animals, as such field is further detailed in the Option Agreement (Licensed Field).

In consideration for MGB’s granting of the exclusive option, we paid MGB a non-refundable fee of $40,000.

Under the Option Agreement, we were required to use reasonable efforts to enter into a clinical trial agreement with MGB.

We entered into such clinical trial agreement with MGB, or the MGB Clinical Trial Agreement, on June 19, 2018.

We entered into such clinical trial agreement with MGB (MGB Clinical Trial Agreement) on June 19, 2018.

Under the MGB Clinical Trial Agreement, we have committed to remitting up to $750,000 for the performance of a specified Phase 1 clinical trial by MGB pursuant to a protocol summary contained in the Option Agreement.

On September 15, 2020, we exercised our option and entered into an exclusive patent license agreement with MGB, or the MGB License Agreement.

Under the MGB License Agreement, MGB granted to us (a) an exclusive, royalty-bearing license under certain of MGB’s patents to make, have made, use, have used, sell and have sold certain products covered by such licensed patents, or the Licensed Products and otherwise practice processes covered by such licensed patents, or Licensed Processes;

On September 15, 2020, we exercised our option and entered into an exclusive patent license agreement with MGB (the MGB License Agreement).

Under the MGB License Agreement, MGB granted to us (a) an exclusive, royalty-bearing license under certain of MGB’s patents to make, have made, use, have used, sell and have sold certain products covered by such licensed patents (the Licensed Products) and otherwise practice processes covered by such licensed patents (Licensed Processes);

and (b) a non-exclusive, royalty-bearing license under certain other of MGB’s patents to make, have made, use, have used, sell and have sold Licensed Products, but not to sell or have sold Licensed Processes.

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prior written notice.

On March 1, 2014, we entered into an exclusive license agreement, or the Ventagen Agreement, with Ventagen, LLC, or Ventagen.

The Ventagen Agreement provides Ventagen an exclusive license, with rights to

grant sublicenses (subject to certain terms and conditions) under any worldwide patent rights and know-how owned or controlled by us during the term of the Ventagen Agreement which cover applicable technology utilizing the delivery method of the herpes derived TK protein to tumors or other tissues via a viral vector (as further specified therein), to research, use, have used, import, have imported, export, have exported, offer for sale, have sold, sell, distribute and market certain products for the prevention or treatment of cancer in humans and any use in animals (or the Field of Use), or the Licensed Products, for commercial sale and distribution within Mexico, Belize, Guatemala, Honduras, El Salvador, Costa Rica, Nicaragua, Panama, Colombia and Bolivia (or the Territory).

On March 1, 2014, we entered into an exclusive license agreement (the Ventagen Agreement), with Ventagen, LLC (Ventagen).

The Ventagen Agreement provides Ventagen an exclusive license, with rights to grant sublicenses (subject to certain terms and conditions) under any worldwide patent rights and know-how owned or controlled by us during the term of the Ventagen Agreement which cover applicable technology utilizing the delivery method of the herpes derived TK protein to tumors or other tissues via a viral vector (as further specified therein), to research, use, have used, import, have imported, export, have exported, offer for sale, have sold, sell, distribute and market certain products for the prevention or treatment of cancer in humans and any use in animals (or the Field of Use) (Licensed Products), for commercial sale and distribution within Mexico, Belize, Guatemala, Honduras, El Salvador, Costa Rica, Nicaragua, Panama, Colombia and Bolivia (or the Territory).

Under the Ventagen Agreement, Ventagen agreed to use commercially reasonable efforts to develop and commercialize Licensed Products in the Territory in the Field of Use.

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Ventagen retains an irrevocable, perpetual, paid up, royalty-free license, with rights of sublicense to use, have used, lease, import and export, offer to sell, sell, have sold, product, distribute and market Licensed Products in each country in the Territory after the expiration of the Royalty Term in such country.

Certain of our current shareholders own 49.5% of the voting stock of Ventagen, but we do not hold any management position or run the day-to-day operations of Ventagen.

Certain of our current stockholders own 49.5% of the voting stock of Ventagen, but we do not hold any management position or run the day-to-day operations of Ventagen.

See “Certain Relationships and Related Person Transactions.”

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We face competition from major pharmaceutical, specialty pharmaceutical and biotechnology companies among others with respect to CAN-2409 and CAN-3110 and will face similar competition with respect to any product candidates that we may seek to develop or commercialize in the future.

We compete in pharmaceutical, biotechnology and other related markets that develop immune-oncology therapies for the treatment of cancer.

We compete in pharmaceutical, biotechnology and other related markets that develop immuno-oncology therapies for the treatment of cancer.

There are other companies working to develop viral immunotherapies for the treatment of cancer including divisions of large pharmaceutical and biotechnology companies of various sizes.

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Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Many of the companies we compete against or may compete against 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 drugs than we do.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in concentration of even more resources among a smaller number of our competitors.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in the concentration of even more resources among a smaller

number of our competitors.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

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Manufacturing

We have established an operations leadership team with extensive experience in manufacturing biologics based on viruses, including oncolytic products and gene therapy products, and in the construction, validation, approval and operation of facilities designed to manufacture biologics.

We have received proposals from and are evaluating third-party contract manufacturing organizations for commercial-scale manufacturing of our CAN-2409 product candidates.

We are also currently evaluating various options for the clinical scale manufacture of our CAN-3110 product candidate, including the development of clinical-scale manufacturing capabilities in our facility in Needham, Massachusetts.

We have established an operations leadership team with extensive experience in manufacturing biologics based on viruses, including viral immunotherapy products and gene therapy products, and in the construction, validation, approval and operation of facilities designed to manufacture biologics.

We have secured a third-party contract manufacturing organization for clinical and commercial-scale manufacturing of our CAN-2409 product candidates.

We are also currently evaluating various options for the clinical-scale manufacture of our CAN-3110 product candidate, including the development of clinical-scale manufacturing capabilities at our own facility.

Intellectual Property

We have obtained Orphan drug designation for CAN-2409 for the treatment of glioblastoma, which makes the product candidate eligible for a period of orphan drug exclusivity, if approved in this indication, under certain conditions.

We believe that approval of our CAN-2409 and CAN-3110 product candidates under a BLA may result in 12 years of data exclusivity in the United States under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, 10 years of market exclusivity in Europe and significant durations in other markets, which would be complementary to any relevant patent exclusivity.

Through licensing and developing our own portfolio, we have rights to one issued composition of matter patent in the United States that relates to CAN-3110, which expires in 2036 and is exclusively licensed to us.

We also own a patent issued in the United States that relates to a method of use of CAN-2409 in combination with other agents that expires in 2034.

There are also multiple patent applications in the United States and foreign countries, that are fully or partially owned by us or are exclusively licensed to us by the inventor owners.

We believe that approval of our CAN-2409 and CAN-3110 product candidates under a BLA may result in 12 years of data exclusivity in the United States under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively the ACA), 10 years of market exclusivity in Europe and significant durations in other markets, which would be complementary to any relevant patent exclusivity.

With regard to patent exclusivities, we have rights to issued composition of matter patents in the United States, Australia, Canada, China, Europe, and Japan and patent applications pending in Australia, Europe, and Korea that relate to CAN-3110.

The issued patents and the pending applications, if issued, are expected to expire in 2036.

This patent family is exclusively licensed to us.

We also own a United States patent and a pending patent application that relate to a method of use of CAN-2409 in combination with a checkpoint inhibitor.

The issued patent and the pending application, if issued, are expected to expire in 2034.

We also have in-licensed from Periphagen patents and patent applications relating to our enLIGHTEN Discovery Platform.

These patents and applications, if issued, are expected to expire between 2037 and 2042.

Government Regulation

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and data privacy and security.

Such laws, rules, and regulations are complex, continuously evolving, and,

in many cases, have not been subject to extensive interpretation by applicable regulatory agencies or the courts.

We are required to invest significant time and financial resources in policies, procedures, processes, and systems to ensure compliance with these laws, rules, and regulations, and our failure to do so may result in the imposition of substantial monetary or other penalties by federal or state regulatory agencies, give rise to reputational harm, or otherwise have a material adverse effect on our results of operations and financial condition.

Such laws, rules, and regulations are complex, continuously evolving, and, in many cases, have not been subject to extensive interpretation by applicable regulatory agencies or the courts.

are required to invest significant time and financial resources in policies, procedures, processes, and systems to ensure compliance with these laws, rules, and regulations, and our failure to do so may result in the imposition of substantial monetary or other penalties by federal or state regulatory agencies, give rise to reputational harm, or otherwise have a material adverse effect on our results of operations and financial condition.

United States Biological Products Development Process

The process required by the FDA before a biological product candidate may be licensed for marketing in the United States generally involves the following:

completion of nonclinical laboratory tests and animal studies performed in accordance with FDA’s good laboratory practices, or GLPs, requirements and applicable requirements for the humane use of laboratory animals or other applicable regulations;

submission to the FDA of an application for an investigational new drug application, or IND, which must become effective before human clinical trials may begin;

completion of nonclinical laboratory tests and animal studies performed in accordance with FDA’s good laboratory practices (GLPs) requirements and applicable requirements for the humane use of laboratory animals or other applicable regulations;

submission to the FDA of an application for an investigational new drug application (IND) which must become effective before human clinical trials may begin;

approval of the protocol and related documentation by an IRB or ethics committee at each clinical trial site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials according good clinical practices, or to GCPs, requirements and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product candidate for its intended use;

performance of adequate and well-controlled human clinical trials according to good clinical practices (GCPs) requirements and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product candidate for its intended use;

preparation of and submission to the FDA of a BLA for marketing approval that includes sufficient evidence of establishing the safety, purity, and potency of the proposed biological product for its intended indication, including from results of nonclinical testing and clinical trials;

a determination by the FDA within 60 days of its receipt of a BLA to accept and file the application;

satisfactory completion of an FDA pre-license inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practices, or cGMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

satisfactory completion of an FDA pre-license inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with current good manufacturing practices (cGMPs) to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

satisfactory completion of an FDA advisory committee review, if applicable;

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payment of user fees for FDA review of the BLA (unless a fee waiver applies);

FDA review and approval, or licensure, of the BLA to permit commercial marketing of the product for particular indications for use in the United States.

FDA review and approval, or licensure, of the BLA to permit commercial marketing of the product for specific indications for use in the United States.

Pre-clinical Studies and the IND Process

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Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

The FDA also may impose clinical holds on a sponsor’s IND at any time before or during clinical trials due to, among other considerations, unreasonable or significant safety concerns, inability to assess safety concerns, lack of qualified investigators, a misleading or materially incomplete investigator brochure, study design deficiencies, interference with the conduct or completion of a study designed to be adequate and well-controlled for the same or another investigational product, insufficient quantities of investigational product, lack of effectiveness, or non-compliance.

study design deficiencies, interference with the conduct or completion of a study designed to be adequate and well-controlled for the same or another investigational product, insufficient quantities of investigational product, lack of effectiveness, or non-compliance.

If the FDA imposes a clinical hold, studies may not recommence without FDA authorization and then only under terms authorized by the FDA.

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An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee, or DSMB.

Some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee (DSMB).

This group provides authorization as to whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the trial and may recommend halting the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

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Failure to exhibit due diligence with regard to conducting required Phase 4 clinical trials could result in withdrawal of approval for products.

Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

To help reduce the risk of the introduction of adventitious agents with use of biological products, the Public Health Service Act, or PHS Act, emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among

other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product.

manufacturing the product in commercial quantities in accordance with cGMP requirements.

To help reduce the risk of the introduction of adventitious agents with use of biological products, the Public Health Service Act (PHS Act), emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

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In most cases, the submission of a BLA is subject to a substantial application user fee, although the fee may be waived under certain circumstances.

Under the performance goals and policies implemented by the FDA under the Prescription Drug User Fee Act, or PDUFA, for original BLAs, the FDA targets ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review.

Under the performance goals and policies implemented by the FDA under the Prescription Drug User Fee Act (PDUFA) for original BLAs, the FDA targets ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review.

The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification.

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The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent for its intended use and whether the product is being manufactured in accordance with cGMP to ensure its continued safety, purity and purity.

The FDA may refer applications for novel biological products or biological products that present difficult or novel 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.

review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

During the biological product approval process, the FDA also will determine whether a

Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product.

During the biological product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy (REMS) is necessary to assure the safe use of the biological product.

If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS;

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To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control.

Under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA for a novel product (e.g., new active ingredient, new indication, etc.) must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

Under the Pediatric Research Equity Act (PREA) a BLA or supplement to a BLA for a novel product (e.g., new active ingredient, new indication, etc.) must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may grant deferrals for submission of data or full or partial waivers.

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If a product that has orphan product designation subsequently receives the first FDA approval for a particular active ingredient for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan product exclusivity.

Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if a product candidate is determined to be contained within the competitor’s product for the same indication or disease.

however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if a product candidate is determined to be contained within the competitor’s product for the same indication or disease.

If a biological product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.

In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if the second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Orphan drug status in the European Union has similar, but not identical, benefits.

Orphan drug status in the European Union (EU) has similar, but not identical, benefits.

Expedited Development and Review Programs

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Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on an intermediate clinical endpoint other than survival or irreversible morbidity or mortality, that is reasonably likely to predict irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

In addition, for products being considered for accelerated approval, the FDA generally requires, unless otherwise informed by the agency, that all advertising and promotional materials, intended for dissemination or publication within 120 days of marketing approval be submitted to the agency for review during the pre-approval review period.

The FDA may 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.

As a condition of approval, the FDA generally requires that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials, which must be conducted with due diligence, to verify the clinical benefit in relationship to the surrogate endpoint or ultimate outcome in relationship to the clinical benefit and, under the Food and Drug Omnibus Reform Act of 2022 (FDORA), the FDA may require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date accelerated approval was granted.

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.

Post-Approval Requirements

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Manufacturers of products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.

Other post-approval requirements applicable to biological

products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

Other post-approval requirements applicable to biological products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

After a BLA is approved, the product also may be subject to official lot release.

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Any agency or judicial enforcement action could have a material adverse effect on us.

Biological product manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentation requirements on sponsors and their contract manufacturing organizations, or CMOs.

Manufacturers and other parties involved in the drug supply chain for prescription drug and biological products must also comply with product tracking and tracing requirements and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in the United States.

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In addition, a patent can only be extended once and only for a single product.

The United States Patent and trademark Office, or USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

The United States Patent and trademark Office (USPTO) in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

In the future, we may intend to apply for restoration of patent term for one of our patents, if and as applicable, to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

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Pediatric exclusivity, if granted, adds six months to existing exclusivity periods, including some regulatory exclusivity periods tied to patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request”

This six-month

exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request”

for such a study.

The ACA includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.

The ACA includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (BPCIA) which created an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.

This amendment to the PHS Act attempts to minimize duplicative testing.

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Unless an exemption applies, companion diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.

The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket approval, or PMA approval.

The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket approval (PMA approval).

If use of companion diagnostic is essential to safe and effective use of a drug or biological product, then the FDA generally will require approval or clearance of the diagnostic contemporaneously with the approval of the therapeutic product.

On August 6, 2014, the FDA issued a final guidance document addressing the development and approval process for “

In Vitro Companion Diagnostic Devices.”

On August 6, 2014, the FDA issued a final guidance document addressing the development and approval process for “In Vitro Companion Diagnostic Devices.”

According to the guidance, for novel candidates such as our product candidates, a companion diagnostic device and its corresponding drug or biological candidate should be approved or cleared contemporaneously by FDA for the use indicated in the therapeutic product labeling.

The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a biologic product candidate generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared.

If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption, or IDE, regulations.

Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations.

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The FDA generally requires companion diagnostics intended to select the patients who will respond to cancer treatment to obtain approval of a PMA for that diagnostic contemporaneously with approval of the therapeutic.

The review of these in vitro companion diagnostics in conjunction with the review of therapeutic candidates such as those we are developing involves coordination of review by the FDA’s Center for Biologics Evaluation and Research and by the FDA’s Center for Devices and Radiological Health.

The review of these in vitro companion diagnostics in conjunction with the review of therapeutic candidates such as those we are developing

involves coordination of review by the FDA’s Center for Biologics Evaluation and Research and by the FDA’s Center for Devices and Radiological Health.

The PMA process, including the gathering of clinical and pre-clinical data and the submission to and review by the FDA, can take several years or longer.

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In particular, for a diagnostic, the applicant must demonstrate that the diagnostic produces reproducible results when the same sample is tested multiple times by multiple users at multiple laboratories.

In addition, as part of the PMA review, the FDA will typically inspect the manufacturer’s facilities for compliance with the Quality System Regulation, or QSR, which imposes elaborate testing, control, documentation and other quality assurance requirements.

In addition, as part of the PMA review, the FDA will typically inspect the manufacturer’s facilities for compliance with the Quality System Regulation (QSR) which imposes elaborate testing, control, documentation and other quality assurance requirements.

If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or a not-approvable letter, which usually contains a number of conditions that must be met in order to secure the final approval of the PMA, such as changes in labeling, or specific additional information, such as submission of final labeling, in order to secure final approval of the PMA.

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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 European Union, for example, a CTA must be submitted for each clinical trial to each country’s national competent authority, or NCA, and at least one independent ethics committee, or EC, much like the FDA and an IRB, respectively.

Once the CTA is approved in accordance with a

country’s requirements, the corresponding clinical trial may proceed.

Under the current regime (the EU Clinical Trials Directive 2001/20/EC and corresponding national laws), all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the EU Member State where they occurred.

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014, which is set to replace the current Clinical Trials Directive 2001/20/EC.

It will overhaul the current system of approvals for clinical trials in the EU.

Specifically, the new Regulation, which will be directly applicable in all Member States (meaning that no national implementing legislation in each EU Member State is required), aims at simplifying and streamlining the approval of clinical trials in the EU.

For instance, the new Regulation provides for a streamlined application procedure via a single entry point and strictly defined deadlines for the assessment of clinical trial applications.

It is expected that the new Regulation will come into effect following confirmation of full functionality of the Clinical Trials Information System, the centralized EU portal and database for clinical trials foreseen by the new Regulation, through an independent audit, which is currently expected to occur in December 2021.

In the EU, for example, an application must be submitted for each clinical trial to each country’s national competent authority (NCA), and at least one independent ethics committee, much like the FDA and an IRB, respectively.

Under the new Clinical Trials Regulation (EU) No.

536/2014, which replaced the Clinical Trials Directive 2001/20/EC on January 31, 2022, a single application is now made through the Clinical Trials Information System (CTIS) for clinical trial authorization in up to 30 EU/EEA countries at the same time and with a single set of documentation.

The assessment of applications for clinical trials is divided into two parts (Part I contains scientific and medicinal product documentation and Part II contains the national and patient-level documentation).

Part I is assessed by a coordinated review by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted (Member States concerned) of a draft report prepared by a Reference Member State.

Part II is assessed separately by each Member State concerned.

The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned EU Member State, however overall related timelines are defined by the Clinical Trials Regulation.

The new Clinical Trials Regulation also provides for simplified reporting procedures for clinical trial sponsors.

European Union Drug Review and Approval

In the European Economic Area, or EEA, medicinal products can only be commercialized after obtaining a marketing authorization.

To obtain regulatory approval of a medicinal product in the EEA, we must submit a marketing authorization application, or MAA.

The centralized procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced-therapy medicinal products such as (gene-therapy, somatic cell-therapy or tissue-engineered medicines), and medicinal products containing a new active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions, and viral diseases.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EEA.

In the EU, medicinal products can only be commercialized after obtaining a marketing authorization.

To obtain regulatory approval of a medicinal product in the EU, we must submit a marketing authorization application (MAA).

A centralized marketing authorization is issued by the European Commission through the centralized procedure, based on the opinion of the Committee for Medicinal Products for Human Use (CHMP) of the EMA, and is valid throughout the EU and the additional Member States of the European Economic Area (Iceland, Liechtenstein and Norway) (the EEA).

The centralized procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced-therapy medicinal products (i.e.

gene therapy, somatic cell therapy or tissue-engineered medicines), and medicinal products containing a new active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions, and viral diseases.

The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

Under the centralized procedure the maximum timeframe for the evaluation of a MAA by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP.

Clock stops may extend the timeframe of evaluation of a MAA considerably beyond 210 days.

Where the CHMP gives a positive opinion, it provides the opinion together with supporting documentation to the European Commission, who make the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s recommendation.

Where the CHMP gives a positive opinion, it provides the opinion together with supporting documentation to the European Commission, who makes the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s recommendation.

Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of major public health interest, particularly from the point of view of therapeutic innovation.

The timeframe for the evaluation of a MAA under the accelerated assessment procedure is 150 days, excluding clock stops, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that the application is no longer appropriate to conduct an accelerated assessment.

The timeframe for the evaluation of an MAA under the accelerated assessment procedure is 150 days, excluding clock stops, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that the application is no longer appropriate to conduct an accelerated assessment.

The application used to submit the BLA in the United States is similar to that required in the European Union, although there may be certain specific requirements, for example those set out in Regulation (EC) No 1394/2007 on advanced therapy medicinal products, covering gene therapy, somatic cell therapy and tissue-engineered medicinal products.

Now that the UK (which comprises Great Britain and Northern Ireland) has left the European Union, Great Britain will no longer be covered by centralized marketing authorizations (under the Northern Irish Protocol, centralized marketing authorizations will continue to be recognized in Northern Ireland).

All medicinal products with a current centralized marketing authorization were automatically converted to Great Britain marketing authorizations on January, 1 2021.

For a period of two years from January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, the UK medicines regulator, may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization.

Now that the UK (which comprises Great Britain and Northern Ireland) has left the EU, Great Britain is no longer covered by centralized marketing authorizations (under the Northern Ireland Protocol, centralized marketing authorizations will continue to be recognized in Northern Ireland).

All medicinal products with a centralized marketing authorization were automatically converted to Great Britain marketing authorizations on January, 1 2021.

For a period of three years from January 1, 2021, the Medicines and Healthcare products Regulatory Agency (MHRA) the UK medicines regulator, may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization.

A separate application will, however, still be required.

On January 24, 2023, the MHRA announced that a new international recognition framework will be put in place from January 1, 2024, which will have regard to decisions on the approval of marketing authorizations made by the European Medicines Agency and certain other regulators when determining an application for a new Great Britain marketing authorization.

Data and Market Exclusivity

In the EEA, upon receiving marketing authorization, innovative medicinal products generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents generic or biosimilar applicants from referencing the innovator’s pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the EEA, during a period of eight years from the date on which the reference product was first authorized in the EEA.

During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization application can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity.

The overall ten-year period will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to authorization, is held to bring a significant clinical benefit in comparison with existing

In the EU, upon receiving a marketing authorization, innovative medicinal products approved on the basis of a complete and independent data package qualify for eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents generic or biosimilar applicants from referencing the innovator’s pre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic or biosimilar marketing authorization in the EU, during a period of eight years from the date on which the reference product was first authorized in the EU.

During the additional two-year period of market exclusivity, a generic or biosimilar MAA can be submitted and authorized, and the innovator’s data may be referenced, but no generic or biosimilar product can be placed on the EU market until the expiration of the market exclusivity.

The overall ten-year period will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

There is no guarantee that a product will be considered by the EMA to be an innovative medicinal product, and products may not qualify for data exclusivity.

Even if a product is considered to be an innovative medicinal product so that the innovator gains the prescribed period of data exclusivity, another company may market another version of the product if such company obtained a marketing authorization based on a MAA with a completely independent data package of pharmaceutical tests, preclinical tests and clinical trials.

Even if a product is considered to be an innovative medicinal product so that the innovator gains the prescribed period of data exclusivity, another company may market another version of the product if such company obtained a marketing authorization based on an MAA with a complete and independent data package of pharmaceutical tests, preclinical tests and clinical trials.

Orphan Drug Designation and Exclusivity

Products receiving orphan designation in the EEA can receive ten years of market exclusivity, during which time no “similar medicinal product”

Products receiving orphan designation in the EU can receive ten years of market exclusivity, during which time no “similar medicinal product”

may be placed on the market.

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is defined as a medicinal product containing a similar active substance or substances as contained in an authorized orphan medicinal product, and which is intended for the same therapeutic indication.

An orphan product can also obtain an additional two years of market exclusivity in the European Union where an agreed Pediatric Investigation Plan for pediatric studies has been complied with.

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

An orphan medicinal product can also obtain an additional two years of market exclusivity in the EU where an agreed pediatric investigation plan (PIP) for pediatric studies has been complied with.

No extension to any supplementary protection certificate (SPC) can be granted on the basis of pediatric studies for orphan indications.

The criteria for designating an “orphan medicinal product”

in the EEA are similar in principle to those in the United States.

Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if it meets the following criteria:

in the EU are similar in principle to those in the United States.

Under Article 3 of Regulation (EC) 141/2000, a product may be designated as an orphan medicinal product if it meets the following criteria:

(1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

(2) either (a) such condition affects no more than five (5) in ten thousand (10,000) persons in the EEA when the application is made, or (b) it is unlikely that the product, without the benefits derived from orphan status, would generate sufficient return in the European Union to justify the necessary investment in its development;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EEA, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The application for orphan drug designation must be submitted before the application for marketing authorization.

(2) either (a) such condition affects no more than five (5) in ten thousand (10,000) persons in the EEA when the application is made, or (b) it is unlikely that the product, without the benefits derived from orphan status, would generate sufficient return in the EU to justify the necessary investment in its development;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product would be of significant benefit to those affected by that condition, as defined in Regulation (EC) 847/2000.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon the grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The application for orphan designation must be submitted before the application for marketing authorization.

The applicant will receive a fee reduction for the MAA if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity.

Additionally, marketing authorization may be granted to a similar medicinal product for the same indication at any time if:

the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

Additionally, a marketing authorization may be granted to a similar medicinal product for the same indication at any time if:

the second applicant can establish that its product, although similar to the authorized orphan product, is safer, more effective or otherwise clinically superior;

the marketing authorization holder of the authorized product consents to a second orphan medicinal product application;

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Pediatric Development

In the EEA, companies developing a new medicinal product must agree upon a Pediatric Investigation Plan, or PIP, with the EMA’s pediatric committee, or PDCO, and must conduct pediatric clinical trials in accordance with that PIP, unless a waiver applies (e.g., because the relevant disease or condition occurs only in adults).

The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being sought.

The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted by the PDCO of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults, in which case the pediatric clinical trials must be completed at a later date.

Products that are granted a marketing authorization with the results of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) even where the trial results are negative.

In the EU, companies developing a new medicinal product must agree upon a PIP with the EMA’s pediatric committee (PDCO) and must conduct pediatric clinical trials in accordance with that PIP, unless the EMA has granted a product-specific waiver, a class waiver, or a deferral for one or more of the measures included in the PIP.

This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already authorized.

The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the product for which a marketing authorization is being sought.

The MAA for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted by the PDCO of the obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy and safety of the product in adults, in which case the pediatric clinical trials must be

completed at a later date.

Products that are granted a marketing authorization with the results of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six month extension of the protection under an SPC (provided an application for such extension is made at the same time as filing the SPC application for the product, or at any point up to 2 years before the SPC expires) even where the trial results are negative.

In the case of orphan medicinal products, a two-year extension of the orphan market exclusivity may be available.

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The holder of a marketing authorization must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, who is responsible for oversight of that system.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or PSURs.

All new MAAs must include a risk management plan, or RMP, describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports (PSURs).

All new MAAs must include a risk management plan (RMP) describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product.

The regulatory authorities may also impose specific obligations as a condition of the marketing authorization.

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RMPs and PSURs are routinely available to third parties requesting access, subject to limited redactions.

All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, or SmPC, and therefore all off-label promotion is prohibited.

Direct-to-consumer advertising of prescription medicines is also prohibited in the European Union.

Although general requirements for advertising and promotion of medicinal products are established under European Union directives, the details are governed by regulations in each European Union Member State and can differ from one country to another.

All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics (SmPC) and therefore all off-label promotion is prohibited.

Direct-to-consumer advertising of prescription medicines is also prohibited in the EU.

Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each EU Member State and can differ from one country to another.

The aforementioned EU rules are generally applicable in the EEA.

Brexit and the Regulatory Framework in the United Kingdom

In June 2016, the electorate in the UK voted in favor of leaving the European Union (commonly referred to as “Brexit”).

Thereafter, in March 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty.

The UK formally left the European Union on January 31, 2020.

A transition period began on February 1, 2020, during which European Union pharmaceutical law remained applicable to the UK, however this ended on December 31, 2020.

On December 24, 2020, the UK and European Union entered into a Trade and Cooperation Agreement.

The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction.

Since the regulatory framework in the UK covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU Directives and Regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the UK, as the UK legislation now has the potential to diverge from EU legislation.

It remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the UK in the long-term.

The MHRA has recently published detailed guidance for industry and organizations to follow from January 1, 2021 now the transition period is over, which will be updated as the UK’s regulatory position on medicinal products evolves over time.

The UK formally left the EU on January 31, 2020, and the UK and the EU have concluded a trade and cooperation agreement or TCA, which was provisionally applicable since January 1, 2021 and has been formally applicable since May 1, 2021.

The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued, but does not provide for wholesale mutual recognition of UK and EU pharmaceutical regulations.

At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU regulatory framework continues to apply in Northern Ireland).

Except in respect of the new EU Clinical Trials Regulation, the regulatory regime in Great Britain therefore largely aligns with current EU medicines regulations, however it is possible that these regimes will diverge more significantly in future now that Great Britain’s regulatory system is independent from the EU and the TCA does not provide for mutual recognition of UK and EU pharmaceutical legislation.

However, notwithstanding that there is no wholesale recognition of EU pharmaceutical legislation under the TCA, under the new framework mentioned above which will be put in place by the MHRA from January 1, 2024, the MHRA has stated that it will still take into account decisions on the approval of marketing authorizations from the EMA (and certain other regulators) when considering an application for Great Britain marketing authorization.

Health Reform

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs.

For example, in March 2010, the ACA was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and continues to significantly impact the U.S.

For example, in 2010, the ACA was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and continues to significantly impact the U.S.

pharmaceutical industry.

The ACA, among other things, subjects biological products to potential competition by lower-cost biosimilars, addresses 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, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of certain branded prescription drugs, and creates a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition to coverage under Medicare Part D for the manufacturer’s outpatient drugs.

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.

The ACA, among other things, subjects biological products to potential competition by lower-cost biosimilars, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of certain branded prescription drugs, and creates a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition to coverage under Medicare Part D for the manufacturer’s outpatient drugs.

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted:

On August 2, 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.

The Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year.

These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will

remain in effect through 2030 unless additional action is taken by Congress.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, as well as subsequent legislation, these reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic.

Then, 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.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers.

On April 13, 2017, the Centers for Medicare & Medicaid Services, or 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.

Subsequent legislation extended the 2% payment reduction which remains in effect through 2030.

The American Taxpayer Relief Act further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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.

On April 13, 2017, the Centers for Medicare & Medicaid Services (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 30, 2018, the Right to Try Act, was signed into law.

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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.

Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives which could limit the amounts that federal and state governments will pay for healthcare products and services and result in reduced demand for certain pharmaceutical products or additional pricing pressures.

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 cap for Medicare Part D beneficiaries to $2,000 starting in 2025;

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 the rebate rule that would limit 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.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

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presidential executive orders, congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient 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 biosimilars;

and (ii) support the enactment of a public health insurance option.

Among other things, the Executive Order also directs the U.S.

Department of Health and Human Services, or 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.

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.

President Biden has also issued multiple executive orders that have sought to reduce prescription drug costs.

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.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

This could reduce the ultimate demand for our drugs or put pressure on our drug pricing, which could negatively affect our business, financial condition, results of operations and prospects.

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

This could reduce the ultimate

demand for our drugs or put pressure on our drug pricing, which could negatively affect our business, financial condition, results of operations and prospects.

Coverage and Reimbursement

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Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication.

Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.

We cannot be sure that reimbursement will be available for any product candidate that we commercialize and, if reimbursement is available, the level of reimbursement.

In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs.

Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives.

In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, which will require additional expenditure above and beyond the costs required to obtain FDA or other comparable regulatory approvals.

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Governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit a company’s revenue generated from the sale of

any approved products.

Coverage policies and third-party payor reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for one or more products for which a company or its collaborators receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing vary widely from country to country.

For example, the European

Union provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates.

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

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In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

The federal civil and criminal false claims laws, including the civil False Claims Act, or FCA, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false, fictitious or fraudulent;

The federal civil and criminal false claims laws, including the civil False Claims Act (FCA) prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false, fictitious or fraudulent;

knowingly making, using, or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government;

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The federal civil monetary penalties laws impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary, if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, or falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes criminal and civil liability for knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, or falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity may be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose, among other things, specified requirements on covered entities and their respective business associates relating to the privacy and security of individually identifiable health information including mandatory contractual terms and required implementation of technical safeguards of such information.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their respective implementing regulations, impose, among other things, specified requirements on covered entities and their respective business associates relating to the privacy and security of individually identifiable health information including mandatory contractual terms and required implementation of technical safeguards of such information.

HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates in some cases, 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 attorneys’

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The Physician Payments Sunshine Act, enacted as part of the ACA, imposed new annual reporting requirements for certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, for certain payments and “transfers of value”

provided to physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Effective January 1, 2022, these reporting obligations extend to include transfers of value made in the previous year to certain non-physician providers such as physician assistants and nurse practitioners.

provided to physicians (currently 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 physicians and their immediate family members.

Additionally, we are subject to state and foreign equivalents of each of the healthcare laws and regulations described above, among others, some of which may be broader in scope and may apply regardless of the payor.

states have adopted laws similar to the federal Anti-Kickback Statute and False Claims Act, and may apply to our business practices, including, but not limited to, research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental payors, including private insurers.

In addition, some states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on Interactions with Healthcare Professionals.

Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales representatives.

There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement we could be subject to penalties.

Federal Consumer Protection and Unfair Competition Laws Broadly Regulate Marketplace Activities and Activities That Potentially Harm Consumers.

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Employees and Human Capital Resources

As of March 15, 2022, we had 65 employees.

As of December 31, 2022, we had 76 employees.

Of these employees, 61 perform research and development functions.

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From time to time, we may become involved in litigation or other legal proceedings.

We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business.

On December 15, 2022, Periphagen notified us by letter of its claim that we have failed to use commercially reasonable efforts to complete a human proof of concept clinical trial of an NT-3 Asset under an Exclusive License Agreement dated December 9, 2019 between us and Periphagen (the “Periphagen License Agreement”).

We have denied Periphagen’s claims.

On January 13, 2023, we

filed a demand for arbitration against Periphagen with the American Arbitration Association, seeking a declaration that Periphagen’s December 15 letter failed to comply with the dispute and escalation provisions in the Periphagen License Agreement.

After filing the demand, the parties began engaging in the dispute and escalation process under the Periphagen License Agreement.

On March 10, 2023, Periphagen filed its answer and counterclaims to our demand for arbitration.

In its counterclaims, Periphagen seeks a declaration that we have not used commercially reasonable efforts to complete a human proof of concept clinical trial of the NT-3 Asset and a declaration that any further extension of time would not be scientifically or commercially reasonable.

Periphagen also seeks a declaration that we must use commercially reasonable efforts to develop the NT-3 Asset during any remaining time under the agreement.

We have denied Periphagen’s counter claims.

In the event the parties are unable to resolve the dispute as part of the escalation process, an arbitrator will decide whether we have used commercially reasonable efforts.

In the event that the arbitrator determines that we have not used commercially reasonable efforts, then we may submit a specified payment in lieu of satisfying such obligations.

Aside from the proceeding with Periphagen, we are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business.

Regardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors.

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Our Internet website address is www.candeltx.com.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available through the “Investors”

portion of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available through the “Investors”

portion of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).

Information on our website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporated herein by reference.

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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