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Item 1. Business

2023-03-28 compared with 2022-03-10 · 242 added, 254 removed, 507 unchanged (49% of the section changed)

We are a clinical stage biopharmaceutical company.

Our strategy is to focus our efforts on the development of immune modulator product candidates with the potential to treat solid cancers, T-cell lymphomas, autoimmune diseases and infectious diseases.

Our strategy is to focus our efforts on the development of immune modulator product candidates with the potential to treat solid cancers, T cell lymphomas, autoimmune, allergic and infectious diseases.

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

Our lead product candidate is mupadolimab (formerly CPI-006), a 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, mupadolimab has demonstrated binding to various immune cells and the enhancement of immune responses by activating B cells.

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

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 and allergy.

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”).

Ciforadenant is designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of immunosuppressive adenosine in the tumor microenvironment to the A2A receptor.

Our molecularly targeted 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.

Our lead product candidate is CPI-818, 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 also to affect the differentiation of normal T cells, which could enhance immunity to tumor cells.

We believe these properties have the potential to regulate the growth and activity of abnormal T cells involved in autoimmunity and allergy.

Our second product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of immunosuppressive adenosine in the tumor microenvironment to the A2A receptor.

We are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic RCC in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1)

Our third product candidate is mupadolimab, a humanized monoclonal antibody that is designed to react with a specific site on CD73.

In both preclinical and in vivo studies, mupadolimab has demonstrated binding to various immune cells and the enhancement of immune responses by activating B cells.

While we believe mupadolimab has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of cancers and infectious diseases, we are waiting to initiate a potential Phase 2 randomized clinical trial in order to prioritize the development of our other two lead product candidates.

Angel Pharmaceuticals is continuing the development of mupadolimab in China and is enrolling patients in a Phase 1 trial with mupadolimab alone and together with pembrolizumab in patients with advanced NSCLC and head and neck cancer.

Our molecularly targeted product candidates are designed to exhibit a high degree of specificity, which we believe have 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.

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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.

(“Angel Pharmaceuticals”), a 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 – mupadolimab, CPI-818 and ciforadenant – in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Contemporaneously with the financing, Angel Pharmaceuticals licensed the rights to develop and commercialize our three clinical-stage candidates – CPI-818, ciforadenant and mupadolimab – 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.

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Our product candidate pipeline includes the following:

Mupadolimab, B-Cell Activating anti-CD73 antibody.

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.

CD73 also 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.

Mupadolimab is an investigational, humanized, engineered anti CD73 monoclonal antibody that is designed to bind to a critical epitope involved in B cell signaling, which are the cells responsible for antibody production and presentation of antigens to T cells, which are involved in cell mediated immunity to cancers and infectious agents.

In preclinical studies, mupadolimab bound to B cells and triggered signaling, that resulted in activation of B cells and expression of cell surface markers involved in lymphocyte trafficking.

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

In patients, mupadolimab activated B cells, resulting in morphological and surface marker changes consistent with B cell differentiation into antibody secreting plasma cells and memory B cells, the cells responsible for immunologic memory.

Mupadolimab is also designed to inhibit the production of adenosine by blocking the catalytic conversion of adenosine monophosphate to adenosine.

In the tumor microenvironment, inhibition of the production of adenosine is believed to reduce tumor mediated immunosuppression.

● Mupadolimab has potential features that we believe could distinguish it from other reported anti-CD 73 antibodies in clinical development:

o Designed to activate B cells;

o Absence of a “hook effect.” This suggests that mupadolimab may exhibit consistent blocking of enzymatic activity over broad range of antibody concentrations with no loss of antibody binding or enzyme inhibition at higher antibody concentrations;

o Did not induce loss of CD 73 target from cell surface in preclinical studies.

Our work in both cancer and viral diseases, such as COVID-19, have provided important insights and data into how we may best utilize the potential properties of our antibody candidate in the clinic.

Our studies have uncovered a novel potential mechanism of action:

mupadolimab is designed to activate B cells which may then be driven into antibody producing plasma cells by the presence of tumor associated antigens within the tumor.

Recent work by several groups have highlighted the importance of B cells in anti-tumor immunity.

As published in Nature in 2020, investigators have shown that B cell infiltration in some tumors were strong predictors of response to immunotherapies and predictors of favorable outcomes.

Cancer cells are known to express neoantigens.

These antigens are derived from mutations that occur in the genome of the cancer cells.

We believe that if sufficient immune responses to these antigens can be generated, it could have a beneficial effect on tumor growth or response to therapies.

Various immunotherapies are now approved to enhance immune responses to tumor antigens such as anti-PD1 antibodies.

In addition to neoantigens resulting from mutations, viruses can also lead to cancers, which express viral antigens that are potential targets of immunotherapies.

Human papilloma virus (HPV) for example, is associated with oropharyngeal, cervical, anal, vulvar, penile and other cancers.

Recent data from others have revealed that B cells in the tumor microenvironment of oropharyngeal cancers are producing antibodies to HPV related antigens that are expressed within the tumors.

The findings that mupadolimab stimulated immune responses through B cell activation has motivated us to conduct further studies of this agent in combination with anti PD1 antibodies.

The rationale is that synergies may be achieved by combining activation of B cells, or stimulation of immune response, with checkpoint inhibitors such as anti PD1 antibodies, which remove the brakes on immune system.

We believe mupadolimab has the potential to improve on existing immunotherapies by simultaneously stepping on the gas (stimulating) and simultaneously releasing the brakes of the immune system.

Mupadolimab Oncology Phase 1/1b Clinical Trial

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

As of March 1, 2022, we have enrolled over 110 patients on this trial at doses of up to 24 mg/kg every three weeks.

Key findings from this trial as of March 1, 2022 include the observation that mupadolimab 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 mupadolimab was also associated with increases in memory B-cells in the blood, the emergence of new B-cell clones and, in some patients, the production of novel anti-tumor antibodies.

In our ongoing Phase 1/1b cancer clinical trial with mupadolimab, we have observed evidence of anti-tumor activity in NSCLC and in oropharyngeal head and neck cancers.

Based on these findings, during the second quarter, we began enrolling an expansion cohort of up to 15 patients with advanced, HPV+ head and neck cancer that have failed treatment with anti-PD-1 therapy and chemotherapy.

In this cohort, mupadolimab will be given in combination with pembrolizumab.

Our objective is to evaluate response rate in this expansion cohort.

In the third quarter of 2021, we began enrolling an expansion of up to 15 patients with relapsed refractory NSCLC who have failed therapies with anti-PD(L)-1 therapy and chemotherapy.

In this cohort, mupadolimab will be given in combination with pembrolizumab.

Our objective is to evaluate response rate in this expansion cohort.

or greater of mupadolimab as a single agent, in combination with ciforadenant, in combination with pembrolizumab or in combination with pembrolizumab and ciforadenant.

These patients had advanced refractory disease and failed a median of three prior therapies.

All but one had failed therapy with prior anti PD(L)-1 antibodies.

There were sixteen evaluable NSCLC and HNSCC patients.

Seven patients achieved tumor regression, which did not meet the criteria for partial response by RECIST.

However, for the patients that showed tumor regression, six patients had progressive disease as their best response to their last treatment prior to entering the Phase 1/1b clinical trial, which indicates that the tumors in these patients were not responsive to their last therapy.

The seven patients who showed tumor regression on the trial were treated for a period of 4.5 to 12.5 months.

Based on the interim results presented at SITC, we plan to initiate a randomized Phase 2 clinical trial of

mupadolimab as a front-line therapy for the treatment of patients with advanced NSCLC.

The randomized, blinded trial will compare standard chemotherapy plus pembrolizumab (anti-PDL-1) with or without mupadolimab.

The trial is planned to enroll approximately 150 patients with any tumor PDL-1 expression.

The primary endpoint for the study will be progression free survival (“PFS”) and secondary endpoints will include objective response rate and overall survival.

In February 2021, we initiated a Phase 3 trial evaluating a single dose of mupadolimab in a global, randomized, double-blind trial designed to evaluate the efficacy and safety of mupadolimab compared to placebo in hospitalized patients with mild-to-moderate COVID-19.

On July 15, 2021, we announced that we discontinued our Phase 3 clinical trial due to positive trends exhibited by COVID-19 vaccines in lowering serious infection and hospitalizations due to COVID-19.

The discontinuation was not related to any safety or efficacy issues observed in the trial patients.

On September 21, 2021, we published preliminary results of our discontinued Phase 3 trial.

The primary endpoint of the trial was the proportion of patients free from respiratory failure or death within 28 days after receiving either mupadolimab 2mg/kg, 1mg/kg or placebo.

Forty patients were enrolled in the clinical trial.

In the 2mg/kg cohort, 93.3% of patients were alive and free from respiratory failure compared to 85.7% in the 1mg/kg cohort and 81.1% in the placebo.

Secondary endpoints also favored mupadolimab treatment cohorts.

Due to the number of participants enrolled in the trial before it was discontinued, the foregoing results were not sufficiently powered for statistical significance.

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 mupadolimab.

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

In 2020, we filed a provisional U.S.

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

CPI-818, ITK Inhibitor.

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

CPI-818 is an investigational selective, orally bioavailable, covalent inhibitor of ITK.

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.

One of the key survival mechanisms of tumors is believed to be the reprogramming of T cells to create an inflammatory environment that inhibits anti-tumor immune response and favors tumor growth.

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

T cell lymphomas are malignancies of T cells that proliferate and spread throughout the body.

These lymphomas often have tonic signaling through the T cell receptor pathway, which involves ITK.

Inhibition of ITK could result in blockade of this signaling pathway and control the growth of the malignancy.

In addition, one of the key survival mechanisms of both lymphomas and solid tumors is believed to be the reprogramming of normal T cells to create an inflammatory environment that inhibits anti-tumor immune response and favors tumor growth.

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

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.

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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.

ITK is expressed in many T cell lymphomas, including peripheral T cell lymphoma (“PTCL”), angioimmunoblastic T cell lymphoma (“AITL”), cutaneous T cell lymphomas (“CTCL”), anaplastic large cell lymphomas (“ALCL”), natural killer T cell lymphomas (“NKTCL”) and other T cell malignancies.

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 interferon gamma (“IFNg”), which are the cells responsible for tumor rejection.

We believe that skewing T helper cell differentiation to favor cytotoxic T cells, known as Th1 skewing, may be beneficial in treating T cell lymphomas and many other types of cancer.

ITK deficient mice also demonstrate a reduction in Th2 cells, which are the cells often responsible for autoimmunity and allergy.

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

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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.

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

as well as reducing the activity of Th2 cells.

The blockade of Th2 differentiation has the potential to suppress inflammatory reactions involved in various autoimmune and allergic diseases.

CPI-818 was designed to have the necessary selectivity to specifically block ITK function without altering other closely related enzymes involved in T cell differentiation.

We believe such selectivity is required for achieving Th1 skewing and Th2 blockade, as demonstrated by ITK genetic knockout studies in mice.

ITK also 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

Other in vitro studies with normal human peripheral blood T cells showed that the observed effects of CPI-818 on T cell function were concentration dependent.

At high concentrations (10 micromolar) T cell proliferation was inhibited.

At lower concentrations between 0.01 and 10 micromolar, Th1 skewing was observed.

These data suggest that the dose of CPI-818 may be important in achieving the desired effects on T cell function.

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.

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.

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

CPI-818 is currently being studied in a Phase 1/1b clinical trial that was designed to select the recommended Phase 2 dose of CPI-818 and evaluate its safety, pharmacokinetics (“PK”), target occupancy, immunologic effects, biomarkers and efficacy.

The study employs 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).

o One patient who failed multiple prior therapies achieved a partial response at four months on therapy.

This patient then went on to receive a bone marrow transplant.

● 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 have been observed to date.

Based on the interim results from our Phase 1/1b clinical trial, Angel Pharmaceuticals, has joined this clinical trial with a goal of enrolling patients with PTCL.

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

In January 2022, Angel Pharmaceuticals announced the enrollment of the first patient in the clinical trial.

The study has enrolled patients from the United States, Australia and South Korea with several types of advanced, refractory T cell lymphomas.

During the dose escalation phase of the study, and with longer follow up, it became clear that the patients receiving the 200mg twice per day dose were demonstrating higher response rates as well as longer disease control.

This dose was determined to be the optimal dose and was consistent with dose-response effects seen in vitro experiments described above.

In December 2022 at the American Society of Hematology Annual Meeting (“ASH”), we presented preliminary Phase 1/1b clinical data with CPI-818 in refractory T cell lymphomas.

The data presented were as of a September 2, 2022 data cut-off:

T Cell Lymphoma Interim Data Highlights

● 13 patients were enrolled in the 200 mg cohort and 11 were evaluable for response.

Overall objective responses were seen in 4 of 11 patients.

Enrolled patients were heavily pretreated receiving a median of 3 prior therapies.

In this group, there was one complete response (“CR”) lasting 25 months in a patient with peripheral T cell lymphoma (“PTCL”);

one nodal CR lasting 19 months in a patient with cutaneous T cell lymphoma;

and two partial responses (“PR”) ongoing at six and eight months follow up, respectively, in patients with PTCL and anaplastic large cell lymphoma.

An additional patient in the 600 mg cohort also had a PR.

● No dose limiting toxicities were observed, and a maximum tolerated dose was not reached at doses as high as 600 mg twice per day.

Immunologic Interim Data Highlights

● The 200 mg dose induced Th1 skewing and both Th2 and Th17 blockade based on peripheral blood samples from several patients:

o In one patient that had a substantial reduction of a large tumor on the abdominal wall, a blood sample analysis demonstrated an increase in blood Th1, a decrease in blood Th17, and a reduction of eosinophil count and IL-5 consistent with Th1 skewing and Th2 blockade.

Tumor samples in this patient were also analyzed and showed an increase in terminally differentiated T effector memory cells

(“TEMRA” cells), which are T cells that have responded to an antigen and are able to mediate effector functions, such as the destruction of tumor cells.

o In four patients (two with PRs, one with stable disease (“SD”) and one with progressive disease (“PD”), the change in Th1 and CD8+ TEMRA cells was serially measured over time.

The PR and SD patients showed an increase in both Th1 and CD8+ TEMRA cells.

Of note, SD and PD patients were lymphopenic at baseline with absolute lymphocyte counts less than 1,000, suggesting the need for a minimal level of immune competence.

● In vitro data demonstrated that CPI-818 induced Th1 skewing and Th2 blockade in a dose-dependent manner that supported the selection of the 200 mg dose.

This includes an analysis of peripheral blood samples from 12 healthy volunteers that were stimulated in the presence of various concentrations of CPI-818 and other studies that showed that CPI-818 inhibited Th2 cytokine production from normal CD4+ and malignant Sezary cells.

● Other in vitro studies showed that CPI-818 inhibited the production of interleukin 4, 5 and 13 cytokines produced by Th2 cells.

● In vivo preclinical studies in mice with transplanted T cell lymphoma showed that CPI-818 led to an increase in infiltration of normal CD8+ T cells in the tumor and inhibition of tumor growth.

● The findings of the human and preclinical studies suggest that CPI-818 has the potential to enhance anti-tumor immunity representing a potentially novel approach to immunotherapy.

As of February 23, 2023, we have enrolled a total of 53 patients with several types of advanced, refractory T cell lymphomas in our Phase 1/1b clinical trial.

Enrollment in the 200 mg cohort has continued with 20 patients enrolled, including 13 evaluable for tumor response.

There have been 1 complete response (CR) of 24 months duration, 1 equivocal CR awaiting confirmatory PET scan of 13+ months duration (a previous PR), 1 nodal CR of 21 months duration and 1 PR of 7 months duration.

Ten patients continue on therapy, including seven that have not yet been evaluated for tumor response.

The swimmer and waterfall plots for these patients are in the following figures 1 and 2, respectively.

Swimmer Plot for Patients in the 200 mg Dose Cohort of the CPI-818 Phase 1/1b Clinical Trial for T Cell Lymphoma .

The plot shows the tumor response and duration for patients with various tumor histologies, which are shown on the chart and defined as follows:

PTCL-NOS, peripheral T cell lymphoma not otherwise specified;

CTCL-SS, cutaneous T cell lymphoma Sezary;

CTCL-MF, cutaneous T cell lymphoma mycosis fungoides;

AITL, angioimmunoblastic T cell lymphoma;

ALCL, anaplastic T cell lymphoma and NKTCL, natural killer T cell lymphoma.

The tumor response evaluation are labeled on the chart and are defined as follows:

CR, complete response;

equivocal CR;

PR, partial response;

SD, stable disease;

PD, progressive disease.

Arrows indicate that treatment with CPI-818 is continuing as of the February 23, 2023 data cut-off.

Waterfall Plot for Patients in the 200 mg Dose Cohort of the CPI-818 Phase 1/1b Clinical Trial for T Cell Lymphoma .

The plot shows the best percent change in tumor volume in the evaluable patients from the same group shown in Figure 1.

Treating patients in the 200 mg cohort has identified a biomarker associated with response to CPI-818.

CPI-818 induces a host anti-tumor cell mediated immune response that requires normal functioning T cells.

Data from the 200 mg cohort in the Phase 1/1b clinical trial indicates that a minimum absolute lymphocyte count (ALC) above 900 cells per cubic milliliter of blood is required for tumor response and disease control.

Four of eight patients with ALC above 900 have objective responses (those four patients are described above), all eight have disease control (stable disease, PR, CR) and the median progression free survival (PFS) is 28.1 months.

No objective responses were seen in five patients (0 of 5) with ALC below 900 and the PFS is 2.1 months.

The ALC biomarker is routinely measured, is consistent with CPI-818’s presumed mechanism of action and is present in about 70% of patients based on the Company’s experience to-date.

This biomarker has been incorporated as an eligibility criterion in the ongoing Phase 1/1b clinical trial.

Based on the current enrollment rate of our Phase 1/1b clinical trial, we believe that the number of patients treated in the clinical trial would provide adequate safety and preliminary efficacy data to inform the design of a registration clinical trial.

We expect such a trial to enroll patients with relapsed T cell lymphomas whose prognosis is poor with currently available therapies.

Although there are single agents approved for this disease, the current National Cooperative Cancer Network guidelines recommend that patients be enrolled in experimental therapies indicating a serious unmet need for improved therapies to treat T cell lymphomas.

We recently received a communication from the U.S.

Food and Drug Administration (FDA) regarding our clinical development plans for CPI-818.

As recommended by the FDA, we plan to request a meeting with the FDA to discuss the design of a registration Phase 3 clinical trial.

We anticipate that this meeting will take place later this year.

Separate from the ASH presentation, we recently initiated a study of CPI-818 in companion dogs with naturally occurring, refractory atopic dermatitis.

Atopic dermatitis is an inflammatory disease of the skin that is mediated by Th2 cells and their secreted cytokines.

Early results from this study demonstrated CPI-818’s potential activity in this disease

with five out of five treated dogs responding to therapy within 14 days.

Based on recent progress and data supporting the ongoing development of CPI-818 for T cell lymphoma and other cancers, we have decided to delay our plans to initiate a Phase 1 clinical trial in atopic dermatitis.

This decision allows us to conserve cash and intensify our focus on T cell lymphoma, which could include conducting a potentially registrational, randomized Phase 3 trial.

While we are pausing development of CPI-818 for the treatment of atopic dermatitis, we will continue to investigate the potential role of CPI-818 in immune diseases through our ongoing and planned preclinical research and external collaborations.

In February 2023 at the 30th Annual Conference on Retroviruses and Opportunistic Infections (“CROI”), data were presented demonstrating CPI-818’s potential to block chronic human immunodeficiency virus (“HIV”) latency reversal.

For people living with HIV (“PLWH”) on antiretroviral therapy, HIV can be reduced to levels below detection limits, which enables the restoration and preservation of immune system function, reduces HIV-associated morbidity and prevents HIV transmission.

However, in these individuals the virus persists in a latent form in CD4 cells, which are white blood cells that are a key component of the immune system that are destroyed by HIV.

Viral latency is reversed if therapy is discontinued, leading to a re-emergence of replicating HIV and the destruction of CD4 cells, necessitating PLWH to be on life-long therapy.

Previous studies have shown that ITK is involved in several steps in the HIV life cycle and in this study, researchers explored the potential of ITK inhibition with CPI-818 to inhibit the latency reversal of HIV.

The study was conducted in two models:

(1) a T cell lymphoma cell line latently infected with fluorescence-tagged HIV ( in vitro ) and (2) CD4+ T cells from the blood of four PLWH ( ex-vivo ).

In both models, the cells were stimulated to reverse viral latency and promote viral replication.

The cells were simultaneously treated with various concentrations of CPI-818, and in each of the two models, there was a statistically significant and dose-dependent reduction in the reversal of viral latency (P<0.0001) including four of the four PLWH.

In CD4 T cells, CPI-818 inhibited the proliferation of HIV-infected cells more than uninfected cells.

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.

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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.

Consistent with studies of the inhibition of the A2A receptor, A2A receptor gene knockout mice, which completely lack expression of the A2A receptor, exhibit improved anti-tumor immunity.

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.

Preclinical studies in animal tumor models have examined use of ciforadenant in combination with anti PD1, in combination with anti CTLA4 and as a triplet of ciforadenant, anti PD1 and anti CTLA-4 antibodies.

In our published studies in Cancer Immunology Research, combinations of ciforadenant with anti CTLA-4 have resulted in a high portion of cured animals, even when administered to animals with established tumors.

These results provided the rationale for the use of ciforadenant in combination with nivolumab and ipililumab in renal cell cancer patients.

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-(L)1.

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

Results in 68 patients with treatment-refractory RCC were published in January 2020 in the journal Cancer Discovery.

Key findings from the published results include:

● 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).

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

For patients receiving monotherapy, one patient experienced a confirmed PR, one experienced an unconfirmed PR, and several patients experienced tumor regression not meeting the PR criteria.

● Responses were seen in both the combination therapy and monotherapy arms, and in patients who failed prior anti-PD-(L)1 therapy.

● Progression-free survival (as assessed by RECIST criteria) was 5.8 months with combination therapy and 4.1 months with monotherapy.

● Overall survival (OS) was 90% at 25 months follow-up with combination therapy and 69% at 16 months follow-up with monotherapy.

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

● The recently described adenosine gene signature (AdenoSig) 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.

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

In contrast, patients with a high adenosine gene signature had a 17% (N=18) overall response rate by RECIST criteria.

● Ciforadenant was well tolerated with grade 3 adverse events that were infrequent (less than 5%) and reversible.

This study supports the tumor immune enhancing potential of adenosine pathway blockade.

The unique mechanism of action and safety results suggest that this treatment, if successfully developed and approved, may be valuable, particularly in patients who have failed anti-PD-(L)1 therapy or as a combination to prevent the development of resistance.

The studies also demonstrate that RCC exhibited high levels of adenosine pathway related genes.

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 adenosine signature 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.

We are now planning a Phase 1b/2 clinical trial of ciforadenant in a triplet combination with ipilimumab, and nivolumab.

We plan to conduct this clinical trial with the Kidney Cancer Consortium.

The trial is planned to enroll approximately 60 patients.

The endpoint of the trial is deep response rate defined as greater than 50% reduction of tumor volume.

Deep response rates in renal cell cancer have been found to correlate with long term progression free survival.

The adenosine signature biomarker will also be evaluated in tumor biopsy specimens.

We also discovered the Adenosine Gene Signature, which we believe has demonstrated the potential to serve as a biomarker to identify patients most likely to respond to treatment with ciforadenant.

The results of our Phase 1/1b clinical trial involving 68 patients with RCC were published in the journal Cancer Discovery in January 2020.

This study reported that in 30 patients evaluated for the Adenosine Gene Signature, no patients showing a low Adenosine Gene Signature exhibited signs of tumor regression while 17% (3 of 18) of patients with a high Adenosine Gene Signature had an overall response rate by RECIST criteria.

Based on these results, we are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic RCC in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1).

The clinical trial is expected to enroll approximately 60 patients.

In the Phase 1b portion of the clinical trial (N=8), the primary endpoints are safety, tolerability and anti-tumor activity.

In the Phase 2 portion of the clinical trial, the primary endpoint is the percent of patients that achieve a deep response, defined as complete response or depth of partial response of greater than 50% tumor reduction.

Historical data has shown that deep responses correlate with prolonged progression free

survival and is seen in approximately 32% of patients with RCC receiving ipilimumab and nivolumab.

The Adenosine Gene Signature biomarker also will be evaluated in tumor biopsy specimens.

The trial design is based on our preclinical research published in 2018 in Cancer Immunology Research that demonstrated impressive antitumor control and cures in several animal models using ciforadenant in combination with anti-CTLA4 and anti-PD1.

Preclinical studies and data from earlier clinical trials with ciforadenant, suggest adenosine may be a cause of resistance to current therapies with anti PD(L)-1.

The Kidney Cancer Research Consortium is comprised of a group of leading cancer centers in the United States led by investigators at MD Anderson.

The issued U.S.

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.

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 and are expected to expire between September 2028 and 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.

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.

Mupadolimab, B Cell Activating anti-CD73 antibody.

Mupadolimab is a unique anti-CD73 antibody that is designed to bind to a critical epitope involved in B cell signaling.

Our work in both cancer and viral diseases, such as COVID-19, have provided important insights and data into how we may best evaluate the biologic properties of our antibody candidate in the clinic.

Our studies have uncovered a novel potential mechanism of action:

mupadolimab has the ability to activate B cells which may then be driven into antibody producing plasma cells by the presence of tumor associated antigens within the tumor.

Recent work by several scientific groups have highlighted the importance of B cells in anti-tumor immunity.

As published in Nature in 2020, investigators have shown that B cell infiltration in some tumors are strong predictors of response to immunotherapies and predictors of favorable outcomes.

CD73 is also involved in the generation of adenosine in the tumor microenvironment, which is immunosuppressive.

Mupadolimab has found to block production of adenosine in addition to its B cell stimulating properties.

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

We completed this trial in 2022 enrolling over 115 patients at doses of up to 24 mg/kg every three weeks.

Key findings from this trial include the observation that mupadolimab 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 mupadolimab was also associated with increases in memory B cells in the blood, the emergence of new B cell clones and, in some patients, the production of novel anti-tumor antibodies.

At the 2021 Annual Meeting of the Society for Immunotherapy of Cancer (“SITC”) in November 2021, we presented interim data demonstrating anti-tumor activity in NSCLC and head and neck cancer (“HNSCC”) patients treated with 12 mg/kg or greater of mupadolimab as a single agent, in combination with ciforadenant, in combination with pembrolizumab or in combination with pembrolizumab and ciforadenant.

These patients had advanced refractory disease and failed a median of three prior therapies.

Further, all but one had failed therapy with prior anti PD(L)-1 antibodies.

There were 16 evaluable NSCLC and HNSCC patients.

Seven patients achieved tumor regression, which did not meet the criteria for partial response by RECIST.

However, of the patients that showed tumor regression, six patients had progressive disease as their best response to their last treatment prior to entering the Phase 1/1b clinical trial, which indicates that the tumors in these patients were not responsive to their last therapy.

The seven patients who showed tumor regression on the trial were treated for a period of 4.5 to 12.5 months.

We published the results of these studies and the characterization of mupadolimab in December 2022 in the Journal of Immunotherapy of Cancer.

Based on the results from this trial, we believe this program is ready to advance into a randomized Phase 2 clinical trial evaluating mupadolimab in combination with pembrolizumab and chemotherapy as a front-line therapy for the treatment of patients with NSCLC.

However, we are delaying the initiation of this clinical trial in order to prioritize the development of CPI-818, ciforadenant, as well as and to conserve capital.

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

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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.

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

CPI-935, Adenosine A2B Receptor Antagonist.

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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 mupadolimab drug substance and other third-party manufacturers to produce our other product candidates.

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 CPI-818 and ciforadenant molecules, on one manufacturer for mupadolimab 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.

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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).

These companies include Bristol-Myers Squibb (nivolumab, ipilimumab), Merck (pembrolizumab), Genentech (atezolizumab)

and AstraZeneca (durvalumab, tremelimumab).

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.

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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.

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.

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.

We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of immuno-oncology.

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We also possess and in license substantial know how and trade secrets relating to the development and commercialization of our product candidates, including related manufacturing processes and technology.

As of January 20, 2022, our owned and licensed patent portfolio consisted of fourteen licensed U.S.

As of January 20, 2023, our owned and licensed patent portfolio consisted of fifteen licensed U.S.

issued patents, one licensed U.S.

pending patent applications, six owned U.S.

issued patents, twelve owned U.S.

pending patent applications, and one owned U.S.

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

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

pending patent applications, eight owned U.S.

issued patents, eight owned U.S.

pending patent applications, one pending Patent Cooperation Treaty (“PCT”) application, and three owned U.S.

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

In addition, our owned and licensed patent portfolio included thirty-eight licensed patents, nine licensed patent applications, twenty-nine owned patents, and fifty-four 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 term of patents outside of the United States varies in accordance with the laws of the foreign jurisdiction, but typically is also 20 years from the earliest effective filing date.

The issued United States patents we license from Vernalis directed to the composition of matter of ciforadenant and its method of use for treating disorders treatable by purine receptor blocking are expected to expire between May 2022 and July 2029, excluding any patent term extension that may be available.

The issued United States patents we license from Vernalis directed to the composition of matter of ciforadenant and its method of use for treating disorders treatable by purine receptor blocking are expected to expire between September 2028 and July 2029, excluding any patent term extension that may be available.

The granted U.S.

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and foreign patents and pending U.S.

and foreign patent applications, if granted as patents, that we own directed to the composition of matter and methods of treatment for CPI 818 are expected to expire November 2037, excluding any patent term extension that may be available.

and foreign patent applications, if granted as patents, that we own directed to the composition of matter and methods of treatment for CPI

818 are expected to expire November 2037, excluding any patent term extension that may be available.

However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent.

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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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The issued U.S.

These patents are expected to expire in the United States between January 2022 and July 2029, excluding any patent term extension that may be available.

patents that we in-licensed from Vernalis pursuant to this agreement are directed to the composition of matter of ciforadenant and its method of use for treating disorders treatable by purine receptor blocking and are expected to expire between September 2028 and July 2029, excluding any patent term extension that may be available.

Vernalis has the first right to prosecute and maintain the licensed patent rights worldwide, subject to our right with respect to certain of the licensed patents to continue prosecution and maintenance if Vernalis elects not to do so.

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Pursuant to this agreement, we made a one-time cash payment to Vernalis in the amount of $1.0 million upon entering into the agreement.

We are also required to make cash milestone payments to Vernalis upon the successful completion of clinical and regulatory milestones for licensed products depending on the indications for which such licensed products are developed and upon achievement of certain sales milestones.

We are also required to make cash milestone payments to Vernalis upon the successful

completion of clinical and regulatory milestones for licensed products depending on the indications for which such licensed products are developed and upon achievement of certain sales milestones.

In February 2017, we made a milestone payment of $3 million to Vernalis following the expansion of a cohort of patients with renal cell cancer treated with single-agent ciforadenant in our Phase 1/1b clinical trial.

The aggregate potential milestone payments are approximately $220 million for all indications.

During the year ended December 31, 2022, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $220 million for all indications as of December 31, 2022.

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 may also terminate the agreement after the third anniversary of the effective date of the agreement if it reasonably believes, based on reports we provide to Scripps, that we have not used commercially reasonable efforts as required under the agreement, subject to a specified notice and cure period.

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.

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.

Genentech will supply Tecentriq.

At this time, no further patients are being enrolled in this trial.

As part of the agreement, we granted Genentech certain rights of first negotiation to participate in future clinical trials that we may conduct evaluating the administration of ciforadenant in combination with an anti-PD-1 or anti-PD-L1 antibody.

If we do not reach agreement on the terms of any such participation by Genentech within a specified time period, we retain the right to collaborate with third parties in such activities.

We also granted Genentech certain rights of first negotiation should we decide to license development and commercialization rights to ciforadenant.

Should we not reach agreement

on the terms of such a license within a specified time of period, we retain the right to enter into a license with another third party.

This agreement will expire after a set period of time following the provision by us of the final clinical study report to Genentech, which has not yet been finalized.

In May 2017, we entered into a second clinical trial collaboration agreement with Genentech.

Under the new agreement, ciforadenant administered in combination with Tecentriq will be evaluated in a Phase 1b/2 randomized, controlled clinical study as second-line therapy in patients with NSCLC who are resistant and/or refractory to prior therapy with an anti-PD-(L)1 antibody.

This study has completed patient enrollment of 16 patients.

Genentech was responsible for the conduct of the study and we will share the cost of the Phase 1b/2 trial, which began enrolling patients in the fourth quarter of 2017.

We are responsible for supplying ciforadenant and retain global development and commercialization rights to ciforadenant.

This agreement will expire after a set period of time following the provision by Genentech of a final study report to us.

Monash License Agreement

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We are also obligated to pay an annual license maintenance fee to Monash of $25,000 until a certain development milestone is met with respect to the licensed product, after which no further maintenance fee will be due.

We are also required to make development and sales milestone payments to Monash with respect to the licensed products in the aggregate of up to $45.1 million.

We are also required to make development and sales milestone payments to Monash with respect to the licensed products.

During the year ended December 31, 2022, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $45.1 million as of December 31, 2022.

We are also required to pay to Monash tiered royalties on net sales of licensed products sold by us, our affiliates and our sublicensees at a rate ranging in the low-single digits.

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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.

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.

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Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about on going or proposed clinical trials or non compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that the hold has been lifted.

While the IND is active, each protocol or protocol amendment must be submitted to the FDA as part of the IND, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations.

They must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated.

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 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.

Furthermore, 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.

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.

Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

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

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In addition, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure.

There are also requirements governing the reporting of ongoing clinical trials and completed trial results to public registries.

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United States Review and Approval Process

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.

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;

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The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations.

A deferral may be granted for

several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin.

A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin.

The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

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The designation of such drug or biologic also entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user fee waivers.

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.

However, competitors may receive approval of different products for the disease or condition for which the orphan product has exclusivity or obtain approval for the same product but for a different disease or condition for which the orphan product has exclusivity.

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

Expedited Development and Review Programs

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Any product candidate submitted to the FDA for approval, including a product candidate with a Fast Track designation or Breakthrough Therapy 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 BLA or NDA is eligible for

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

A BLA or NDA is eligible for priority review if the product candidate 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.

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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.

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 confirmatory clinical trials.

A product receiving accelerated approval may be subjected to expedited withdrawal procedures if the sponsor fails to conduct any required confirmatory 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.

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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.

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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These diagnostics, often referred to as companion diagnostics, are regulated as medical devices.

In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.

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

The FDA may also determine that

additional clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and then the data submitted in an amendment to the PMA.

The FDA may also determine that additional clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and then the data submitted in an amendment to the PMA.

Once granted, PMA approval may be withdrawn by the FDA if compliance with post approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing.

PMA approval is not guaranteed, and the FDA may ultimately respond to a PMA submission with a not approvable determination based on deficiencies in the application and require additional clinical trial or other data that may be expensive and time-consuming to generate and that can substantially delay approval.

PMA approval is not guaranteed, and the FDA may ultimately respond to a PMA submission with a not approvable determination based on

deficiencies in the application and require additional clinical trial or other data that may be expensive and time-consuming to generate and that can substantially delay approval.

After a device is placed on the market, it remains subject to significant regulatory requirements.

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Government Regulation Outside of the United States

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

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials, and any commercial sales and distribution of our product once approved.

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 trials or marketing of the product candidates in those countries.

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Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances.

Non-clinical studies must be conducted in compliance with the principles of good laboratory practice (“GLP”) as set forth in EU Directive 2004/10/EC.

Non-clinical (pharmaco-toxicological) studies must be conducted in compliance with the principles of good laboratory practice (“GLP”) as set forth in EU Directive 2004/10/EC (unless otherwise justified for certain particular medicinal products – e.g., radio-pharmaceutical precursors for radio-labelling purposes).

In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality system for the organizational process and the conditions for non-clinical studies.

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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.

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

The regulatory landscape related to clinical trials in the EU has been subject to recent changes.

The EU Clinical Trials Regulation (“CTR”) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.

Unlike directives, the CTR is directly applicable in all EU member states without the

need for member states to further implement it into national law.

Unlike directives, the CTR is directly applicable in all EU member states without the need for member states to further implement it into national law.

The CTR notably harmonizes the assessment and supervision processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU portal and database.

While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned.

While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only requires the submission of a single for multi-center trials.

The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.

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The extent to which ongoing and new clinical trials will be governed by the CTR varies.

For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years.

Additionally, sponsors may still choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorised, those will be governed by the Clinical Trials Directive until January 31, 2025.

By that date, all ongoing trials will become subject to the provisions of the CTR.

Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the Clinical Trials Directive remain governed by said Directive until January 31, 2025.

After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR.

Medicines used in clinical trials must be manufactured in accordance with Good Manufacturing Practices (“GMP”).

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In the EU, medicinal products can only be placed on the market after obtaining a marketing authorization (“MA”).

To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a marketing authorization application (“MAA”).

To obtain regulatory approval of an investigational medicinal product under EU regulatory systems, we must submit a MA application (“MAA”).

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

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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 MAin no more than 150 days (not including clock stops).

In exceptional cases, the CHMP might perform an accelerated review of a MA 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.

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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.

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

Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been submitted.

Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee level.

Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s

committee level.

An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.

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The criteria for designating an “orphan medicinal product” in the EU 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 EU to justify investment;

A medicinal product may be designated as orphan if its sponsor can establish that:

(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 EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.

The application for orphan drug designation must be submitted before the MAA.

The application for orphan designation must be submitted before the MAA.

Orphan medicinal products are eligible for incentives such as reduction of fees or fee waivers, protocol assistance, and access to the centralized procedure and are, upon grant of a MA, entitled to ten years of market exclusivity for the approved therapeutic indication.

During the ten-year market exclusivity period, the regulatory authorities cannot accept another MAA, or grant a MA, or accept an application to extend an existing MA for a period of ten years 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 EU for orphan medicinal products that have also complied with an agreed pediactric investigation plan (“PIP”).

An orphan product can also obtain an additional two years of market exclusivity in the EU for orphan medicinal products that have also complied with an agreed pediatric investigation plan (“PIP”).

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.

Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition has increased above the threshold.

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Similar to the United States, both MA 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.

The holder of a MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance (“QPPV”) who is responsible for the establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any emerging safety concerns.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports (“PSURs”).

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Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing approval, MA 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.

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

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.

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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 manufacturers 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 once the in-vitro medical diagnostic devices Regulation (No 2017/746) (“IVDR”) will become applicable on 26 May 2022.

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

In vitro diagnostic medical devices had to 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 is subject to further requirements since the in-vitro medical diagnostic devices Regulation (No 2017/746) (“IVDR”) became applicable on 26 May 2022.

However, on October 14, 2021, the European Commission proposed a “progressive” roll-out of the IVDR to prevent disruption in the supply of in vitro diagnostic medical devices.

The European Parliament and Council voted to adopt the proposed regulation on December 15, 2021 and the regulation entered into force on January 2022.

The IVDR will fully apply on May 26, 2022 but there will be a tiered system extending the grace period for many devices (depending on their risk classification) before they have to be fully compliant with the regulation.

The IVDR fully applies since May 26, 2022 but there is a tiered system extending the grace period for many devices (depending on their risk classification) before they have to be fully compliant with the regulation.

The IVDR 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 MMA for the medicinal product has been submitted through the centralized procedure.

Before it can issue an EU 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 MMA 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.

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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.

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

Such laws include:

● 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.

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;

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● 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.

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.

Violation of any of such laws or any other governmental regulations that may apply could result in significant 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 operations, exclusion from participation in federal and state healthcare programs and individual imprisonment.

Coverage and Reimbursement

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Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

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 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, 2022, 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.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

In addition, the Budget Control Act of 2011 and due to subsequent legislative amendments included, among other things, aggregate reductions of Medicare payments to providers that will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.

three to five years.

In addition, in March 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, beginning January 1, 2024.

Moreover, there has recently 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 and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical products.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated.

In addition, individual states in the United States have also become increasingly active in 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, mechanisms to encourage importation from other countries and bulk purchasing.

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healthcare system and international healthcare systems.

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.

We expect that additional state, federal and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal, state and foreign 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.

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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.

In addition, certain state and non-U.S.

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.

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We currently lease a total of approximately 27,280 square feet of office and research and development facilities in Burlingame, California.

7,585 square feet are subleased to Angel Pharmaceuticals through February 2023.

7,585 square feet was subleased to Angel Pharmaceuticals through January 2023.

Our lease expires in 2025.

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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