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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-28 · 176 added, 138 removed, 301 unchanged (51% of the section changed)

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We are a clinical stage biopharmaceutical company focused on developing off-the-shelf viral immunotherapies that elicit an individualized, systemic anti-tumor immune response 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 at the site of injection.

Our engineered viruses are designed to induce a systemic anti-tumor response due to induction of immunogenic cell death within the tumor microenvironment, thus releasing tumor neo-antigens and creating a pro-inflammatory microenvironment at the site of injection.

This is intended to lead to in-situ vaccination against the injected tumor and uninjected distant metastases.

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

Our biological multimodal 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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o A pivotal 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 evaluable 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 report topline data in the fourth quarter of 2024.

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

The FDA previously granted fast track designation for the use of CAN-2409 for the treatment of localized, primary prostate cancer in combination with radiation therapy to improve the local control rate.

We completed enrollment of this trial in September 2021.

• In December 2024, we announced positive topline data from our phase 3 clinical trial.

This randomized, double-blind, placebo-controlled, multicenter clinical trial enrolled 745 patients (intent to treat population (ITT)) to evaluate the effectiveness and safety of CAN-2409 plus prodrug (valacyclovir) viral immunotherapy in combination with standard of care (SoC) external beam radiation therapy to improve disease-free survival (DFS) in patients with intermediate-to-high-risk, localized prostate cancer.

Patients were randomized 2:1 (496 in CAN-2409+prodrug and 249 in placebo (PBO) +prodrug).

Both arms received standard of care external beam radiation therapy (EBRT) +/- short course androgen deprivation therapy (ADT) (<6 months) and were stratified by NCCN risk group and ADT use.

Three intraprostatic injections of CAN-2409 (5x10 11 v/2mL) or PBO were administered, each followed by 14 days of prodrug.

• The study met its primary endpoint, demonstrating a statistically significant improvement in disease-free survival compared to the control arm.

Key topline results include:

▪ Statistically significant improvement in DFS for CAN-2409 plus radiation therapy (n=496) vs.

radiation therapy alone (n=249).

Treatment with CAN-2409 reduced the risk of prostate cancer recurrence or death by 30%.

Median DFS was not reached for the CAN-2409 treatment arm vs.

86.1 months in the PBO arm (p=0.0155, HR 0.7, 95% CI 0.52 to 0.94)

▪ Prostate cancer specific DFS (exclusion of non-prostate cancer related deaths) demonstrated a greater effect with a 38% decreased risk in the CAN-2409 arm vs.

PBO (p=0.0046;

HR 0.62, 95% CI 0.44 to 0.87)

▪ DFS improvement was observed both in patients receiving short-term ADT and in patients not receiving ADT

▪ Significant increase in the proportion of patients achieving a prostate-specific antigen (PSA) nadir (<0.2 ng/ml) was observed in the treatment arm compared to the placebo control arm (67.1% vs.

58.6%, respectively;

▪ CAN-2409 induced 80.4% pathological complete responses in the 2-year post-treatment biopsies compared to 63.6% observed in the control arm (p=0.0015)

• The median follow-up time for the recruited population was 50.3 months.

The primary outcome measure, DFS, included the evaluation of post-treatment biopsies, performed at two years from the end of radiation, for the presence of tumor recurrence.

Local or systemic recurrence and death from any cause were also part of the primary endpoint.

• CAN-2409 was generally well tolerated, with no new safety signals identified.

The most common CAN-2409-related adverse events were flu-like symptoms, fever and chills, which were generally mild to moderate in severity and self-limited.

• Based on these results, we intend to initiate discussions with the FDA regarding the regulatory pathway for CAN-2409 in intermediate-to-high-risk localized prostate cancer, and we anticipate submitting a biologics license application for CAN-2409 in the fourth quarter of 2026.

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

We completed enrollment of this trial in May 2019, and we expect to report topline data in the fourth quarter of 2024.

We completed enrollment of this trial in May 2019.

• In December 2024, we also reported that the phase 2b clinical trial of monotherapy CAN-2409 in 190 patients with low-to-intermediate risk, localized prostate cancer undergoing active surveillance showed numerical improvement in time to radical treatment and the percentage of patients achieving negative (prostate cancer-free) biopsies at 1-year post-treatment.

However, these differences did not reach statistical significance.

CAN-2409 was generally well tolerated, with no new safety signals identified.

The most common CAN-2409-related adverse events were flu-like symptoms, fever and chills, which were generally mild to moderate in severity and self-limited.

▪ Non-Small Cell Lung Cancer (NSCLC)

o 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 approximately 80 patients with stage III/IV NSCLC who have inadequate response to front line PD-(L)1 checkpoint inhibitor treatments.

o 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 patients with stage III/IV NSCLC who have inadequate response to front line PD-(L)1 checkpoint inhibitor treatments.

In April 2023, we announced that the FDA granted fast track designation for CAN-2409 plus valacyclovir in combination with pembrolizumab in order to improve survival or delay progression in patients with stage III (not candidates for curative intent) or stage IV NSCLC, who are resistant to first line PD-(L)1 inhibitor therapy and who do not have activating molecular driver mutations or have progressed on directed molecular therapy.

These patients historically have had an expected median overall survival (mOS) of 10-14 months (Reckamp K et al.

These patients historically have had an expected median overall survival (mOS) of <12 months when treated with SoC chemotherapy (Reckamp K et al.

J Clin Onc 2022;40:2295-2306).

The aim of the CAN-2409 immunotherapy antitumor strategy is to raise the tail on the survival curve by increasing the number of long survivors beyond 10-14 months.

o In 2022, we presented data from this phase 2 clinical trial where patients who received two administrations of CAN-2409 plus prodrug and completed the 12-week treatment window that demonstrated:

1) increased infiltration of CD8+ cytotoxic tumor infiltrating lymphocytes in the tumor microenvironment, systemic expansion of effector T cells and increased soluble granzyme B levels in peripheral blood, 2) favorable changes in the trajectory of tumor progression, 3) decreased tumor size of target lesions in most patients, and 4) reduced size of uninjected tumor lesions (Aggarwal C et al.

Abstract #9037 ASCO June 2022 and Aggarwal C et al.

Candel Virtual R&D Day, December 2022).

These data were further supported in an update released September 2023, based on a data cutoff of August 1, 2023:

▪ 40 patients across Cohort 1 (stable disease at enrollment;

n=5) and Cohort 2 (progressive disease at enrollment;

n=35) were evaluable, as they received two courses of CAN-2409 plus valacyclovir and completed the 12-week treatment window.

▪ While overall survival was not yet mature, we observed an encouraging number of long survivors.

We believe that CAN-2409 may induce a new state of functional immunosurveillance and durable disease control in a subset of the patients.

▪ Of the 40 evaluable patients, 15 patients had lived ≥ 12 months;

of these, 10 patients had lived > 18 months, of whom 70% (7/10) were alive as of last follow up.

All 4 patients (100%) with overall survival > 24 months were alive at last follow up, with the longest reaching 31.7 months.

▪ An additional 18 out of the 40 evaluable patients were also alive but had not yet reached 12 months of follow up.

▪ Notably, many patients treated with CAN-2409 had long survival (≥ 12 months) despite having disease features generally associated with advanced disease and reduced likelihood to benefit from immune checkpoint inhibitor therapy, such as low or negative PD-(L)1 expression, including:

• Amongst patients alive ≥ 12 months with known PD-(L)1 status (14/15), 93% had negative or low PD-(L)1 score (<1 or between 1-49).

• Advanced disease with stage IV in 73% (11/15), lymph node involvement in 73% (11/15), pleural effusion in 40% (6/15), bone metastases in 27% (4/15), adrenal metastases in 20% (3/15), brain metastases in 13% (2/15), liver metastases in 7% (1/15), involvement of 3 or more organs in 13% (2/15), and Eastern Cooperative Oncology Group performance status 1 in 40% (6/15).

▪ There was a significant increase observed in activated central memory, effector-memory, effector T cells, and natural killer (NK) cells after CAN-2409 treatment.

These include CD8+Ki67+IFN g + T cells, CD8+ granzyme B+Ki67+ T cells, CD56+CD16+granzyme B+ NK cells, and gd + T cells.

We also observed an increase in memory B cells after CAN-2409 treatment

▪ We observed an increase in effector/cytotoxic T cells and NK cells in peripheral blood after the second CAN-2409 administration associated with subsequent improved survival (≥ 12 months).

▪ We continued to observe a favorable safety/tolerability profile after CAN-2409 treatment in NSCLC.

There were no dose limiting toxicities or grade 4 or greater treatment related adverse events.

Grade 3 treatment related adverse events were reported in < 10% of patients receiving at least one dose of CAN-2409 (safety population), which we believe compares favorably to current standard of care (SoC) options.

o Candel expects to share topline overall survival data for Cohort 2 in the second quarter of 2024, assuming data are mature at that time.

The aim of the CAN-2409 immunotherapy antitumor strategy is to raise the tail on the survival curve by increasing the number of long survivors beyond 12 months in patients treated with two CAN-2409 injections.

o In May 2024, we announced topline data that showed prolonged overall survival in our phase 2 clinical trial of CAN-2409 plus valacyclovir, together with immune checkpoint inhibitor (ICI) therapy in patients with Stage III/IV NSCLC inadequately responding to ICI [anti-PD-(L)1] therapy (as of an April 1, 2024 data cut-off):

• mOS of 20.6 months was observed following two administrations of CAN-2409 plus valacyclovir in NSCLC patients with progressive disease despite ICI therapy, compared to published results of mOS of 11.6 months observed with SoC docetaxel-based chemotherapy in a similar patient population (Reckamp K et al.

J Clin Onc 2022;40:2295-2306).

Improved mOS was observed in both PD-L1 negative and PD-L1 positive tumors in patients with progressive disease (N=37 patients in cohort 2 for which PD-L1 status at baseline was available).

mOS of 22.0 months was observed across all patients (n=46) who had an inadequate response to ICI and who received two administrations of CAN-2409.

• Treatment with CAN-2409 resulted in systemic activation of the immune response, including increased numbers of effector and cytotoxic T cells as well as elevated levels of inflammatory soluble mediators.

• Activation of the systemic immune response was associated with shrinkage of uninjected lesions (abscopal response).

71.4% of patients with metastatic disease and at least one uninjected tumor (n=35) experienced a beneficial effect from CAN-2409 treatment on both injected and uninjected tumors.

When using a threshold of >5% decrease, more than 60% of patients still showed an abscopal response.

• As of the cut-off date, treatment with CAN-2409 in NSCLC continued to exhibit a generally favorable safety and tolerability profile.

There were no dose-limiting toxicities or grade 4 or higher treatment-related adverse events (TRAEs);

the majority of TRAEs were grade 1 or 2, and there were three grade 3 TRAEs (1 pyrexia, 2 pneumonitis).

• We expect to present updated overall survival data for CAN-2409 in NSCLC in the first quarter of 2025.

▪ Pancreatic Cancer

o We have initiated a randomized phase 2 clinical trial in the United States evaluating CAN-2409 in borderline resectable and locally advanced pancreatic adenocarcinoma.

In December 2023, we announced that the FDA granted fast track designation for CAN-2409 plus valacyclovir for the treatment of patients with pancreatic ductal adenocarcinoma (PDAC) to improve overall survival.

o We initiated a randomized phase 2 clinical trial in the United States and Mexico evaluating the activity of CAN-2409 in borderline resectable and locally advanced pancreatic ductal adenocarcinoma (PDAC).

Initial positive phase 2 data revealed notable clinical improvements in patients with borderline resectable PDAC following CAN-2409 plus prodrug together with SoC chemoradiation.

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 new patient enrollment, we presented initial positive interim overall survival and immunological biomarker clinical data at the Society for Immunotherapy of Cancer (SITC) Annual Meeting in the fourth quarter of 2023.

o In a previous phase 1b trial, a statistically significant increase in the number of CD8+ tumor infiltrating lymphocytes was observed.

Initial positive phase 2 data revealed notable improvements in patients with borderline resectable pancreatic ductal adenorcarcinoma (PDAC) following CAN-2409 plus prodrug together with SoC chemoradiation;

the following data were disclosed as of the August 21, 2023 data cutoff

In December 2023, we announced that the FDA granted fast track designation for CAN-2409 plus valacyclovir for the treatment of patients with PDAC to improve overall survival.

In April 2024, we announced updated positive overall survival data and also announced that the FDA has granted orphan drug designation for CAN-2409 for the treatment of pancreatic cancer.

o The following data were disclosed as of the March 29, 2024 data cutoff:

▪ Clinical data highlights:

• Prolonged and sustained survival was observed after experimental treatment with CAN-2409 in patients with borderline resectable PDAC.

• An estimated survival rate of 71.4% at both 24 and 36 months was observed in patients who received CAN-2409 regimen together with SoC chemoradiation prior to surgery, versus only 16.7% estimated survival at 24 and 36 months with SoC chemoradiation prior to surgery

• Importantly, 5 out of 7 patients who received CAN-2409 were still alive at the time of data cutoff, with two patients surviving more than 45 months from enrollment.

Only one patient randomized to control SoC chemotherapy remained alive at data cutoff (alive at 43 months).

• mOS has not been reached yet in patients who received CAN-2409 because most of the patients in the CAN-2409 group were still alive at data cut-off;

mOS was 12.5 months in the control arm.

• Disease course was altered after salvage chemotherapy with improved CA19-9 levels and ongoing survival in CAN-2409 arm, but not in control arm.

• Estimated mOS was 28.8 months in the CAN-2409 group versus 12.5 months in the control group.

• At 24 months, a survival rate of 71.4% was observed in patients receiving CAN-2409 at the time of SoC chemoradiation and surgery, versus only 16.7% in the control group.

At 36 months, a survival rate of 47.6% was estimated in patients who received CAN-2409 versus only 16.7% in the control group.

• Importantly, 4 out of 7 patients who received CAN-2409 were still alive at the time of data cutoff, with 2 patients surviving more than 50.0 months from enrollment.

Only 1 out of 6 patients, randomized to control SoC chemotherapy alone, remained alive at data cutoff (alive at 50.6 months).

▪ Biomarker data analysis demonstrated:

• Consistent and robust activation of immune response after dosing with CAN-2409.

• In pancreatic tissue of patients treated with CAN-2409 plus prodrug together with SoC (but not SoC alone), dense aggregates of CD8+ granzyme B positive cytotoxic T cells, dendritic cells, and B cells were observed in the tumor microenvironment.

• Increased levels of soluble granzymes B and H as well as pro-inflammatory cytokines, including IFN-γ, were observed in peripheral blood after CAN-2409 treatment, but not with control treatment.

These lymphocyte aggregates resemble tertiary lymphoid structures, whose formation in solid tumors is known to be associated with improved prognosis and better response to therapy.

• Increased levels of soluble granzymes B and H as well as pro-inflammatory cytokines, including IFN-γ, were observed in peripheral blood after CAN-2409 treatment, but not after SoC.

▪ Safety analysis:

• CAN-2409 was associated with a favorable tolerability profile.

• Addition of CAN-2409 regimen to SoC was generally well tolerated, with no reported dose-limiting toxicities, including no cases of pancreatitis.

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).

• Addition of CAN-2409 regimen to SoC was generally well tolerated, with no dose-limiting toxicities, including no cases of pancreatitis.

o In February 2025, we announced the final analysis of this phase 2 clinical trial in borderline resectable PDAC:

▪ Estimated median overall survival after enrollment was 31.4 months in the CAN-2409 group versus only 12.5 months in the control group.

▪ Importantly, 3 out of 7 patients who received CAN-2409 were still alive at the time of data cut-off (February 20, 2025) with survival of 66.0, 63.6, and 35.8 months after enrollment;

survival from the time of diagnosis was 73.5, 68.8 and 41.3 months for these patients.

In contrast, only one out of 6 patients randomized to SoC chemotherapy arm remained alive at the data cutoff;

histologic analysis at resection showed intraepithelial neoplasia associated with improved prognosis in this patient.

▪ Median survival post-progression was 21.2 months in CAN-2409 patients (vs.

7.2 months on the control arm).

▪ Based on these promising findings, the Company has decided to prepare for a larger, late-stage, randomized controlled clinical trial of CAN-2409 in PDAC.

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

Patients recruited in this study have previously failed SoC treatment and have a poor prognosis (expected overall survival < 6-9 months).

In February 2024, we announced that the FDA granted fast track designation for CAN-3110 for the treatment of patients with recurrent HGG to improve overall survival.

These patients have failed SoC treatment and have a poor prognosis (expected overall survival < 6-9 months).

Initial overall survival data from this clinical trial was presented in an oral presentation at the ASCO Annual Meeting in June 2021, and additional biomarker data was reported in an oral presentation at the Society for Neuro-Oncology Annual Meeting 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 herpes simplex virus 1 (HSV-1) antigen and HSV-1 replication consistent with mechanism of action as well as robust evidence of immune activation.

In May 2024, we also announced that the FDA granted orphan drug designation for CAN-3110 for the treatment of recurrent HGG.

Initial overall survival data from this clinical trial was presented in an oral presentation at the American Society of Clinical Oncology (ASCO) Annual Meeting in June 2021, and additional biomarker data was reported in an oral presentation at the Society for Neuro-Oncology Annual Meeting in November 2021.

During our Research and Development Day in December 2022, we presented updated data demonstrating that a single administration of CAN-3110 was well tolerated with no observed dose-limiting toxicity and achieved 11.6 months mOS.

Furthermore, we showed evidence of persistent herpes simplex virus 1 (HSV-1) antigen and HSV-1 replication consistent with the mechanism of action of CAN-3110 as well as evidence of robust immune activation in the tumor microenvironment and in the peripheral blood of treated patients.

In May 2023, we presented clinical and biomarker data from this ongoing clinical trial in an oral presentation at the American Society of Gene & Cell Therapy (ASGCT) Annual Meeting where we reported mOS in arm A (n=41) ongoing at 11.8 months and mOS in arm B (n=9) ongoing at 12.0 months as of the April 20, 2023 data cutoff.

Safety and tolerability data reported no dose-limiting toxicities in both arm A and arm B.

The safety and tolerability data highlighted the absence of dose-limiting toxicities in both arm A and arm B.

In October 2023, we jointly published an article in Nature that reported extended survival associated with immune activation in patients with recurrent HGG treated with CAN-3110.

Notably, new data reported an increased survival in 66% of patients with positivity for anti-HSV1 antibodies (mOS of 14.2 months).

Immune status was positively associated with survival both in patients with pre-existing HSV1 antibodies (pre-treatment) and in 33% of patients that, while negative at baseline, developed anti-HSV1 antibodies after a single injection of CAN-3110.

Notably, new data reported an increased survival in the 66% of patients with positivity for anti-HSV1 antibodies (mOS of 14.2 months).

Immune status was positively associated with survival both in patients with pre-existing HSV1 antibodies (pre-treatment) and in 33% of patients who, while negative at baseline, developed anti-HSV1 antibodies after a single injection of CAN-3110.

Clinical responses were observed in both injected and uninjected lesions in patients with multifocal disease.

Significant tumor responses in both arm A and arm B were observed, with continued reduction in tumor volume in a patient in arm B approximately one year after CAN-3110 treatment.

Clinical response for this patient, in follow-up as of data cutoff, continued without additional treatment.

Clinical response for this patient continues as of February 2025 without additional treatment.

Analysis of post-treatment samples demonstrated evidence of persistent HSV antigen expression and replication in both injected and uninjected tumor tissue associated with CD8+ T cell infiltration.

The extent of immune activation, measured by gene profiling and quantification of immune cells in post-treatment specimens, was associated with the presence of anti-HSV1 antibodies and survival.

Survival was also associated with the diversity of the T cell repertoire in circulating T cells, suggesting that patients treated with CAN-3110 were able to mount a diverse immune response against the virus and tumor antigens released during the oncolytic process had improved survival.

Survival was also associated with the diversity of the T cell repertoire in circulating T cells, suggesting that patients who were able to mount a diverse immune response against the virus and tumor antigens released during the oncolytic process after CAN-3110 administration, had improved survival.

We are conducting an extension of the clinical trial known as arm C, in which patients with recurrent HGG will receive a repeat dosing regimen of CAN-3110 (up to six injections over four months).

Clinical data from arm C will help evaluate whether multiple injections can increase mOS.

Clinical data from arm C will help evaluate whether multiple injections could further improve survival.

This clinical trial extension is supported by the Break Through Cancer foundation.

We are also designing other novel viral immunotherapy candidates using our proprietary enLIGHTEN Discovery Platform, a 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 our enLIGHTEN Discovery Platform to strengthen the activity of UPenn’s investigational CAR-T cell therapies in difficult to treat solid tumors.

As of February 2025, we have dosed seven patients with multiple injections of CAN-3110 (up to six injections over a period of four months).

In June 2024, a poster presentation at the ASCO Annual Meeting demonstrated that multiple intratumoral injections of CAN-3110 were feasible and well tolerated with no dose-limiting

toxicities or severe adverse events observed in the first six patients treated in arm C.

More than 300 core biopsies were obtained from these patients, across the planned dose ranging time points, which were processed for “-omic” analysis, including single-cell RNA sequencing and cell profiling.

In October 2024, during the 16th Annual International Oncolytic Virotherapy Conference (IOVC), we announced clinical activity and biomarker data for arm C.

The principal investigator of the study reported ongoing improved survival compared to historical controls in patients treated with multiple injections of CAN-3110, with 3 out of 6 patients with recurrent HGG (recurrent glioblastoma) still alive more than one year (12.2, 13.0, and 18.7 months, respectively) after initiation of experimental treatment with CAN-3110.

The data also showed discrepancies between imaging and histologic findings.

Post treatment longitudinal biopsies demonstrated near absence of tumor cells alongside dense lymphocyte infiltrates especially in patients with enhancement on post-treatment MRI scans, suggesting the presence of radiologic pseudo-progression after treatment with CAN-3110.

This data cautions against the evaluation of progression by imaging, restating the importance of survival as the primary endpoint for viral immunotherapy trials.

We expect to present initial median overall survival data for the repeat dosing cohort in the fourth quarter of 2025.

In November 2024, during the SITC 2024 Annual Meeting, we presented data demonstrating the antitumor activity of CAN-3110 in preclinical models of melanoma, a tumor characterized by high Nestin expression, frequent loss-of-function in CDKN2A, and alterations in the Ras-Raf signaling pathway.

This data supports the rationale to expand the evaluation of CAN-3110 into tumors beyond recurrent HGG, creating a potential pipeline in a product.

We are also designing additional novel viral immunotherapy candidates using our proprietary enLIGHTEN Discovery Platform, a 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.

In November 2023, during the SITC 2023 Annual Meeting, we presented two posters describing the key elements of the platform and the development of the first experimental agent from the enLIGHTEN Discovery Platform.

The new agent, Alpha-201 Macro1, is an investigational viral immunotherapy designed to interfere with the CD47/SIRPα pathway and activate innate immune surveillance.

Results demonstrated monotherapy activity following local administration in a preclinical model of lung and breast cancer.

Additional preclinical data presented at SITC confirmed the capability of the enLIGHTEN Advanced Analytics suite to predict optimal gene payload combinations to arm viral vectors, that enable the design of potential combination therapeutics to overcome tumor resistance especially in cancers resistant to ICI treatment.

In March 2024, we announced the acceptance of an abstract at the American Association for Cancer Research's 2024 Annual Meeting related to the second candidate from our enLIGHTEN Discovery Platform, a first-in-class multimodal immunotherapy for induction of tertiary lymphoid structures as a novel therapeutic strategy for 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.

The first agent based on enLIGHTEN, Alpha-201 Macro1, is an investigational viral immunotherapy designed to interfere with the CD47/SIRPα pathway and activate innate immune surveillance.

Results demonstrated monotherapy activity of this agent following local administration in a preclinical model of lung and breast cancer.

Additional preclinical data presented at SITC confirmed the capability of the enLIGHTEN Advanced Analytics suite to predict optimal gene payload combinations to arm viral vectors, enabling the design of potential combination therapeutics to overcome tumor resistance especially in cancers resistant to immune checkpoint inhibitor treatment.

In April 2024, during the American Association for Cancer Research's 2024 Annual Meeting, we presented data on a second preclinical candidate from the enLIGHTEN Discovery Platform, a first-in-class multimodal immunotherapy for induction of tertiary lymphoid structures, being developed as a novel therapeutic strategy for solid tumors.

Data presented included preclinical in vivo evidence of monotherapy activity of this preclinical candidate as well as activity when administered in combination with immune checkpoint inhibitors (improved survival as compared to PD-1 only treated mice).

In October 2024, during the 16th Annual IOVC, we presented data on a novel biological multimodal therapeutic from the enLIGHTEN TM Discovery Platform, the third preclinical candidate, encoding IL-12 and IL-15.

Data included the ability of this asset to induce expansion and activation of natural killer and CD8+ T cells, resulting in significant inhibition of tumor growth and tumor regression in two different tumor models.

We currently own development and commercialization rights for all 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.

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We completed our initial public offering in July 2021.

Our cash and cash equivalents were $35.4 million as of December 31, 2023.

In accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification, 205-40, Presentation of Financial Statements -

Going Concern, we are required to assess our ability to continue as a going concern for the one-year look forward period following the date that the consolidated financial statements are issued.

Based on our current operating plan and existing cash and cash equivalents, we determined that substantial doubt exists regarding our ability to continue as a going concern for the one-year period following the date these consolidated financial statements are issued.

To sustain its future operations beyond such one-year period, we will require additional funding.

We expect to finance our cash needs through a combination of public or private equity or debt financings, government grants, and other sources, which may include collaborations, strategic alliances and licensing arrangements with third parties.

There is no assurance that we will be successful in obtaining sufficient funding on acceptable terms, if at all, and could be forced to delay, reduce, or eliminate some or all of its research, clinical trials, product development or future commercialization efforts, which could materially adversely affect our business prospects or our ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Accordingly, the consolidated financial statements have been prepared on a basis that assumes we will continue as a going concern and that contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

On August 5, 2022, we filed a shelf registration statement on Form S-3 (as amended, the Shelf) with the SEC, which covers the offering, issuance and sale by us of up to an aggregate of $200.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof.

We simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by us of up to $75.0 million of our common stock from time to time in “at-the-market” offerings under the Shelf (the ATM Program).

The Shelf was declared effective by the SEC on August 12, 2022.

As of March 6, 2025, we have sold and issued 2,976,391 shares of common stock under the ATM Program, with total net proceeds of $16.2 million.

On December 16, 2024, we issued and sold 12,000,001 shares of common stock at a price to the public of $6.00 per share and pre-funded warrants to purchase up to an aggregate of 3,333,333 shares of common stock at a price to the public of $5.99 per pre-funded

warrant to purchase one share of the common stock for aggregate gross proceeds of approximately $92.0 million (the 2024 Follow-On Offering).

We received approximately $85.9 million in net proceeds from the 2024 Follow-On Offering after deducting underwriting discounts and commissions and offering expenses.

Our cash and cash equivalents were $102.7 million as of December 31, 2024, which we believe will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

Collaborations

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.

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.

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).

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On March 1, 2014, we entered into an exclusive license agreement ( the Ventagen Agreement) with Ventagen, a related party.

The Ventagen Agreement provides Ventagen an exclusive license, with rights to grant sublicense (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.

Salvador, Costa Rica, Nicaragua, Panama, Colombia and Bolivia.

Ventagen is 49.5% owned by certain of our stockholders.

Corporate Restructuring

In November 2023, our Board of Directors authorized a restructuring plan to focus on continuation and expansion of development of CAN-3110 as well as the enLIGHTEN TM Discovery Platform, which resulted in a reduction of our workforce by approximately 45%.

Each affected employee’s separation from the Company occurred in December 2023.

As a result, the Company incurred costs of $0.7 million related to severance benefits for the affected employees, including severance payments and limited reimbursement of medical insurance premiums.

The restructuring plan is expected to be completed in the first quarter of 2024 once the remaining unpaid severance payments of $46,000 are made.

In November 2023, our board of directors authorized a restructuring plan to focus on key clinical readouts for CAN-2409 and continuation and expansion of development of CAN-3110 as well as the enLIGHTEN TM Discovery Platform, which resulted in a reduction of our workforce by approximately 45%.

Each affected employee’s separation occurred in December 2023.

As a result, we incurred costs of $0.7 million related to severance benefits for the affected employees, including severance payments and limited reimbursement of medical insurance premiums.

The restructuring plan was completed in the first quarter of 2024 when the final severance payments of $46,000 were made.

Components of Our Results of Operations

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from sales of products in the foreseeable future.

We recognized as research and development service revenue $1.0 million that we received in 2014 and 2015 from Ventagen for an exclusive license to develop products for commercial sale and development within certain countries.

We recognized revenue over the period during which we provided services under the license agreement, and the revenue was fully recognized as of December 31, 2022.

Operating Expenses

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At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of, or obtain regulatory approval for, any of our current or future product candidates.

The duration, costs, and timing of clinical trials and development of CAN-2409 and CAN-3110 and any other product candidate we may develop will depend on a variety of factors, including:

The duration, costs,

and timing of clinical trials and development of CAN-2409 and CAN-3110 and any other product candidate we may develop will depend on a variety of factors, including:

• the scope, rate of progress, expense and results of clinical trials;

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• the progress of the development efforts of parties with whom we may enter into collaboration agreements, and the terms and timing of any additional collaboration agreements, license or other arrangement, including the timing of any payments thereunder;

• our ability to enter into agreements with CDMOs for the development, clinical manufacture and commercial manufacture of our product candidate CAN-2409 and CAN-3110

• our ability to enter into agreements with contract development and manufacturing organizations (CDMOs) for the development, clinical manufacture and commercial manufacture of our product candidates CAN-2409 and CAN-3110

• costs related to manufacturing of our product candidates or to account for any future changes in our manufacturing plans;

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and investor and public relations costs.

Grant income consists of amounts received under a grant from the Massachusetts Life Sciences Center.

Interest Income

Interest income consists of amounts earned on investment of cash equivalents.

Interest income primarily consists of amounts earned on investment of cash equivalents.

Interest Expense

Interest expense consists of interest expense on our debt under our Loan Agreement with Silicon Valley Bank (SVB).

Interest expense primarily consists of interest expense on our debt under our Loan Agreement with Silicon Valley Bank (SVB).

Change in Fair Value of Warrant Liability

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Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying shares of common stock, risk-free interest rate, expected dividend yield, and the remaining contractual term of the warrants.

Therefore, the fair value may not be appropriately captured by simple models.

Since our inception, we have generated cumulative federal and state net operating loss and research and development credit carryforwards for which we have not recorded any net tax benefit due to uncertainty around utilizing these tax attributes within their respective carryforward periods.

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Our management has evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets, which are comprised principally of net operating loss carryforwards and certain tax credits.

Management has considered our history of cumulative net losses incurred since inception, as well as our lack of product revenue since inception, and has determined that it is more likely than not that we will not realize the benefits of its deferred tax assets.

As a result, a full valuation allowance has been established at December 31, 2024.

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YEAR ENDED DECEMBER 31,

Research and development service revenue

Operating expenses:

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Comparison of the Years Ended December 31, 2024 and 2023

We had research and development service revenue of zero and $0.1 million for the years ended December 31, 2023 and 2022, respectively.

This represents the recognition as research and development service revenue of a portion of the $1.0 million that we received in 2014 and 2015 from Ventagen, a related party, which was recognized over the period during which we provided the services, and was fully recognized as of December 31, 2022.

Research and Development Expenses

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Clinical development

Depreciation, impairment, and loss on the sale of fixed assets

Depreciation, impairment, and loss on sale of fixed assets

Pre-clinical research

Research and development expenses increased $3.7 million from $20.8 million for the year ended December 31, 2022 to $24.5 million for the year ended December 31, 2023.

The increase was primarily attributable to a $2.3 million increase in clinical development costs driven by increased manufacturing and regulatory costs in support of CAN-2409 programs, a $0.7 million increase in employee compensation costs driven by stock compensation expense, and a $0.6

million increase in fixed asset-related expenses, including $0.4 million of impairment charges to manufacturing equipment.

Research and development expenses decreased $5.2 million from $24.5 million for the year ended December 31, 2023 to $19.3 million for the year ended December 31, 2024.

The decrease was primarily attributable to a $2.7 million decrease in clinical development costs driven by decreased regulatory, manufacturing and clinical trial costs for CAN-2409 programs, a $1.7 million decrease in employee-related expenses due to the corporate restructuring in the fourth quarter of 2023, and a $0.4 million decrease in depreciation, impairment, and loss on the sale of fixed assets.

General and Administrative Expenses

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Information technology costs

General and administrative expenses decreased $0.2 million from $14.1 million for the year ended December 31, 2022 to $13.9 million for the year ended December 31, 2023.

The decrease was primarily attributable to a $0.8 million decrease in insurance costs, which was driven by a lower cost for directors and officers insurance, and a $0.6 million decrease in recruiting costs.

These decreases were offset by a $1.1 million increase in employee compensation due to increased general and administrative headcount throughout the year.

There was no grant income for the year ended December 31, 2023, compared to $48,000 for the year ended December 31, 2022.

Grant income for the year ended December 31, 2022 relates to the recognition of income from a grant from the Massachusetts Life Sciences Center.

General and administrative expenses increased $0.2 million from $13.9 million for the year ended December 31, 2023 to $14.1 million for the year ended December 31, 2024.

The increase was primarily attributable to a $1.6 million increase in professional and consulting fees.

The increase was partially offset by a $0.7 million decrease in

employee-related expenses due to the corporate restructuring in the fourth quarter of 2023, and a $0.4 million decrease in the cost of directors and officers insurance.

Interest Income

Interest income was $2.1 million for the year ended December 31, 2023, compared to $1.2 million for the year ended December 31, 2022, and represents earnings on our cash equivalents.

The increase in interest income is the result of rising interest rates that have generated higher returns on our cash equivalents for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Interest income was $1.1 million for the year ended December 31, 2024, compared to $2.1 million for the year ended December 31, 2023, and primarily represents earnings on our cash equivalents.

The decrease in interest income is the result of interest being generated on a lower cash equivalents balance for most of the year ended December 31, 2024 compared to the year ended December 31, 2023.

Interest Expense

Interest expense was $2.1 million for the year ended December 31, 2024, compared to $2.6 million for the year ended December 31, 2023, and represents interest expense on our outstanding debt obligations.

The increase in interest expense is the result of rising interest rates that are increasing the variable interest rate on our term loan for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Change in Fair Value of Warrant Liability

The change in fair value of our warrant liability was a decrease in the fair value of $1.0 million for the year ended December 31, 2023, compared to a decrease in the fair value of $16.4 million for the year ended December 31, 2022.

The change in fair value of our warrant liability was an increase in the fair value of $20.8 million for the year ended December 31, 2024, compared to a decrease in the fair value of $1.0 million for the year ended December 31, 2023.

The change in the fair value of the warrant liability is primarily driven by changes in the underlying value of our stock price.

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As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

Based on current plans and assumptions,

we expect that our existing cash and cash equivalents will be sufficient to fund our current operating plan into the fourth quarter of 2024.

As of December 31, 2024, we had cash and cash equivalents of $102.7 million.

Based on current plans and assumptions, we expect that our existing cash and cash equivalents will be sufficient to fund our current operating plan into the first quarter of 2027, including the expected completion of the final overall survival phase 2a data readouts in borderline resectable pancreatic ductal adenocarcinoma (“PDAC”), announced on February 25, 2025, and non-small cell lung cancer (“NSCLC”) in the first quarter of 2025 and the final overall survival readout for the ongoing Phase 1b trial in recurrent high-grade glioma with CAN-3110 in the fourth quarter of 2025.

We will require additional capital to further advance development of CAN-2409 in NSCLC and PDAC or of CAN-3110 beyond the current trials and to complete the clinical development of, or commercialize, any of our product candidates or programs.

We do not currently have any approved products and have never generated any revenue from product sales.

We have financed our operations primarily through proceeds from government grants and proceeds from the sale of convertible notes, common stock, and our convertible preferred stock.

As of December 31, 2023, we have raised approximately $160.8 million, including $15.6 million of government grants, $66.1 million from the sale of convertible preferred stock, and $79.1 million from the sale of our common stock in our IPO.

As of December 31, 2024, we have raised approximately $270.9 million of gross proceeds from such transactions, including $15.6 million of government grants, $66.1 million from the sale of convertible preferred stock, $187.4 million from the sale of our common stock and accompanying pre-funded warrants, and $1.8 million from stock option exercises.

Our cash and cash equivalents totaled $102.7 million as of December 31, 2024.

We had $12.5 million of debt as of December 31, 2024.

Subsequent to December 31, 2023 and through March 21, 2024, we raised $0.2 million under our ATM Program (as defined below).

On February 24, 2022, we entered into a loan and security agreement Loan Agreement with SVB pursuant to which SVB agreed to provide term loans to us in an aggregate principal amount of $20.0 million.

As of December 31, 2024, we have raised $15.8 million of net proceeds under the ATM Program (as defined below).

Subsequent to December 31, 2024 and through March 6, 2025, we raised an additional $0.4 million of net proceeds under the ATM Program.

On February 24, 2022, we entered into a Loan Agreement with SVB pursuant to which SVB agreed to provide term loans to us in an aggregate principal amount of $20.0 million.

We borrowed $20.0 million upon entering into the Loan Agreement.

We could have borrowed up to an additional aggregate principal amount not to exceed $5.0 million, at any time on or prior to December 31, 2022, upon the achievement of all of the following milestones, inclusively:

(a) positive phase 2 clinical activity data from our CAN-2409 NSCLC clinical trial, (b) dosing of our first patient in our phase 3 CAN-2409 high-grade glioma clinical trial;

and (c) receipt on or prior to December 31, 2022, of net cash proceeds in an amount equal to at least $75.0 million from the issuance and sale of equity securities to investors acceptable to SVB.

We did not borrow any of the additional aggregate principal amount on or prior to December 31, 2022.

The term loans are secured by substantially all of our properties, rights and assets, except for our intellectual property, which is subject to a negative pledge under the Loan Agreement.

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Upon repayment in full of the term loans, we will be required to pay a final payment fee equal to 4.50% of the original principal amount of any funded term loan being repaid.

The Loan Agreement permits voluntary prepayment of all, but not less than all, of the SVB term loans, subject to a prepayment premium of 1% to 3% based upon the timing of the prepayment.

The Loan Agreement permits voluntary prepayment of all, but not less than all, of the SVB term loans, subject to

a prepayment premium of 1% to 3% based upon the timing of the prepayment.

As of December 31, 2024, $11.6 million of indebtedness was outstanding under the Loan Agreement.

On August 5, 2022, we filed the Shelf with the SEC, which covers the offering, issuance and sale by us of up to an aggregate of $200.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof.

The Shelf was declared effective by the SEC on August 12, 2022.

Subsequent to December 31, 2023 and through March 21, 2024, we have sold and issued 109,485 shares of common stock under the ATM Program, with total net proceeds of $0.2 million.

As of March 6, 2025, we have sold and issued 2,976,391 shares of common stock under the ATM Program, with total net proceeds of $16.2 million.

In connection with the 2024 Follow-On Offering, we issued and sold 12,000,001 shares of common stock at a price to the public of $6.00 per share and pre-funded warrants to purchase up to an aggregate of 3,333,333 shares of common stock at a price to the public of $5.99 per pre-funded warrant to purchase one share of the common stock for aggregate gross proceeds of approximately $92.0 million.

We received approximately $85.9 million in net proceeds from the 2024 Follow-On Offering after deducting underwriting discounts and commissions and offering expenses.

As of December 31, 2024, we had an accumulated deficit of $192.2 million and have not generated any product sales.

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Net cash used in investing activities

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash Flows for the Years Ended December 31, 2024 and 2023

Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $27.0 million, primarily consisting of a net loss of $55.2 million as we incurred expenses associated with our clinical programs and incurred costs associated with operating as a public company.

We had non-cash charges of $27.8 million primarily related to the $20.8 million change in the fair value of our warrant liability and non-cash stock-based compensation.

Net cash used in operating activities was also impacted by $0.3 million in changes in operating assets and liabilities, primarily driven by an increase of $0.8 million in accrued expenses and a decrease of $0.2 million in prepaid expenses and other current assets.

These changes were partially offset by a decrease of $0.5 million in lease-related liabilities and a decrease of $0.2 million in accounts payable.

Net cash used in operating activities for the year ended December 31, 2023 was $34.2 million, primarily consisting of a net loss of $37.9 million as we incurred expenses associated with our clinical programs, increased our headcount prior to the restructuring in the fourth quarter of 2023 and incurred costs associated with operating as a public company.

In addition, we had non-cash income of $1.0 million as a result of the change in the fair value of our warrant liability.

addition, we had non-cash income of $1.0 million as a result of the change in the fair value of our warrant liability.

Non-cash income was partially offset by $5.2 million in non-cash charges primarily related to non-cash stock-based compensation and depreciation expense.

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These changes were partially offset by a decrease of $0.5 million in prepaid expenses and other current assets.

Net cash used in operating activities for the year ended December 31, 2022 was $31.4 million, primarily consisting of a net loss of $18.8 million as we incurred expenses associated with our clinical programs, increased our headcount and incurred costs associated with operating as a public company.

In addition, we had non-cash income of $16.4 million as a result of the change in the fair value of our warrant liability, which was partially offset by $3.1 million of non-cash stock-based compensation and depreciation expense.

Net cash used in operating activities was also impacted by $0.1 million in changes in operating assets and liabilities, primarily driven by an increase of $1.3 million in accrued expenses and a decrease in prepaid expenses and other current assets of $0.4 million.

These changes were partially offset by a decrease of $1.2 million in accounts payable and a decrease of $0.5 million in lease-related liabilities.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $16,000 and consisted of the purchase of fixed assets.

Net cash used in investing activities for the year ended December 31, 2023 was $0.3 million, and consisted of the purchase of fixed assets, which was partially offset by proceeds from the sale of fixed assets.

Net cash used in investing activities for the year ended December 31, 2022 was $1.3 million, which was attributable to the use of $1.3 million for purchases of fixed assets.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2023 was $0.1 million, consisting of payments related to tax withholding for vested restricted stock units.

Net cash provided by financing activities for the year ended December 31, 2022 was $20.0 million, primarily consisting of $19.9 million of net proceeds from a term loan with SVB.

Net cash provided by financing activities for the year ended December 31, 2024 was $94.3 million and consisted of $85.9 million of net proceeds from the issuance of common stock and accompanying pre-funded warrants in the 2024 Follow-On Offering, $15.8 million of net proceeds from the issuance of common stock under the ATM Program and $1.7 million of proceeds from option exercises, partially offset by $9.2 million of principal payments on our term loan with SVB.

Net cash used in financing activities for the year ended December 31, 2023 was $0.1 million and consisted of payments related to tax withholding for vested restricted stock units.

Funding Requirements

We expect our operating expenses to increase substantially in the future in connection with our ongoing activities, particularly as we advance CAN-2409 and CAN-3110 through research and development, clinical trials, and develop our manufacturing capabilities, as we research and develop additional product candidates including preclinical activities and as we prepare for marketing approval and commercialization.

We also expect to incur additional costs associated with operating as a public company.

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• advance the clinical development of CAN-2409 and CAN-3110;

• develop our manufacturing capabilities, including through relationships with contract manufacturers for commercial manufacturing of our product candidate CAN-2409 and the development, construction and qualification of our clinical manufacturing capabilities, internally or through CDMOs for our product candidate CAN-3110;

• develop our manufacturing capabilities, including through relationships with contract manufacturers for potential commercial manufacturing of our product candidate CAN-2409 and the development, construction and qualification of our clinical manufacturing capabilities, internally or through CDMOs for our product candidate CAN-3110;

• pursue preparatory activities for potential launch and commercialization for CAN-2409 in localized prostate cancer;

• pursue the preclinical and clinical development of other product candidates using our enLIGHTEN Discovery Platform, an HSV-based platform;

• expand our operational, financial, and management systems and increase personnel, including personnel to support our operations as a public company.

We believe that our existing cash and cash equivalents as of December 31, 2023 will enable us to fund our operating expenses and capital expense requirements into the fourth quarter of 2024.

We believe that our existing cash and cash equivalents as of December 31, 2024 will enable us to fund our operating expenses and capital expense requirements into the first quarter of 2027.

We have based this estimate on assumptions that may prove to be incorrect, and we could utilize our available capital resources sooner than we currently expect.

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The promissory note is due upon maturity in November 2027.

See our financial statements and related footnotes elsewhere in this Annual Report on Form 10-K for additional information on these agreements.

See our consolidated financial statements and related footnotes elsewhere in this Annual Report on Form 10-K for additional information on these agreements.

We also enter into contracts in the normal course of business with hospitals, clinics, universities, and other third parties for clinical trials and testing and with construction contractors and process developers for the construction of our manufacturing facility.

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Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP).

The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements.

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Determination of Fair Value of Warrants

In connection with the Series B convertible preferred stock issuance in November 2018, the Company issued warrants to purchase shares of common stock of which certain warrants are shown as a liability on the balance sheet.

In connection with the Series B convertible preferred stock issuance in November 2018, we issued warrants to purchase shares of common stock of which certain warrants are shown as a liability on the balance sheet.

The fair value of the warrants was determined based on significant inputs not observable in the market.

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Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying shares of common stock prior to the IPO, risk-free interest rate, expected dividend yield, expected volatility of the price of the underlying preferred stock, and the remaining contractual term of the warrants.

The most significant assumption in the model impacting the fair value of the common stock warrants is the fair value of the Company’s common stock as of each remeasurement date.

Prior to the IPO, the Company determined the fair value per share of the underlying common stock by taking into consideration the most recent sales of preferred stock, results obtained from third-party valuations and additional factors that were deemed relevant.

The most significant assumption in the model impacting the fair value of the common stock warrants is the fair value of our common stock as of each remeasurement date.

Prior to the IPO, we determined the fair value per share of the underlying common stock by taking into consideration the most recent sales of preferred stock, results obtained from third-party valuations and additional factors that were deemed relevant.

Stock-Based Compensation

We measure stock options and other stock-based awards granted to our employees, directors, consultants, advisors based on the fair value on the date of the grant, awards, net of actual forfeitures, over the requisite service period, which is generally the vesting period of the respective award.

We measure stock options and other stock-based awards granted to our employees, directors, consultants, advisors based on the fair value on the date of the grant.

We recognize compensation expense over the requisite service period, which is generally the vesting period of the respective award.

We recognize forfeitures as they occur.

For stock-based awards granted to non-employees, compensation expense is recognized over the vesting period which approximates the period over which services are rendered by such non-employees.

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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 7. Management’s Discussion and Analysis