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Item 1. Business

2021-03-25 compared with 2020-03-09 · 417 added, 500 removed, 401 unchanged (70% of the section changed)

We are a clinical stage biopharmaceutical company focused on the development and commercialization of precisely targeted oncology therapies.

Our strategy is to identify and utilize novel biomarkers to enhance selection of patients we believe will be most likely to benefit from treatment with our product candidates.

We have utilized adaptive clinical protocol designs that enable us to evaluate our agents in multiple dosing regimens and for a range of cancer types.

Since we began operations in November 2014, we have built a pipeline of five oncology programs.

Three of these product candidates are now in international multicenter trials directed against a broad number of cancer indications.

To date, we have evaluated our product candidates in over 350 patients.

We are developing small molecules that are designed to selectively inhibit the binding of immunosuppressive adenosine to either A2A receptors or to A2B receptors.

Another small molecule inhibitor is designed to block the function of ITK, a kinase protein inside T cells that is crucial to T-cell activation and differentiation.

We also are developing injectable monoclonal antibodies.

One of these antibodies is designed to block the production of adenosine by tumors by inhibiting the cell surface enzyme CD73.

This antibody is designed to have dual properties;

in addition to blocking production of immunosuppressive adenosine, the antibody is designed to stimulate various immune cells.

Another antibody that is designed to bind to the chemokine receptor CXCR2 on myeloid cells to block the activity of immunosuppressive myeloid cells that infiltrate tumors is in preclinical development.

Our product candidates’

designed specificity has the potential to provide greater safety and facilitate their development either as monotherapies or in combination with other cancer therapies such as immune checkpoint inhibitors or chemotherapy.

Ciforadenant (formerly CPI-444), is an oral, small molecule antagonist of the A2A receptor for adenosine and is currently being studied under a Phase 2 expansion protocol in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq ®

(atezolizumab) for patients with either advanced, refractory renal cell cancer (“RCC”) or patients with refractory metastatic castration resistant prostate cancer (“mCRPC”).

Our second clinical product candidate, CPI-006, is an anti‑CD73 monoclonal antibody that is designed to both inhibit the production of adenosine and stimulate various immune cells.

CPI-006 is currently being studied in a Phase 1/1b clinical trial as a monotherapy and in combination with ciforadenant, in combination with pembrolizumab and in triplet combination with both ciforadenant and pembrolizumab.

Our third clinical product candidate, CPI-818, is a selective, covalent inhibitor of ITK and is in a multi-center Phase 1/1b clinical trial in patients with various malignant T-cell lymphomas.

CPI-818 is designed to be directly cytotoxic to certain malignant T-cells and we believe has the potential to regulate immune responses to tumors.

We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing oncology assets as well as in identifying product candidates that can be in‑licensed and further developed internally to treat many types of cancer.

We hold worldwide rights to all of our product candidates.

Oncology therapies that stimulate or enhance immune responses to tumors have become a commonly used approach with several potential benefits over existing therapies.

First, the immune system exhibits immunologic diversity and selectivity, which enables it to respond selectively to a large number of potential targets.

Second, once triggered, the immune response can be amplified, offering the potential to enhance the efficacy of treatment.

Third, once activated, the immune system possesses immunologic memory, potentially providing for a durable and long‑lasting response.

Some of the most successful types of immuno‑oncology therapies are immune checkpoint inhibitors.

Immune checkpoints are signaling molecules produced by or expressed on immune cells that act to shut down or block an immune response.

In a healthy person, these checkpoints function to limit an immune response to ensure that the immune system does not overreact, which could lead to excessive inflammation and tissue damage, as occurs in patients with autoimmune diseases or allergies.

Tumor cells have evolved to activate these checkpoints to shield the tumor from immune response attacks, but studies have shown that immune checkpoint inhibitors can counter these tumor‑protective measures and unleash the immune system’s cancer‑destroying properties.

The FDA has approved agents that target specific immune checkpoints, including antibodies against the cytotoxic T‑lymphocyte‑associated antigen‑4 (“CTLA‑4”), programmed death 1 (“PD‑1”) receptors, and programmed death receptor‑ligand 1 (“PD‑L1”).

These antibodies represent the first immune checkpoint inhibitors to demonstrate effectiveness in the clinic, and preclinical data suggest that there are many other immune checkpoints or targets that may

be modulated to promote the activation of a patient’s anti‑tumor immune system.

To date, antibodies targeting immune checkpoints have been approved to treat melanoma, lung, renal cell, breast, bladder, head and neck and other cancers.

We are a clinical stage, immunology focused biopharmaceutical company developing drugs and antibodies that target the most critical cellular elements of the immune system.

Our strategy is to focus our efforts on the development of immune modulator product candidates to treat COVID-19, T-cell lymphomas, other cancers and autoimmune diseases.

We have built a pipeline of five programs, three of which are in clinical development.

Our lead product candidate is CPI-006, a potent humanized monoclonal antibody that is designed to react with a specific site on CD73.

In both preclinical and in vivo studies in cancer patients and patients with COVID-19, CPI-006 has demonstrated binding to various immune cells and the inducement of a humoral adaptive immune response.

We believe CPI-006 has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of infectious diseases and cancers.

We are evaluating CPI-006 in a global, randomized, double-blind, Phase 3 trial designed to evaluate the efficacy and safety of CPI-006 compared to placebo in hospitalized patients with mild-to-moderate COVID-19.

The primary endpoint of the trial is the proportion of patients progressing to respiratory failure or death during the 28 days after dosing.

The trial was designed based on feedback received from the U.S.

Food and Drug Administration, or FDA.

Our next product candidate, CPI-818, is a selective, covalent inhibitor of ITK and is in a multi-center Phase 1/1b clinical trial in patients with various malignant T-cell lymphomas.

CPI-818 is designed to inhibit the proliferation of certain malignant T-cells, and we believe it also has the potential to regulate the growth of abnormal T cells involved in autoimmunity.

Our third product candidate, ciforadenant (formerly CPI-444), is an oral, small molecule antagonist of the A2A receptor for adenosine with which we completed a Phase 2 expansion protocol in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq® (atezolizumab) for patients with either advanced or refractory renal cell cancer (“RCC”).

We have identified a novel biomarker that may enable us to select patients that we believe will be most likely to benefit from ciforadenant.

In studies presented at the American Society of Oncology (“ASCO”) meeting in June 2020, patients expressing this marker in their tumor had a 17% response rate.

Activity was seen with both CPI-444 as a monotherapy and in combination with Tecentriq.

We have refined our strategy with ciforadenant and plan to collaborate with an academic consortium to evaluate ciforadenant in a front line RCC Phase 2 trial as a triplet combination with pembrolizumab and a tyrosine kinase inhibitor (“TKI”).

Our product candidates are designed to exhibit a high degree of specificity, which we believe has the potential to provide greater safety compared to other cancer therapies and may facilitate their development either as monotherapies or in combination with other cancer therapies such as immune checkpoint inhibitors or chemotherapy.

We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing immunology focused assets as well as in identifying product candidates that can be in-licensed and further developed internally to treat many types of cancer.

We hold worldwide rights to all of our product candidates (other than in greater China).

In October 2020, we announced the formation and launch of Angel Pharmaceuticals Co., Ltd.

(“Angel Pharmaceuticals”), a new China based biopharmaceutical company with a mission to bring innovative quality medicines to Chinese patients for treatment of serious diseases including cancer, autoimmune diseases and infectious diseases.

We formed Angel Pharmaceuticals as a wholly owned subsidiary and it launched with a post-money valuation of approximately $106.0 million, based on an approximate $41.0 million cash investment from a Chinese investor group that includes funds associated with Tigermed and Betta Pharmaceuticals, Hisun Pharmaceuticals and Zhejiang Puissance Capital.

Such cash is not available for our use.

Contemporaneously with the financing, Angel Pharmaceuticals licensed the rights to develop and commercialize our three clinical-stage candidates – CPI-006, CPI-818 and ciforadenant – in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Under the collaboration, we

currently have a 49.7% equity interest in Angel Pharmaceuticals, excluding 7% of Angel’s equity reserved for issuance under the Employee Stock Ownership Plan (“ESOP”), and are entitled to designate three individuals on Angel’s five-person Board of Directors.

Product Pipeline

Our oncology product candidate pipeline includes the following:

Ciforadenant Adenosine A2A Receptor Antagonist.

Our initial product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine that we in-licensed from Vernalis (R&D) Limited (“Vernalis”) in February 2015.

In January 2016, we began enrolling patients in a large expansion cohort trial for ciforadenant.

This Phase 1/1b clinical trial is designed to examine safety, tolerability, biomarkers and preliminary efficacy of ciforadenant in several solid tumor types, both as a single agent and in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD‑L1.

In November 2016, we completed enrollment of 48 patients in the first step of the Phase 1/1b clinical trial, which was designed to determine the optimal dose of ciforadenant as both a single agent therapy and in combination with Tecentriq for use in the cohort expansion stage of the trial.

The expansion cohort portion of the trial enrolled patients with non‑small cell lung cancer (“NSCLC”), RCC, melanoma (“MEL”), triple negative breast cancer (“TNBC”) and other cancers including colorectal cancer, prostate cancer, head and neck cancer and bladder cancer at leading medical centers in the U.S., Australia and Canada.

We have enrolled over 300 patients in this clinical trial to date.

In 2017, both the single agent and combination arms of the NSCLC and RCC cohorts met the protocol‑defined criteria for expansion from 14 to 26 patients, and both arms of the RCC cohort further met the protocol‑defined criteria for expansion to 48 patients.

In December 2017, Genentech began enrolling patients in a Phase 1b/2 clinical trial that is evaluating ciforadenant in combination with Tecentriq in patients with NSCLC under an umbrella protocol known as Morpheus.

In 2018, we amended our Phase 1/1b protocol to enroll patients in a Phase 1b/2 clinical trial with RCC who have failed therapies with both anti-PD-(L)1 antibodies and tyrosine kinase inhibitors (“TKI”).

Based on data observed in the Phase 1b/2 trial in 2019, we began enrolling patients with metastatic castration-resistant prostate cancer (“mCRPC”) in a Phase 2 expansion arm of our ongoing Phase 1/1b clinical trial with mCRPC who will receive the combination of ciforadenant with Tecentriq based on data from the Phase 1b/2 trial that showed activity in this disease.

As of November 2019, the key findings from these clinical trials include:

Ciforadenant has been well-tolerated at doses that achieved substantial receptor blockade;

Ciforadenant has shown evidence of anti-tumor activity as a monotherapy and in combination with atezolizumab;

Of cancers studied, RCC, mCRPC and NSCLC have appeared most responsive to therapy;

Identification of a gene expression signature, known as the adenosine gene signature, that enhances selection of patients we believe are most likely to benefit from therapy and may be a useful biomarker for selection of patients in future clinical trials.

The issued U.S.

patents that we in‑licensed from Vernalis for ciforadenant are directed to the composition of matter of ciforadenant and its method of use for treating disorders treatable by purine receptor blocking.

The composition of matter patent covering ciforadenant is expected to expire in the United States in July 2029, excluding any patent term extension that may be available.

We hold an exclusive, worldwide license under these patent rights and related know‑how, including a limited right to grant sublicenses, for all fields of use, to develop, manufacture and commercialize products containing certain adenosine receptor antagonists, including ciforadenant.

We have also filed patent applications covering the use of ciforadenant in combination with other checkpoint inhibitors, and the use of various biomarkers to select and monitor patients receiving therapy.

CPI-006, Immunomodulatory Anti‑CD73 Antibody.

Our second clinical product candidate, CPI-006, is an anti‑CD73 monoclonal antibody that is designed to inhibit the production of adenosine, which we in‑licensed from The Scripps Research Institute (“Scripps”) in December 2014.

CPI-006 was developed into a humanized anti‑CD73 monoclonal antibody from a mouse hybridoma clone expressing an anti‑human CD73 antibody.

We have further modified CPI‑006 to improve binding to CD73 and maximize its inhibition of catalytic activity.

Our product candidate pipeline includes the following:

CPI-006, B-Cell Activating anti-CD73 antibody.

CPI-006 is an investigational, humanized, engineered anti CD73 monoclonal antibody that is designed to activate various immune cells including B cells, which are the cells responsible for antibody production.

CPI-006 is also designed to inhibit the production of adenosine by blocking catalytic conversion of adenosine monophosphate to adenosine.

We in-licensed this antibody from Scripps in December 2014.

We have modified CPI-006 to potentially improve binding to CD73 and increase its inhibition of catalytic activity.

CD73 is an ectonucleotidase often found on lymphocytes, tumors and other tissues and is believed to play an important role in tumor immune suppression by catalyzing the production of extracellular adenosine.

In preclinical in vitro studies, our humanized monoclonal anti‑CD73 antibody has been shown to inhibit the catalytic activity of CD73, resulting in the blocking of extracellular adenosine production by tumor cells, which we believe could stimulate or enhance immune response to tumors.

In addition to its role in the production of adenosine, CD73 also functions as an immunomodulatory receptor present on B-cells, T-cells and certain myeloid cells.

In February 2018, we initiated a Phase 1/1b clinical trial with CPI-006 administered alone and in combination with ciforadenant and in combination with pembrolizumab.

In addition, we recently added a treatment arm to the study to evaluate the triplet combination of CPI-006, ciforadenant and pembrolizumab.

As of February 2020, the key findings from this clinical trial include the observation that CPI-006 has been well-tolerated and has resulted in changes in lymphocyte migration and activation in peripheral blood.

We hold a non‑exclusive, world‑wide license for all fields of use under Scripps’

rights in a hybridoma clone expressing an anti‑CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma.

CD73 is a cellular adhesion molecule involved in lymphocyte activation and trafficking to lymphoid tissues.

CD73 is expressed in lymph nodes where it plays a role in immune response to antigens.

These functions of CD73 are independent of adenosine production.

CPI-006 is designed to activate B cells and other immune cells resulting in the proliferation, migration and differentiation of B cells into antibody producing plasma cells and memory B cells.

In preclinical and clinical studies, both cancer patients and patients with COVID-19 treated with CPI-006 experienced activation of B cells into antigen specific antibody producing cells.

Enhancement of antibody production and development of memory B cells are thought to improve immunity to diseases such as viral infections and cancer, and also lead to immunologic memory preventing reinfection upon subsequent exposure to pathogens.

As depicted above, Phase 1 study results, along with preclinical research, shows that CPI-006 activates antigen specific B cells, triggering the body’s inherent immune response to generate a robust and durable humoral response to the SARS-CoV-2 virus.

These results included the stimulation of the generation of high titers of durable, polyclonal IgG and IgM antibody responses to SARS-CoV-2 and increased levels of memory B cells.

This novel mechanism of action has several advantages over passively administered monoclonal antibodies and could potentially be used to treat other infectious diseases.

As compared to other anti-CD73 antibodies, in in vitro studies using human immune cells, CPI-006 led to activation of B cells and differentiation into antibody producing plasmablasts.

Changes on monocytes were also observed and included increased expression of cell surface markers involved in enhanced antigen presentation.

Together, we believe these results suggest that CPI-006 has the potential to function as an immunostimulant.

We are not aware of any other anti-CD73 antibody that has been reported to possess these properties.

We believe that CPI-006 may have distinct advantages for the treatment of COVID-19, including:

● designed to enhance anti-SARS-CoV-2 antibodies to multiple viral variants;

● has the potential to improve long term immunity and protection from re-infection;

● could accelerate viral clearance and reduce the risk of spreading;

● potential to increase cross-protection to mutants of SARS-COV-2 and other coronaviruses.

Based on all of these properties and early results, we believe that CPI-006 could, if successfully developed and approved, become a foundational therapy for the treatment or prevention of COVID-19 and possibly, other infectious diseases.

CPI-006 COVID-19 Phase 1 Clinical Trial

In June 2020, we initiated a Phase 1 clinical trial to investigate CPI-006 as a novel immunotherapy approach for the treatment of patients with COVID-19 based on CPI-006’s potential immunomodulatory effects.

The open-label, Phase 1 clinical trial has enrolled 29 hospitalized COVID-19 high-risk patients with mild to moderate symptoms as of March 4, 2021.

Cohorts of patients received a single dose of CPI-006, with doses of 0.3, 1.0, 2.0, 3.0 and 5.0 mg/kg.

Patients received medications, therapies, and interventions per standard treatment protocols for COVID-19 for the duration of the study.

The primary efficacy endpoint was the change in serum immunoglobulin (IgM and IgG) anti-SARS-CoV-2 levels compared to baseline at day 28.

Safety and clinical outcomes were also assessed.

No drug related toxicities were observed at any of the dosing levels.

Of the 29 patients, no patients progressed to requiring mechanical ventilation and the median time to discharge from the hospital was three days.

These results are favorable, as published reports suggest that approximately 20% of such patients will progress to requiring invasive mechanical ventilation.

Patients in the study generated high titers of polyclonal antibodies against a diverse range of targets on the SARS-CoV-2 virus that were sustained over several months.

They also had increased levels of circulating memory B cells, which could produce long-term immunity.

Our Phase 1 data showed that this response occurred quickly.

We believe the polyclonal antibody response and the potential mechanism of action of CPI-006 could reduce the potential for immune evasion due to viral mutation and emergence of variants.

Magnitude and Duration of Anti-SARS-Cov2 Responses

The diagram below shows the anti-SARS-CoV-2 response generated in patients treated with CPI-006 in the Phase 1 study.

The level and duration of antibody production has been shown in other third-party studies to be a good predictor of clinical outcome.

In the four panels on the left of the slide, the serum titers over time from the pre-treatment to the day 28, day 66 and day 84 for IgG and IgM antibodies to trimeric spike protein and its receptor binding domain, or RBD, are shown.

Cohorts are color coded, with 0.3 mg/kg in green, 1 mg/kg in blue, 3 mg/kg in purple and 5 mg/kg in brown, with a convalescent plasma control on the far right in gray.

A dose response was observed from the lowest dose of 0.3mg/kg to higher doses and titers are higher than those seen in convalescent plasma samples tested.

Antibody responses were increased out to day 28 to very high titers and these high titers were sustained for 84-plus days.

Titers well above 100,000 were observed.

For example, at 1 mg/kg, Day 56 IgG to spike was >200,000 and IgM to spike was >100,000.

We observed a dose response with 0.3mg/kg being least effective and a plateau being reached at 1-3mg/kg.

We reported data from the Phase 1 clinical trial in November at the 2020 Society for Immunotherapy of Cancer Annual Meeting (“SITC”).

The data presented at SITC included results from 22 patients enrolled in the Phase 1 study utilizing a cut-off date of November 4, 2020.

This included enrollment in four dosing cohorts of the study (0.3, 1.0, 3.0 and 5.0 mg/kg).

All patients received a single dose of CPI-006 administered via a 5-10 minute intravenous (“IV”) infusion.

The median age of the patients was 58 years (range 23-76 years).

All of the patients had comorbidities that increased their COVID-19 risk including diabetes, coronary disease, hypertension, obesity, chronic kidney disease, chronic lung disease and/or cancer.

95% of patients were from minority populations that are at high risk of COVID-19 complications.

The key highlights of the data reported include:

Results Support the Further Evaluation of CPI-006 in COVID-19

● All patients had relatively low titers of anti-SARS-CoV-2 antibodies at the time of hospitalization despite having varying durations of prior COVID-19 symptoms from 1-21 days (median 5 days);

all patients had a confirmed COVID-19 diagnosis by positive PCR nasal swab testing.

● All evaluable patients showed prompt anti-SARS-CoV-2 antibody responses within 7 days of administration of CPI-006 at all dose levels.

● All patients recovered and were discharged from the hospital at a median of 3.5 (range 2-23) days.

● As of the November 4, 2020 cut-off date, there were no drug-related toxicity or safety issues reported.

Antibody Response Results

● Four of four evaluable patients that received the 0.3 mg/kg dose had sustained high titers of IgG antibodies to trimeric spike (“TS”) protein out to 84+ days (one patient 100+ days), without evidence of diminution of response.

In these patients, IgM antibody titers peaked at 28-56 days and remained elevated out to 84+ days.

Similar trends were seen in IgG and IgM antibody response to receptor binding domain (“RBD”).

● A dose response was observed comparing the 3.0 and 1.0 mg/kg dose to the 0.3 mg/kg dose.

Higher and more sustained titers of both IgG and IgM to both spike protein and RBD were seen out to 56 days when comparing the 1.0 to 0.3 mg/kg doses.

The IgM responses were noteworthy for the sustained prolonged elevation.

● Antibody responses from 3.0 and 5.0 mg/kg doses appeared similar to the 1.0 mg/kg dose, but the follow up period for such doses was shorter as of the cut-off date.

● In viral neutralization assays, three of three patients developed anti-viral antibody responses out to day 56 that blocked infectivity of receptor bearing cells in a pseudovirus neutralization assay.

● Memory B cells were elevated in 6 of 6 tested patients following treatment with CPI-006.

Memory T effector cells were also elevated following treatment and produced interferon-gamma and interleukin-2 in response to SARS-CoV-2 antigen consistent with antigen specific Th1 biasing.

Polyclonal Antibody Response

The magnitude and diversity of the polyclonal responses were evaluated by mapping of antibody responses to the subdomains of the TS protein including the N-terminal, RBD, S1 and S2 subdomains.

Polyclonality and reactivity to multiple antigenic determinants on the virus were found, which have the potential to lead to viral neutralization and elimination and to reduce the potential for escape due to emergence of mutant forms of the virus.

The mapping shows:

● IgG responses were polyclonal, polyspecific and directed to all subdomains.

● IgM responses were polyclonal and directed to all subdomains but are preferentially directed to the RBD.

We believe the totality of the data from the Phase 1 clinical trial supports the potential of CPI-006 as a treatment for COVID-19.

CPI-006, when administered at low doses, and has demonstrated a boost in antibody responses to the SARS-CoV-2 virus.

The responses were long-lived and the data reflect a dose response relationship with the 1.0 mg/kg dose having produced higher and more prolonged titers than the 0.3 mg/kg dose.

CPI-006 COVID-19 Phase 3 Clinical Trial

In February 2021, we initiated a randomized double-blind Phase 3 clinical trial of CPI-006 for the treatment of hospitalized patients with COVID-19.

The Phase 3 study will evaluate the efficacy and safety of CPI-006 compared to placebo in hospitalized patients with mild-to-moderate COVID-19 and is expected to enroll approximately 1,000 patients at sites in North America, Europe, South Africa and Latin America.

Patients will be randomized in a 1:1:1 ratio to receive a single intravenous dose of either 2.0 mg/kg or 1.0 mg/kg dose of CPI-006 intravenously or placebo;

all patients will receive standard of care treatments for COVID-19.

The primary endpoint is the proportion of patients progressing to respiratory failure or death during the 28 days after dosing.

Respiratory failure is defined as requiring non-invasive or invasive mechanical ventilation.

Additional secondary endpoints include time to recovery, time to resolution of COVID-19 symptoms, anti-viral antibody responses, etc.

An interim futility and efficacy analysis will be conducted by an independent data monitoring committee when approximately 60% of subjects complete the 28-day post-treatment visit.

We expect to complete enrollment in the study in the fourth quarter of 2021.

CPI-006 Oncology Phase 1/1b Clinical Trial

In February 2018, we initiated a Phase 1/1b clinical trial with CPI-006 administered alone and in combination with ciforadenant and in combination with pembrolizumab and in a triplet combination of CPI-006, ciforadenant and pembrolizumab.

As of February 2021, we have enrolled over 95 patients on this trial at doses of up to 24 mg/kg every

Key findings from this trial as of March 4, 2021 include the observation that CPI-006 was well-tolerated and evidence of B-cell activation and lymphocyte trafficking was observed in patients that received single doses as low as 1 mg/kg.

Treatment with CPI-006 was also associated with increases in memory B-cells, the emergence of new B-cell clones and, in some patients, the production of novel anti-tumor antibodies.

Anti-tumor activity was observed in certain patients receiving triplet combination therapy.

With our current focus on our Phase 3 trial with CPI-006 to treat COVID-19, we do not plan any further enrollment in this trial at this time.

We hold a nonexclusive, worldwide license (except for greater China) for all fields of use under Scripps’ rights in a hybridoma clone expressing an anti-CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma.

In 2016, we filed a patent application covering the composition of matter of CPI 006.

In 2019, we filed patent applications covering the use of this CPI-006 for immunomodulation and enhancement of anti-tumor immunity.

In 2019, we filed patent applications covering the use of CPI-006 for immunomodulation and enhancement of anti-tumor immunity.

In 2020, we filed a provisional U.S.

patent application directed to the use of CPI-006 in the treatment of COVID-19 and other infectious diseases.

CPI-818, ITK Inhibitor.

Our third clinical product candidate, CPI-818, is a selective, covalent inhibitor of ITK.

CPI-818 is an investigational selective, orally bioavailable, covalent inhibitor of ITK designed to have low nanomolar affinity.

ITK, an enzyme that functions in T cell signaling and differentiation, is expressed predominantly in T cells, which are lymphocytes that play a vital role in immune responses.

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We believe highly selective inhibitors of this enzyme will facilitate induction of T cell anti-tumor immunity and also may be useful in the treatment of T cell lymphomas.

CPI-818 is orally bioavailable and has been shown to achieve cellular occupancy of the target in vivo in various animal models.

ITK is an enzyme expressed predominantly in T cells where it plays a key role in T cell signaling.

T cell signaling involving ITK is required in the development of T cells within the thymus, where ITK regulates the production of various T cell subsets and functions.

The ITK cell signaling pathway is similar to the signaling that occurs in B cells, which is mediated by a homologous enzyme known as BTK, the target of ibrutinib, an approved treatment for patients with B cell lymphomas and leukemias.

We believe that inhibiting ITK in malignant T cells may be of therapeutic benefit in patients with T cell leukemias and lymphomas, analogous to the effects of ibrutinib on B cell lymphomas and leukemias.

In malignant T cells, ITK was found to be over expressed specifically in certain T cell lymphomas, including peripheral T cell lymphoma (“PTCL”), angioimmunoblastic T cell lymphoma (“AITL”) and in a subgroup of T lymphoblastic leukemia and lymphoma (“T ALL”).

In ITK genetic knockout mice, which completely lack expression of ITK, T cells exhibit defects in T helper cell differentiation and cytokine secretion but retain the ability to differentiate into cytotoxic T cells that secrete IL 2 and IFNg, which are the cells responsible for tumor rejection.

We believe that skewing T helper cell differentiation to favor cytotoxic T cells may be beneficial in treating many types of cancer.

We have developed CPI-818 by targeting the cysteine amino acid residue at position 442 in the ITK protein.

We believe covalent targeting of ITK has the potential to provide a selective and prolonged duration of activity without the need for high systemic exposures and thereby improve the therapeutic window.

This approach was previously used by our cofounders to generate ibrutinib.

We believe that the potential selectivity of CPI-818 could mimic the immune properties seen in ITK knockout mice and skew the immune response toward a more favorable anti-tumor immune response.

In addition, ITK plays a role in the proliferation of some T-cell lymphomas and we believe its inhibition could lead to growth arrest and/or tumor cell cytotoxicity.

In our preclinical studies of CPI-818, objective tumor responses were observed in dogs with spontaneous T-cell lymphomas.

CPI-818 is orally bioavailable and has achieved cellular occupancy of the target in vivo in various animal models.

Pre-clinical studies have demonstrated that CPI-818 was well-tolerated in vivo and resulted in inhibition of T-cell activation.

In March of 2019, we initiated a phase 1/1b study of CPI-818 in patients with advanced refractory T-cell lymphomas.

Early interim results from the dose-escalation portion of the study were presented in December 2019 at the American Society of Hematology (ASH) meeting and in February 2020 at the 12 th Annual T-cell Lymphoma Forum, showing that, CPI-818 was well tolerated and achieved substantial ITK target occupancy, one of the goals of the study.

We have filed patent applications covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights for all indications.

CPI-182, Anti-CXCR2 Antibody designed to block Myeloid Suppression.

In 2017, we in-licensed this monoclonal antibody designed to block CXCR2, a novel target expressed on myeloid derived suppressor cells

(“MDSC”).

Preclinical studies have demonstrated that this antibody blocked MDSCs and also may have reacted with CXCR2 present on certain cancers such as acute myeloid leukemia cells and other cancers.

This product candidate is now in Investigational New Drug (“IND”)-enabling studies and scale-up manufacturing.

CPI-935, Adenosine A2B Receptor Antagonist.

Adenosine A2B receptors have been found to play an important role in the immune response to tumors as well as in inflammation and fibrosis.

Similar to adenosine A2A receptors, adenosine binds to adenosine A2B receptors, which leads to immunosuppression.

Preclinical models have shown that inhibition of A2B receptors prevents fibrosis.

In 2018, we selected a development candidate for this program, a small molecule antagonist of the A2B receptor.

Our Company Origins and Team

Since we began operations in November 2014, our focus has been on improving and expanding upon the recent success achieved with immune checkpoint inhibitors and on developing agents to new targets in the evolving immuno‑oncology field.

Our founders and management team consist of industry veterans who have played significant roles in the discovery and development of successful oncology and immunology antibodies and drugs, including rituximab and ibrutinib.

Our co‑founders include our Chief Executive Officer, Richard A.

Miller, M.D., our Chief Financial Officer, Leiv Lea, and our Executive Vice President, Discovery Research, Joseph Buggy, Ph.D.

Miller previously co‑founded IDEC (which merged to form Biogen IDEC, now Biogen), where he led research efforts on lymphoma, culminating in the development of rituximab.

Miller, an oncologist, also co‑founded and was the initial CEO of Pharmacyclics, Inc.

where he and colleagues in‑licensed ibrutinib and, together with Dr.

Buggy and other members of our executive team, led its development.

Our Chief Financial Officer, Leiv Lea, has previously led finance teams for emerging biotechnology companies, including Pharmacyclics.

Lea has extensive commercial and operating experience in addition to having completed a number of financial and strategic transactions.

We have recruited industry veterans and experts to join our management team, and established collaborations with leading biotechnology companies, including Genentech, and collaborative relationships with many leading academic research institutions.

With our management team’s expertise in developing both small molecule and antibody‑based oncology treatments, we believe we are well positioned to identify and develop novel therapeutic agents that have diverse but complementary mechanisms of action, allowing for their potential integration into oncology treatment regimens for a broad variety of cancers.

Our goal is to become a leader in the discovery and development of precisely targeted treatments for multiple cancer indications.

Specific elements of our strategy are:

Leverage our expertise in immunology and oncology to identify, develop and commercialize new product candidates.

We have established development expertise and capabilities in synthetic chemistry, molecular biology, immunology and clinical oncology, which we believe will help us advance product candidates in the oncology field.

We plan to become a leader in the development and commercialization of product candidates targeting adenosine and other components involved in cancer immunity.

Our ITK inhibitor, CPI-818, leverages our expertise in development of covalent kinase inhibitors.

We have also in‑licensed CPI-182, a monoclonal antibody to a novel immuno‑oncology target.

In addition to our internal research programs, we intend to seek opportunities to in‑license other product candidates with a focus on the potential to address unmet needs within our areas of expertise.

Utilize efficient clinical trial designs to enable us to identify the most promising clinical indications.

Our adaptive clinical trials are efficiently designed to evaluate multiple variables, such as single agent and combination therapy, impact of prior therapy with immuno‑oncology agents and the role of various biomarkers, which may allow us to determine tumor types that are most responsive to our product candidates.

This approach has the potential to shorten development time by quickly identifying the most promising clinical indications, which would then be evaluated in subsequent definitive pivotal trials.

To date, over 350 patients have been treated in our clinical studies, with results presented at several major medical meetings.

Advance product candidates for use alone or in combination with other oncology treatments.

We intend to focus on product candidates with single agent activity, which are also designed to be combined synergistically with other cancer therapies.

We believe focusing on single agent activity allows us to better understand safety, mechanism of action, potential efficacy and use of biomarkers before testing our product candidates in combination with other therapies, where interpretation of results becomes more difficult.

This approach may enable us to more strategically combine our agents with other therapies.

Identify and utilize biomarker-driven patient selection strategies.

Predicting optimal drug responses in patients requires the identification and validation of predictive biomarkers.

We believe that developing the ability to identify patient subsets most likely to respond to our product candidates will increase the clinical benefit to patients and improve the probability of success of our clinical trials.

Our Phase 1/1b clinical trials of ciforadenant, CPI-006 and CPI-818 include the examination of numerous biomarkers to identify those that may correlate with clinical efficacy and increase our likelihood of success.

For instance, from our clinical data we believe we have discovered a novel adenosine gene expression signature, which could identify patients most likely to respond to treatment with adenosine blockade with ciforadenant.

In patients with RCC, expression of the adenosine signature has correlated with tumor response and progression free survival.

Pursue collaborative relationships, partnerships and in‑licensing opportunities to help advance and expand our product candidate portfolio .

In addition to developing product candidates through preclinical and clinical stages of development, we plan to identify and pursue strategic collaborative relationships, partnerships and in‑licensing opportunities, which could enhance the development of our programs and product candidates.

As evidenced by our collaboration with Genentech for ciforadenant, we intend to build upon our relationships with leading biotechnology companies and research institutions to identify and expand new opportunities in cancer treatment.

Cancer Treatment and Immuno‑oncology

Cancer is the second leading cause of mortality in the United States, accounting for nearly one in every four deaths.

Approximately 40% of Americans will develop some form of cancer, and, according to the American Cancer Society, there were an estimated 1.8 million new cases of cancer and 600,000 deaths due to cancer in the United States in 2019.

Cancer treatment has traditionally included chemotherapy, biologic therapy, radiation, surgery or a combination of these approaches.

Treatment with targeted agents that block cell signaling pathways or inhibit driver mutations in cancer cells is becoming more widely used.

These agents often react with specifically mutated proteins in cancer or signaling molecules involved in cellular activation and proliferation.

Many different mutations are now known to occur in cancer and, in many cases, are responsible for driving tumor progression.

Immuno‑oncology is an approach to treating cancer that is based on stimulating or enhancing an immune response to the tumor and is founded on the findings that the mutations occurring in cancer cells may be immunogenic and capable of eliciting an immune response against the tumor.

Immuno‑oncology therapies offer several potential advantages over existing cancer therapies due to the intrinsic features of the immune system.

For instance, the immune system exhibits immunologic diversity and selectivity, which enables it to respond to a large number of potential targets.

In addition, once triggered, the immune response can be amplified, offering the potential to enhance the efficacy of treatment.

Furthermore, once activated, the immune system possesses immunologic memory, potentially providing for a durable and long‑lasting response.

Finally, because immunotherapy mechanisms are indifferent to tissue origin and are instead focused on immunogenic mutations, which are often expressed across tumor types, immunotherapy may be widely applicable to many types of cancer and not limited to a particular tumor type.

This allows for these agents to be potentially active in a multitude of cancer histologies.

Recently, the reasons for the historical failures of immunologic approaches to cancer treatment have become better understood.

Tumors evolve sophisticated survival mechanisms, allowing them to avoid immune‑mediated destruction as occurs with pathogens, such as bacteria or viruses.

These mechanisms include the activation of immune checkpoints on cells of the immune system, which act to block immune responses, and the reprogramming of T‑cells to create an inflammatory environment that inhibits immune response and favors tumor growth.

Immune checkpoints are signaling molecules produced by or expressed on immune cells that shut down or block an immune response.

healthy person, these checkpoints function to limit an immune response to ensure that the immune system does not overreact, which could lead to excessive inflammation and tissue damage, as occurs in patients with autoimmune diseases or allergies.

Tumors have evolved to activate these checkpoints to shield them from immune response attacks.

However, studies have shown that these mechanisms can be countered using immune checkpoint inhibitors, which can unleash the immune system’s cancer‑destroying properties.

The new found understanding of immune checkpoints has led to a revolution in cancer treatment and the growing field of immuno‑oncology.

Specific immune checkpoint inhibitors, including antibodies against CTLA‑4, PD‑1 receptor or its ligand PD‑L1 have produced impressive results in the clinic in a range of cancers, leading to FDA approvals for ipilimumab (anti‑CTLA‑4), nivolumab (anti‑PD‑1), pembrolizumab (anti‑PD‑1), Tecentriq (anti‑PD‑L1), durvalumab (anti‑PD‑L1) and avelumab (anti‑PD‑L1).

Despite their recent success, current checkpoint inhibitors suffer from several limitations.

Only a subset of patients treated with checkpoint inhibitors exhibit robust anti‑tumor responses, and responses are often partial and temporary.

Many patients initially respond, but then relapse due to the emergence of resistant pathways, which may occur due to tumor cell expression of other checkpoints.

Some patients experience unusual toxicities related to an over‑exuberant immune response against normal tissues leading to pneumonitis, hepatitis, colitis and other autoimmune related disorders.

These limitations have motivated a search for other immune checkpoint targets and the use of combinations of various checkpoint inhibitors in an attempt to improve efficacy, reduce resistance and limit or reduce toxicity.

The recent success of checkpoint inhibitors has stimulated increased interest in utilizing various immunotherapy approaches to treating cancer, including vaccines, cellular therapies and other immunomodulatory agents.

These approaches include modulating the function of various immune cells.

In addition to the search for more precisely targeted therapeutic agents, much attention has focused on the use of biomarkers to identify and enrich clinical trial enrollment with patients who are more likely to benefit from a treatment.

We believe this approach has the potential to result in more efficient clinical design and to reduce the cost of clinical trials.

The ultimate goal of this personalized approach is to select the optimum treatment for a patient based on the biologic characteristics of the patient and tumor.

The use of protein, genetic or other biomarkers to select the right patient for the right treatment is growing in importance in oncology.

Product Pipeline

We are developing novel, precisely targeted agents that we believe may overcome some of the limitations of current therapies.

Two of our clinical programs are aimed at disabling cancer’s ability to subvert immune attack by inhibiting adenosine in the tumor microenvironment or by both blocking its production by tumors and concomitantly stimulating host tumor immunity.

Our third clinical program is aimed at developing product candidates that regulate T‑cell activation and differentiation by inhibiting ITK, an enzyme important in T-cell differentiation and function.

Our two preclinical product candidates are designed to enhance anti-tumor immunity by blocking immunosuppressive cells present in the tumor microenvironment.

We intend to commercialize any approved product candidates primarily in the United States, Asia and Europe for any oncology indications our product candidates are approved for.

We expect cancer patients or their healthcare providers to be our primary customers for any approved product candidates and expect that our commercial sales of such product candidates will depend on the availability of adequate coverage and reimbursement from government health administration authorities, private health insurers and other third‑party payors.

The following chart summarizes key information regarding our current product candidate pipeline:

Adenosine Inhibitors

CPI-818 is currently being studied in a Phase 1/1b clinical trial that was designed to select the recommended dose of CPI-818 and evaluate its safety, pharmacokinetics (“PK”), target occupancy, biomarkers and efficacy.

The study employed an adaptive, expansion cohort design, with an initial phase that evaluated escalating doses (100, 200, 400, 600

mg taken twice a day) in successive cohorts of patients, followed by a second phase that is designed to evaluate safety and tumor response to the recommended dose of CPI-818 in disease-specific patient cohorts.

By protocol design, treatment is discontinued after one year or upon disease progression.

The study enrolled 25 patients from the United States, Australia and South Korea with several types of advanced, refractory T cell lymphomas, including nine patients with peripheral T-cell lymphoma (“PTCL”), 12 patients with cutaneous T-cell lymphoma (“CTCL”), and four patients with other T-cell lymphomas.

All patients had failed multiple prior therapies.

In December 2020 at the American Society of Hematology Annual Meeting, we presented preliminary Phase 1/1b clinical data with CPI-818in refractory T cell lymphomas in patients receiving adequate doses of the drug.

The data presented was as follows:

● Of the seven evaluable patients with PTCL, there were two objective tumor responses as of the cut-off date of October 5, 2020:

o One patient, who previously failed chemotherapy and high dose chemotherapy with autologous bone marrow transplantation, achieved a complete response (“CR”) with CPI-818 at month 8 that remained ongoing after 12 months on study.

The patient received CPI-818 for 12 months and the CR persisted beyond discontinuation of therapy (per the study protocol, the patient stopped receiving therapy after 12 months on study).

As of December 1, 2020, this patient was off all therapy for lymphoma and remains disease free at 14+ months.

o One patient who failed multiple prior therapies achieved a partial response at four months on therapy and remained on study as of October 5, 2020.

● Of the 11 evaluable patients with CTCL:

o One patient achieved a complete response in lymph node disease and continued to have stable cutaneous disease at more than 12 months on therapy as of November 2, 2020.

o Three patients achieved stable disease on therapy for between 3 and 5 months.

● There was a dose dependent increase in receptor occupancy, with trough occupancy >75% observed at the 200, 400 and 600 mg doses.

● No dose limiting toxicities and no grade 3 or 4 treatment related adverse events were observed as of October 5, 2020.

Based on the interim results from our Phase 1/1b clinical trial, Angel Pharmaceuticals, together with us, plans to initiate a global Phase 2 study of CPI-818 in peripheral T cell lymphomas.

PTCL is more common in China than the United States representing approximately 26% of non-Hodgkins lymphomas in China.

Presentation of Preclinical Data in ALPS at ASH meeting December 2020

Autoimmune lymphoproliferative syndrome (“ALPS”) is a rare genetic disease affecting children that manifests with lymphadenopathy, splenomegaly, cytopenias (low blood counts) and autoimmunity.

The disease is caused by a mutation in the Fas gene, which provides instructions for making a signaling protein involved in the induction of apoptosis.

The mutation results in immune dysregulation due to abnormally high levels of “double negative” T cells (CD4 and CD8 double negative), which infiltrate the blood, spleen and lymphoid tissues.

A similar mutation occurs in Fas-deficient MRL/lpr mice, which are used as a model for this disease.

These mice are frequently also used as a model for autoimmune disease.

CPI-818 has been studied in vivo in MRL/lpr mice and in vitro using abnormal cells from ALPS patients.

These data were presented in December 2020 at the American Society of Hematology Annual Meeting.

Key highlights from the presentation include:

● ITK was expressed in double negative T cells from ALPS patients.

● In vitro , CPI-818 inhibited the activation of stimulated abnormal double negative T cells in ALPS patients.

● In vivo studies in MRL/lpr mice demonstrated that treatment with CPI-818 reduced lymphadenopathy, splenomegaly, and autoimmune skin and kidney disease.

The animal preclinical data and in vitro data with lymphocytes from ALPS patients support the use of CPI-818 in autoimmunity and potentially as a treatment for ALPS.

We have filed patent applications covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights (except for greater China) for all indications.

Ciforadenant Adenosine A2A Receptor Antagonist.

Ciforadenant is an oral, small molecule antagonist of the A2A receptor for adenosine that we in-licensed from Vernalis (R&D) Limited (“Vernalis”) in February 2015.

Since licensing ciforadenant, we have conducted extensive laboratory studies in vitro and in vivo in animal models to evaluate ciforadenant’s immune enhancing and anti-tumor properties.

In these studies, orally administered ciforadenant inhibited tumor growth in multiple mouse models of cancer as a single agent, in combination with anti-PD-1, in combination with anti-PD-L1, in combination with other immuno oncology agents and in combination with certain chemotherapy drugs.

We also have shown in vitro that ciforadenant bound potently and selectively to human activated T cells and blocked adenosine mediated immunosuppression by restoring T cell function.

In addition, we have shown anti-tumor activity in mice for a significant time following oral administration, which appeared to be mediated through a long lasting memory immune response.

Adenosine activates an immune checkpoint, the adenosine A2A receptor, that is used by the body to limit inflammation and immune responses.

It is produced during acute, inflammatory processes in two steps.

The first step is the catalytic conversion of adenosine triphosphate (“ATP”) to adenosine monophosphate (“AMP”) by the enzyme CD39.

The second and rate‑limiting step is the conversion of AMP to adenosine by CD73, an enzyme expressed on the surface of several types of immune cells, tumor cells and cells of certain other tissues.

Under normal circumstances, the level of adenosine is increased to protect a person from over‑injury in response to such stimuli as inflammation, infection or ischemia.

However, as a self‑protective maneuver, many tumor types actively sustain increased levels of extracellular adenosine by production through CD73 or by direct secretion of adenosine.

These increased levels of adenosine interact with the A2A and A2B receptors expressed on several cells of the immune system, including T‑cells, NK cells, macrophages, dendritic cells and myeloid derived suppressor cells, as well as other cells, which has the effect of dampening the immune response to the tumor, a system known as the adenosine‑cancer axis.

The following figure provides an overview of adenosine production by tumors and its effects on the immune system:

Adenosine‑Cancer Axis

Immunosuppressive Effects of Adenosine Mediated through Multiple Pathways

The immune system is composed of several cellular components that mediate a variety of functions in response to tumor cells and foreign pathogens.

For instance, macrophages and dendritic cells function primarily to process foreign antigens and tumor antigens.

These cells then present such antigens to other cells, such as T‑cells.

The presentation of these antigens to T‑cells stimulates cytotoxic T‑cells (also known as killer T‑cells) to destroy the tumor cells or foreign pathogens.

Other cells, such as NK cells, are capable of destroying tumor cells without the need for antigen presentation from macrophages or dendritic cells.

In addition, certain immune cells, such as myeloid derived suppressor cells and T-regulatory cells, function to suppress or dampen immune responses.

The various cellular components of the immune system work in a coordinated manner to recognize and destroy pathogens and tumor cells, and then return the tissue to its normal state.

Adenosine hinders the immune response to tumors by both blocking the activation and effectiveness of immune cells capable of destroying tumor cells, and by increasing the number of immune cells that act to suppress immune cells from responding to the tumor.

For instance, adenosine reduces T‑cell and NK cell production of cytokines, such as interleukin‑2 (“IL‑2”) and gamma interferon (“IFNg”), which results in the blockade or reduction in the ability of such cells to destroy tumor cells.

Adenosine also leads to activation and proliferation of T-regulatory cells, which function to suppress or dampen immune responses.

In addition, adenosine causes dendritic cells to both decrease the rate at which they present antigens to T‑cells, thereby inhibiting the ability of T‑cells to destroy tumor cells, and decrease their production of co‑stimulatory cytokines, which also has the effect of suppressing or dampening the immune response.

Macrophages exposed to adenosine will similarly decrease their function, which results in the suppression of immune activity.

Finally, adenosine stimulates and increases the number of myeloid derived suppressor cells in the tumor microenvironment, which suppresses immune responses to the tumor.

As tumor cells evolve and form cancerous growths, they utilize these processes to evade immune attack and promote their survival.

Many of the effects of adenosine on the immune system are mediated through binding to A2A receptors present on several immune cells.

Much less is known about A2B receptors, but they have recently been found on certain immune cells, such as macrophages and myeloid derived suppressor cells, and adenosine binding to A2B receptors also appears to play a role in tumor induced immune suppression.

Cancer cells also appear to directly utilize adenosine to promote their own growth.

Many solid tumors upregulate CD73 for increased adenosine production.

In some cases, it appears adenosine can stimulate growth in tumors by increasing a tumor’s blood supply.

Increased levels of adenosine seen in tumors interact with the A2A and A2B receptors expressed on several cells of the immune system, including T cells, NK cells, macrophages, dendritic cells and myeloid derived suppressor cells, as well as other cells, which has the effect of dampening the immune response to the tumor.

A significant body of data indicates that targeting the adenosine cancer axis through the A2A receptor can promote anti-tumor immune responses leading to tumor regression.

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In addition, several preclinical tumor model studies have shown that treatment with A2A receptor inhibitors leads to tumor regression that is enhanced when administered in combination with various other checkpoint inhibitors, such as anti-PD-1 therapies and anti-CTLA 4 therapies.

Treatment with anti‑CD73 antibodies has been shown to inhibit tumor growth in several pre‑clinical animal tumor models.

Lead Product Candidate:

Ciforadenant, an A2A selective, orally administered antagonist of the adenosine A2A receptor

Our lead product candidate, ciforadenant, is a selective oral adenosine A2A receptor antagonist that we licensed from Vernalis in February 2015.

Since licensing ciforadenant, we have conducted extensive laboratory studies in vitro and in vivo in animal models to evaluate ciforadenant’s immune‑enhancing and anti‑tumor properties.

In these studies, orally administered ciforadenant inhibited tumor growth in multiple mouse models of cancer as a single agent, in combination with anti‑PD‑1, in combination with anti‑PD‑L1, in combination with other immuno‑oncology agents and in combination with certain chemotherapy drugs.

We also have shown in vitro that ciforadenant bound potently and selectively to human activated T‑cells and blocked adenosine mediated immunosuppression by restoring T‑cell function.

In addition, we have shown anti‑tumor activity in mice for a significant time following oral administration, which appeared to be mediated through a long‑lasting memory immune response.

Furthermore, we have shown in animal models that the treatment was well tolerated.

Our IND in oncology was filed in October 2015, and we began enrolling patients in a Phase 1/1b clinical trial in January 2016.

Preclinical data with ciforadenant was published in the journal Cancer Immunology Research in October 2018 demonstrating that ciforadenant was active as a monotherapy and in combination with other agents in several tumor models.

Ciforadenant Clinical Development Plan

In January 2016, we began enrolling patients in a Phase 1/1b, open‑label, expansion cohort design clinical trial for patients with selected advanced, incurable cancers.

The trial was designed to examine oral ciforadenant administered as both a single agent and in combination with Tecentriq.

Under our clinical trial collaboration agreement with Genentech, we are responsible for the design, conduct and cost of the relevant studies, which are under the review of a joint development committee made up of our representatives and representatives of Genentech.

Genentech supplies Tecentriq.

Pre‑treatment and on‑treatment tissue, blood and serum samples are collected and tested for a wide range of biomarkers including the characteristics of immune cell infiltrates and expression of numerous genes in tumor tissue samples.

We are currently conducting the trial at leading medical centers in the United States, Australia and Canada.

We have enrolled over 300 patients to date.

Initially, patients with NSCLC, MEL, RCC, TNBC, bladder cancer, prostate cancer or colorectal cancer with high mutation rates were eligible for participation.

The objectives of this portion of the trial were to identify the optimum and safe dose of ciforadenant when used as a monotherapy or in combination with Tecentriq, and to evaluate anti-tumor activity in various cancers.

Extensive biomarker analysis was performed to search for biomarkers that may be associated with disease response.

Key interim findings of our clinical trial for ciforadenant, as a single agent and in combination with Tecentriq, include:

Ciforadenant has been well-tolerated at doses that achieved substantial receptor blockade;

Ciforadenant demonstrated evidence of anti-tumor activity as both a monotherapy and in combination with atezolizumab;

Of cancers studied, RCC, mCRPC and NSCLC have appeared most responsive to therapy;

Expression of adenosine induced genes was observed in tumor biopsies, and we believe may provide useful biomarkers for selection of patients in future clinical trials.

Ciforadenant Interim Clinical Trial Results

Results Presented at the Society for Immunotherapy of Cancer Annual Meeting—November 2018

Clinical and biomarker data in 68 patients with treatment-refractory RCC from our Phase 1/1b clinical trial were presented in November 2018 at the Society for Immunotherapy of Cancer Annual Meeting.

Data from 33 patients receiving ciforadenant as a monotherapy and 35 receiving ciforadenant in combination with atezolizumab who were evaluable for response were reported.

In January 2016, we began enrolling patients in a large expansion cohort trial for ciforadenant.

In 2018, we amended our Phase 1/1b protocol to enroll patients in a Phase 1b/2 clinical trial with RCC who have failed therapies with both anti-PD-(L)1 antibodies and TKIs.

Interim Results Published in the Journal Cancer Discovery

Updated results in 68 patients with treatment-refractory RCC demonstrated an overall survival (“OS”) of 90% at more than 25 months follow-up with ciforadenant administered in combination with atezolizumab.

Results in 68 patients with treatment-refractory RCC demonstrated an overall survival (“OS”) of 90% at more than 25 months follow-up with ciforadenant administered in combination with atezolizumab.

The OS for patients receiving ciforadenant alone was over 69% at 16 months.

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● Disease control for more than 6 months was observed in 39% and 17% of patients receiving combination therapy and monotherapy, respectively.

For patients receiving combination therapy, 11% experienced a confirmed partial response (“PR”) (as determined by RECIST criteria).

● For patients receiving combination therapy, 11% experienced a confirmed partial response (“PR”) (as determined by RECIST criteria).

Several additional patients experienced tumor regression not meeting the criteria for a PR.

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● Combination therapy was superior to monotherapy with respect to OS, response rate, disease control rate and progression-free survival.

Evaluation of pre- and on-treatment tumor biopsies showed a statistically significant correlation between treatment-induced CD8+ T-cell infiltration in tumors and response (p<0.016).

● The recently described adenosine gene signature showed a statistically significant correlation with tumor response and disease control rates (p<0.008).

We evaluated adenosine gene signatures in pretreatment

biopsies from 30 patients.

We evaluated adenosine gene signatures in pretreatment biopsies from 30 patients.

Of the patients showing a low adenosine gene signature, none exhibited signs of tumor regression.

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We expect to be able to utilize this biomarker in future studies to target patients most likely to benefit from therapy with ciforadenant.

Current Ciforadenant Clinical Trials

The preliminary data from our ongoing clinical trial indicate that ciforadenant has shown activity as a single agent and when used in combination with Tecentriq in multiple tumor histologies and in patients refractory to prior therapies with anti‑PD‑(L)1 antibodies.

Based on these preliminary results, we amended our Phase 1b/2 trial to focus on ciforadenant in combination with Tecentriq in patients with either advanced refractory RCC or mCRPC.

This trial is currently evaluating safety and efficacy of the combination as well as providing additional evidence regarding the potential role of the adenosine gene signature biomarker in predicting outcome.

The mCRPC arm of the study began enrolling patients in October 2019 and in February 2020 we presented data at ASCO GU from 35 patients with advanced mCRPC, including 11 that received ciforadenant as a monotherapy (100 mg twice daily) and 24 that received ciforadenant (100 mg twice daily) in combination with Tecentriq (840 mg delivered intravenously every two weeks).

These patients had failed a median of three prior therapies and 43% had visceral metastases, which is a negative prognostic factor for patients with mCRPC.

Key updates from the clinical trial include:

With median follow up of 3.2+ months, there was one partial response (PR, RECIST), wich such patient exhibiting a prostate-specific antigen (PSA) level drop from 98 to less than 1.

Ten additional patients had tumor regression not meeting the criteria for PR.

Seven patients had confirmed stable disease exceeding 6 months;

one of these patients remained on therapy.

Five patients have unconfirmed stable disease and were continuing on therapy.

A total of nine patients were continuing on therapy.

Gene expression profiling of tumor biopsies demonstrated a significant correlation of tumor CD73 expression with the adenosine signature (p=0.02).

We believes this correlation supports the relevance of adenosine in prostate cancer, its production by CD73 and the expression of adenosine induced immunosuppressive genes.

Treatment was well tolerated with one Grade 3 adverse event of fatigue in monotherapy and one Grade 3 adverse event of anemia in the combination arm.

Updated Data at the ASCO20 Virtual Scientific Program

Updated data on 51 RCC patients that were treated with ciforadenant monotherapy or in combination with Genentech’s Tecentriq® (atezolizumab), an anti-PD-L1 antibody, and whose tumors were biopsied to test with the adenosine gene signature was reported at ASCO 2020.

The key updates from the presentation include:

● 31 patients (30 evaluable) were positive for the and 20 patients were negative.

Patients had a median of three prior therapies, including 86% that failed a prior anti-PD-(L)1 therapy.

● In the AdenoSig positive group, there were five PRs, (as assessed by RECIST criteria) for an ORR of 17% and six additional patients that had tumor regression not meeting the criteria for a PR.

● In the AdenoSig negative group, there were no PRs and no patients with tumor regression.

● In the AdenoSig positive group, the progression free survival curve plateaued at 23% at 40 weeks, compared to declining to 0% in the AdenoSig negative group.

Refractory, late-line RCC has become a crowded space, with several recently approved drugs resulting in extensive patient heterogeneity and complexities, making development of combinations with new agents difficult.

Given these considerations, our prioritization of CPI-006 in COVID-19, and the potential mechanism of action and safety results for ciforadenant, we have decided to pursue a strategy in front line RCC.

In front line RCC, the field is most interested in strategies that increase response rate;

especially complete response rate or deep responses.

We are now planning a Phase 2 study of ciforadenant in a triplet combination with pembrolizumab and lenvatinib.

We plan to do this study with the Kidney Cancer Consortium.

The trial is planned to enroll approximately 60 patients.

The endpoint goal will be to show that 35% or more of the patients achieve deep tumor responses, defined as greater than 80% reduction of tumor volume.

This compares to historical levels of 20% of patients achieving a deep response with pembro plus TKIs.

The adenosine signature biomarker will also be evaluated.

Ciforadenant is also being evaluated in combination with the anti-CD38 antibody, daratumumab (Darzalex) in patients with advanced refractory multiple myeloma.

The objective of this Phase 1 clinical trial is to evaluate whether ciforadenant can overcome resistance in patients who have failed daratumumab treatment.

In May 2017, we entered into a second collaboration agreement with Genentech, pursuant to which Genentech will evaluate ciforadenant in combination with atezolizumab in patients with NSCLC that have previously failed a platinum containing chemotherapy regimen and an anti‑PD‑(L)1.

Enrollment in this Phase 1b/2 clinical trial, which was being conducted under an umbrella protocol known as Morpheus, has been completed and patients are in follow-up.

Product Candidate:

CPI-006, A monoclonal anti‑CD73 immunomodulatory antibody for cancer

In December 2014, we in‑licensed from Scripps a mouse anti‑human CD73 antibody, CPI‑006.

We have genetically engineered CPI‑006 to be humanized by replacing the immunoglobulin (“Ig”) heavy and light chain constant regions, and by replacing the murine variable framework regions with human heavy and light chain Ig frameworks.

In addition, we have further engineered CPI‑006 to enhance binding to CD73 in order to both block its catalytic activity and to activate its immunomodulatory properties.

The Role of CD73 in Cancer

CD73 is a multifunctional enzyme expressed on immune cells, tumor cells and certain other tissues.

CD73 converts AMP to adenosine in the extracellular space.

The catalytic production of adenosine by CD73 may play an important role in tumor immune suppression by increasing the concentration of adenosine in the tumor microenvironment.

CD73 is overexpressed in many cancers, and high levels of CD73 have been shown to be associated with poor disease prognosis.

CD73 expression on tumor cells as well as on the host immune cells has been shown to promote tumor immune suppression and metastasis in mice.

Other studies in mice have shown that the targeted blockade of CD73 with antibodies can enhance the therapeutic activity of anti‑PD‑1 and anti‑CTLA‑4 checkpoint blockade.

CD73 also exhibits additional immunomodulatory functions including cellular adhesion, lymphocyte migration and T and B-cell activation.

While most investigators have focused on its role in adenosine production, we have concentrated efforts on understanding both its role in adenosine production as well as its immunomodulatory properties.

We believe, that together, these properties will be complementary and potentially lead to synergistic anti-tumor activity.

Preclinical Proof of Concept

In preclinical studies using tumor cells that express the CD73 enzyme, the addition of various concentrations of CPI‑006 to such cells in culture substantially inhibited the catalytic activity of the enzyme to background levels of the assay.

This was studied by measuring the conversion of AMP to adenosine.

These studies demonstrated that at concentrations of 10 µg/ml, CPI‑006 was capable of substantially inhibiting the production of adenosine, which indicates that CPI‑006 binds to a critical site in the CD73 enzyme necessary for its function.

By blocking the cellular production of adenosine, we believe CPI‑006 could lead to enhancement of the anti‑tumor immune response by lowering the amount of adenosine in the tumor environment.

As compared to other reported anti‑CD73 antibodies, CPI‑006 has been shown in these preclinical studies to react with the active site of the CD73 enzyme and has not caused internalization of CD73.

We believe this means it will act as a more potent blockade of the enzyme.

In in vitro studies with human lymphocytes, CPI‑006 restored T-cell activation in the presence of AMP, indicating blockade of CD73 activity.

CPI-006 has been found to bind to CD73, resulting in activation of some lymphocytes and redistribution from blood to other lymphoid tissues.

In other preclinical studies we conducted, CPI‑006 bound to a variety of different types of cancer cell lines in vitro , including those derived from human breast cancer, lung cancer, lymphoma, leukemias and sarcomas.

In in vitro studies using human immune cells, CPI-006 led to activation of B-cells and differentiation into antibody producing plasmablasts.

Changes on monocytes were also observed and included increased expression of cell surface markers involved in enhanced antigen presentation.

Together, we believe these results suggest that CPI-006 has the potential to function as an immunostimulant.

We are not aware of any other anti-CD73 antibody that has been reported to possess these properties.

CPI-006 Anti-CD73 Development Plan

In March 2018, we began enrollment in a multicenter Phase 1/1b expansion design trial with four arms that will evaluate CPI‑006 as a single agent, in combination with our adenosine antagonist, ciforadenant, in combination with pembrolizumab (anti‑PD‑1), and in a triplet combination arm of CPI-006, ciforadenant and pembrolizumab.

In each arm, CPI‑006 will be administered in increasing doses to cohorts of patients until a maximally tolerated dose is determined for each arm.

This will be followed by an expansion stage that will evaluate various tumor types, including RCC, mCRPC and NSCLC.

Interim results from this trial have been reported in oral presentations at both the June 2019 American Society of Clinical Oncology (ASCO) and the November 2019 Society for Immunotherapy of Cancer (SITC) meetings.

As of February 2020, we have dosed patients in the single agent arm of the trial, in the CPI-006 combination arm with ciforadenant and in the combination arm of CPI-006 with pembrolizumab.

No dose limiting toxicity up to doses of 18 mg/kg have been observed as of February 2020.

Interim data from the single-agent arm of the trial has suggested that CPI-006 blocked production of adenosine by inhibiting the enzymatic active site of CD73, activated peripheral blood B-cells, and affected B-lymphocyte trafficking in the blood.

The interim results as of February 2020 are summarized below:

CPI-006 has shown novel immunomodulatory activities:

Induced differentiation of B-cells, class switching, secretion of immunoglobulin (in vitro), and generation of memory B-cells;

Increased expression of CD69 and other markers consistent with increased antigen presentation by APCs.

The recommended dose of CPI-006 for further study was 18 mg/kg or a fixed dose of 1200 mg and led to sustained target occupancy.

This dose was well tolerated.

Treatment with CPI-006 induced redistribution of T-cells and B-cells with an observed increase in returning memory B-cells and expansion of new B-cell clones.

Changes in lymphocytes were consistent with induction of adaptive humoral immunity.

Tumor regression was observed in protocol predefined cohorts of patients with RCC and mCRPC.

Enrollment in this trial continues and has entered the disease specific expansion cohorts for monotherapy with CPI-006 and for CPI-006 in combination with ciforadenant.

Dose escalation continues in the CPI-006 with pembrolizumab arm of the trial.

ITK Inhibitor

ITK and Anti‑tumor Immune Response

ITK is an enzyme expressed predominantly in T‑cells where it plays a key role in T‑cell signaling.

T‑cell signaling involving ITK is required in the development of T‑cells within the thymus, where ITK regulates the production of various T‑cell subsets and functions.

The ITK cell signaling pathway is similar to the signaling that occurs in B‑cells, which is mediated by a homologous enzyme known as BTK, the target of ibrutinib, an approved treatment for patients with B‑cell lymphomas and leukemias.

We believe that inhibiting ITK in malignant T‑cells may be of therapeutic benefit in patients with T‑cell leukemias and lymphomas, analogous to the effects of ibrutinib on B‑cell lymphomas and leukemias.

In malignant T‑cells, ITK was found to be over‑expressed specifically in certain T‑cell lymphomas, including peripheral T‑cell lymphoma (“PTCL”), angioimmunoblastic T‑cell lymphoma (“AITL”) and in a subgroup of T‑lymphoblastic leukemia and lymphoma (“T‑ALL”).

In ITK genetic knockout mice, which completely lack expression of ITK, T‑cells exhibit defects in T‑helper cell differentiation and cytokine secretion but retain the ability to differentiate into cytotoxic T‑cells that secrete IL‑2 and IFNg, which are the cells responsible for tumor rejection.

We believe that skewing T‑helper cell differentiation to favor cytotoxic T‑cells may be beneficial in treating many types of cancer.

Product Candidate:

CPI-818, An ITK kinase inhibitor

CPI-818 is a selective, small molecule designed as a covalent inhibitor of ITK that we have selected as our lead development candidate for our ITK program.

We identified ITK as a product candidate target because it plays a key role in T‑cell receptor signaling and in the differentiation of T‑cells responsible for tumor immunity.

We have developed CPI-818 by targeting the cysteine amino acid residue at position 442 in the ITK protein.

Covalent targeting of ITK is expected to provide a selective and prolonged duration of activity without the need for high systemic exposures and thereby improve the therapeutic window.

This approach was previously used by our co‑founders to generate ibrutinib.

We anticipate that the selectivity of CPI-818 will mimic the immune properties seen in ITK knockout mice and skew the immune response toward a more favorable anti‑tumor immune response.

In addition, ITK plays a role in the proliferation of some T-cell lymphomas and its inhibition may lead to growth arrest and/or tumor cell cytotoxicity.

In our preclinical studies of CPI-818, objective tumor response has been seen in a preclinical study in dogs with spontaneous T-cell lymphomas.

Our Phase 1/1b clinical trial of CPI-818 is currently enrolling patients with several types of advanced, refractory T-cell lymphomas, including peripheral T-cell lymphoma-not otherwise specified (PTCL-NOS), angioimmunoblastic T-cell lymphoma (AITL), cutaneous T-cell lymphoma (CTCL) and other T-cell lymphomas.

The study employs an adaptive, expansion cohort design to select the dose and evaluate the safety, pharmacokinetics (PK), target occupancy, biomarkers and efficacy of CPI-818.

The initial phase of the trial is evaluating escalating doses in successive cohorts of patients in order to determine the optimum dose.

A second phase will evaluate safety and tumor response to this optimum dose of CPI-818 in disease-specific patient cohorts that may be expanded based on early signs of efficacy.

The study is enrolling patients at major medical centers in the United States, Australia and South Korea.

In December 2019, we presented preliminary preclinical and Phase 1/1b clinical data with CPI-818 at the American Society of Hematology meeting.

In vitro studies with human malignant Sezary cells indicated that CPI-818 inhibited proliferation of the malignant cells but not normal T-cells.

In February 2020, we presented additional preliminary preclinical and Phase 1/1b clinical data with CPI-818.

The key updates at such time included that:

16 patients have been enrolled in the first four dose cohorts in the initial phase of the trial, receiving a 100 mg, 200 mg, 400 mg or 600 mg oral dose of CPI-818 two times per day, with no dose limiting toxicities and no grade 3 or 4 treatment related adverse events observed.

The median patient follow-up period is now three months, with 11 patients remaining on therapy.

One patient with CTCL treated with the 200 mg dose of CPI-818 achieved a reduction in lymphadenopathy and improvement of PET scan imaging;

another patient with CTCL receiving the 400 mg dose has exhibited improvement in cutaneous disease.

These patients continue on therapy.

The results from the pharmacokinetic and occupancy studies for the first 12 patients have been in-line with expectations, with increasing target occupancy with higher doses based on available data from the 100 mg, 200 mg, and 400 mg doses.

We plan to continue to advance CPI-818 in our Phase 1/1b clinical trial in patients with several types of T‑cell lymphomas including peripheral T-cell lymphoma (“PTCL”), cutaneous T-cell lymphoma, angioimmunoblastic T-cell lymphoma and others.

CPI-182 Anti-CXCR2 Antibody for Myeloid Suppression

In 2017, we in-licensed a monoclonal antibody to the chemokine receptor CXCR2, a novel target in immuno‑oncology.

CXCR2 is a receptor expressed on myeloid cells, particularly myeloid cells known as MDSC that infiltrate tumors and play a role in tumor induced immunosuppression.

This antibody is now undergoing IND‑enabling studies and scale-up manufacturing.

Product Candidate:

An antagonist of the adenosine A2B receptor

We have identified a selective A2B receptor antagonist from our internal research program.

Adenosine A2B receptors have recently been found to play an important role in the immune response to tumors.

The issued U.S.

patents that we in licensed from Vernalis for ciforadenant are directed to the composition of matter of ciforadenant and its method-of-use for treating disorders treatable by purine receptor blocking.

The composition of matter patent covering ciforadenant is expected to expire in the United States in July 2029, excluding any patent term extension that may be available.

We hold an exclusive, worldwide license (except for greater China) under these patent rights and related know how, including a limited right to grant sublicenses, for all fields of use, to develop, manufacture and commercialize products containing certain adenosine receptor antagonists, including ciforadenant.

CPI-182, Anti-CXCR2 Antibody designed to block inflammation and Myeloid Suppression.

In 2017, we in-licensed this monoclonal antibody designed to block CXCR2, a novel target expressed on neutrophils and various inflammatory cells including myeloid derived suppressor cells (“MDSC”).

Preclinical studies have demonstrated that this antibody blocked neutrophil function and migration, and MDSCs.

MDSCs are involved in tumor immunosuppression and blockade of these cells may improve anti-tumor immunity.

A publication describing this antibody was published in the journal MABS in January 2021.

Preclinical data in vivo in mice demonstrated that CPI-182 was active in models of rheumatoid arthritis and in models of atopic dermatitis.

We believe these data support the role of CXCR in inflammatory diseases and demonstrate that CPI-182 may have the potential to treat these conditions.

This product candidate is now in Investigational New Drug application (“IND”)-enabling studies and scale-up manufacturing.

CPI-935, Adenosine A2B Receptor Antagonist.

Adenosine A2B receptors have been found to play an important role in the immune response to tumors as well as in inflammation and fibrosis.

Similar to adenosine A2A receptors, adenosine binds to adenosine A2B receptors, which leads to immunosuppression.

However, adenosine A2B receptor expression is found on different immune cells, and its function in tumor induced immune suppression is not yet well understood.

We have selected a development candidate and expect to begin IND-enabling studies in 2020 for potential use in cancer and fibrotic diseases.

Preclinical models have shown that inhibition of A2B receptors prevented fibrosis.

In 2018, we selected a development candidate for this program, a small molecule antagonist of the A2B receptor.

Manufacturing

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This strategy allows us to maintain a more efficient infrastructure, avoid depending on our own manufacturing facility and equipment while simultaneously enabling us to focus our expertise on developing our products.

Although we believe we have multiple potential sources for the manufacturing of our product candidates, we currently rely on several different manufacturers who supply different components of the ciforadenant and CPI-818 molecules, on one manufacturer for CPI-006 drug substance and other third-party manufacturers to produce our other product candidates.

The pharmaceutical and biotechnology industries are characterized by intense competition and rely heavily on the ability to move quickly, adapt to changing medical and market needs, and to develop and maintain strong intellectual property positions.

We believe that the development experience of our scientific and management team, as well as the strength and promise of our product candidates, provide us with a competitive advantage;

Although we believe we have multiple potential sources for the

manufacturing of our product candidates, we currently rely on several different manufacturers who supply different components of the ciforadenant and CPI-818 molecules, on one manufacturer for CPI-006 drug substance and other third-party manufacturers to produce our other product candidates.

The pharmaceutical and biotechnology industries are characterized by intense competition and rely heavily on the ability to move quickly, adapt to changing medical and market needs, and develop and maintain strong intellectual property positions.

We believe that the development experience of our scientific and management teams, as well as the strength and promise of our product candidates, provides us with a competitive advantage;

nevertheless, we face potential competition from myriad sources, including pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions.

Kyowa Hakko Kirin has approval in Japan and the United States for istradefylline, an A2A antagonist, in Parkinson’s disease.

Within oncology, Novartis has announced an exclusive licensing agreement with Palobiofarma SL and is conducting a Phase 1 trial with an A2A antagonist.

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to develop programs targeting the adenosine pathway.

In addition, Redoxtherapies, Inc., which was acquired by Juno Therapeutics and subsequently by Celgene, and Arcus Biosciences, Inc.

are developing A2A receptor antagonists for cancer.

Astra Zeneca, Bristol-Myers Squib, and Novartis in partnership with Surface Oncology, Inc.

have initiated clinical trials with anti-CD73 antibodies in cancer patients.

In addition, Redoxtherapies, which was acquired by Juno Therapeutics and subsequently by Celgene, and Arcus Biosciences are developing A2A receptor antagonists for cancer.

Astra Zeneca, Bristol-Myers Squib, and Novartis, in partnership with Surface Oncology, have initiated clinical trials with anti-CD73 antibodies in cancer patients.

More generally, in the field of immuno-oncology, there are large pharmaceutical companies with approved products or products in late-stage development that target other immune checkpoints, including PD-1, PD-L1 or CTLA-4.

These companies include Bristol-Myers Squibb (nivolumab, ipilimumab), Merck (pembrolizumab), Genentech (atezolizumab) and AstraZeneca (durvalumab, tremelimumab).

Janssen Pharmaceuticals, Inc.

and AbbVie Inc.

are co-marketing Imbruvica (ibrutinib), which is a small molecule inhibitor of the kinase BTK that has also been reported to inhibit ITK.

Janssen Pharmaceuticals and AbbVie are co-marketing Imbruvica (ibrutinib), which is a small molecule inhibitor of the kinase BTK that has also been reported to inhibit ITK.

Intellectual Property

We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from our collaborators or other third parties.

We do not yet own any issued patents relating to our

product candidates.

We do not yet own any issued patents relating to our product candidates.

Our policy is to seek to protect our proprietary position by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States covering our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation of our business.

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provisional patent applications, and seven owned PCT International patent applications directed to ciforadenant, CPI-006, and CPI-818, and certain of our other proprietary technology, inventions, improvements or other potential product candidates.

In addition, our owned and licensed patent portfolio included forty‑four licensed patents, nine licensed patent applications, and sixty-three owned patent applications pending in jurisdictions outside of the United States that are foreign counterparts to one or more of the foregoing U.S.

In addition, our owned and licensed patent portfolio included forty-four licensed patents, nine licensed patent applications, and sixty-three owned patent applications pending in jurisdictions outside of the United States that are foreign

counterparts to one or more of the foregoing U.S.

patents and patent applications.

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The relevant patent laws and their interpretation outside of the United States is also uncertain.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish

our ability to protect our technology or product candidates and enforce the patent rights that we license, and could affect the value of such intellectual property.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license, and could affect the value of such intellectual property.

In particular, our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions, and improvements.

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For these reasons, we may face competition with respect to our product candidates.

Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

Licenses and Collaborations

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We have also agreed to pay Vernalis tiered incremental royalties based on the annual net sales of licensed products containing ciforadenant on a product-by-product and country-by-country basis, subject to certain offsets and reductions.

The tiered royalty rates for products containing ciforadenant range from the mid‑single digits up to the

low‑double digits on a country‑by‑country net sales basis.

The tiered royalty rates for products containing ciforadenant range from the mid-single digits up to the low-double digits on a country-by-country net sales basis.

The royalties on other licensed products that do not include ciforadenant also increase with the amount of net sales on a product-by-product and country-by-country basis and range from the low-single digits up to the mid-single digits on a country-by-country net sales basis.

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Scripps Licensing Agreement

In December 2014, we entered into a license agreement with Scripps, pursuant to which we were granted a non‑exclusive, world‑wide license for all fields of use under Scripps’

rights in certain know‑how and technology related to a mouse hybridoma clone expressing an anti‑human CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma, from which we developed CPI-006.

In December 2014, we entered into a license agreement with Scripps, pursuant to which we were granted a non-exclusive, world-wide license for all fields of use under Scripps’ rights in certain know-how and technology related to a mouse hybridoma clone expressing an anti-human CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma, from which we developed CPI-006.

Scripps also granted us the right to grant sublicenses in conjunction with other proprietary rights we hold, or to others collaborating with or performing services for us.

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Upon execution of the agreement, we made a one-time cash payment to Scripps of $10,000 and are also obligated to pay a minimum annual fee to Scripps of $25,000.

The first minimum annual fee payment is due on the first anniversary of effective date of the agreement and will be due on each subsequent anniversary of the effective date for the term of the agreement.

The first minimum annual fee payment is due on the first anniversary of the effective date of the agreement and will be due on each subsequent anniversary of the effective date for the term of the agreement.

We are also required to make performance-based cash payments upon successful completion of clinical and sales milestones.

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Genentech Collaboration Agreements

In October 2015, we entered into a clinical trial collaboration agreement with Genentech to evaluate the safety, tolerability and preliminary efficacy of ciforadenant combined with Genentech’s investigational cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD‑L1, in a variety of solid tumors in our Phase 1/1b clinical trial.

In October 2015, we entered into a clinical trial collaboration agreement with Genentech to evaluate the safety, tolerability and preliminary efficacy of ciforadenant combined with Genentech’s investigational cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD-L1, in a variety of solid tumors in our Phase 1/1b clinical trial.

Pursuant to this agreement, we will be responsible for the conduct and cost of the relevant studies, under the supervision of a joint development committee made up of our representatives and representatives of Genentech.

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Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing.

A new drug must be approved by the FDA through the New Drug Application (“NDA”) process and a new biologic must be approved by the FDA through the Biologics License Application (“BLA”) process before it may be legally marketed in the United States.

United States Drug Development Process

In the United States, the FDA regulates drugs under the federal Food, Drug, and Cosmetic Act (“FDCA”), and in the case of biologics, also under the Public Health Service Act (“PHSA”), and their implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and

foreign statutes and regulations require the expenditure of substantial time and financial resources.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions.

These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

Any agency or judicial enforcement action could have a material adverse effect on us.

The process required by the FDA before a drug or biologic may be marketed in the United States generally involves the following:

completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice (“GLP”) regulations and other applicable regulations;

submission to the FDA of an Investigational New Drug application (“IND”), which must become effective before human clinical trials may begin;

performance of adequate and well‑controlled human clinical trials in accordance with Good Clinical Practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug, or safety, purity and potency of the proposed biologic for its intended use;

submission to the FDA of an NDA or BLA;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

FDA review and approval of the NDA or BLA.

● completion of preclinical laboratory tests, animal studies and formulation studies in accordance with Good Laboratory Practice (“GLP”) regulations and other applicable regulations;

● submission to the FDA of an IND, which must become effective before human clinical trials may begin;

● a pproval by an institutional review board (“IRB”) or ethics committee at each clinical site before the trial is

● performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice (“GCP”) regulations to establish the safety and efficacy of the proposed drug, or safety, purity and potency of the proposed biologic for its intended use;

● submission to the FDA of an NDA or BLA after completion of all clinical trials ;

● s atisfactory completion of an FDA Advisory Committee review, if applicable;

● a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review;

● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity , and of selected clinical investigation sites to assess compliance with GCP ;

● FDA review and approval of the NDA or BLA to permit commercial marketing of the product for particular indications for use in the United States .

Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage.

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Each protocol must be submitted to the FDA as part of the IND, and timely safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events.

An institutional review board (“IRB”) at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.

An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

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Some Phase 1b studies evaluate biomarkers or surrogate markers that may be associated with efficacy in patients with specific types of diseases.

This phase involves clinical trials in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage.

Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites.

The product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and appropriate dosage .

The product candidate is administered to an expanded patient population to provide statistically significant evidence of clinical efficacy and further test for safety, generally at geographically dispersed clinical study sites.

These clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product labeling .

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The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

In addition, some clinical trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring board or committee.

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Sponsors of certain clinical trials of FDA-regulated products are required to register and disclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov.

Information related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration.

Sponsors are also obligated to discuss the results of their clinical trials after completion.

Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved.

United States Review and Approval Process

The results of product development, preclinical and other non‑clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA or BLA requesting approval to market the product.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, preclinical and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA or BLA requesting approval to market the product.

The submission of an NDA or BLA is subject to the payment of user fees;

a waiver of such fees may be obtained under certain limited circumstances.

The FDA reviews all NDAs and BLAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing.

Within 60 days following submission of the application, the FDA reviews all NDAs and BLAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing.

The FDA may request additional information rather than accept an NDA or BLA for filing.

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Once the submission is accepted for filing, the FDA begins an in depth substantive review.

The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP compliant to assure and preserve the product’s identity, strength, quality and purity.

The FDA reviews a BLA to determine, among other things whether the product is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency.

Before approving an NDA or BLA, the FDA will inspect the facility or facilities where the product is manufactured.

The FDA may refer the NDA or BLA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.

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Even if such data and information are submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval.

The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP‑compliant to assure and preserve the product’s identity, strength, quality and purity.

Before approving an NDA or BLA, the FDA will inspect the facility or facilities where the product is manufactured.

After the FDA evaluates an NDA or BLA, it will issue an approval letter or a Complete Response Letter.

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If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

In addition, the FDA may require a sponsor to conduct Phase 4 testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA or BLA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.

The FDA may also place other conditions on approval including the requirement for a risk evaluation and mitigation strategy (“REMS”) to assure the safe use of the drug.

If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS.

The FDA will not approve the NDA without an approved REMS, if required.

A REMS could include medication guides, physician communication plans or elements to

assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products.

Marketing approval may be withdrawn for non-compliance with regulatory requirements or if problems occur following initial marketing.

The Food and Drug Administration Safety and Innovation Act (“FDASIA”) made permanent the Pediatric Research Equity Act (“PREA”), which requires a sponsor to conduct pediatric clinical trials for most drugs and biologics, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

Under PREA, original NDAs, BLAs and supplements thereto must contain a pediatric assessment unless the sponsor has received a deferral or waiver.

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However, competitors 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 exclusivity also could block the approval of a product candidate for seven years if a competitor obtains approval of the same drug or biologic as defined by the FDA or if such product candidate is determined to be contained within the competitor’s product for the same indication or disease.

If an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity.

Orphan drug status in the European Union has similar but not identical benefits in that jurisdiction.

Although we have not sought or obtained orphan designation for any of our product candidates, we may pursue such designation in the future if we determine that our proposed indications meet the qualifying criteria for such designation.

Expedited Development and Review Programs

The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria.

Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life‑threatening disease or condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the disease or condition.

Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.

The FDA may consider for review sections of the NDA or BLA for a

Fast Track review designation on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA or BLA, the FDA agrees to accept sections of the NDA or BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA or BLA.

Any product submitted to the FDA for approval, including a product with a Fast Track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

A product is eligible for priority review if it is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review.

The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing product candidates that meet certain criteria.

Specifically, new drugs and biologics are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the disease or condition.

Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied.

The FDA may consider for review sections of the NDA or BLA for a Fast Track review designation on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA or BLA, the FDA agrees to accept sections of the NDA or BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA or BLA.

Any product candidate submitted to the FDA for approval, including a product candidate with a Fast Track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

A product candidate is eligible for priority review if it is designed to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness compared to marketed products.

The FDA will attempt to direct additional resources to the evaluation of an application designated for priority review in an effort to facilitate the review.

The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of original BLAs and new molecular entity NDAs under its standard review goals.

In addition, a product may be eligible for accelerated approval.

Drug and biologic products intended to treat serious or life‑threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on 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.

As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well‑controlled post‑marketing clinical trials.

In addition, a product candidate may be eligible for accelerated approval.

Drug and biologic product candidates intended to treat serious or life-threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on 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.

As a condition of approval, the FDA may require that a sponsor of a drug or biologic receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials.

A product receiving accelerated approval may be subjected to expedited

withdrawal procedures if the sponsor fails to conduct any required post-marketing trials in a timely manner, or if such trials fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

FDASIA established a category of drugs and biologics referred to as “breakthrough therapies”

that may be eligible to receive Breakthrough Therapy Designation.

A sponsor may seek FDA designation of a drug or biologic candidate as a “breakthrough therapy”

if the product is intended, alone or in combination with one or more other products, to treat a serious or life‑threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

FDASIA established a category of drugs and biologics referred to as “breakthrough therapies” that may be eligible to receive Breakthrough Therapy designation.

A sponsor may seek FDA designation of a drug or biologic candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance.

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Drug and biologics manufacturers and other entities involved in the manufacture and distribution of approved drugs and biologics 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 cGMP regulations and other laws and regulations.

distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements.

The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug and biologics manufacturers, such as those related to direct‑to‑consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off‑label use”), industry‑sponsored scientific and educational activities, and promotional activities involving the internet.

Any drug products manufactured or distributed by us or our partners pursuant to FDA approvals will be subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements.

The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug and biologics manufacturers, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.

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The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA or BLA, plus the time between the submission date of an NDA or BLA and the approval of that application, less any time the applicant did not act with due diligence.

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A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.

During the exclusivity period, the FDA may not approve or even accept for review an abbreviated new drug application (“ANDA”) or a NDA submitted under Section 505(b)(2), or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval.

However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.

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Pediatric exclusivity is a type of marketing exclusivity available in the United States.

Pediatric exclusivity under the Best Pharmaceuticals for Children Act provides for an additional six months of marketing exclusivity if a

sponsor conducts clinical trials in children in response to a written request from the FDA.

Pediatric exclusivity under the Best Pharmaceuticals for Children Act provides for an additional six months of marketing exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA.

If such written request does not include clinical trials in neonates, the FDA is required to include its rationale for not requesting those clinical trials.

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Biosimilars and Exclusivity

The Affordable Care Act includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA‑licensed reference biological product.

The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies.

Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Interchangeability requires that a product is biosimilar to the reference product

and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

However, complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being addressed by the FDA.

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In addition, the approval of a biosimilar product may not be made effective by the FDA until twelve years from the date on which the reference product was first licensed.

During this twelve‑year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well‑controlled clinical trials to demonstrate the safety, purity and potency of their product.

During this twelve-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable”

by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

The BPCIA is complex and continues to be interpreted and implemented by the FDA.

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Unless an exemption applies, 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 (“PMA”).

We expect that any companion diagnostic developed for our product candidates will utilize the PMA pathway.

If use of companion diagnostic is essential to safe and effective use of a drug or biologic product, then the FDA generally will require approval or clearance of the diagnostic contemporaneously with the approval of the therapeutic

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 product candidates, a companion diagnostic device and its corresponding drug candidate should be approved or cleared contemporaneously by FDA for the use indicated in the therapeutic product labeling.

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 product candidates, a companion diagnostic device and its corresponding drug 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 drug 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 (“IDE”) regulations.

Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations.

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The FDA has generally required companion diagnostics intended to select the patients who will respond to cancer treatment to obtain approval of a PMA for that diagnostic simultaneously with approval of the therapeutic.

The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years or longer.

It involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing and labeling.

PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years or longer.

In addition, PMAs for certain devices must generally include the results from extensive preclinical and adequate and well-controlled clinical trials to establish the safety and effectiveness of the device for each indication for which FDA approval is sought.

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.

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 an 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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The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution.

If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.

A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable.

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Device manufacturers must also establish registration and device listings with the FDA.

A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices.

Domestic facility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA.

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In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical studies and any commercial sales and distribution of our product candidates.

Whether or not we obtain FDA approval for a product candidates, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product candidates in those countries.

Certain countries outside of the United States have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies.

In the European Union, for example, a clinical trial authorization (“CTA”) must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively.

Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed.

Whether or not we obtain FDA approval for a product candidate, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product candidates in those countries.

The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.

In all cases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

To obtain regulatory approval of an investigational biological product under European Union regulatory systems, we must submit a marketing authorization application.

The application used to file the BLA in the United States is similar to that required in the European Union, with the exception of, among other things, country‑specific document requirements.

Failure to comply with applicable foreign regulatory requirements, may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Clinical Trials

In the European Union (“EU”), for example, a clinical trial authorization (“CTA”) must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively.

Once the CTA is approved by the national health authority and the ethics committee has granted a positive opinion in relation to the conduct of the trial in the relevant member state(s),in accordance with a country’s requirements, clinical study development may proceed.

The CTA must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.

Currently, CTAs must be submitted to the competent authority in each EU member state in which the trial will be conducted.

Under the new Regulation on Clinical Trials, which is currently expected to take effect by early 2022, there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other national authorities have only limited involvement.

Any substantial changes to the trial protocol or other information submitted with the CTA must be notified to or approved by the relevant competent authorities and ethics committees.

Medicines used in clinical trials must be manufactured in accordance with GMP.

Other national and European Union-wide regulatory requirements may also apply.

Clinical studies of medicinal products in the European Union must be conducted in accordance with EU and national regulations and the International Conference on Harmonization (“ICH”) guidelines on GCP as well as the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If the sponsor of the clinical trial is not established within the EU, it must appoint an EU entity to act as its legal representative.

The sponsor must take out a clinical trial insurance policy, and in most EU countries, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial.

Marketing Authorizations

To obtain regulatory approval of an investigational medicinal product under European Union regulatory systems, we must submit a marketing authorization application.

The application used to file the NDA or BLA in the United States is similar to that required in the European Union, with the exception of, among other things, country-specific document requirements.

The process for doing this depends, among other things, on the nature of the medicinal product.

The centralized procedure results in a single marketing authorization, issued by the European Commission, based on the opinion of the EMA’s Committee for Human Medicinal Products (“CHMP”), which is valid across the entire territory of the EU.

The centralized procedure is compulsory for human medicines that are:

(i) derived from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) designated orphan medicines and (iv) advanced therapy medicinal products, or ATMPs, such as gene therapy, somatic cell therapy or tissue-engineered medicines.

The centralized procedure may at the request of the applicant also be used in certain other cases.

It is likely that the centralized procedure would apply to the products we are developing.

Under the centralized procedure, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days.

In exceptional cases, the CHMP might perform an accelerated review of a marketing authorization in no more than 150 days (not including clock stops).

Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the PRIME scheme, which provides incentives similar to the breakthrough therapy designation in the U.S.

PRIME is a voluntary scheme aimed at enhancing the EMA’s support for the development of medicines that target unmet medical needs.

It is based on increased interaction and early dialogue with companies developing promising medicines, to optimize their product development plans and speed up their evaluation to help them reach patients earlier.

Product developers that benefit from PRIME designation can expect to be eligible for accelerated assessment but this is not guaranteed.

The benefits of a PRIME designation include the appointment of a CHMP rapporteur before submission of a marketing authorization application, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.

MAs have an initial duration of five years.

After these five years, the authorization may be renewed for an unlimited period on the basis of a reevaluation of the risk-benefit balance.

Data and Marketing Exclusivity

The European Union also provides opportunities for market exclusivity.

For example, in the European Union, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic application.

During the additional two‑year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity.

However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

Products receiving orphan designation in the European Union can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market.

An orphan product can also obtain an additional two years of market exclusivity in the European Union for pediatric studies.

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

The criteria for designating an “orphan medicinal product”

in the European Union 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 (1) it is intended for the diagnosis, prevention or treatment of a life‑threatening or chronically debilitating condition;

Upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic or biosimilar application.

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 market exclusivity period may be extended to a maximum of eleven years if, during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

Orphan Medicinal Products

The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States.

A medicinal product may be designated as orphan if (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 in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, 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.

applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

During the ten-year market exclusivity period, the EMA cannot accept a marketing authorization application for the same indication, in respect of a similar medicinal product.

An orphan product can also obtain an additional two years of market exclusivity in the European Union for pediatric studies.

No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

Orphan drug 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.

In addition, marketing authorization may be granted to a similar 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;

In addition, marketing authorization may be granted to a similar product for the same indication at any time if (1) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

(2) the applicant consents to a second orphan medicinal product application;

the applicant cannot supply enough orphan medicinal product.

When conducting clinical trials in the EU, we must adhere to the provisions of the European Union Clinical Trials Directive (Directive 2001/20/EC) and the laws and regulations of the EU Member States implementing them.

These provisions require, among other things, that the prior authorization of an Ethics Committee and the competent Member State authority is obtained before commencing the clinical trial.

In April 2014, the EU passed the Clinical Trials Regulation (Regulation 536/2014), which will replace the current Clinical Trials Directive.

To ensure that the rules for clinical trials are identical throughout the European Union, the EU Clinical Trials Regulation was passed as a regulation that is directly applicable in all EU member states.

All clinical trials performed in the European Union are required to be conducted in accordance with the Clinical Trials Directive until the Clinical Trials Regulation becomes applicable.

According to the current plans of the EMA, the Clinical Trials Regulation is expected to become applicable in 2020.

or (3) the applicant cannot supply enough orphan medicinal product.

Post-Approval Requirements

Similar to the United States, both marketing authorization holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of the member states.

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 marketing authorization applications 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.

The regulatory authorities may also impose specific obligations as a condition of the marketing authorization.

Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies.

The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.

All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, 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 member state and can differ from one country to another.

Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.

These penalties could include delays or refusal to authorize the conduct of clinical trials, or to grant marketing authorizations, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

Approval and Regulation of Companion Diagnostics

In the EU, in vitro diagnostic medical devices are regulated by Directive 98/79/EC which regulates the placing on the market, the CE-marking, the essential requirements, the conformity assessment procedures, the registration obligations for manufactures and devices as well as the vigilance procedure.

In vitro diagnostic medical devices must comply with the requirements provided for in the Directive, and with further requirements implemented at national level (as the case may be).

The regulation of companion diagnostics will be subject to further requirements as of the entry into force of the in-vitro diagnostic devices Regulation (No 2017/746) which introduces a new classification system for companion diagnostics which are now specifically defined as diagnostic tests that support the safe and effective use of a specific medicinal product, by identifying patients that are suitable or unsuitable for treatment.

Companion diagnostics will have to undergo a conformity assessment by a notified body.

Before it can issue a CE certificate, the notified body must seek a scientific opinion from the EMA on the suitability of the companion diagnostic to the medicinal product concerned if the medicinal product falls exclusively within the scope of the centralized procedure for the authorization of medicines, or the medicinal product is already authorized through the centralized procedure, or a marketing authorization application for the medicinal product has been submitted through the centralized procedure.

For other substances, the notified body can seek the opinion from a national competent authorities or the EMA.

The aforementioned EU rules are generally applicable in the European Economic Area (“EEA”), which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.

For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.

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In addition to FDA restrictions on marketing of pharmaceutical and biological products, other U.S.

federal and state healthcare regulatory laws restrict business practices in the pharmaceutical industry, which include, but are not limited to, state and federal anti‑kickback, fraud & abuse, false claims, price reporting, consumer fraud, data privacy and security and physician payment transparency laws.

federal and state healthcare regulatory laws restrict business practices in the pharmaceutical industry, which include, but are not limited to, state and federal anti-kickback, fraud & abuse, false claims, price reporting, consumer fraud and physician payment transparency laws.

These laws may affect our sales, marketing and other promotional activities by limiting the kinds of financial arrangements we may have with physicians, customers and third-party payors including discount practices, customer support, education and training programs, physician consulting and other service arrangements.

In addition, manufacturers can be held liable under the False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause”

the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off‑label.

In addition, manufacturers can be held liable under the False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

These laws are broadly written, and it is often difficult to determine precisely how these laws will be applied to specific circumstances.

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● The federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

A person or entity does not need to have actual

knowledge of the federal Anti‑Kickback Statute or specific intent to violate it to have committed a violation.

A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation;

● The federal false claims laws, including the False Claims Act, which prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

The federal false claims and civil monetary penalties laws, including the False Claims Act, which prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government;

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which prohibits, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third‑party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services;

The Physician Payments Sunshine Act, which imposed, among other things, new annual reporting requirements for covered manufacturers for certain payments and “transfers of value”

provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members and will be expanded to include certain other healthcare professionals in 2022 for payments made in 2021;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, impose specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates;

● The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which prohibits, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement 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 does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation ;

● The Physician Payments Sunshine Act, which imposed, among other things, new annual reporting requirements for covered manufacturers for certain payments and “transfers of value” provided to physicians (as defined by statute) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members and will be expanded to include certain other healthcare professionals in 2022 for payments made in 2021;

● Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs and individual imprisonment, any of which could adversely affect our ability to operate our business and our financial results.

individual imprisonment, any of which could adversely affect our ability to operate our business and our financial results.

To the extent that any of our product candidates, once approved, are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.

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Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

Sales of any product candidates for which we receive regulatory approval for commercial sale will therefore depend, in part, on

the availability of coverage and adequate reimbursement from third‑party payors.

Sales of any product candidates for which we receive regulatory approval for commercial sale will therefore depend, in part, on the availability of coverage and adequate reimbursement from third-party payors.

Third- party payors include government authorities, managed care plans, private health insurers and other organizations.

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A decision by a third-party payor not to cover our product candidates could reduce physician utilization of our products once approved and have a material adverse effect on our sales, results of operations and financial condition.

Moreover, a third‑party payor’s decision to provide coverage for a pharmaceutical or biological product does not imply that an adequate reimbursement rate will be approved.

Moreover, a third-party payor’s decision to provide coverage for a pharmaceutical or biological product does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

In addition, coverage and reimbursement for new products can differ significantly from payor to payor.

One third‑party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate.

One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate.

As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payor separately and will be a time consuming process.

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Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products.

For example, in March 2010, the Affordable Care Act was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;

For example, in March 2010, the Affordable Care Act, or ACA, was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;

introduced 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;

extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans;

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’

outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’

share of sales to federal healthcare programs, and created a new Patient Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.

We expect that the current presidential administration and U.S.

Congress will likely continue to seek to challenge, replace, modify, repeal, or otherwise invalidate all, or certain provisions of, the Affordable Care Act.

For example, the Tax Cuts and Jobs Act was enacted, which, among other things, removes penalties for not complying with the Affordable Care Act’s individual mandate to carry health insurance.

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs, and created a new Patient Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.

Since its enactment, there have been judicial, executive and Congressional legislative challenges to certain aspects of the ACA.

For example, the Tax Cuts and Jobs Act was enacted, which, among other things, removed penalties for not complying with the ACA’s individual mandate to carry health insurance.

On December 14, 2018, a U.S.

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On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court's decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

It is unclear how these decisions, subsequent appeals, and other efforts to challenge, replace, modify, repeal or otherwise invalidate the Affordable Care Act will impact the Act or our business.

We expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and

additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government‑funded programs may result in a similar reduction in payments from private payors.

Recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, reform government program reimbursement methodologies.

Additionally, individual states in the United States have also become increasingly active in passing legislation and implementing 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.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates.

In addition, the Budget Control Act of 2011 and the Bipartisan Budget Act of 2015 led to aggregate reductions of Medicare payments to providers of up to 2% per fiscal year that will remain in effect through 2029 unless additional Congressional action is taken.

Supreme Court is currently reviewing the case, although it is unclear how the Supreme Court will rule.

It is also unclear how other efforts, if any, to challenge, replace, modify, repeal or otherwise invalidate the ACA will impact the law or our business.

In addition, the Budget Control Act of 2011 and the Bipartisan Budget Act of 2015 led to aggregate reductions of Medicare payments to providers of up to 2% per fiscal year that will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021, unless additional Congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context.

In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers.

In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by

relevant health service providers.

Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could restrict or regulate post-approval activities and affect the ability of pharmaceutical companies to commercialize their products.

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We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.

Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates.

Data Privacy and Security

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

In addition, certain state and non-U.S.

laws, such as the California Consumer Privacy Act, or the CCPA, the California Privacy Rights Act, or the CPRA, and the EU General Data Protection Regulation, or the GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Research and Development Expenses

Our research and development expenses were $31.8 million, $38.0 million and $38.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Please see “Management’s Discussion and Analysis of

Financial Condition and Results of Operations‑Research and Development Expenses”

for additional detail regarding our research and development activities.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Research and Development Expenses” for additional detail regarding our research and development activities.

Our third-party manufacturers are subject to inspections by the FDA for compliance with cGMP and other U.S.

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We would be subject to significant penalties for failure to comply with these laws and regulations.

As of December 31, 2019, we had 53 total employees, one of whom was part-time and 42 of whom were primarily engaged in research and development activities.

Human Capital Resources

As of December 31, 2020, we had 42 total employees, all of whom were full-time and 31 of whom were primarily engaged in research and development activities.

We currently lease a total of approximately 27,280 square feet of office and research and development facilities in Burlingame, California.

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We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act).

as defined in Rule 12b‑2 under the Exchange Act, which would occur if the market value of our common stock held by non‑affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year, or (4) the date on which we have issued more than $1.0 billion in non‑convertible debt securities during the prior three‑year period.

We will remain an emerging growth company until the earlier of (1) December 31, 2021, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies.

As an emerging growth company,

We may present only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations;

● We may present only two years of audited consolidated financial statements, plus unaudited condensed consolidated financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations;

● We may avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”);

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We view our operations and manage our business as one reportable segment.

See Note 2 to our audited financial statements included in this Annual Report on Form 10‑K.

Additional information required by this item is incorporated herein by reference to Part II, Item 6, “Selected Financial Data.”

See Note 2 to our audited consolidated financial statements included in this Annual Report on Form 10-K.

Additional information required by this item is incorporated herein by reference to Part II, Item 6, “Selected Financial Data.”

Available Information

We file electronically with the SEC our annual reports on Form 10‑K, quarterly reports on Form 10‑Q and current reports on Form 8‑K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.

We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q and

current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.

We make available on our website at http://www.corvuspharma.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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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