What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-18 compared with 2020-03-10 · 501 added, 1362 removed, 777 unchanged (71% of the section changed)

4 unchanged sentences

We are currently conducting a Phase 1/2a clinical trial of PBCAR0191 in adult patients with relapsed or refractory, or R/R, non-Hodgkin lymphoma, or NHL, or R/R B-cell precursor acute lymphoblastic leukemia, or B-ALL.

PBCAR0191 is our first gene-edited allogeneic chimeric antigen receptor, or CAR, T cell therapy candidate targeting CD19 and is being developed in collaboration with Les Laboratoires Servier, or Servier, pursuant to a development and commercial license agreement, as amended (the “Servier Agreement”).

We have received orphan drug designation, for PBCAR0191 from the U.S.

Food and Drug Administration, or FDA, for the treatment of acute lymphoblastic leukemia, or ALL.

Food and Drug Administration (“FDA”), for the treatment of acute lymphoblastic leukemia, or ALL.

In August 2020, the FDA granted Fast Track Designation for PBCAR0191 for the treatment of B-ALL.

The NHL cohort will include patients with mantle cell lymphoma (“MCL”), an aggressive subtype of NHL, for which we have received orphan drug designation from the FDA.

Made from donor-derived T cells modified using our ARCUS genome editing technology, PBCAR0191 recognizes the well characterized tumor cell surface protein CD19, an important and validated target in several B-cell cancers, and is designed to avoid graft-versus-host disease, or GvHD, a significant complication associated with donor-derived, cell-based therapies.

1 unchanged sentence

Furthermore, we believe that our proprietary, one-step engineering process for producing allogeneic CAR T cells with a potentially optimized cell phenotype, at large scale in a cost-effective manner, will enable us to overcome the fundamental clinical and manufacturing challenges that have limited the CAR T field to date.

In December 2019, we announced initial data from the ongoing Phase 1/2a clinical trial of PBCAR0191 in adult patients with R/R NHL and R/R B-ALL.

A total of nine adult patients were reported in these initial Phase 1 trial results, including six with NHL (three treated at Dose Level 1 (3x10 5 cells/kg), or DL1, and three treated at Dose Level 2 (1x10 6 cells/kg), or DL2), and three with B-ALL (all treated at DL2).

These data indicated no serious adverse events or dose limiting toxicities.

In the NHL cohort, four of six patients demonstrated an objective tumor response by Lugano criteria at day 28, for an overall objective response rate of 67%, including three partial responses and one complete response.

In the ALL cohort, one of three patients achieved a complete response at day 28 following treatment with PBCAR0191.

As of December 31, 2019, dosing of patients at Dose Level 3 (3x10 6 cells/kg) was underway.

Based on the data observed at DL1 and DL2, we filed a protocol amendment for this trial with the FDA in December 2019.

The amended trial design is intended to specifically address key clinical questions.

These include assessing the impact of higher total doses of cells on clinical activity and/or the impact of modified lymphodepletion on the ability to achieve durable clinical benefit with associated CAR T cell expansion and persistence.

Following feedback from the FDA in late January 2020, the protocol amendment is now being implemented.

In September 2019, the FDA accepted our investigational new drug, or IND, application for our second allogeneic CAR T cell therapy product candidate, PBCAR20A, for which we expect to commence a Phase 1/2a clinical trial in the first quarter of 2020.

We expect to report updated interim data for the PBCAR0191 study in mid-year 2021.

In April 2020, we commenced patient dosing in a Phase 1/2a clinical trial with our second allogeneic CAR T cell therapy product candidate, PBCAR20A.

PBCAR20A is wholly owned by us and targets the validated tumor cell surface target CD20.

It will be investigated in subjects with NHL, chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma, or SLL.

A subset of the NHL patients will have the diagnosis of mantle cell lymphoma, or MCL, and we have received orphan drug designation for PBCAR20A from the FDA for the treatment of this disease.

Based on the adverse events observed to date with PBCAR0191, the FDA has agreed to allow us to commence dosing with PBCAR20A directly at Dose Level 2, which we expect to accelerate the timing for our expected completion of the trial.

In January 2020, the FDA accepted our IND application for our third allogeneic CAR T cell therapy product candidate, PBCAR269A, for which we expect to commence a Phase 1/2a clinical trial in 2020.

It is being investigated in R/R NHL, including those with R/R chronic lymphocytic leukemia, CLL, or R/R small lymphocytic lymphoma, or SLL.

A subset of the NHL patients will have the diagnosis of MCL and we have received orphan drug designation for PBCAR20A from the FDA for the treatment of this disease.

Based on the safety profile observed to date with PBCAR0191, the FDA allowed us to commence dosing with PBCAR20A directly at 1 x 10 6 cells/kg.

The study has continued to escalate through dose level two (3 x 10 6 cells/kg), and, in February 2021, we commenced patient dosing at dose level 3 (480 x 10 6 cell fixed dose) with a max dose of 6 x 10 6 cells/kg.

We expect to report interim data for the PBCAR20A study in 2021.

In June 2020, we commenced patient dosing in a Phase 1/2a clinical trial with our third allogenic CAR T cell therapy product candidate, PBCAR269A.

The starting dose of PBCAR269A is 6 x 10 5 cells/kg.

PBCAR269A is wholly owned by us and is designed to target the validated tumor cell surface target BCMA.

It will be investigated in subjects with R/R multiple myeloma and we have received orphan drug designation from the FDA for this indication.

Also in January 2020, we announced that we expect to advance a program targeting the rare genetic disease primary hyperoxaluria type 1, or PH1 as our lead wholly owned in vivo gene correction program.

It is being investigated in subjects with R/R multiple myeloma and we have received orphan drug designation and Fast Track Designation from the FDA for this indication.

In September 2020, we announced that we entered into a clinical trial collaboration with SpringWorks Therapeutics, Inc.

(“SpringWorks”), a clinical-stage biopharmaceutical company focused on developing medicines for patients with severe rare diseases and cancer.

Pursuant to the collaboration, PBCAR269A will be evaluated in combination with nirogacestat, SpringWorks’ investigational gamma secretase inhibitor (“GSI”), in patients with R/R multiple myeloma, which is expected to commence in the first half of 2021.

In February 2021, we commenced patient dosing at the highest dose cohort, dose level 3 o f 6 x 10 6 cells/kg and we expect to report interim data on the PBCAR269A trial in 2021.

Additionally, in June 2020, Elo Life Systems (“Elo”), our wholly-owned subsidiary, established a strategic partnership with the Dole Food Company (“Dole”) and entered into a Research, Development, and Commercialization Agreement with Dole, with the aim to co-develop banana varieties resistant to Fusarium oxysporum f.

sp cubense Tropical race 4 (“Foc TR4”), utilizing proprietary computational biology workflows and the ARCUS genome editing platform.

The disease caused by Foc TR4, commonly known as Fusarium wilt, threatens the continued cultivation of the world’s most popular variety of banana called Cavendish, which is of considerable economic significance as this variety is used to produce export bananas for key markets around the globe and Dole is one of the largest producers in the industry.

Fungicides, or other traditional means of disease control have failed as the pandemic continues to spread across vital banana growing economies.

In September 2020, we regained full clinical development and commercialization rights, and all data we generated for the in vivo chronic hepatitis B virus (“HBV”) program developed under our 2018 collaboration agreement with Gilead Sciences.

We are exploring partnership or alternative opportunities to enable the continued development of ARCUS-based HBV therapies.

In October 2020, we announced the U.S.

Patent and Trademark Office’s Patent Trial and Appeal Board (“PTAB”) issued judgements in our favor in two patent interference proceedings that challenged nine U.S.

patents we owned.

The patents, which issued in 2018, relate to allogeneic CAR T cells produced by inserting a gene encoding a CAR into the T cell receptor (“TCR”) alpha chain (“TRAC”)

locus, as well as methods of using those cells for cancer immunotherapy.

In the interference proceedings, a third party argued that it had invented the technology in 2012.

The PTAB, however, found that the third-party patent application did not satisfy the written description requirement and rejected these claims while maintaining the claims in all nine of our patents.

In November 2020, we announced a research collaboration and exclusive license agreement with Eli Lilly and Company (“Lilly”) to utilize ARCUS for the research and development of potential in vivo therapies for genetic disorders, with an initial focus on Duchenne muscular dystrophy (“DMD”) and two other undisclosed gene targets.

Under the agreement, Lilly has the right to nominate up to three additional gene targets for genetic disorders over the first four years of the Development and License Agreement, which may be extended to six years upon Lilly’s election and payment of an extension fee.

In December 2020, we announced interim clinical results from our Phase 1/2a study of PBCAR0191 as a treatment of R/R NHL and R/R B-ALL.

As of the November 16, 2020 cutoff, 27 patients including 16 patients with aggressive NHL and 11 patients with aggressive B-ALL were enrolled and evaluated.

In this dose escalation and dose expansion study, PBCAR0191 had an acceptable safety profile with no cases of graft versus host disease, no cases of Grade ≥ 3 cytokine release syndrome, and no cases of Grade ≥ 3 neurotoxicity.

PBCAR0191 demonstrated longest durability of response to 11 months in B-ALL.

PBCAR0191 with enhanced lymphodepletion (“eLD”) resulted in objective response rate of 83% (5/6) in NHL and B-ALL as compared to 33% (3/9) in NHL with standard lymphodepletion (“sLD”).

Additionally, in December 2020, researchers at Elo in collaboration with Alan Chambers, Ph.D., and the Tropical Research and Education Center at the University of Florida published a paper in Nature Food , reporting a chromosome-scale, phased Vanilla planifolia genome, which revealed sequence variants for genes that may impact the vanillin pathway, and therefore influence bean quality, including its productivity, flower anatomy, and disease resistance.

In January 2021, we announced that the FDA has accepted our Initial New Drug (“IND”) application for PBCAR19B, our next-generation, stealth cell, CD19 allogenic CAR T candidate for Non-Hodgkin Lymphoma, and we expect to begin the Phase 1 study by mid-2021.

Additionally, in January 2021, we announced that we received a Notice of Allowance from the U.S.

Patent and Trademark Office for a patent application covering PBCAR19B.

The allowed composition claims of this patent application encompass genetically-modified human T cells comprising the PBCAR19B construct, which is inserted within the T cell receptor alpha constant locus.

Once issued, patents arising from this patent family will have standard expiration dates in April 2040.

In preclinical studies, PBCAR19B has shown to delay both T cell and natural killer cell mediated allogeneic rejection in vitro and may improve the persistence of allogeneic CAR T cells.

We expect to advance a program targeting the rare genetic disease primary hyperoxaluria type 1 (“PH1”) as our lead wholly owned in vivo gene correction program.

PH1 affects approximately 1-3 people per million in the United States and is caused by loss of function mutations in the AGXT gene, leading to the accumulation of calcium oxalate crystals in the kidneys.

Patients suffer from painful kidney stones which may ultimately lead to renal failure.

Using ARCUS, we are developing a potential therapeutic approach to the treatment of PH1 that involves knocking out a gene called hydroxyacid oxidase 1, or HAO1, which acts upstream of AGXT.

Using ARCUS, we are developing a potential therapeutic approach to PH1 that involves knocking out a gene called HAO1 which acts upstream of AGXT.

Suppressing HAO1 has been shown in preclinical models by us to prevent the formation of calcium oxalate.

We therefore believe that a one-time administration of an ARCUS nuclease targeting HAO1 may be a viable strategy for a durable treatment of PH1 patients.

In preclinical studies we have demonstrated in a mouse model of PH1 that administration of an ARCUS nuclease targeting HAO1 resulted in approximately 70% reduction in urine calcium oxalate levels.

We have also demonstrated that ARCUS efficiently knocked out the HAO1 gene in non-human primates.

We plan to select a clinical candidate for this program during 2020.

D uring the fiscal year end ed December 31, 2019, we opened our Manufacturing Center for Advanced Therapeutics, or MCAT, which we believe is the first in-house current good manufacturing practice, or cGMP, compliant manufacturing facility dedicated to genome-edited, off-the-shelf CAR T cell therapy product candidates in the United States.

MCAT will enable in-house production of three different drug substances:

allogeneic CAR T cells, messenger RNA (including formulations development) and adeno-associated viral vectors.

We are currently using this new manufacturing center to create clinical trial material to be used in our BCMA targeting allogeneic CAR T clinical trials beginning in 2020.

We believe MCAT confers a number of strategic advantages including cost benefits, control of our manufacturing process , and strategic flexibility as we execute our clinical trials.

In the longer term, we believe MCAT has the potential to be a commercial launch facility with the capacity to generate up to 10,000 doses of CAR T cell therapies and 4,000 doses of gene therapies per year.

Pre-clinical research has continued to progress, and we expect to provide an update on this program in the first half of 2021.

In January 2021, we disclosed our intention to spinout our wholly owned subsidiary, Elo.

We are continuing to explore our strategic options, and the timing of any such sale, spinout or other treatment of Elo remains uncertain.

Allogeneic CAR T Immunotherapy

9 unchanged sentences

Leveraging the unique gene editing capabilities of ARCUS, we have developed a one-step cell engineering process for allogeneic CAR T cells that is designed to maintain naïve and central memory T cell phenotypes throughout the CAR T manufacturing process, which we believe to be important for an optimized CAR T therapy.

Due to our one-step editing method and the decision early in the development of our allogeneic CAR T immunotherapy platform to invest in process development, we have scaled our manufacturing process and are currently producing allogeneic CAR T cells at large scale in accordance with good manufacturing practice, or GMP.

In February 2016, we entered into a development and commercial license agreement, as subsequently amended, with predecessor entities of Les Laboratoires Servier, or Servier, which we refer to as the Servier Agreement.

Pursuant to this agreement we have agreed to perform early-stage research and development on individual T cell modifications for up to six unique antigen targets, the first of which was selected at the inception of the agreement.

In February 2016, we entered into the Servier Agreement.

Pursuant to this agreement we have agreed to perform early-stage research and development on individual T cell modifications for five unique antigen targets.

Servier selected one target at the Servier Agreement’s inception and, during 2020, selected two additional hematological cancer targets beyond CD19 and two new solid tumor targets.

With the addition of these new targets, we received development milestone payments in 2020 and may be eligible to receive additional development milestone payments in 2021.

Upon selection of an antigen target, we have agreed to develop the resulting therapeutic product candidates through Phase 1 clinical trials and prepare the clinical supply of such product candidates for use in Phase 2 clinical trials.

2 unchanged sentences

CD19 is a protein that is expressed on the surface of B cells.

The FDA has granted PBCAR0191 orphan drug designation for the treatment of ALL.

In December 2019, we reported initial data from our ongoing Phase 1/2a clinical trial of PBCAR0191.

These data indicated no serious adverse events or dose limiting toxicities.

In the ALL cohort, one of three patients achieved a complete response at day 28 following treatment with PBCAR0191.

As of December 31, 2019, dosing of patients at Dose Level 3 (3x10 6 cells/kg) was underway.

Based on the data observed at DL1 and DL2, we filed a protocol amendment for this trial with the FDA in December 2019.

The amended trial design is intended to specifically address key clinical questions.

Following feedback from FDA in late January 2020, the protocol amendment is now being implemented.

The FDA has granted PBCAR0191 orphan drug designation for the treatment of ALL and, in August 2020 granted PBCAR0191 Fast Track Designation for treatment of B-ALL.

We reported updated interim data from our ongoing Phase 1/2a clinical trial of PBCAR0191 including response rates across R/R NHL and R/R B-ALL patient cohorts as further described in “Our Allogeneic CAR T Immunotherapy Pipeline.”

PBCAR0191, which incorporates our patented N6 co-stimulatory domain, demonstrated a clear dose dependent increase in peak cell expansion.

Compared to sLD, eLD with PBCAR0191 at DL3 resulted in approximately 95-fold increase in peak cell expansion, and approximately 45-fold increase in area under the curve.

This was associated with a higher CR rate in NHL (75%).

One NHL patient who was treated with PBCAR0191 and eLD had previously received nine prior lines of therapy before entering the trial.

The patient presented with persistent cytopenias at baseline and a history of infections, including bacterial sepsis.

The patient had an episode of sepsis at day 27 which appeared to have resolved at day 33, following which a partial response was achieved at day 34.

Unfortunately, the patient died at day 42 with grade 5 sepsis.

We reported the serious adverse event to the FDA and reported the patient death.

We are enrolling additional patients with eLD and plan to present updated interim data on this study by mid-2021.

In vivo Gene Correction.

1 unchanged sentence

In vivo gene corrections are gene corrections that take place in a living organism.

We have advanced a deep portfolio of diverse programs toward in vivo efficacy and toxicity studies.

We have generated a significant large animal dataset that we believe to be the most comprehensive of any in the field and have observed high-efficiency in vivo genome editing in non-human primates in our preclinical studies, as highlighted in our July 2018 publication in Nature Biotechnology .

We believe this is the first peer-reviewed publication of in vivo genome editing data in non-human primates.

In our preclinical studies, we observed the high-efficiency editing of the PCSK9 gene in non-human primates using ARCUS and, even at the highest dose, the treatment was observed to be well-tolerated.

continued to observe the subjects for over three years since initial dosing and the benefit of the treatment in these studies appears to be permanent, which we believe is due to modifications to the DNA itself.

In January 2020 we announced that we expect to advance a program for the treatment of the rare genetic disease PH1 as our lead wholly owned gene correction program, based on preclinical data we have generated demonstrating high efficiency knock out of the HAO1 target gene in non-human primates using ARCUS, and evidence from a mouse model of clinically meaningful biomarker changes using our approach.

We expect to nominate a clinical development candidate for this program during 2020.

In addition, we are party to a collaboration agreement with Gilead Sciences, Inc.

(“Gilead”) to co-develop an ARCUS-based product candidate that is designed to cure chronic hepatitis B infection.

Submission of an IND to the FDA for this product candidate is currently targeted for 2021.

We have advanced a deep portfolio of diverse programs toward preclinical efficacy and toxicity studies.

We have generated a significant large animal dataset that we believe to be the most comprehensive of any in the field and have observed high-efficiency in vivo genome editing in non-human primates (“NHPs”) in our preclinical studies, as highlighted in our July 2018 publication in Nature Biotechnology .

We believe this is the first peer-reviewed publication of in vivo genome editing data in NHPs.

In our preclinical studies, we observed the high-efficiency editing of the PCSK9 gene in NHPs using ARCUS and, even at the highest dose, the treatment was observed to be well-tolerated.

As published in Molecular Therapy in February 2021, the NHPs have been monitored for more than three years and have continued to show a sustained reduction in low density lipoprotein cholesterol levels while maintaining stable gene editing without any obvious adverse effects.

After the one-time vector administration more than three years ago, NHPs treated with ARCUS have experienced stable reductions of up to 85% in PCSK9 protein levels and a 56% reduction of low-density lipoprotein (“LDL”) cholesterol levels.

W e expect to advance a program for the treatment of the rare genetic disease PH1 as our lead wholly owned gene correction program, based on preclinical data we have generated high efficiency knock out of the HAO1 target gene in NHPs using ARCUS, and evidence from a mouse model of clinically meaningful biomarker changes using our approach.

We expect to provide an update on t his program during the first half of 202 1 .

As discussed above, in November 2020, we announced a research collaboration and exclusive license agreement with Lilly, pursuant to which we will be responsible for conducting certain pre-clinical research and IND-enabling activities with respect to the gene targets nominated by Lilly.

Lilly will be responsible for conducting clinical development and commercialization activities for licensed products resulting from the collaboration and may engage with us for additional clinical and/or initial commercial manufacture of licensed products.

We expect to advance a program for the treatment of the rare genetic disease PH1 as our lead wholly owned gene correction program, based on preclinical data we have generated high efficiency knock out of the HAO1 target gene in NHPs using ARCUS, and evidence from a mouse model of clinically meaningful biomarker changes using our approach.

We expect to provide an update on this program during the first half of 2021.

We are also in the discovery stage for other in vivo indications:

familial amyloid polyneuropathy, hemophilia A, autosomal dominant retinitis pigmentosa, lipoprotein lipase deficiency and familial hypercholesterolemia.

Our food platform, which we operate through our wholly owned subsidiary, Elo Life Systems, or Elo, is an integrated suite of gene discovery and crop engineering technologies that is designed to generate products in collaboration with leading food producers.

We have a team with in-depth experience in crop genome editing.

Over the last decade, we have worked with some of the largest plant biotechnology companies to edit gene targets and develop potential product candidates in a variety of crop plants.

By combining the power of our ARCUS technology platform with target discovery, transformation and high throughput trait evaluation, we are enabling our partners to potentially address critical issues in food and agriculture created by climate change and dramatic shifts in consumer preference toward healthier eating.

Our collaboration-driven business model enables us to remain capital efficient throughout the product development cycle while generating revenue through various revenue-sharing models.

For example, since 2014, Elo and Cargill have been engaged in a collaboration to produce ARCUS-optimized canola varieties and have achieved significantly lower levels (less than 4.5%) of saturated fatty acids compared to the current levels (7%) in greenhouse studies.

Elo achieved proof of concept with its ZeroMelon TM watermelon-based sweetener program.

lipoprotein lipase deficiency, familial amyloid polyneuropathy, familial hypercholesterolemia, and autosomal dominant retinitis pigmentosa.

Our food platform, which we operate through our wholly owned subsidiary, Elo, is an integrated suite of gene discovery and crop engineering technologies that is designed to generate products in collaboration with leading food producers.

Elo has a team with in-depth experience in crop genome editing.

Over the last decade, Elo has worked with some of the largest plant biotechnology companies to edit gene targets and develop potential product candidates in a variety of crop plants.

By combining the power of the ARCUS technology platform with target discovery, transformation and high throughput trait evaluation, Elo has enabling our partners to potentially address critical issues in food and agriculture created by climate change and dramatic shifts in consumer preference toward healthier eating.

Elo’s collaboration-driven business model enables Elo to remain capital efficient throughout the product development cycle while generating revenue through various revenue-sharing models.

Elo achieved proof of concept with its ZeroMelon TM watermelon-based sweetener program and advanced the program to greenhouse trials.

This program is intended to leverage ARCUS to develop a scalable low-calorie sweetener.

Elo will continue to advance the ZeroMelon program towards greenhouse trials in 2020.

Prior to commercialization of any of our food product candidates, we must complete greenhouse studies and multiple phases of field testing.

As discussed above, Elo also entered into a Research, Development, and Commercialization Agreement with Dole.

with the aim to co-develop banana varieties resistant to FOC TR4, utilizing proprietary computational biology workflows and the ARCUS genome editing platform.

Elo’s ClimateSmart Chickpea program addresses the effect of climate change as a foundational trait for the plant-based protein industry.

Edited chickpea plants were successfully created at a subsidiary of Elo in Australia in collaboration with the Queensland University of Technology.

Genotypic and phenotypic screens are in progress.

We believe that our team, whom we call Precisioneers, has among the deepest scientific experience and capabilities of all genome editing companies.

Derek Jantz, Ph.D., our Chief Scientific Officer and a co-founder of Precision, and Jeff Smith, Ph.D., our Chief Technology Officer and also a co-founder of Precision, have been working with genome editing technology for more than 15 years.

They are pioneers in the genome editing field and developed our ARCUS genome editing platform to address what they perceived as limitations in the existing genome editing technologies.

They are pioneers in the genome editing field and developed the ARCUS genome editing platform to address what they perceived as limitations in the existing genome editing technologies.

Our Chief Executive Officer, Matthew Kane, also a co-founder of Precision, has almost 20 years’ experience in life sciences, most of which has been working in genome editing.

We have selectively expanded our team of Precisioneers to include individuals with extensive industry experience and expertise in the discovery, development, manufacture and commercialization of cell and gene therapies and the creation of innovative solutions to myriad problems affecting food systems.

Our team of Precisioneers includes more than 62 scientists with Ph.D.

We have selectively expanded our team of Precisioneers to include individuals with extensive industry experience and expertise in the discovery, development and manufacture of cell and gene therapies and the creation of innovative solutions to myriad problems affecting food systems.

As of December 31, 2020, our team of Precisioneers included more than 57 scientists with Ph.D.

We are a purpose-driven organization, and we have carefully promoted a culture that values innovation, accountability, respect, adaptability and perseverance.

We strive to ensure that our open, collaborative culture empowers Precisioneers to be their best selves and do their best work.

We strongly believe that our shared values will help our team navigate and overcome any challenges we may experience as we pursue our mission of improving life through genome editing.

We strongly believe that our shared values will help our team navigate and overcome challenges we may experience as we pursue our mission of improving life through genome editing.

Our culture has helped build a world-class team with industry-leading experience in genome editing and continually attracts new talent to further build our capabilities.

9 unchanged sentences

We believe that we have developed the first allogeneic CAR T cell platform capable of producing drug product at scale, with a potentially optimal cell profile for therapeutic efficacy and true off-the-shelf delivery without the need for harsh and potentially toxic lymphodepletion.

We have selected three validated CAR T cell targets that we believe offer the greatest chance of clinical success for our initial product candidates, which we aim to rapidly advance through and into clinical development.

In December 2019, we reported initial data from the first six patients with advanced NHL and first three patients with advanced ALL treated with PBCAR0191 at the lowest two dose levels in our ongoing Phase 1/2a clinical trial.

These initial data indicated no serious adverse events or dose-limiting toxicities, and demonstrated initial evidence of cell-mediated anti-tumor activity.

As of December 31, 2019, dosing of patients at the third dose level was underway.

We have selected three validated CAR T cell targets that we believe offer the greatest chance of clinical success for our initial product candidates.

Our CAR T platform is modular, which we believe will allow us to leverage proof-of-concept from our ongoing and planned initial human trials for multiple other CAR T programs.

1 unchanged sentence

Advance ARCUS-based in vivo gene correction programs into human clinical trials.

In our preclinical studies, we observed the high-efficiency and tolerability of in vivo genome editing using ARCUS in a non-human primate model, as published in Nature Biotechnology in July 2018.

In our preclinical studies, we observed the high-efficiency and tolerability of in vivo genome editing using ARCUS in a non-human primate model, as published in Nature Biotechnology in July 2018 and Molecular Therapy in February 2021.

To our knowledge, we are the first company to complete this milestone, which we believe to be critical to successful in vivo genome editing therapeutic development.

We have built on this early success by diligently advancing a diverse portfolio of preclinical in vivo gene correction programs through additional large animal studies, focusing initially on gene targets occurring in the liver and eye.

Based on the results from these studies, we are advancing our lead wholly owned in vivo gene correction program for the rare genetic disease primary hyperoxaluria type 1.

Build a food business focused on developing products designed to improve human health and respond to the impacts of climate change.

We believe that rapidly changing consumer preferences and food insecurity resulting from population growth and climate change will drive significant demand for genome-edited food products.

We are building a fully integrated discovery and development platform that combines genome editing, gene discovery, plant transformation and high-throughput testing to enable accelerated innovation in the food industry.

We employ a business model that is focused on collaborating with critical stakeholders within the supply chain from the outset of any given project.

We believe that this approach will enable us to successfully respond to growing unmet needs within food supply to build a human health-focused business in a capital-efficient manner.

As discussed above, in November 2020, we also announced a research collaboration and exclusive license agreement with Lilly to utilize ARCUS for the research and development of potential in vivo therapies for genetic disorders, with an initial focus on DMD and two other undisclosed gene targets.

Continue investing in the optimization of ARCUS and enabling technologies.

44 unchanged sentences

Based on scientific literature, we believe that several attributes of I-CreI naturally inhibit off-target cutting.

Recognizes and cuts a DNA sequence in the genome of algae that is 22 base pairs in length .

A sequence of this length is statistically expected to occur only once in a large genome.

Recognizes its DNA target site through a large number of complex molecular interactions with the bases .

Relative to other endonucleases, an unusually high percentage of the I-CreI protein surface area is dedicated to specific contacts with the DNA bases.

This method of site recognition enhances I-CreI’s ability to discriminate among similar sequences of DNA, reducing the likelihood that it will cut DNA sequences that differ even slightly from the intended DNA sequence.

Physically couples the functions of DNA binding and DNA cutting .

The region of I-CreI that is responsible for DNA site recognition also contains the region that cuts the DNA, or the active site.

Due to this structure, the active site is not in a position to cut unless the enzyme is seated properly on the correct DNA sequence.

ZFN, TALEN and CRISPR/Cas9 are multi-domain endonucleases in which the DNA-binding and DNA-cutting functions reside in different regions of the enzyme.

Remains inactive in the absence of its DNA target site .

When I-CreI is not bound to its proper DNA target site, it folds up on itself such that its active site is blocked from external interaction.

In this form, I-CreI is inert.

This structural configuration provides a type of natural “on/off switch” that reduces I-CreI’s activity away from the target site.

Other genome editing endonucleases lack this type of natural control over the enzyme’s cutting activity.

Cuts slowly and with low turnover .

Relative to other genome editing endonucleases and to enzymes in general, I-CreI has a very slow mechanism of action.

I-CreI takes a relatively long time to cut its DNA target site and, after doing so, remains bound to the cut DNA ends.

These properties greatly reduce the likelihood that I-CreI will cut any other DNA site after making its initial on-target cut.

We believe that this translates directly to a reduction in the frequency of off-target cutting without sacrificing on-target editing efficiency.

In contrast, other editing endonucleases have high rates of catalysis and turnover because their natural function is defending bacteria from viruses.

Most applications of genome editing technology require that a sufficient portion of the targeted cells are edited to achieve the desired result.

9 unchanged sentences

Both of these properties significantly broaden the spectrum of potential applications for I-CreI-based genome editing endonucleases.

The three prime, or 3’, overhangs created when I-Cre I cuts DNA have been shown to promote DNA repair through a mechanism called “homology directed repair,” or HDR.

The three prime, or 3’, overhangs created when I-CreI cuts DNA have been shown to promote DNA repair through a mechanism called “homology directed repair,” or HDR.

3’ overhangs are stretches of unpaired nucleotides in the end of a DNA molecule.

18 unchanged sentences

Moreover, since the ARCUS process involves a sophisticated blend of protein engineering art and science, each ARCUS nuclease we create is novel and, we believe, patentable.

As of December 31, 2019, we have obtained U.S.

patents with claims directed to three ARCUS nucleases as compositions of matter, and currently claim over 270 ARCUS nucleases as compositions of matter in pending U.S.

As of December 31, 2020, we have

obtained U.S.

patents with claims directed to six ARCUS nucleases as compositions of matter, and currently claim over 2 90 ARCUS nucleases as compositions of matter in pending U.S.

and foreign patent applications.

24 unchanged sentences

We believe ARCUS nucleases are the smallest and easiest to deliver genome editing endonucleases.

Like I-CreI, in our preclinical studies, ARCUS nucleases have been observed to produce DNA cuts with 3’ overhangs that promote HDR, facilitating gene insertions and gene repairs in addition to gene knockouts.

Like I-CreI, in our preclinical studies, ARCUS nucleases have been observed to produce DNA cuts with 3’ overhangs that promote HDR, facilitating

gene insertions and gene repairs in addition to gene knockouts.

We believe that these attributes will enable us to translate ARCUS into patient-based clinical trials and a wide array of product candidates that have the potential to address the limitations of other genome editing technologies and improve life.

3 unchanged sentences

Our goal is to leverage ARCUS to build additional product-development platforms designed to rapidly generate new products in a given field.

We are currently developing products from three such platforms:

allogeneic CAR T immunotherapy, in vivo gene correction, and food.

Our Allogeneic CAR T Immunotherapy Platform

2 unchanged sentences

This method allows us to produce allogeneic CAR T therapy candidates with a potentially optimal phenotype for clinical development and scaled manufacturing.

We have demonstrated that our approach yields an allogeneic product with a high proportion of so-called naïve and central memory CAR T cells, which are the T cell phenotypes that have previously correlated best with good clinical benefit and fewer adverse events compared with terminally differentiated effector T cells.

We have demonstrated that our approach yields an allogeneic product with a high proportion of naïve and central memory CAR T cells, which are the T cell phenotypes that have previously correlated best with good clinical benefit and fewer adverse events compared with terminally differentiated effector T cells.

Additionally, because these cells are derived from healthy donors and maintain the phenotypic characteristics described, it is our hypothesis that they will be more capable of controlled in vivo expansion and tumor killing without requiring harsh lymphodepletion regimens to be administered to the patient.

3 unchanged sentences

T cells are a component of the immune system that can distinguish pathogen-infected or tumor cells from healthy cells and kill them.

Recognition of pathogen-infected cells or tumor cells occurs through a protein called a T cell receptor, or TCR, that is expressed on the surface of T cells.

Recognition of pathogen-infected cells or tumor cells occurs through a protein called a TCR, that is expressed on the surface of T cells.

Tumor cells, however, have evolved numerous ways to evade TCR-mediated killing by T cells.

13 unchanged sentences

This high cost of treatment, along with the practical complexities described above, limits the availability of autologous CAR T cell therapies to patients.

Our Approach to Allogeneic CAR T Cells

We believe that the use of allogeneic, or donor-derived, CAR T cells will address many of the challenges associated with autologous CAR T cell therapy.

2 unchanged sentences

one product” burden of autologous CAR T cell therapies.

Because healthy donors would provide the starting material, patients that were too sick or otherwise unqualified for an autologous a pproach may benefit from an allogeneic CAR T cell therapy.

Because healthy donors would provide the starting material, patients that were too sick or otherwise unqualified for an autologous approach may benefit from an allogeneic CAR T cell therapy.

Additionally, patients receiving an off-the-shelf allogeneic treatment would not have to wait for the manufacture of a personalized autologous treatment, which could be further delayed by manufacturing difficulties.

1 unchanged sentence

These potential advantages of an allogeneic approach should allow for a safer, more predictable product with defined quality standards and significantly increase patient access.

The major challenge to producing allogeneic CAR T cells is that donor-derived T cells still express their own TCR.

Because the TCR enables T cells to recognize cells that are foreign to the donor, they may induce GvHD if introduced to the patient in their natural form.

This is a dangerous condition in which the donor T cells indiscriminately attack cells in the body of the patient.

Accordingly, expression of the TCR must be eliminated in donor cells before the cells can be engineered into CAR T cells and administered to a patient.

An allogeneic CAR T cell therapy therefore requires the use of a genome editing technology like ARCUS to knock out TCR genes in the T cell DNA to produce “universal” donor cells that are designed to be incapable of eliciting GvHD.

We and others have shown that genome editing can be used to eliminate expression of the TCR on donor cells, and there are several companies working on gene-edited allogeneic CAR T cell therapies.

However, there are a number of challenges associated with manufacturing gene-edited allogeneic CAR T cells, including the following:

T cell phenotype.

T cells actually comprise several subtypes of different cells.

Some subtypes of T cells are directly responsible for killing virus-infected or tumor cells, while other subtypes serve a helper function.

Some subsets retain a “memory” function and can be recalled later if the target tumor reappears, and some subsets even decrease the killing activity of T cells.

T cells undergo a process of differentiation in response to contact with their targets, which leads to young, naïve and central memory T cells changing into “terminally differentiated” or “effector” T cells.

These effector T cells are good at killing pathogen-infected cells and other foreign cells, but do not survive for long periods of time in the body and are poorly expansile, in contrast to naïve and central memory T cells.

T cell subsets are distinguished by the unique combination of proteins they express on their cell surface, which is described as their “phenotype.” Understanding what phenotypes of T cells are best for a CAR T cell therapy is important, as is the ability to maintain the stability of those phenotypes throughout the manufacturing process.

The more genetic and other manipulation T cells undergo, the more likely they are to differentiate from the naïve and central memory phenotype into terminally differentiated cells.

This can happen over the course of a manufacturing run, with the length of the process being directly related to the final cell phenotype.

As a result, the final CAR T product may not comprise the desired mix of T cell subtypes for clinical development.

In most CAR T cell therapies, the CAR is introduced into the T cell using a viral vector, usually a lentiviral vector.

Lentiviral vectors are retroviruses that are typically engineered to insert DNA, in this case the gene encoding a CAR, into a random location in the genome of a cell.

When introduced in this manner, CAR expression typically varies significantly from cell-to-cell depending on the number of CARs that were delivered and where in the T cell genome they were inserted.

This variability can cause CAR T cells to be inconsistent from cell-to-cell within the same CAR T cell batch.

Too little expression could make the CAR T cell unable to activate and kill when it identifies a cancer cell.

Too much expression could lead the CAR T cell to become hyper-stimulated, which can lead to an inactive state known as “exhaustion.”

Manufacturing scale drives the cost and availability of the final off-the-shelf product.

While generating allogeneic CAR T cells at lab scale (a few million cells) is relatively straightforward, manufacturing them at a clinically relevant scale (billions of cells) is a major challenge that is impacted by, among other things, the efficiency of CAR gene insertion, the efficiency of on- and off-target genome editing, starting donor T cell phenotype and the duration of the manufacturing process.

Our Approach to Allogeneic CAR T Cells

We have used the unique qualities of ARCUS to create a one-step cell engineering process for allogeneic CAR T cells that we believe yields a well-defined cell product and is designed to maintain naïve and central memory T cell phenotypes throughout the CAR T manufacturing process;

2 unchanged sentences

First, it is necessary to knock out the gene that encodes the TCR to prevent the donor-derived T cells from eliciting GvHD in the patient.

The TCR is actually a complex of several

different components encoded by different genes, and knocking out any one of them is generally sufficient to prevent the TCR from functioning.

The TCR is actually a complex of several different components encoded by different genes, and knocking out any one of them is generally sufficient to prevent the TCR from functioning.

Second, it is necessary to add, or knock in, a gene that encodes the CAR to give the T cells the ability to recognize and kill cancer cells.

14 unchanged sentences

Importantly, our one-step genome editing approach avoids making multiple breaks to the T cell’s DNA and also contributes to minimizing cell processing time, which helps prevent the CAR T cells from differentiating during the process.

We believe our 10-day allogeneic manufacturing process is the shortest in the industry.

The figure below shows results from three full-scale manufacturing campaigns, each of which produced a GMP batch of PBCAR0191.

We believe our 10-day allogeneic manufacturing process is the shortest established process in the industry.

The figure below shows results from seven full-scale manufacturing campaigns, each of which produced a cGMP batch of PBCAR0191 with desired product specifications.

The figure below shows phenotype data from PBCAR0191 CAR T cells that were produced as drug product for our ongoing Phase 1/2a clinical trial in adult patients with R/R NHL and R/R B-ALL.

The drug product comprises mostly naïve (T N/SCM ) and central memory (T CM ) T cells.

The drug product comprises naïve (T N/SCM ) and central memory (T CM ) T cells.

Novel co-stimulatory domain.

9 unchanged sentences

CAR T cells produced using ARCUS exhibit reduced cell-to-cell variability as well as more controlled levels of CAR gene expression depending on whether the cells are tuned for high expression or low expression.

To realize the potential benefits of allogeneic CAR T cell therapy, it will be important to manufacture as many cells as possible in each batch in accordance with GMP.

To realize the potential benefits of allogeneic CAR T cell therapy, it will be important to manufacture as many cells as possible in each batch in accordance with cGMP.

Scaling efficiently requires scale-up at every step in the process and, as with all drug manufacturing, process development takes significant time and capital.

In July 2019, we opened our MCAT facility, which we believe is the first in-house cGMP compliant manufacturing facility dedicated to genome-edited, off-the-shelf CAR T cell therapy product candidates in the United States.

In July 2019, we opened our

Manufacturing Center for Advanced Therapeutics (“ MCAT ”) facility, which we believe is the first in-house cGMP compliant manufacturing facility dedicated to genome-edited, off-the-shelf CAR T cell therapy product candidates in the United States.

We made the decision early in the development of our CAR T cell platform to invest in process development and manufacturing rather than initiating clinical trials with a process that would not fully support development and commercialization.

1 unchanged sentence

As a consequence of our early investment and the one-step editing method enabled by ARCUS, we have scaled our manufacturing process today, adding in-house capabilities through the opening of our MCAT facility.

Over the last twelve months, we have manufactured our lead anti-CD19 allogeneic CAR T cell product candidate at a multi-billion cell scale consistently.

During 2020, we completed technology transfer of PBCAR0191 and PBCAR20A to MCAT, as well as manufactured the first batch and clinical trial material for PBCAR269A and produced clinical trial material for PBCAR19B stealth cell.

Key features of Precision’s allogeneic CAR T platform

3 unchanged sentences

Patients who receive CAR T therapy are typically preconditioned prior to being given the cell therapy using lymphodepleting drugs such as cyclophosphamide or fludarabine, which suppress the immune system of the patient.

We believe that this degree of preconditioning will be sufficient to prevent CAR T cell rejection by patients who receive our treatments due to our unique approach to producing CAR T cells.

We believe that the degree of preconditioning can be modified by adjusting the doses of the cyclophosphamide or fludarabine to prevent CAR T cell rejection by patients who receive our treatments due to our unique approach to producing CAR T cells.

Our CAR T production process preserves T cell phenotypes that we believe are highly expansile in vivo and therefore do not require an aggressive lymphodepletion regime to survive and proliferate in the body.

Our ongoing Phase 1/2a clinical trial of PBCAR0191 employs a standard lymphodepletion regimen comprised of cyclophosphamide at a dose of 1,500mg/m 2 over three days and fludarabine at a dose of 90mg/m 2 over three days.

Based on the initial clinical data from this trial, we believe this lymphodepletion regime to be effective given the high quality of our cell product.

However, higher concentrations of fludarabine and cyclophosphamide have been delivered safely to patients.

Therefore, we also have the option to increase or decrease the dose of lymphodepletion in the future to further optimize CAR T cell persistence and clinical efficacy if needed, and we will evaluate the need for this based on the assessment of clinical data from our ongoing trials.

In addition, we have the ability to incorporate a novel piece of our technology that we call “stealth cell” into the CAR T product candidate.

The stealth cell technology is a modified CAR T vector that is designed to suppress a gene called beta-2-microglobulin, or B2M, in CAR T cells using a short-hairpin RNA, or shRNA.

B2M is a component of the major histocompatibility complex type 1, a cell surface receptor which activates T cells.

In preclinical studies, we and others have observed that suppression or elimination of B2M reduces the rejection of CAR T cells by T cells from an unrelated individual.

However, we have found that complete elimination of B2M, for example by knocking the gene out using gene editing, provokes rejection of the CAR T cells by an alternative immune cell called natural killer, or NK cells.

As shown in the figure below, in preclinical studies, we have observed that suppression of B2M to a level that is approximately 5% to 20% of normal levels can significantly reduce rejection by T cells without inducing an NK response.

We expect to begin the Phase 1 study of PBCAR19B, our next-generation, stealth cell, CD19 allogenic CAR T candidate for Non-Hodgkin Lymphoma by mid-2021.

The stealth cell technology is a modified CAR T vector that is designed to suppress expression of a gene called beta-2-microglobulin, or B2M, in CAR T cells using a short-hairpin RNA, or shRNA , and enable expression of a transgenic HLA-E molecule on the cell surface.

B2M is a component of the major histocompatibility complex type 1 (“MHC-I”) , a cell surface receptor which enables alloreactive T cell recognition and activation .

Suppression of B2M expression leads to reduced cell-surface expression of major histocompatibility complex components HLA-A, HLA-B, and HLA-C.

In preclinical studies, we and others have observed that suppression or elimination of B2M reduces the rejection of CAR T cells by alloreactive T cells from an unrelated individual.

However, we have found that reduction of cell-surface HLA-A, HLA-B, and HLA-C expression provokes rejection of the CAR T cells by an alternative immune cell called natural killer, or NK cells.

Decreased expression of HLA-A , HLA-B, and HLA-C therefore necessitates an additional modification to enable overexpression of HLA-E, a non - classical MHC -I that inhibits cytotoxic killing by NK cells by interacting with inhibitory receptors on the NK cell surface (Gornalusse et al, 2017;

Lanza et al, 2019) .

Thus, the “stealth cell” is designed to avoid rejection by both alloreactive cytotoxic T cells and NK cells, which we believe has the potential to increase the ability of these cells to expand, persist, and mediate anti-tumor activity in unrelated recipients as summarized in the figure below .

Pre-clinical studies showed anti-CD19 stealth CAR T cells resisted rejection by allo-reactive

T cells and NKs in mixed-lymphocyte reactions

Our Allogeneic CAR T Immunotherapy Pipeline

1 In partnership with Servier.

2 In combination with gamma secretase inhibitor from SpringWorks Therapeutics.

We are leveraging our CAR T cell platform to develop product candidates against validated CAR T cell targets.

4 unchanged sentences

We believe that the combination of these factors, along with our next generation ARCUS technology, puts us in a differentiated position to become the leader in the development of allogeneic CAR T therapies.

In December 2019, we reported initial data from the first six patients with advanced NHL and the first three patients with advanced ALL treated with PBCAR0191 at the lowest two dose levels from our ongoing Phase 1/2a clinical trial.

These initial data indicated no serious adverse events or dose-limiting toxicities, and demonstrated initial evidence of cell-mediated anti-tumor activity.

As of December 31, 2019, dosing of patients at the third dose level was underway.

The first three product candidates in our allogeneic CAR T cell development pipeline are:

The first four product candidates in our allogeneic CAR T cell development pipeline are:

We are developing PBCAR0191, an allogeneic anti-CD19 CAR T cell product candidate for the treatment of adult R/R NHL and adult R/R B-cell precursor ALL.

CD19 is a protein that is expressed on the surface of B cells.

It is a well-validated target for CAR T cell therapy and the two currently marketed autologous CAR T cell therapy products also target CD19.

CD19 is a protein that is expressed on the surface of B cells and is a well-validated target for CAR T cell therapy.

The three currently marketed autologous CAR T cell therapy products also target CD19.

In February 2016, we entered into the Servier Agreement, pursuant to which we have agreed to develop allogeneic CAR T cell therapies for CD19.

4 unchanged sentences

NHL and ALL cohorts are evaluated independently .

The base trial design includes up to three dose levels:

The base trial design include d up to three dose levels:

3.0 x 10 5 cells/kg, 1.0 x 10 6 cells/kg and 3.0 x 10 6 cells/kg.

Recently, we have added higher dose levels in flat doses (DL4b:

500 x 10 6 cells and DL5:

750 x 10 6 cells).

Patients will be further evaluated for a follow-up period of 11 months.

The trial is being conducted at the following four clinical sites across the United States:

Moffitt Cancer Center in Florida, City of Hope Cancer Treatment and Research Center in California, Dana-Farber Cancer Institute in Massachusetts and MD Anderson Cancer Center in Texas.

A further eight to ten sites are expected to be initiated during the course of 2020 .

Initial Data from Phase 1/2a Trial of PBCAR0191 in R/R NHL and R/R B-ALL

In December 2019, we announced initial data from our ongoing Phase 1/2a clinical trial of PBCAR0191 in adult patients with R/R NHL or R/R B-ALL.

A total of nine patients were reported in these initial Phase 1 trial results, including six with NHL (three treated at Dose Level 1, or DL1, and three treated at Dose Level 2, or DL2), and three with B-ALL (all treated at DL2).

Patients treated at Dose Level 1 (3x10 5 cells/kg) included three NHL patients, two with diffuse large B cell lymphoma and one with mantle cell lymphoma, with a mean age of 54 years (min-max 34-64 years).

Patients had received a median of four prior lines of therapy, with two patients being refractory to their last treatment, and one having previously relapsed following treatment with Yescarta®, an FDA-approved autologous CD19-targeted CAR T therapy.

Dose Level 2 (1x10 6 cells/kg) included t hree NHL patients , all with mantle cell lymphoma, with a mean age of 74 years (min-max 71-77 years) who had received a median of two prior lines of therapy, with one patient refractory to their last treatment and two who had relapsed.

Three B-ALL patients were also treated at DL2, with a mean age of 56 years (min-max 48-72 years);

these patients had received a median of four prior lines of therapy – all three patients were refractory to their last treatment, with two patients having poor prognostic indicators at trial entry.

Patients received a single infusion of PBCAR0191 on day 0, following three days of lymphodepletion using fludarabine 30mg/m 2 /day and cyclophosphamide 500mg/m 2 /day.

The primary objective of this Phase 1 portion of the ongoing Phase 1/2a trial is to evaluate safety as measured by the occurrence of dose limiting toxicities.

Secondary objectives include assessment of objective tumor responses using standard criteria, and further evaluation of adverse events, or AEs, and adverse events of special interest, including GvHD, cytokine release syndrome, or CRS, and immune effector cell - associated neurotoxicity syndrome, or ICANS.

Data were presented as of a November 4, 2019 cutoff date, with additional critical data collected through December 2, 2019, including occurrence of CRS, ICANS, GvHD and evaluation of objective responses.

Safety of PBCAR0191

No serious adverse events or evidence of GvHD were observed through December 2, 2019.

Three of the nine patients treated with PBCAR0191, or 33%, developed CRS including two Grade 1 cases and one Grade 2 case.

One of the nine patients, or 11%, developed Grade 2 neurotoxicity.

All events of CRS and neurotoxicity resolved, and no deaths occurred on study.

In addition, one patient experienced a Grade 3 AE that was deemed related to PBCAR0191 (pain at the site of the patient’s tumor mass for one day following infusion) and one patient experienced Grade 4 lymphopenia for a duration of seven days and deemed related to PBCAR0191.

Clinical activity of PBCAR0191

Of the nine patients treated with PBCAR0191, seven, or 78%, had objective evidence of tumor shrinkage at any time point.

The data also provided preliminary evidence of dose-dependent CAR T cell expansion and persistence.

In the NHL cohort, four of six patients, or 67%, achieved an objective response by Lugano 2014 criteria at day 28+, including three partial responses (two patients treated at DL1 and one patient treated at DL2) and one complete response (patient treated at DL2).

As of December 2, 2019, one patient (treated at DL2) remained in complete response.

One patient (treated at DL1) achieved a partial response then progressed six months after treatment with PBCAR0191.

This was notable given the patient had relapsed following treatment with Yescarta®.

The remaining two NHL patients, one treated at DL1 and one at DL2, achieved early responses (one CR, one PR respectively) at day 14;

both patients had evidence of disease progression at day 28.

In the B-ALL cohort treated at DL2, one of three patients, or 33%, achieved a complete response by the National Comprehensive Cancer Network 2017 criteria at day 28+, with undetectable B-ALL in the bone marrow by flow cytometry, described as minimal residual disease (MRD) negative.

The remaining two patients did not respond at day 28;

these patients had poor prognostic indicators on entry into the trial:

one with prior CNS involvement and 95% blast infiltration into the bone marrow, and one with 77% blast infiltration into the bone marrow and disease refractory to two previous lines of treatment.

CAR T cell expansion and persistence in the peripheral blood was assessed at DL1 and DL2 by flow cytometry and quantitative polymerase chain reaction, or qPCR .

Evidence of a dose-dependent increase in cell expansion was observed between subjects treated at DL1 and DL2, as was a dose-dependent increase in CAR T cell persistence.

B-cell aplasia and serum cytokine analysis also anecdotally corresponded to observed clinical responses and CAR T cell expansion.

As of December 31, 2019, dosing of patients at Dose Level 3 (3x10 6 cells/kg) was underway.

Recent trial amendment

Based on the safety profile and clinical activity observed at DL1 and DL2, we filed a protocol amendment for this trial with the FDA in December 2019.

Following feedback from FDA in late January 2020, the protocol amendment is now being implemented.

The amended trial design is intended to specifically address key clinical questions.

The most important modification is the inclusion of two additional dose levels:

Dose Level 4 (6x10 6 cells/kg) and Dose Level 5 (9x10 6 cells/kg).

These higher doses will employ a split dosing strategy following a single lymphodepletion with the intention of optimizing clinical activity while preserving a favorable safety profile.

Dose Level 4 will comprise two infusions of 3x10 6 cells/kg, and Dose Level 5 will comprise three such infusions – this strategy will enable us to explore higher total doses of PBCAR0191 while limiting potential GvHD risk.

In addition, we have introduced a modification to allow for the option to increase or decrease the doses of fludarabine and cyclophosphamide used in the lymphodepletion protocol if data suggest that CAR T cell rejection limits efficacy.

The final modification allows for the option to re-dose patients with PBCAR0191 following evidence of clinical response but with subsequent disease progression.

We expect to present updated results from this trial during the course of 2020.

Our second allogeneic CAR T therapy candidate is PBCAR20A, an allogeneic anti-CD20 CAR T cell product candidate for the treatment of NHL, chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma, or SLL.

Additionally, alternative lymphodepletion regimens, including enhanced doses of fludarabine and cyclophosphamide, are also being explored.

Finally, repeat dosing after initial response and progression and scheduled repeat dosing, both with repeat lymphodepletion , are also being explored.

The trial is being conducted at the multiple sites around the United States.

A listing of these sites c an be found at https://clinicaltrials.gov/ct2/show/NCT03666000 .

Updated Interim Data from Phase 1/2a Trial of PBCAR0191 in R/R NHL and R/R B-ALL

In December 2020, we reported updated interim data from our ongoing Phase 1/2a clinical trial of PBCAR0191.

As of the November 16, 2020 cutoff, 27 patients including 16 patients with R/R NHL and 11 patients with R/R B-ALL had been enrolled and evaluated.

For this study, in which patients received either sLD or eLD, response rates across R/R NHL and R/R B-ALL patient cohorts were as follows:

83% objective response rate (“ORR”) at day 28 or later for patients across NHL (n=4) and B-ALL (n=2) who received PBCAR0191 when coupled with eLD.

At day 28 or later, 75% (3/4) of NHL patients who received PBCAR0191 with eLD achieved a complete response (“CR”).

Meanwhile, 33% of NHL patients (n=9) across DL2 and DL3 using sLD achieved a CR.

The longest demonstrated response was > 11 months in a B-ALL patient at DL2.

Response Rates at Day ≥28

DL1 (3x10 5 cells) + sLD

DL2 (1x10 6 cells) + sLD

DL3 (3x10 6 cells) + sLD

DL4 (2 doses at 3x10 6 cells) + sLD

Enhanced LD Regimen

PBCAR0191, which incorporates our patented N6 co-stimulatory domain, demonstrated a clear dose dependent increase in peak cell expansion.

Compared to sLD, patients undergoing eLD with PBCAR0191 at DL3 resulted in approximately 95-fold increase in peak cell expansion, and approximately 45-fold increase in area under the curve.

This was associated with a higher CR rate in NHL (75%).

One NHL patient who was treated with PBCAR0191 and eLD had previously received nine prior lines of therapy before entering the trial.

The patient presented with persistent cytopenias at baseline and a history of infections, including bacterial sepsis.

The patient had an episode of sepsis at day 27 which appeared to have resolved at day 33, following which a partial response was achieved at day 34.

Unfortunately, the patient died at day 42 with grade 5 sepsis.

We reported the serious adverse event to the FDA and reported the patient death.

We are enrolling additional patients with eLD and plan to present updated interim data on this study by mid-2021.

Additionally, the FDA has accepted our IND application for PBCAR19B, our next-generation, stealth cell, CD19 allogeneic CAR T candidate for Non-Hodgkin Lymphoma, and we expect to begin the Phase 1 study by mid-2021.

In preclinical studies, PBCAR19B has been shown to delay both T cell and natural killer cell mediated allogeneic rejection in vitro and may improve the persistence of allogeneic CAR T cells in recipients after infusion.

Our second allogeneic CAR T therapy candidate is PBCAR20A, an allogeneic anti-CD20 CAR T cell product candidate for the treatment of NHL, including chronic lymphocytic leukemia, or CLL, and small lymphocytic lymphoma, or SLL.

Like CD19, CD20 is a protein expressed on the surface of B cells.

It is a validated target for cancer treatment and several CD20-targeted therapies, such as the monoclonal antibody Rituxan, have long histories of clinical and commercial success.

In September 2019, the FDA cleared our IND application for PBCAR20A and we expect to commence a Phase 1/2a clinical trial for PBCAR20A in the first quarter of 2020.

It will be investigated in subjects in two cohorts:

NHL and CLL/SLL.

In April 2020, we commenced patient dosing in a Phase 1/2a clinical trial of PBCAR20A.

The trial will include patients with NHL, of which a subset will have the diagnosis of mantle cell lymphoma, or MCL.

We have received orphan drug designation for the treatment of MCL.

In our planned Phase 1/2a clinical trial, the primary objective will be to evaluate the safety and tolerability of PBCAR20A, as well as to determine the maximum tolerated dose.

In our Phase 1/2a clinical trial, the primary objective is to evaluate the safety and tolerability of PBCAR20A, as well as to determine the maximum tolerated dose.

Secondary objectives will include evaluating the anti-tumor activity of PBCAR20A.

We also plan to evaluate the expansion, trafficking and persistence of PBCAR20A in this trial.

Based on the adverse event s observed to date with PBCAR0191, the FDA has agreed to allow us to commence dosing with PBCAR20A directly at Dose Level 2, which we expect to accelerate the timing for our expected completion of the trial.

We therefore currently plan to investigate two dose levels in this trial, 1.0 x 10 6 cells/kg and 3.0 x 10 6 cells/kg .

Our clinical plan for this trial is depicted in the graphic below:

Based on the safety profile observed to date with PBCAR0191, the FDA allowed us to commence dosing with PBCAR20A directly at 1 x 10 6 cells/kg.

The study has continued to dose escalate through dose level two (3 x 10 6 cells/kg), and in February 2021, we commenced patient dosing at dose level 3 (480 x 10 6 cell fixed dose) with a max dose of 6 x 10 6 cells/kg.

We expect to report interim data for the PBCAR20A study in 2021.

Our accepted IND for PBCAR20A included data from our preclinical study in mice measuring cell proliferation, cytotoxic killing, and production of effector cytokines in response to co-culture with CD20+ or CD20- target cells.

3 unchanged sentences

We also evaluated the potency of PBCAR20A in vivo .

As shown below, PBCAR20A was observed to prolong survival in a mouse model of lymphoma (Raji Sub-Q model) at both doses tested (1.0 x 10 6 and 5.0 x 10 6 cells per mouse), which we believe supports further development.

PBCAR20A was observed to prolong survival in a mouse model of lymphoma (Raji Sub-Q model) at both doses tested (1.0 x 10 6 and 5.0 x 10 6 cells per mouse), which we believe supports further development.

PBCAR20A was observed to be well-tolerated in this study.

2 unchanged sentences

In January 2020, the FDA cleared our IND for PBCAR269A.

We plan to commence a Phase 1/2a open-label, multi-center, dose-escalation clinical trial in patients with R/R multiple myeloma in 2020.

In June 2020, we commenced a Phase 1/2a open-label, multi-center, dose-escalation clinical trial in patients with R/R multiple myeloma.

In this trial, the primary objective will be to evaluate the safety and tolerability of PBCAR269A, as well as to determine the maximum tolerated dose.

2 unchanged sentences

We expect to investigate up to three dose levels:

6.0 x 10 5 cells/kg, 2.0 x 10 6 cells/kg and 6.0 x 10 6 cells/kg.

6.0 x 10 5 cells/kg, 2.0 x 10 6 cells/kg and 6.0 x 10 6 cells/kg and we expect to report interim data on the PBCAR269A trial in 2021.

We evaluated the potency of PBCAR269A CAR T cells in a preclinical study in mice by measuring cell proliferation, cytotoxic killing and production of effector cytokines in response to co-culture with BCMA+ or BCMA- target cells.

3 unchanged sentences

We also evaluated the potency of PBCAR269A in vivo .

As shown below, PBCAR269A was observed to prolong survival in a mouse model of multiple myeloma, which we believe supports further development.

PBCAR269A was observed to prolong survival in a mouse model of multiple myeloma, which we believe supports further development.

PBCAR269A was observed to be well-tolerated in this study.

Our in vivo Gene Correction Platform

1 In partnership with Lilly

We expect in vivo genome editing to be a significant focus of our operations long-term because the differentiated attributes of ARCUS are particularly advantageous for this type of application.

3 unchanged sentences

Due to the demands of in vivo editing, we are taking a highly disciplined approach to managing our project portfolio that emphasizes studies in large animals, using both viral and non-viral delivery technologies.

We believe that there is a remarkable lack of large animal data in the genome editing field and that demonstrating safety and efficacy in large animals is an important gating step prior to beginning human clinical studies.

Thus, we are advancing an extensive and diverse portfolio of programs toward in vivo efficacy and toxicity studies and are generating a large animal dataset that, we believe, will be the most comprehensive of any in the field.

Our two most advanced programs in this area are focused on chronic hepatitis B, in partnership with Gilead, and PH1 which is wholly owned by Precision.

Thus, we are generating a large animal dataset that, we believe, is the most comprehensive of any in the field.

Our two most advanced programs in this area are focused on PH1 which we wholly own and DMD in partnership with Lilly.

Treatment of Genetic Disease

Genetic diseases are caused by errors in the DNA that lead to misfunction of a cell or tissue.

Genetic diseases are caused by errors in the DNA that lead to dysfunction of a cell or tissue.

While the underlying cause of a particular genetic disease can often be complex and variable, DNA errors generally fall into two categories:

5 unchanged sentences

Genetic disease is a very active area of therapeutic development, and the therapies that are available or in development are, to a large extent, as variable and specialized as the diseases themselves.

There are, however, two gene therapy platform approaches that are being broadly applied to the treatment of multiple genetic disorders.

There are, however, gene therapy platform approaches that are being broadly applied to the treatment of multiple genetic disorders.

For the treatment of loss-of-function diseases, AAV-based gene therapy can often be an effective treatment.

21 unchanged sentences

Efficiency is best measured in vivo in animals because it is affected by multiple parameters including delivery, endonuclease activity and the accessibility of the DNA target site in the organism.

Moreover, we believe that only large animals such as non-human primates accurately model these different parameters and are representative of the human condition.

Moreover, we believe that only large animals such as NHPs accurately model these different parameters and are representative of the human condition.

As such, we have placed significant emphasis on large animal studies and have demonstrated, we believe, therapeutic levels of editing efficiency using ARCUS in the most relevant models.

This gives us greater confidence that ARCUS will translate from the lab bench to the clinic.

The potential of ARCUS for in vivo genome editing is highlighted in a July 2018 publication in Nature Biotechnology that describes a research project performed as part of a sponsored research collaboration between our company and Dr.

Jim Wilson’s Orphan Disease Center at the University of Pennsylvania.

Jim Wilson and the Gene Therapy Program at the University of Pennsylvania.

Co-authors of the publication include Derek Jantz and Jeff Smith, two of our co-founders.

This publication is, to our knowledge, the first peer-reviewed publication of in vivo genome editing data in non-human primates.

We reported well-tolerated, long-term, high-efficiency editing of the PCSK9 gene in non-human primates using ARCUS.

A single IV administration of an AAV vector encoding a PCSK9-specific ARCUS nuclease was able to efficiently knock out the gene in the livers of Rhesus macaques, a species of monkey, resulting in up to approximately 85% reduced levels of PCSK9 protein in the blood.

This reduction in PCSK9 then resulted in significantly reduced levels of LDL-C, commonly known as “bad cholesterol,” in the blood of treated animals.

Because this therapeutic effect is due to modifications to the DNA itself, the benefit of the treatment appeared to be permanent.

The first animals that were treated have maintained reduced levels of PCSK9 and LDL-C since they were treated in February 2017.

This publication is, to our knowledge, the first peer-reviewed publication of in vivo genome editing data in NHPs.

We reported well-tolerated, long-term, high-efficiency editing of the PCSK9 gene in NHPs using ARCUS.

A single IV administration of an AAV vector encoding a PCSK9-specific ARCUS nuclease was able to efficiently knock out the gene in the livers of Rhesus macaques, a species of monkey.

Importantly, even at the highest dose the treatment was observed to be well tolerated in the study.

These peer reviewed data exemplify the power of ARCUS for in vivo editing at therapeutically meaningful levels of efficiency.

As published in Molecular Therapy in February 2021, we have continued to monitor the NHPs for more than three years and have continued to show a sustained reduction in LDL cholesterol levels while maintaining stable gene editing without any obvious adverse effects.

PCSK9 and LDL Serum Levels

We believe that establishing collaborations with other groups that have additive domain expertise and access to the most relevant animal models will be important to advancing our in vivo gene correction platform, and we have entered into a number of collaborations and licensing agreements with third parties to help us advance our in vivo editing portfolio.

Hepatitis B Program

In September 2018, we entered into a collaboration and license agreement with Gilead to co-develop an ARCUS-based treatment for chronic hepatitis B infection.

Infection by the hepatitis B virus, or HBV, is in many ways analogous to a gain-of-function genetic disorder.

In this case, the deleterious DNA that needs to be eliminated is the genome of the virus itself.

To this end, we are collaborating with Gilead to develop an ARCUS-based product candidate that is designed to specifically target and eliminate both forms of viral DNA (integrated DNA and covalently closed circular DNA (“cccDNA”)) from infected liver cells.

Our ARCUS-based product candidate is designed to cut and thereby inactivate or degrade cccDNA and to cut and thereby inactivate the integrated hepatitis B genome.

We believe making these edits gives us the ability to permanently eliminate the chronic viral infection, and potentially cure the disease.

Submission of an IND for this product candidate is currently targeted for 2021.

In preclinical studies, we developed a pair of ARCUS nucleases that recognized and cut conserved DNA sequences in the Hepatitis B genome.

We observed that these nucleases reduced HBV S-antigen and cccDNA HBV-infected primary human hepatocytes, as shown below.

Primary Hyperoxaluria Type 1 (PH1) Program

In January 2020, we announced that we will advance a program designed to target the rare genetic disease PH1 as our lead wholly owned in vivo gene correction program.

We plan to advance a program designed to target the rare genetic disease PH1 as our lead wholly owned in vivo gene correction program.

PH1 affects approximately 1-3 people per million in the United States and is caused by loss of function mutations in the AGXT gene.

5 unchanged sentences

We therefore believe that a one-time administration of an ARCUS nuclease targeting HAO1 may be a viable strategy for a durable treatment of PH1 patients.

In preclinical studies we have demonstrated that ARCUS efficiently knocked out the HAO1 gene in non-human primates.

In preclinical studies we have demonstrated that ARCUS efficiently knocked out the HAO1 gene in NHPs.

We have also demonstrated in a mouse model of PH1 that administration of an ARCUS nuclease targeting HAO1 resulted in approximately 70% reduction in urine calcium oxalate levels.

We plan to select a clinical candidate for this program during 2020.

*Ethylene glycol

We have also demonstrated that ARCUS efficiently reduced HAO1 mRNA levels by greater than 90% in the liver of NHPs.

Pre-clinical research has continued to progress, and we expect to provide an update on this program in the first half of 2021.

Manufacturing

We believe that we have strong internal scientific process development and manufacturing capabilities, including our MCAT, an in-house cGMP compliant manufacturing facility supporting our therapeutic product development platforms which we opened in 2019.

We believe that MCAT is the first in-house cGMP compliant manufacturing facility in the United States dedicated to genome-edited, off-the-shelf CAR T cell therapy products.

We believe that having internal manufacturing capacity and expertise is a competitive advantage that enables enhanced control over process development timelines, costs and intellectual property.

We have leased over 33,800 square feet of space for our MCAT facility at a location approximately seven miles from our headquarters in Durham, North Carolina.

We have four cleanroom production suites for CAR T cell, mRNA and AAV production for process development for our allogeneic CAR T immunotherapy platform.

Our manufacturing facility leverages single-use, disposable, closed-system operations aligned to our technology platforms to ensure both flexibility and cost effectiveness.

The initial scope is creating clinical trial material for certain of our planned clinical trials.

In the longer term, we believe MCAT has the potential to be a commercial launch facility.

During 2020, we completed tech transfer of PBCAR0191 and PBCAR20A to MCAT, as well as manufactured the first batch and clinical trial material for PBCAR269A and produced clinical trial material for PBCAR19B stealth cell.

We currently contract with third parties for the manufacturing of materials used in the production of our product candidates.

To date, our third-party manufacturers have met our manufacturing requirements.

We believe that there are alternate sources of supply that can satisfy our requirements.

The manufacturing process for our allogeneic CAR T immunotherapy platform utilizes a one-step cell engineering method in which a CAR gene is targeted directly into the TRAC locus.

We believe this approach greatly streamlines the manufacturing process and have entered into a license agreement with a principal supplier for research and clinical licensed technology used in such process.

Commercial raw materials and reagents for this production are readily available.

Our manufacturing strategy for our in vivo gene correction platform and our food platform is to internally control process development and manufacturing to safeguard the proprietary nature of our technology and facilitate our ability to function as an integrated life sciences company.

Our Food Platform

2 unchanged sentences

With the global population projected to reach 8.5 billion by 2030, demand for basic food and nutrition needs has already put a lot of pressure on traditional food production systems.

In response, the food and agriculture industry is currently in the process of a slow, but massive, repositioning effort to reinvent its capital-intensive infrastructure, complex business structures and product pipelines.

This is creating new opportunities to disrupt the otherwise archaic food industry by introducing technology solutions that address unmet needs.

Of particular concern to the industry is the agronomic impact of climate change.

Many staple foods and critical ingredients, such as citrus, bananas and coffee, are under threat from environmental changes and the new pathogens it can bring.

2 unchanged sentences

We believe that many of the current pressures on the food and agriculture industry from climate-related threats and changing consumer preferences can be effectively addressed using biotechnology.

However, consumers are generally opposed to genetically modified organisms, or GMOs, which makes food companies reluctant to incorporate them into their products.

Our wholly-owned food and agriculture focused subsidiary, Elo Life Systems, was created to help food companies “thread the needle” between competing pressures to improve the genetics of their ingredients while avoiding the incorporation of GMO organisms.

Elo Life Systems:

7 unchanged sentences

At that point, our partners typically assume responsibility for subsequent development and commercialization.

Because large consumer-facing food companies are often not directly responsible for producing their own starting ingredients, this transfer may involve an intermediate in the supply chain such as a seed producer or grower who is responsible for pre-commercial activities.

Whenever possible, we try to partner with the entire supply chain early in the project to ensure a smooth transition across phases of development.

In general, our partners are responsible for financing all or a portion of our development costs, which greatly reduces our capital requirements.

1 unchanged sentence

Elo’s Technology Platform

Our end-to-end food platform is built to support rapid innovation across multiple crop species.

With the ARCUS genome editing platform as our cornerstone technology, we have integrated complementary tools and technologies both upstream and downstream to potentially be a complete solutions provider.

At the core of our food platform is our ARCUS editing technology.

1 unchanged sentence

Over the last decade, we have developed highly efficient methods to improve delivery and functionality of ARCUS nucleases in plants to edit DNA.

These nucleases have been successfully validated in collaborative projects with major food and agriculture companies like Cargill, BASF, Bayer CropScience and DuPont Pioneer Hi-bred.

These nucleases have been successfully validated in collaborative projects with major food and agriculture companies like Dole, Cargill, BASF, Bayer CropScience and DuPont Pioneer Hi-bred.

Importantly, ARCUS can be used to create small deletions or insertions in plants using a non-plant pest- or pathogen-based delivery approach.

1 unchanged sentence

This aspect of the technology platform is critical to food producers, particularly as they respond to consumer demands for healthier products.

Because Elo partners with large companies that generally lack significant biotechnology capabilities, it was necessary for us to build these capabilities in-house to complete Elo’s portion of the development process.

This end-to-end platform is unusual in the industry and, we believe, makes Elo an attractive partner.

In addition to ARCUS, Elo’s in-house capabilities include:

11 unchanged sentences

Elo has a dedicated facility and capabilities of cultivating gene edited plants from incubator to greenhouse.

Ultra-low saturated fatty acid canola oil (in collaboration with Cargill Inc.)

Canola oil is the third largest vegetable oil by volume after palm and soybean oil.

In the United States, canola oil is one of the most widely consumed oils, second only to soybean oil.

With worldwide production at 30 million metric tons in 2017, global canola oil is estimated to be a $20 billion industry.

Cargill is one of the world’s largest growers and processors of canola.

Since 2014, Elo and Cargill are engaged in a collaboration to produce ARCUS-optimized canola varieties and have achieved significantly lower levels (less than 4.5%) of saturated fatty acids compared to the current levels (7%) in greenhouse studies.

This oil with the desirable premium trait is intended for the quick-service restaurants and food ingredients industries, and products made with it—particularly fried foods—may be able to use front-of-package nutrient content claims on saturated fat levels, such as “Low in Saturated Fat” or “No Saturated Fat,” depending on their overall nutritional profile.

This program has generated canola varieties with up to an approximately 33% decrease in total saturated fats compared to un-edited varieties in greenhouse studies and we have not observed any less desirable traits in these canola varieties in these greenhouse studies to date.

ZeroMelon TM Low-Calorie Sweeteners from Watermelon

Low calorie sweeteners are a rapidly growing segment of the food and beverage industry as companies respond to consumer demands for low-sugar snack foods and soda alternatives.

Based on an April 2019 report by Mordor Intelligence, the global food sweetener market is estimated to be worth approximately $82 billion by 2024.

In addition, the adoption of “sugar taxes” by many cities across the United States and Europe are significantly impacting profit margins and creating an acute need for alternatives to cane sugar and corn syrup such as the natural, high intensity sweeteners in stevia and monk fruit.

We believe that a potentially optimal low calorie sweetener comes from monk fruit.

The monk fruit compound mogroside V is approximately 250 times sweeter than cane sugar and contains zero calories, making it an excellent potential alternative to cane sugar and stevia.

However, monk fruit currently is not scalable for large scale applications in the food and beverage industry as a result of lower productivity and a lack of reliable supply chain.

We are currently collaborating with a n industry partner to develop a watermelon variety to produce this high value metabolite in a crop that is readily cultivated across North America and Europe.

We are now focused on moving this program forward towards initiation of greenhouse trials.

Fusarium wilt resistant banana varieties (in collaboration with Dole Food Company)

Fusarium wilt, caused by the Tropical Race 4 (TR4) strain of a plant pathogenic fungus called Fusarium, is a fast-spreading pandemic threatening the continued cultivation of the world’s most popular fruit in a $25 billion banana industry.

The disease was detected in Colombia in August 2019 and is expected to spread throughout Latin America.

Through our collaboration agreement with Dole, Elo intends to use its proprietary suite of tools, including cutting-edge knowledge mining platform, gene discovery pipeline, trait validation workflows, and end-to-end expertise in translational agriculture, in

combination with its proprietary homing endonuclease-based genome editing platform to develop potential TR4-resistant banana varieties in this important clonally propagated crop.

Plant-Based Proteins

Shifting consumer preferences across the globe towards higher protein diets has created unprecedented demand for plant-based protein sources.

We do not believe that this demand for plant-based proteins, projected to grow to a $10.5 billion global industry by 2020, can be met without the application of biotechnology to increase protein content in different crop species.

In 2018, we launched Elo Life Systems Australia, a subsidiary of Elo that will support research programs in Australia.

Elo Life Systems Australia’s primary focus is developing climate-resilient legumes with improved protein and nutritional profiles, starting with chickpea.

We aim for the resulting products to make a significant contribution towards the increasing demand for sustainable plant-based proteins as a healthful alternative to animal protein.

Manufacturing

We believe that we have strong internal scientific process development and manufacturing capabilities, including our Manufacturing Center for Advanced Therapeutics, or MCAT, an in-house cGMP compliant manufacturing facility supporting our therapeutic product development platforms which we opened in 2019.

We believe that MCAT is the first in-house cGMP compliant manufacturing facility in the United States dedicated to genome-edited, off-the-shelf CAR T cell therapy products.

We believe that having internal manufacturing capacity and expertise is a competitive advantage that enables enhanced control over process development timelines, costs and intellectual property.

We have leased approximately 33,600 square feet of space for our MCAT facility at a location approximately seven miles from our headquarters in Durham, North Carolina.

We have a modular, three-suite cleanroom setup, for CAR T cell, mRNA and AAV production, to process development for our allogeneic CAR T immunotherapy platform.

Our manufacturing facility leverages single-use, disposable, closed-system operations aligned to our technology platforms to ensure both flexibility and cost effectiveness.

The initial scope is creating clinical trial material for certain of our planned clinical trials in 2020.

In the longer term, we believe MCAT has the potential to be a commercial launch facility.

We currently contract with third parties for the manufacturing of materials used in the production of our product candidates.

To date, our third-party manufacturers have met our manufacturing requirements.

We believe that there are alternate sources of supply that can satisfy our requirements.

The manufacturing process for our allogeneic CAR T immunotherapy platform utilizes a one-step cell engineering method in which a CAR gene is targeted directly into the T cell receptor alpha constant, or TRAC, locus.

Commercial raw materials and reagents for this production are readily available.

Multiple edited events in chickpeas have been generated and are being screened in the laboratory.

Through this program, we aim for the resulting products to make a significant contribution towards the increasing demand for sustainable plant-based proteins as a healthful alternative to animal protein.

License and Collaboration Agreements

In February 2016, we entered into the Servier Agreement as subsequently amended, with predecessor entities of Servier.

Pursuant to this agreement, we have agreed to develop allogeneic chimeric antigen receptor T cell therapies for up to six unique antigen targets, the first of which was selected at the inception of the agreement.

Eli Lilly and Company

In November 2020, we entered into a research collaboration and exclusive license agreement (the “Development and License Agreement”) with Lilly to utilize ARCUS for the research and development of potential in vivo therapies for genetic disorders.

Lilly has initially nominated DMD and two gene targets for other genetic disorders, and has the right to nominate up to three additional gene targets for genetic disorders over the first four years of the Development and License Agreement (the “Nomination Period”).

Lilly may extend the Nomination Period for an additional two years from the date on which such initial Nomination Period ends, upon Lilly’s election and payment of an extension fee.

Under the terms of the Development and License Agreement, Lilly will receive an exclusive license to research, develop, manufacture and commercialize the resulting licensed products to diagnose, prevent and treat any and all diseases by in vivo gene editing directed against the applicable gene target.

The Development and License Agreement provides that we will be responsible for conducting certain pre-clinical research and IND-enabling activities with respect to the gene targets nominated by Lilly to be subject to the collaboration, including manufacture of initial clinical trial material for the first licensed product.

Lilly will be responsible for, and must use commercially reasonable efforts with respect to, conducting clinical development and commercialization activities for licensed products resulting from the collaboration, and may engage us for additional clinical and/or initial commercial manufacture of licensed products.

In January 2021, we and Lilly closed the Development and License Agreement following clearance under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) .

In connection with the closing, we received an upfront cash payment of $100.0 million as well as $35.0 million from Lilly’s purchase of 3,762,190 newly issued shares of our common stock pursuant to a stock purchase agreement as described below (the “Stock Purchase Agreement”).

These cash receipts are not included in the cash and cash equivalents portion of the audited consolidated balance sheet included elsewhere in this Annual Report on Form 10-K.

We will also be eligible to receive milestone payments of up to an aggregate of $420 million per licensed product as well as nomination fees for additional targets and certain research funding.

If licensed products resulting from the collaboration are approved and sold, we will also be entitled to receive tiered royalties ranging from the mid-single digit percentages to the low-teens percentages on world-wide net sales of the licensed products, subject to customary potential reductions.

Lilly’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following first commercial sale of the licensed product.

We have the right to elect to co-fund the clinical development of one licensed product, which may be selected from among the third or any subsequent licensed products to reach IND filing.

If we elect to co-fund such licensed product, we would reimburse Lilly for a portion of the clinical development expenses for such product and, in exchange, each royalty tier with respect to net sales of such licensed product would be increased by a low single digit percentage.

During the term of the Development and License Agreement, we may not (and may not license or collaborate with any third party to) research, develop, or commercialize any in vivo gene editing product directed against any gene targets that have been nominated and are subject to the Development and License Agreement.

Unless earlier terminated, the Development and License Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country.

Lilly has the right to terminate the Development and License Agreement for convenience by providing advance notice to us.

Either party may terminate the Development and License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the agreement or (ii) due to a challenge to its patents brought by the other party.

In February 2016, as further described above, we entered into the Servier Agreement.

Pursuant to this Servier Agreement, we have agreed to develop allogeneic chimeric antigen receptor T cell therapies for five unique antigen targets.

Servier selected one target at the Servier Agreement’s inception and, during 2020, selected two additional hematological cancer targets beyond CD19 and two new solid tumor targets.

With the addition of these new targets, we received development milestone payments in 2020 and may be eligible

to receive additional development milestone payments in 2021.

Upon selection of an antigen target, we perform early-stage research and development on individual T cell modifications for the selected target, develop the resulting therapeutic product candidates through Phase 1 clinical trials and manufacture clinical trial material for use in Phase 2 clinical trials.

We received an upfront payment of $105.0 million under the Servier Agreement.

At Phase 2 readiness for any product candidate covered by the Servier Agreement, Servier may exercise a commercial option to proceed with development and commercialization of the product candidate, subject to option fees.

We received an upfront payment of $105.0 million under the Servier Agreement in 2016.

At Phase 2 readiness for any product candidate covered by the Servier Agreement, Servier may exercise a commercial option to proceed with development and commercialization of the product candidate.

Following the exercise of any such commercial option, Servier must use commercially reasonable efforts to develop and commercialize the product candidate.

We have the ability to receive total payments, including the upfront payment, option fees and milestone payments, in the aggregate across all six targets that may be selected, of up to approximately $1.6 billion.

This includes up to $1.5 billion in milestone payments, consisting of up to $401.3 million in development milestone payments and up to $1.1 billion in commercial milestone payments.

We have the ability to receive total payments, including the upfront payment, option fees and milestone payments, in the aggregate across all five targets of up to approximately $1.4 billion.

This includes up to $1.3 billion in milestone payments, consisting of up to $329.3 million in development milestone payments and up to $925.0 million in commercial milestone payments.

We are also entitled to receive tiered royalties ranging from the mid-single digit percentages to sub-teen percentages on worldwide net sales of any products developed under the Servier Agreement, subject to customary potential reductions.

1 unchanged sentence

We also have the right to participate in the development and commercialization of any licensed products resulting from the collaboration through a 50/50 co-development and co-promotion option in the United States, subject to our payment of an option fee, which is exercisable after Servier’s commercial option exercise.

So long as Servier holds a commercial license with respect to any particular licensed product, we may not develop, manufacture or commercialize any engineered human T cells with chimeric antigen receptors for use in humans directed to the same antigen target as the target of that licensed product.

So long as Servier holds a commercial license with respect to any particular licensed product, we may not develop, manufacture or commercialize any engineered human CAR T cells for use in humans directed to the same antigen target as the target of that licensed product.

Unless terminated earlier, the Servier Agreement expires upon the first to occur of (1) the expiration of the period in which Servier may nominate antigen targets, if there are no included targets under the agreement, (2) the expiration of the period in which Servier may exercise a commercial option on a licensed product candidate, if no commercial options have been exercised by Servier, or (3) the expiration of the last to expire royalty term for the licensed products and satisfaction of all of Servier’s payment obligations under the agreement.

3 unchanged sentences

If Servier terminates the agreement for our uncured material breach of provisions in the agreement that restrict development, manufacture or commercialization of engineered human T cells with chimeric antigen receptors for use in humans directed to a target selected by Servier, certain licenses we grant to Servier will become royalty-free, fully paid-up, perpetual and irrevocable with respect to the licensed product candidates and licensed products directed to the target that was the subject of such breach, and Servier will be deemed to have previously exercised its commercial option for any then-existing licensed product candidates directed to such target.

In September 2018, we entered into the Gilead Agreement to develop genome editing tools using ARCUS to target viral DNA associated with the Hepatitis B virus.

Pursuant to the terms of the agreement, Gilead received an exclusive license to exploit the resulting synthetic nucleases and products that use them to treat the Hepatitis B virus in humans, and we are entitled to receive up to approximately $40 million in research funding over an initial three year term and milestone payments of up to an aggregate of $445 million, consisting of up to $105.0 million in development milestone payments and up to $340.0 million in commercial milestone payments.

We are also entitled to receive tiered royalties ranging from the high single digit percentages to the mid-teen percentages on worldwide net sales of the products developed through the term of the agreement, subject to customary potential reductions.

Gilead’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of applicable patents, expiration of regulatory exclusivity or 10 years following the first commercial sale of the first licensed product in such country.

Unless terminated earlier, the Gilead Agreement will continue, on a licensed-product-by-licensed-product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country.

Gilead has the right to terminate the Gilead Agreement for convenience by providing advance notice to us as specified in the Gilead Agreement.

Gilead may also terminate the agreement during the collaboration term if we enter into certain change of control transactions with a third party that is clinically developing or commercializing products in the field of the Hepatitis B virus.

In addition, either party may terminate the Gilead Agreement (1) for material breach by the other party and a failure to cure such breach within the time period specified in the Gilead Agreement and (2) upon the occurrence of certain insolvency-related events of the other party.

On July 6, 2020, Gilead Sciences (“Gilead”) notified us of its termination of the collaboration and license agreement dated September 10, 2018, subsequently amended by Amendment No.

1 dated March 10, 2020 or (the “Gilead Agreement”), to develop genome editing tools using ARCUS to target viral DNA associated with the hepatitis B virus.

Pursuant to the termination notice, the Gilead Agreement terminated on September 4, 2020.

Upon termination, we regained full rights and all data we generated for the in vivo chronic hepatitis B program developed under the Gilead Agreement.

Duke University

9 unchanged sentences

If the highest negotiated royalty rate between us and our sublicensee exceeds a mid-single digit percentage, the percentage of sublicensing revenue payable to Duke will be high single digit, decreasing to low single digit as the highest negotiated royalty rate in such sublicense increases.

We closed the transactions under the Lilly Agreement on January 6, 2021 following receipt of clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and, as a result we are required to make $3.0 million in payments under the Duke License in 2021, net of any outstanding credits.

See Note 14 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding the Lilly Agreement.

The Duke License will expire upon the expiration of the last-to-expire patent that is licensed to us.

10 unchanged sentences

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

We principally compete with others developing and utilizing genome editing technology in the human health and plant sciences sectors, including companies such as Allogene Therapeutics, Inc.

Cellectis S.A., CRISPR Therapeutics, AG, Editas Medicine, Inc., Intellia Therapeutics, Inc., Sangamo Therapeutics, Inc, and Beam Therapeutics, Inc.

We principally compete with others developing and utilizing genome editing technology in the human health and plant sciences sectors, including companies such as Allogene Therapeutics, Inc., Alnylam Pharmaceuticals, Inc., Caribou Biosciences, Inc., Cellectis S.A., CRISPR Therapeutics, AG, Dicerna Pharmaceuticals, Inc., Editas Medicine, Inc., Intellia Therapeutics, Inc., Sangamo Therapeutics, Inc., and Beam Therapeutics, Inc.

We compete with many biotechnology and pharmaceutical companies, academic research institutions, governmental agencies and public and private research institutions.

8 unchanged sentences

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

We also compete with participants in the agricultural biotechnology space, including Pairwise Plants, LLC, Caribou Biosciences, Inc., Corteva Agriscience, Tropic Biosciences UK LTD, Calyxt, Inc.

Competition for improving plant genetics comes from conventional and advanced plant breeding techniques, as well as from the development of genetically modified traits.

Competition for providing more nutritious ingredients for food companies comes from chemical‑based ingredients, additives and substitutes, which are developed by various companies.

We also face less direct competition from trait research and development companies and agricultural research universities and institutions.

We compete with respect to many aspects of the product development cycle in the plant sciences space, such as computational capabilities for identifying relevant gene targets, access to germplasm and enabling technologies and entry into strategic relationships to facilitate product development and commercialization.

Many of our current or potential competitors in the agricultural biotechnology space, either alone or with others, have significantly greater financial resources and expertise in research and development, manufacturing, testing and marketing approved products than we do.

11 unchanged sentences

and certain foreign patent applications related to ARCUS, existing and planned programs, and improvements that are important to the development of our business.

We also rely on trademarks, trade secrets, know-how, continuing technological innovation and confidential information, and

the pursuit of licensing opportunities, to develop and maintain our proprietary position and protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We also rely on trademarks, trade secrets, know-how, continuing technological innovation and confidential information, and the pursuit of licensing opportunities, to develop and maintain our proprietary position and protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and others who may have access to proprietary information, under which they are bound to assign to us inventions made during the term of their employment or term of service.

8 unchanged sentences

As of December 31, 2020, we have an exclusive license from Duke under 12 issued U.S.

patents and two pending U.S.

patent applications.

patents and one pending U.S.

patent application.

In addition, as of December 31, 2020, we own 26 issued U.S.

patents, 27 pending non-provisional U.S.

patent applications, and eight pending PCT international patent applications.

patent applications, and 13 pending Patent Cooperation Treaty (“PCT”) international patent applications.

We also exclusively license from Duke or own many corresponding patents and patent applications outside the United States, as described below.

5 unchanged sentences

The first family, licensed from Duke, includes 12 issued U.S.

patents, eight issued European patents, three issued Japanese patents, and one issued patent in each of Australia and Canada.

This family also includes one pending patent application in the United States and one pending patent application in each of Europe, Japan and Canada.

patents, nine issued European patents, three issued Japanese patents, and one issued patent in each of Australia and Canada.

This family also includes pending patent applications in each of the United States, Europe, Canada, and two pending patent applications in Japan.

Patents in this family include claims directed to (1) recombinant meganucleases having altered cleavage specificity, altered heterodimer formation, and/or altered DNA binding affinity, (2) methods for cleaving target recognition sites in DNA using such meganucleases, and (3) methods for producing genetically modified eukaryotic cells using such meganucleases.

2 unchanged sentences

patents, three issued patents in Europe, two issued patents in Japan, and one issued patent in Australia.

This family also includes one pending patent application in each of the United States, Europe, Japan and Australia.

This family also includes two pending patent applications in the United States, and pending patent applications in each of Europe, Japan and Australia.

Patents in this family include claims directed to (1) recombinant single-chain meganucleases, and (2) methods for producing isolated genetically modified eukaryotic cells using such meganucleases.

1 unchanged sentence

The third family, which we own, includes three issued patents in the United States, and two issued patents in each of Europe and Australia.

This family also includes one pending patent application in each of the United States and Europe.

This family also includes two pending patent applications in the United States and one pending patent application in Europe.

Patents in this family include claims directed to methods of cleaving DNA at specific four base pair sites using a recombinant meganuclease.

Patents in this family have a standard expiration date of July 14, 2029, subject to potential extensions.

The fourth family, which we own, includes two pending provisional patent applications in the United States.

The fourth family, which we own, includes a pending PCT international patent application.

Patent applications in this family include claims directed to recombinant meganucleases engineered to cleave recognition sequences having specific four base pair sites.

Patents in this family, if issued, will likely have a standard expiration date of May 7, 2040, subject to potential extensions.

Patents in this family, if issued, will have a standard expiration date of May 7, 2040, subject to potential extensions.

Immunotherapy Patent Families

We own seventeen patent families that are directed to immunotherapy, including CAR T cell therapies.

We own 19 patent families that are directed to immunotherapy, including CAR T cell therapies.

Some of these are applicable to immunotherapies and/or CAR T cells directed to killing a variety of different types of infected or cancerous cells.

Others are directed to specific indications in which cells expressing particular antigens are targeted.

Others are directed to specific indications in which cells expressing particular antigens are targeted, or methods of manufacturing immunotherapies.

Each of our immunotherapy product candidates is protected by one or more patents in these families.

The first family includes nine issued U.S.

patents, and pending patent applications in each of the United States, Europe, Australia, Canada, China, Hong Kong, Israel, Japan, Mexico and South Korea.

patents, one issued patent in each of Europe and Japan, and pending patent applications in each of the United States, Europe, Australia, Canada, China, Hong Kong, Israel, Japan, Mexico and South Korea.

Patents in this family include claims directed to (1) populations of genetically modified human T cells in which 20%-65% of the cells have reduced expression of an endogenous TCR and express an anti-cancer antigen CAR from DNA inserted into the cells’ TCR alpha constant region (TRAC) gene, (2) methods for using such populations of genetically modified human T cells for cancer immunotherapy, (3) pharmaceutical compositions comprising such populations of genetically modified human T cells, (4) genetically modified human T cells which have reduced expression of an endogenous TCR and express an anti-cancer antigen CAR from DNA inserted into the cells’ TRAC gene, (5) methods for using such genetically modified human T cells for cancer immunotherapy, and (6) pharmaceutical compositions comprising such genetically modified human T cells.

Patents in this family have a standard expiration date of October 5, 2036, subject to potential extensions.

The second family includes one issued patent in Europe and pending patent applications in each of the United States, Europe, Australia, Canada and Japan.

The second family includes one issued patent in each of the United States and Europe, pending patent applications in each of the United States, Europe, Hong Kong, Canada and Japan, and two pending patent applications in Australia.

Patent applications in this family include claims directed to (1) first-generation recombinant meganucleases that cleave a target in the TRAC gene, (2) nucleic acids and vectors encoding such recombinant meganucleases, (3) methods for producing genetically modified eukaryotic cells, including CAR T cells, using such meganucleases, and (4) methods of using such genetically modified eukaryotic cells for cancer immunotherapy.

Patents in this family will have a standard expiration date of October 5, 2036, subject to potential extensions.

The third family includes a pending PCT international patent application.

That PCT patent application includes claims directed to (1) second-generation engineered meganucleases that cleave a specific target in the TRAC gene, (2) nucleic acids and vectors encoding such recombinant meganucleases, (3) methods for producing genetically modified eukaryotic cells, including CAR T cells, using such meganucleases, (4) genetically modified eukaryotic cells or populations of cells prepared by such methods, (5) pharmaceutical compositions comprising such cells or populations of cells, and (6) methods of treating diseases using such cells, populations of cells or pharmaceutical compositions to treat diseases, including cancer immunotherapy.

The third family includes a pending PCT international patent application, and pending patent applications in each of the United States, Europe, Australia, Canada, China, Israel, Japan, Mexico, and South Korea.

Patent applications in this family include claims directed to (1) second-generation engineered meganucleases that cleave a specific target in the TRAC gene, (2) nucleic acids and vectors encoding such recombinant meganucleases, (3) methods for producing genetically modified eukaryotic cells, including CAR T cells, using such meganucleases, (4) genetically modified eukaryotic cells or populations of cells prepared by such methods, (5) pharmaceutical compositions comprising such cells or populations of cells, and (6) methods of treating diseases using such cells, populations of cells or pharmaceutical compositions to treat diseases, including cancer immunotherapy.

Patents in this family, if issued, will likely have a standard expiration date of April 11, 2039, subject to potential extensions.

The fourth family includes pending patent applications in the United States, Europe, Australia, Canada and Japan.

The fourth family includes one issued patent in each of the United States and Europe, pending patent applications in Europe, Canada and Japan, and two pending patent applications in the United States and Australia.

Patent applications in this family include claims directed to (1) nucleic acids encoding co-stimulatory domains having certain amino acid sequences, (2) recombinant DNA constructs and vectors comprising such nucleic acids, (3) nucleic acids and vectors encoding such recombinant meganucleases, (4) genetically modified cells comprising such nucleic acids, (5) methods for producing such genetically modified cells, (6) pharmaceutical compositions comprising such cells, and (7) methods of immunotherapy using such cells.

Patents in this family, if issued, will have a standard expiration date of October 4, 2037, subject to potential extensions.

Patents in this family have a standard expiration date of October 4, 2037, subject to potential extensions.

The fifth family includes pending patent applications in the United States and Europe.

Patent applications in this family include claims directed to (1) methods of reducing cytotoxicity associated with DNA transfection in primary eukaryotic cells, (2) methods for increasing the number of gene-edited primary eukaryotic cells following DNA transfection, (3) methods for increasing gene editing frequency in primary eukaryotic cells following DNA transfection, (4) methods for increasing the number of primary eukaryotic cells comprising targeted insertion of an exogenous sequence of interest into the genome following DNA transfection, (5) methods for increasing insertion frequency of an exogenous sequence of interest into the genome in primary eukaryotic cells following DNA transfection, (6) methods for high throughput screening of primary human T cells expressing a CAR or exogenous TCR, (7) methods for high throughput screening of primary human T cells expressing a CAR or exogenous TCR, and (8) genetically modified primary eukaryotic cells produced by such methods.

Patents in this family, if issued, will likely have a standard expiration date of April 30, 2038, subject to potential extensions.

The sixth family includes pending patent applications in the United States, Europe, Australia, Canada and Japan.

Patent applications in this family include claims directed to (1) recombinant meganucleases that recognize and cleave a recognition sequence within the human beta-2-microglobulin gene, (2) nucleic acids and vectors encoding such recombinant meganucleases, (3) methods for producing genetically modified eukaryotic cells, including CAR T cells, using such meganucleases, (4) populations of genetically modified eukaryotic cells in which 80% of the cells have reduced expression of an endogenous TCR and 80% of the cells have reduced expression of beta-2-microglobulin, (5) pharmaceutical compositions comprising such populations of genetically modified eukaryotic cells, and (6) methods for using such genetically modified eukaryotic cells for cancer immunotherapy.

Patents in this family, if issued, will have a standard expiration date of April 30, 2038, subject to potential extensions.

The sixth family includes pending patent applications in Europe, Australia, Canada and Japan, and two pending patent applications in the United States.

genetically modified eukaryotic cells, and (6) methods for using such genetically modified eukaryotic cells for cancer immunotherapy.

Patents in this family, if issued, will have a standard expiration date of December 22, 2036, subject to potential extensions.

The seventh family includes a pending PCT international patent application and pending patent applications in the United States, Europe, Australia, Canada and Japan.

The seventh family includes an issued patent in the United States, and pending patent applications in the United States, Europe, Australia, Canada, Hong Kong, and Japan.

Patent applications in this family include claims directed to (1) nucleic acids encoding an engineered antigen receptor (e.g., a CAR) and an inhibitory molecule (e.g., an RNA interfering with beta-2-microglobulin expression), (2) genetically modified eukaryotic cells comprising such nucleic acids, (3) methods for producing such genetically modified eukaryotic cells using such nucleic acids and an engineered nuclease that promotes insertion of such nucleic acids, (4) genetically modified eukaryotic cells expressing an engineered antigen receptor and having expression of beta-2-microglobulin or MHC Class I molecules reduced by 10%-95%, (5) pharmaceutical compositions comprising such genetically modified eukaryotic cells, and (6) methods for using such genetically modified eukaryotic cells for immunotherapy.

Patents in this family, if issued, will likely have a standard expiration date of May 8, 2038, subject to potential extensions.

The eighth family includes a pending PCT international patent application and pending patent applications in the United States, Europe, Australia, Canada and Japan .

Patents in this family have a standard expiration date of May 8, 2038, subject to potential extensions.

The eighth family includes pending patent applications in the United States, Europe, Australia, Canada, Hong Kong, and Japan.

Patent applications in this family include claims directed to (1) engineered meganucleases that recognize and cleave a recognition sequence in an upstream intron of the human TRAC gene, (2) nucleic acids and vectors encoding such engineered meganucleases, (3) methods for producing genetically modified T cells using such nucleic acids or vectors, (4) genetically modified T cells in which an exogenous sequence is inserted into an upstream intron of the human TRAC gene and endogenous TCR expression is reduced, (5) populations of such genetically modified T cells, (6) pharmaceutical compositions comprising such genetically modified T cells, and (7) methods of treating disease using such genetically modified T cells and pharmaceutical compositions, including cancer immunotherapy.

Patents in this family, if issued, will likely have a standard expiration date of June 27, 2038, subject to potential extensions.

The ninth family includes a pending PCT international patent application.

That PCT patent application includes claims directed to (1) nucleic acids and vectors encoding certain modified human epidermal growth factor receptor, or EGFRs, (2) genetically modified cells and populations of cells, including T cells and CAR T cells, expressing such modified EGFRs, (3) methods for producing such genetically modified cells using such nucleic acids or vectors encoding such modified EGFRs, (4) pharmaceutical compositions comprising such genetically modified cells, (5) methods for isolating such genetically modified cells, (6) methods of treating disease using such genetically modified cells and pharmaceutical compositions, including cancer immunotherapy, and (7) methods of depleting such genetically modified cells in a subject using anti-modified EGFR antibodies.

Patents in this family, if issued, will have a standard expiration date of June 27, 2038, subject to potential extensions.

The ninth family includes pending patent applications in the United States and Europe.

Patent applications in this family include claims directed to (1) nucleic acids and vectors encoding certain modified human epidermal growth factor receptor, or EGFRs, (2) genetically modified cells and populations of cells, including T cells and CAR T cells, expressing such modified EGFRs, (3) methods for producing such genetically modified cells using such nucleic acids or vectors encoding such modified EGFRs, (4) pharmaceutical compositions comprising such genetically modified cells, (5) methods for isolating such genetically modified cells, (6) methods of treating disease using such genetically modified cells and pharmaceutical compositions, including cancer immunotherapy, and (7) methods of depleting such genetically modified cells in a subject using anti-modified EGFR antibodies.

Patents in this family, if issued, will likely have a standard expiration date of October 3, 2038, subject to potential extensions.

We own eight additional patent families that include pending provisional patent applications in the United States that are directed to immunotherapies, including CAR T cell therapies, or to technologies that are useful for the manufacture of immunotherapies.

We jointly own one patent family that includes a pending provisional patent application in the United States directed to immunotherapies.

The tenth family includes a pending provisional patent application in the United States and a pending PCT international patent application.

Patent applications in this family include claims directed to (1) methods for preparing genetically-modified immune cells, (2) populations of genetically-modified immune cells, (3) pharmaceutical compositions comprising such populations of genetically-modified immune cells, (4) methods of treating a disease using such populations of genetically-modified immune cells, (5) lipid nanoparticle compositions, and (6) kits for transfecting a eukaryotic cell with mRNA.

Patents in this family, if issued, will have a standard expiration date of April 3, 2040, subject to potential extensions.

The eleventh family includes a pending provisional patent application in the United States, a pending PCT international patent application, and a pending non-provisional patent application in the United States.

Patent applications in this family include claims directed to (1) a genetically-modified immune cell comprising in its genome a nucleic acid sequence encoding a microRNA-adapted shRNA, (2) a method for reducing the expression of an endogenous protein in an immune cell, (3) immune cells made by such methods, (4) populations of such immune cells, (5) pharmaceutical compositions comprising such populations of immune cells, and (6) methods of immunotherapy for treating a disease in a subject.

Patents in this family, if issued, will have a standard expiration date of April 3, 2040, subject to potential extensions.

We own eight additional patent families that include pending provisional patent applications in the United States or pending PCT international patent applications that are directed to immunotherapies, including CAR T cell therapies, or to technologies that are useful for the manufacture of immunotherapies.

We jointly own one patent family that includes a pending PCT international patent application directed to immunotherapies.

We will determine in the future whether to pursue each of these applications.

In August 2019, the Patent Trial and Appeal Board (the “PTAB”) of the USPTO initiated two patent interferences, administrative proceeding within the USPTO, involving the U.S.

patents issued to us in the first family of immunotherapy patents described above and a pending U.S.

patent application filed by a third party.

An interference is conducted by the PTAB when opposing parties have applied for patent claims to the same invention or substantially the same invention.

The interference is conducted to determine which party, if either, is entitled to claims to the subject matter of the interference.

Hepatitis B Virus Gene Therapy Patent Families

We own three patent families that are directed to gene therapy for Hepatitis B virus.

The first family includes pending patent applications in the United States, Europe, Japan, Canada, Australia, China, South Korea, Mexico, Israel, the African Regional Intellectual Property Organization, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Egypt, Eurasia, Guatemala, Hong Kong, India, Indonesia, Morocco, Malaysia, New Zealand, Nigeria, Panama, Peru, the Philippines, Saudi Arabia, Singapore, South Africa, Thailand, Ukraine, and Vietnam.

Patent applications in this family include claims directed to (1) engineered meganucleases that recognize and cleave recognition sites in the Hepatitis B virus (“HBV”) genome, (2) nucleic acids and vectors encoding such engineered meganucleases, (3) pharmaceutical compositions comprising such nucleic acids or meganucleases, and (4) methods for treating HBV infection using such meganucleases, nucleic acids and/or pharmaceutical compositions.

Patents in this family, if issued, will have a standard expiration date of October 13, 2037, subject to potential extensions.

The second family includes a pending PCT application and patent applications in the United States, Argentina, Taiwan, and the Gulf Cooperation Council.

Patent applications in this family include claims directed to (1) second-generation engineered meganucleases that recognize and cleave recognition sites in the Hepatitis B virus, or HBV genome, (2) nucleic acids and vectors encoding such engineered meganucleases, (3) pharmaceutical compositions comprising such nucleic acids or meganucleases, and (4) methods for treating HBV infection using such meganucleases, nucleic acids and/or pharmaceutical compositions.

Patents in this family, if issued, will likely have a standard expiration date of April 11, 2039, or April 12, 2039, subject to potential extensions.

The third family includes a pending provisional application in the United States.

That provisional patent application is directed to engineered meganucleases that cleave recognition sequences in the HBV genome.

Patents in this family, if issued, will likely have a standard expiration date of December 6, 2040, subject to potential extensions.

In October 2020, we announced the U.S.

Patent and Trademark Office’s PTAB issued judgements in our favor in two patent interference proceedings that challenged nine U.S.

patents we owned.

The patents, which issued in 2018, relate to allogeneic CAR T cells produced by inserting a gene encoding a CAR into the TRAC locus, as well as methods of using those cells for cancer immunotherapy.

In the interference proceedings, a third party argued that it had invented the technology in 2012.

The PTAB, however, found that the third-party patent application did not satisfy the written description requirement and rejected these claims while maintaining the claims in all nine of our patents.

Other Patent Families

We own three patent families directed to gene therapy for Hepatitis B virus.

The first family includes two issued patents in the United States, one issued patent in Japan, and pending patent applications in the United States, Europe, Japan, Canada, Australia, China, South Korea, Mexico, Israel, Colombia, Costa Rica, the Dominican Republic, Egypt, Eurasia, Guatemala, Hong Kong, Morocco, Malaysia, New Zealand, Nigeria, Panama, Peru, the Philippines, Saudi Arabia, South Africa, Thailand and Vietnam.

Patents in this family will have a standard expiration date of October 13, 2037, subject to potential extensions.

The second family includes a pending PCT international patent application and patent applications in the United States, Europe, Taiwan and the Gulf Cooperation Council.

Patents in this family, if issued, will have a standard expiration date of April 11, 2039, or April 12, 2039, subject to potential extensions.

The third family includes a pending PCT international patent application.

Patents in this family, if issued, will have a standard expiration date of December 4, 2040, subject to potential extensions.

We own one patent family directed to engineered meganucleases and methods of treatment targeting the PCSK9 gene, which is associated with familial hypercholesterolemia.

This family includes a pending PCT international and pending patent applications in the United States, Europe, Australia, Canada, China, Israel, Japan, Mexico, and South Korea.

This family includes pending patent applications in the United States, Europe, Australia, Canada, China, Hong Kong, Israel, Japan, Mexico, and South Korea.

Patents in this family, if issued, will have a standard expiration date of April 20, 2038, subject to potential extensions.

We own two patent families directed to engineered meganucleases and methods of treatment targeting the rhodopsin gene, which is associated with retinitis pigmentosa.

The first family includes pending patent applications in the United States, Europe, Australia, Canada and Japan.

Patents in this family, if issued, will have a standard expiration date of September 8, 2036, subject to potential extensions.

The second family includes a pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of April 11, 2040, subject to potential extensions.

We own two patent families that are directed to engineered meganucleases and methods of treatment targeting the hydroxyacid oxidase 1 gene, which is associated with primary hyperoxaluria 1.

The first family includes a pending PCT international application and one pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of December 20, 2039, subject to potential extensions.

The second family includes two pending provisional patent applications in the United States.

Patents in this family, if issued, will likely have a standard expiration date of March 26, 2040, subject to potential extensions.

The first family includes two issued patents in the United States, one issued patent in Japan, pending patent applications in the United States, Europe, Canada and Japan, and two pending patent applications in Australia.

Patents in this family will have a standard expiration date of September 8, 2036, subject to potential extensions.

The second family includes two pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of May 12, 2041, subject to potential extensions.

We own one patent family that is directed to engineered meganucleases and methods of treatment targeting the hydroxyacid oxidase 1 gene, which is associated with primary hyperoxaluria 1.

This family includes a pending PCT international patent application.

Patents in this family, if issued, will have a standard expiration date of December 20, 2039, subject to potential extensions.

We own two patent families that are directed to engineered meganucleases and methods of treatment targeting the Factor VIII gene, which is associated with Hemophilia A.

1 unchanged sentence

Patents in this family, if issued, will have a standard expiration date of May 3, 2037, subject to potential extensions.

The second family includes a pending PCT international patent application.

Patents in this family, if issued, will likely have a standard expiration date of November 1, 2038, subject to potential extensions.

The second family includes pending patent applications in the United States and Europe.

Patents in this family, if issued, will have a standard expiration date of November 1, 2038, subject to potential extensions.

We own one patent family directed to engineered meganucleases and methods of treatment targeting the ApoC3 gene, which is associated with diseases resulting from abnormal triglyceride synthesis.

2 unchanged sentences

We own one patent family directed to engineered meganucleases and methods of treatment targeting the transthyretin (TTR) gene, which is associated with TTR amyloidosis.

This family includes two pending provisional patent applications in the United States.

Patents in this family, if issued, will likely have a standard expiration date of March 26, 2040, subject to potential extensions.

We own one patent family directed to engineered meganucleases and methods of treatment targeting the dystrophin gene, which is associated with Duchenne Muscular Dystrophy.

This family includes pending patent applications in the United States, Europe, Australia, Canada and Japan.

Patents in this family, if issued, will have a standard expiration date of March 12, 2035, subject to potential extensions.

This family includes a pending provisional patent applications in the United States.

Patents in this family, if issued, will likely have a standard expiration date of August 21, 2041, subject to potential extensions.

We own two patent families directed to engineered meganucleases and methods of treatment targeting the dystrophin gene, which is associated with Duchenne Muscular Dystrophy.

The first family includes an issued patent in Europe, pending patent applications in Europe, Australia, Canada and Japan, and two pending patent applications in the United States.

Patents in this family will have a standard expiration date of March 12, 2035, subject to potential extensions.

The second family includes a pending provisional patent application in the United States.

Patent applications in this family, if issued, will likely have a standard expiration date of November 12, 2041.

We own one patent family directed to engineered meganucleases and methods of treatment targeting genomic trinucleotide repeats, which are associated with several trinucleotide repeat disorders.

2 unchanged sentences

We license from Duke one patent family directed to engineered fusion proteins comprising engineered meganuclease domains and effector domains which may be useful in controlling gene expression.

This patent family includes a pending patent application in the United States.

This patent family includes two pending patent applicatio ns in the United States.

Patents in this family, if issued, will have a standard expiration date of October 18, 2026, subject to potential extensions.

We own one patent family directed to engineered meganucleases that target amplifiable genetic loci and may be useful in producing cells with amplified transgenes.

This family includes one patent and one pending patent application in each of the United States and Europe.

This family includes two issued patents in Europe, one issued patent in the United States, and one pending patent application in each of the United States and Europe.

Patents in this family will have a standard expiration date of June 1, 2032, subject to potential extensions.

We own one patent family directed to self-limiting viral vectors (e.g., AAV vectors) that encode engineered meganucleases which eliminate the vector after gene delivery.

This family includes pending patent applications in the United States and Europe.

Patents in this family, if issued, will have a standard expiration date of June 20, 2036, subject to potential extensions.

We own two patent families directed to self-limiting viral vectors (e.g., AAV vectors) that encode engineered meganucleases which eliminate the vector after gene delivery.

The first family includes an issued patent in the United States, and pending patent applications in the United States and Europe.

Patents in this family will have a standard expiration date of June 20, 2036, subject to potential extensions.

The second family includes one pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of May 11, 2041, subject to potential extensions.

We own one patent family directed to compositions and methods for sequential stacking of nucleic acid sequences into a genomic locus.

This family includes a pending PCT international patent application.

Patents in this family, if issued, will have a standard expiration date of July 24, 2040, subject to potential extensions.

We own one patent family directed to eukaryotic cells comprising a modified transferrin gene that includes an exogenous nucleic acid sequence encoding a polypeptide of interest.

This family includes one pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of January 11, 2040.

This family includes a pending PCT international patent application.

Patents in this family, if issued, will have a standard expiration date of January 10, 2040.

We own one patent family directed to methods for separation of empty and full AAV capsids during manufacturing.

This family includes one pending provisional application in the United States.

This family includes a pending provisional application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of February 6, 2041.

We own, through our Elo Life Systems subsidiary, an issued U.S.

patent directed to engineered meganucleases which target a genetic locus in maize and methods for genetically modifying that locus in maize.

We own an issued patent in the United States directed to engineered meganucleases which target a genetic locus in maize and methods for genetically modifying that locus in maize.

That patent has a standard expiration date of March 2, 2029, subject to potential extensions.

We own, through our Elo Life Systems subsidiary, one patent family directed to the modulation of endogenous mogroside pathway genes in watermelon and other cucurbits.

This family includes a pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of March 31, 2041, subject to potential extensions.

We own, through our Elo Life Systems subsidiary, one patent family directed to methods for producing vanilla plants with improved flavor and agronomic product.

This family includes a pending provisional patent application in the United States.

Patents in this family, if issued, will likely have a standard expiration date of October 23, 2041, subject to potential extensions.

For any individual patent, the term depends on the applicable law in the country in which the patent is granted.

11 unchanged sentences

In addition, we may need the cooperation of any such co-owners to enforce any patents that issue from such patent applications against third parties, and such cooperation may not be provided to us.

We or our licensors are subject to and may also become a party to similar proceedings or priority disputes in Europe or other foreign jurisdictions.

Our registered trademark portfolio currently contains three registered trademarks, specifically ARCUS, ARC nuclease, and Elo Life Systems, in the United States.

In addition, our international portfolio contains seven registered trademarks around the world for ARCUS and ARC nuclease and includes one pending application in Australia for Elo Life Systems.

licensors are subject to and may also become a party to similar proceedings or priority disputes in Europe or other foreign jurisdictions.

Our registered trademark portfolio currently contains four registered trademarks in the United States, including ARCUS, ARC nuclease, Elo Life Systems and Zeromelon.

We also own registered trademarks for both ARCUS and ARC nuclease in Europe, China and Australia, and a registered trademark for ARCUS in Canada.

We own a registered trademark for Elo Life Systems in Australia, and pending trademark application for Zeromelon in each of Australia, Brazil, Canada, China, Europe, Germany, India, Japan, Mexico, South Korea, and the United Kingdom.

Additionally, we own pending trademark applications for Zerocanola, Precision Biotechnology and Climate-Smart in the United States, Australia, Brazil, Canada, China, Europe, Japan, and Mexico.

Licensed Intellectual Property

15 unchanged sentences

completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s Good Laboratory Practice requirements, or GLPs;

submission to the FDA of an Investigational New Drug application, or IND, which must become effective before clinical trials may begin;

approval by an IRB or ethics committee at each clinical site before the trial is commenced;

performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

demonstration of successful, reproducible manufacture of clinical trial material produced in compliance with current Good Manufacturing Practices (cGMPs) and consistent with all release specifications for the product at initial manufacture and over time when stored under defined conditions;

submission to the FDA of an IND, which must become effective before clinical trials may begin, and which must be properly maintained throughout the course of clinical development;

approval by an Investigational Review Board (“IRB”) or ethics committee, and additional scientific and biosafety review committees at each clinical site before the trial is commenced;

performance of adequate and well-controlled human clinical trials following protocols agreed to by FDA to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials;

satisfactory completion of an FDA Advisory Committee review, if applicable;

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

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCPs;

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed commercial product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCPs;

satisfactory completion of an FDA Advisory Committee review, if applicable;

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

1 unchanged sentence

An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

A central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product;

chemistry, manufacturing, and controls information;

and any available human data or literature to support the use of the investigational product.

and any available human data or literature to support the use of the investigational product according to the proposed clinical protocol including the proposed dose level(s).

An IND must become effective before human clinical trials may begin.

9 unchanged sentences

A separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.

Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site, and must monitor the study until completed.

Furthermore, for each site proposing to conduct the clinical trial an independent IRB must review and approve the plan for any clinical trial and the informed consent form before the clinical trial begins at that site, and must monitor the study until completed.

Regulatory authorities, the IRB, or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives.

studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

18 unchanged sentences

A waiver of user fees may be obtained under certain limited circumstances.

Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the application also includes a non-orphan indication.

Once a BLA has been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.

5 unchanged sentences

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP and adequate to assure consistent production of the product within required specifications.

Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites involved in the pivotal studies submitted in the BLA to assure compliance with GCP.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response Letter (“CRL”) if the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable.

In the CRL, the FDA will outline the deficiencies in the BLA submission and often will request additional information or testing that the applicant might perform to place the BLA in condition for approval, including requests for additional information or clarification.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A Complete Response Letter will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response Letter without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.

In issuing the Complete Response Letter, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.

Note that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.

The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the BLA with a REMS to ensure the benefits of the product outweigh its risks.

A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

For example, the FDA may approve the BLA with the requirement that a Risk Evaluation and Mitigation Strategy (“REMS”) be established to ensure the benefits of the product outweigh its risks when used according to the approved label.

The FDA also may condition approval on, among other things, changes to

proposed labeling or the development of adequate controls and specifications.

Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace.

1 unchanged sentence

In addition, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could impact the timeline for regulatory approval or otherwise impact ongoing development programs.

For example, in December 2016, the 21st Century Cures Act was signed into law.

The Act is intended, among other things, to modernize the regulation of drugs and biologics and to spur innovation.

Expedited Development and Review Programs

3 unchanged sentences

A fast track designated product candidate may also qualify for priority review, under which the FDA sets the target date for FDA action on the BLA at six months after the FDA accepts the application for filing.

Priority review is granted when there is evidence that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious disease or condition.

Priority review is granted pending availability of FDA review resources for the expedited review and when there is evidence that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious disease or condition.

If criteria are not met for priority review, the application is subject to the standard FDA review period of 10 months after FDA accepts the application for filing.

7 unchanged sentences

If the FDA designates a breakthrough therapy, it may take actions appropriate to expedite the development and review of the application, which may include holding meetings with the sponsor and the review team throughout the development of the therapy;

providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the nonclinical and clinical data necessary for approval is as efficient as practicable;

providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program will gather the nonclinical and clinical data necessary for approval as efficiently as practicable;

involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review;

17 unchanged sentences

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient within the product for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same active ingredient for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition.

81 unchanged sentences

Foreign Regulation

To market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.

Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.

Although many of the issues discussed above with respect to the United States apply similarly in the context of the European Union, or EU, the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods.

The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.

Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

To market a medicinal product in the European Economic Area, or EEA (which is comprised of the 28 Member States of the EU plus Norway, Iceland and Liechtenstein), we must obtain a Marketing Authorization, or MA.

There are two types of marketing authorizations:

The Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA.

The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced therapy products, and medicinal products containing a new active substance indicated for the treatment certain diseases, such as AIDS, cancer, neurodegenerative disorders, diabetes, auto immune and viral diseases.

Medicinal products

Clinical trials .

Clinical trials of medicinal products in the European Economic Area (“EEA”) (which is comprised of the 27 Member States of the EU plus Norway, Iceland and Liechtenstein) must be conducted in accordance with European Union and national regulations and the International Conference on Harmonization (“ICH”) guidelines on GCPs.

Additional GCP guidelines from the European Commission, focusing in particular on traceability, apply to clinical trials of advanced therapy medicinal products.

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

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

Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization (“CTA”), from the competent authority, and a positive opinion from an independent ethics committee.

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

Currently, clinical trial authorization applications must be submitted to the competent authority in each member state in which the trial will be conducted.

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

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

Investigational medicinal products used in clinical trials must be manufactured in accordance with the cGMPs specified in EudraLex, Volume 4, Annex 13 and certified by a Qualified Person before use.

Other national and EEA-wide regulatory requirements may also apply.

Marketing authorizations .

To market a medicinal product in the EEA, we must obtain a Marketing Authorization (“MA”).

There are two types of MAs:

The Union MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (“EMA”) and which is valid throughout the entire territory of the EEA.

The Centralized Procedure is mandatory for certain types of products, such as medicinal products derived from biotechnology processes, orphan designated medicinal products, advanced therapy medicinal products (such as gene therapy, somatic cell therapy and tissue engineered products), and medicinal products containing a new active substance indicated for the treatment certain diseases, such as AIDS, cancer, neurodegenerative disorders, diabetes, auto immune and viral diseases.

The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

5 unchanged sentences

If the product has not received a national MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure.

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

Under the Decentralized Procedure an identical dossier is submitted to the competent authority of each of the Member States in which the MA is sought, one of which is selected by the applicant as the Reference Member State.

Under the above described procedures, in order to grant the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

MAs have an initial duration of five years.

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

Priority medicines scheme.

The EMA has a so-called Priority Medicines, or PRIME, scheme.

The PRIME scheme was launched in 2016 by the EMA to support the development and accelerate the review of new therapies to treat patients with unmet medical need.

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 so-called Priority Medicines (“PRIME”) scheme, which provides incentives similar to the breakthrough therapy designation in the U.S.

PRIME was launched in 2016 by the EMA to support the development and accelerate the review of new therapies to treat patients with unmet medical need.

This voluntary scheme is based on enhanced interaction and early dialogue with developers of promising medicines, to optimize development plans and speed up evaluation so these medicines can reach patients earlier.

1 unchanged sentence

Among the benefits of PRIME are the appointment of a rapporteur to provide continuous support and help build knowledge ahead of an MA application, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.

Innovative medicines fulfilling a medical need may also benefit from different types of fast track approvals, such as a conditional marketing authorization or a marketing authorization under exceptional circumstances granted on the basis of less comprehensive clinical data than normally required (respectively in the likelihood that the sponsor will provide such data within an agreed timeframe or when comprehensive data cannot be obtained even after authorization).

Advanced therapy classification.

Based on legislation adopted in 2007, the EMA established an additional regulatory designation for products classified as an advanced therapy medicinal product (“ATMP”).

The ATMP designation offers sponsors a variety of benefits similar to those associated with the PRIME scheme, including scientific and regulatory guidance, additional opportunities for dialogue with regulators, and presubmission review and certification of the CMC and nonclinical data proposed for submission in a forthcoming MA applications for micro-,small-, or medium-sized enterprises.

To qualify for this designation, product candidates intended for human use must be based on gene therapy, somatic cell therapy, or tissue engineered therapy.

Data and marketing exclusivity .

3 unchanged sentences

The 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

Pediatric investigation plan .

In the EEA, marketing authorization applications for new medicinal products not authorized have to include the results of studies conducted in the pediatric population, in compliance with a pediatric investigation plan, or PIP, agreed with the EMA’s Pediatric Committee, or PDCO.

Pediatric development .

In the EEA, MA applications for new medicinal products have to include the results of studies conducted in the pediatric population, in compliance with a pediatric investigation plan (“PIP”), agreed with the EMA’s Pediatric Committee (“ PDCO”).

The PIP sets out the timing and measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being sought.

1 unchanged sentence

Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.

Once the marketing authorization is obtained in all Member States of the EU and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension.

Once the MA is obtained in all member states of the EU and study results are included in the product information, even when negative, the product is eligible for six months’ supplementary protection certificate extension (if any is in effect at the time of authorization) or, in the case of orphan products, a two year extension of the orphan market exclusivity.

Orphan drug designation.

In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made, or that the product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the European Community and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment.

For either of these conditions, the applicant must demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the EU or, if such method exists, the drug will be of significant benefit to those affected by that condition.

In the EEA, an application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product.

Marketing authorization for an orphan drug leads to a ten-year period of market exclusivity.

During this market exclusivity period, the EMA or the member state competent authorities, cannot accept another application for a marketing authorization, or grant a marketing authorization, for a similar medicinal product for the same indication.

In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that (1) the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

and (2) either (a) such condition affects not more than five in ten thousand persons in the EU when the application is made, or (b) without incentives, it is unlikely that the marketing of the product in the EU would generate sufficient return to justify the necessary investment;

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

In the EEA, an application for designation as an orphan product can be made any time prior to the filing of a MA application.

MA for an orphan drug leads to a ten-year period of market exclusivity.

During this market exclusivity period, the EMA or the member state competent authorities, cannot accept another application for a MA, or grant a MA, for a similar medicinal product for the same indication.

The period of market exclusivity is extended by two years for medicines that have also complied with an agreed PIP.

1 unchanged sentence

Market exclusivity can be revoked only in very selected cases, such as consent from the marketing authorization holder, inability to supply sufficient quantities of the product, demonstration of “clinical superiority” by a similar medicinal product, or, after a review by the Committee for Orphan Medicinal Products, requested by a member state in the fifth year of the marketing exclusivity period (if the designation criteria are believed to no longer apply).

Medicinal products designated as orphan drugs pursuant are eligible for incentives made available by the EU and its Member States to support research into, and the development and availability of, orphan drugs.

Clinical trials .

Clinical trials of medicinal products in the European Union must be conducted in accordance with European Union and national regulations and the International Conference on Harmonization, or ICH, guidelines on GCPs.

Additional GCP guidelines from the European Commission, focusing in particular on traceability, apply to clinical trials of advanced therapy medicinal products.

If the sponsor of the clinical trial is not established within the European Union, it must appoint an entity within the European Union 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.

Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from an independent ethics committee.

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

Currently, clinical trial authorization applications must be submitted to the competent authority in each EU Member State in which the trial will be conducted.

Under the new Regulation on Clinical Trials, which is currently expected to take effect in 2020, there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other national authorities have only a limited involvement.

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

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

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

Medicinal products designated as orphan drugs are eligible for incentives made available by the EU and its Member States to support research into, and the development and availability of, orphan drugs.

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

Genetically Modified Food Products

In the EEA food products are generally governed by Regulation (EC) No 178/2002 laying down the general principles and requirements of food law as well as the procedures in matters of food safety and establishing the European Food Safety Authority (“EFSA”).

Food business operators are regulated by, among other authorities, the European Commission and EFSA, and national food safety authorities in EEA countries.

In addition, food additives (such as substances preserving, coloring or sweetening food) are specifically regulated by Regulation (EC) No 1333/2008, which sets the conditions of use and labeling requirements for additives, and Commission Regulation (EU) No 234/2011, which establishes a common authorization procedure for food improvement agents (including food additives).

To be used on the EEA market, additives must be safe and authorized by the European Commission for that purpose.

EFSA and/or the Scientific Committee on Food assess the safety of food additives.

Authorized additives and their conditions of use are listed in a European list.

For some categories of food additives, additional requirements may apply.

A genetically modified organism (“GMO”) is an organism, with the exception of human beings, in which the genetic material has been altered in a way that does not occur naturally by mating and/or natural recombination.

In July 2018, the Court of Justice of the European Union (“CJEU”) clarified in its ruling C-528/16 that organisms from new mutagenesis techniques also fall within the scope of the European GMO legislation.

Food which contains or consists of such GMOs, or is produced from GMOs, is called genetically modified food, and is regulated by a number of specific EU and national regulations.

In particular, Regulation (EC) No.

1829/2003 on genetically modified food and feed (complemented by Commission Implementing Regulation (EU) No 503/2013) and Directive 2001/18/EC on the deliberate release of GMOs into the environment (as amended by Commission Directive (EU) 2018/350) provide that both the cultivation of GMOs and the use of GMOs in food, feed and derived products in the EEA are subject to prior authorizations.

Authorizations for these respective activities are granted by the national competent authorities of EEA countries following a thorough risk assessment (of the risks the GMO may present to the environment, human health and animal safety) by EFSA.

Authorizations are valid throughout the EEA, for a maximum of 10 years, and are renewable.

In accordance with Directive (EU) 2015/412 individual countries may further restrict or prohibit GMO cultivation on their territory.

The European Commission holds and maintains a register of genetically modified food and feed which is available to the general public.

GMO operators must also comply with traceability and labeling requirements as notably provided for in Regulation (EC) No 1830/2003.

All operators, such as farmers or food and feed producers, which introduce such products in the supply chain or purchase such products, must be able to identify their supplier and the companies to which the products have been delivered.

Operators must provide their customers with an indication that the product – or certain ingredients – contains, consists of, or is obtained from GMOs, and information on the unique identifier(s) for these GMOs.

Operators must keep a record for a five year period after every transaction.

In addition, subject to an exception of a proportion no higher than 0.9 percent of the food/feed ingredients considered individually, the list of ingredients on the labeling of pre-packed genetically modified food/feed products must indicate “genetically modified” or “produced from genetically modified [name of the organism].” For products without packaging, this information must be clearly displayed in close proximity to the product.

Specific post-authorization requirements apply.

For instance, GMO operators must implement and regularly report on a post-market environmental monitoring plan, including general surveillance for unanticipated adverse effects and case-specific monitoring to detect direct and indirect effects which have been identified in the environmental risk assessment.

In addition, post-market monitoring plans may be requested in specific cases to ensure that the conditions of use are duly applied and to monitor the consumption of the product.

Further to Regulation (EU) 2017/625, GMOs are subject to official controls by EEA countries for the deliberate release of GMOs in the EEA and the presence of GMOs and/or genetically modified material in food, feed and seeds at import stage and on the EEA market.

Official controls, which may consist of audits and inspections, verify the absence of unauthorized GMOs and genetically modified material on the EEA market and check proper traceability and labeling.

Transboundary movements of GMOs are regulated by Regulation (EC) 1946/2003 which transposes the Cartagena Protocol on Biosafety into EU law.

The Regulation obliges countries to take legal, administrative and other measures to implement their commitments under the Protocol, and in particular addresses GMOs exports, requiring a notification to importing parties, information to the Biosafety Clearing House as well as other identification and accompanying documentation.

Even though EU regulations are directly applicable in all EU Member States and – when specified – in Iceland, Liechtenstein and Norway, additional national laws, regulations, implementing rules and guidelines on specific aspects may impose further requirements on GMOs operators.

GMOs and modern biotechnologies are under scrutiny in the EEA.

As a variety of new techniques, based on advances in biotechnology, has been developed in the last decade, the European Commission follows these developments to strike a balance between innovation in the food and agricultural sector while maintaining high safety standards.

In November 2019, the Council of the European Union requested the European Commission to provide a study on new genomic techniques, the results of which are expected by April 30, 2021.

Healthcare Laws and Compliance Requirements

In the United States, our activities are potentially subject to regulation under various federal and state healthcare laws including, among others, the federal Anti-Kickback Statute, the federal False Claims Act and HIPAA.

Similar laws exist in foreign jurisdictions including the EEA, as well.

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

7 unchanged sentences

federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates that perform certain services for or on their behalf involving the use or disclosure of individually identifiable health information.

Additionally, the federal Physician Payments Sunshine Act, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually to CMS certain ownership and investment interests held by physicians and their immediate family members.

1 unchanged sentence

laws and regulations may apply to our activities, such as state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by the patients themselves, state laws that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.

government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources, state and local laws and regulations that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information, state and local laws which require the registration of pharmaceutical sales representatives and state and non-U.S.

laws, such as the EU General Data Protection Regulation 2016/679, governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that current and future business arrangements with third parties complies with applicable healthcare laws and regulations involves substantial costs.

If a business is found to be in violation of any of these or any other health regulatory laws that may apply to it, it may be subject to significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other U.S.

government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources, state and local laws and regulations that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information, and state and local laws which require the registration of pharmaceutical sales representatives.

Efforts to ensure that current and future business arrangements with third parties comply with applicable healthcare laws and regulations involves substantial costs.

penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other U.S.

healthcare programs, additional reporting requirements and oversight if subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of operations.

11 unchanged sentences

Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

In the EEA, governments influence the price of products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers.

Member States are free to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement, and to control the prices and reimbursement levels of pharmaceutical products for human use.

Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government.

Member states may approve a specific price or level of reimbursement for the pharmaceutical product, or alternatively adopt a system of direct or indirect controls on the profitability of the company responsible for placing the pharmaceutical product on the market, including volume-based arrangements, caps and reference pricing mechanisms.

To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

Other member states allow companies to fix their own prices for medicines, but monitor and control company profits.

The downward pressure on health care costs in general, particularly prescription products, has become very intense.

As a result, increasingly high barriers are being erected to the entry of new products.

In addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on pricing within a country.

Healthcare Reform

13 unchanged sentences

On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the entire Affordable Care Act is invalid based primarily on the fact that the legislation enacted on December 22, 2017, the Tax Cuts and Jobs Act of 2017, or the TCJA, repealed the tax-based shared responsibility payment imposed by the Affordable Care Act, on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the “individual mandate”.

On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the district court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

It is unclear how these decisions, subsequent appeals, if any, and other efforts to challenge, repeal or replace the Affordable Care Act will impact the Affordable Care Act.

Supreme Court is currently reviewing the case, although it remains unclear when or how the Supreme Court will rule.

It is also unclear how other efforts, if any, to challenge, repeal or replace the Affordable Care Act will impact the Affordable Care Act.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute will remain in effect through 2029 unless additional Congressional action is taken.

On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021, unless additional Congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Further, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies, rebates and price negotiation for pharmaceutical products, some of which are included in the Trump administration’s budget proposals for fiscal years 2019 and 2020, as well as recent bills introduced by the U.S.

Senate and House of Representatives, respectively.

Additionally, the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers.

Department of Health and Human Services has begun soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existing authority.

Although a number of these, and other potential, proposed measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product and medical device pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and medical devices to purchase and which suppliers will be included in their prescription drug and other healthcare programs.

Additionally, on May 30, 2018, the Right to Try Act was signed into law.

The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program.

There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act.

As of December 31, 2019, we had 199 full-time Precisioneers, including 62 scientists with Ph.D.

Of these full-time employees, 146 are engaged in research and development activities.

None of our employees is represented by a labor union or covered by a collective bargaining agreement.

We consider our relationships with our employees to be good.

Finally, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

How the incoming Biden Administration chooses to prioritize such reforms and other policy initiatives, and how such events may impact our ability to realize returns on our product development investments remains to be seen.

Data Privacy and Security

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

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

laws, such as the California Consumer Privacy Act, or the CCPA, the California Privacy Rights Act, or the CPRA, and the EU General Data Protection Regulation, or the GDPR, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Human Capital

We are a purpose-driven organization, and we have carefully promoted a culture that values innovation, accountability, respect, adaptability and perseverance.

We strive to ensure that our open, collaborative culture empowers Precisioneers to be their best selves and do their best work.

We strongly believe that our shared values will help our team navigate and overcome challenges we may experience as we pursue our mission of improving life through genome editing.

Our culture has helped build a world-class team with industry-leading experience in genome editing and we believe this will continue to attract new talent to further build our capabilities.

Our team is a group of motivated individuals that value the opportunity to contribute their time and talents toward the pursuit of improving life.

We believe all Precisioneers appreciate high-quality research and are moved by the opportunity to translate their work into treatments and solutions that could impact human health.

We are a company and a community dedicated to improving life.

This isn’t just a statement supporting the products that we are developing – it is a statement that speaks to our collective desire to do our part in improving the lives of those around us.

Through our newly launched Diversity and Inclusion initiative, we are actively fostering an environment that attracts the best talent, values diversity of life experiences and perspectives, and encourages innovation in pursuit of our mission.

With guest lectures, new trainings, employee resource groups, and other activities, we are supporting a workplace that reflects and embraces the gender, race, ethnicity, sexual orientation, age, physical ability, as well as all cultural backgrounds in our community.

Notable benefits we offer to our full-time Precisioneers include:

employer sponsored health insurance;

employer 401(k) matching contributions;

generous paid time off policies;

wellness programs including employee assistance programs, wellness reimbursement, and an on-site gym;

professional development programs including a tuition reimbursement program

The health and safety of our Precisioneers is also a top priority.

The global effects associated with the COVID-19 pandemic have been unprecedented in their scope and depth.

We have implemented measures to mitigate exposure risks and support operations.

We initiated a health and safety program addressing mandatory use of face masks, social distancing, sanitary handwashing practices, use of personal protective equipment stations, stringent cleaning and sanitization of all facilities and measures to reduce total occupancy in facilities.

We have implemented temperature and symptom screening procedures at each location, and we have continuously communicated to all our Precisioneers that if they are not comfortable coming to work, regardless of role, then they do not have to do so.

Throughout this crisis, our focus has been on keeping our workplace as safe as possible, while ensuring business continuity and positioning ourselves well for the future.

As of December 31, 2020, we had 231 full-time Precisioneers, comprised of 208 from our Therapeutics Segment and 23 from our Food Segment.

Of these full-time employees, 184 are engaged in research and development activities and 57 have Ph.D.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

Corporate Information

9 unchanged sentences

Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K.

Ris k Factors.

Investing in our common stock involves a high degree of risk.

Before investing in our common stock, you should consider carefully the risks described below, together with the other information included or incorporated by reference in this Annual Report on Form 10-K.

The occurrence of any of the following risks could materially adversely affect our business, financial condition, results of operations and future growth prospects.

In these circumstances, the market price of our common stock could decline.

Risks Related to Our Financial Condition, Limited Operating History and Need for Additional Capital

We have incurred significant operating losses since our inception and expect to continue to incur losses for the foreseeable future.

We have never been profitable, and may never achieve or maintain profitability.

We have never been profitable and do not expect to be profitable in the foreseeable future.

Since inception, we have incurred significant operating losses.

If our product candidates are not successfully developed and approved, we may never generate any revenue from product sales.

Our net losses were $92.9 million for the year ended December 31, 2019 and $46.0 million for the year ended December 31, 2018.

As of December 31, 2019, we had an accumulated deficit of $177.1 million.

In addition, we have not commercialized any products and have never generated any revenue from product sales.

Substantially all of our losses have resulted from expenses incurred in connection with our research and development activities, including our preclinical development activities, and from general and administrative costs associated with our operations.

We have financed our operations primarily through an initial public offering, or IPO, of our common stock, private placements of our convertible preferred stock and convertible debt and our development and commercial license agreement dated February 24, 2016, as amended, with Les Laboratoires Servier, which we refer to as the Servier Agreement.

The amount of our future net losses will depend, in part, on the amount and growth rate of our expenses and our ability to generate revenues.

All of our current or future product candidates will require substantial additional development time and resources before we may realize revenue from product sales, if at all.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

We anticipate that our expenses will increase substantially if and as we:

continue our current research and development programs, including conducting laboratory, preclinical and greenhouse studies for product candidates;

continue to conduct or initiate clinical or field trials for product candidates;

seek to identify, assess, acquire or develop additional research programs or product candidates;

maintain, expand and protect our intellectual property portfolio;

seek marketing approvals for any product candidates that may successfully complete development;

establish a sales, marketing and distribution infrastructure to commercialize any products that may obtain marketing approval;

further develop and refine the manufacturing process for our product candidates;

change or add additional manufacturers or suppliers of biological materials or product candidates;

validate our commercial-scale manufacturing facility, MCAT, as compliant with current Good Manufacturing Practices, or cGMP;

further develop our genome editing technology;

acquire or in-license other technologies;

seek to attract and retain new and existing personnel;

expand our facilities;

operate as a public company.

It will be several years, if ever, before we obtain regulatory approval for, and are ready for commercialization of, a therapeutic product candidate.

Similarly, no product candidate from our food platform has advanced to field testing, and it will be several years, if ever, before we or our collaborators commercialize any such product candidate.

New food and agriculture products using the precise editing approach generally take approximately three to five years to develop.

Even if a therapeutic product candidate receives regulatory approval or a food or agriculture product advances through commercialization, future revenues for such product candidate will depend upon many factors, such as, as applicable, the size of any markets in which such product candidate is approved for sale, the market share captured by such product candidate, including as a result of the market acceptance of such product candidate and the effectiveness of manufacturing, sales, marketing and distribution operations related to such product candidate, the terms of any collaboration or other strategic arrangement we may have with respect to such product candidate and levels of reimbursement from third-party payors.

If we are unable to develop and commercialize one or more product candidates either alone or with collaborators, or if revenues from any product candidate that receives marketing approval or is commercialized are insufficient, we may not achieve profitability.

Even if we do achieve profitability, we may not be able to sustain or increase profitability.

If we are unable to achieve and maintain profitability, the value of our common stock will be materially adversely affected.

We will need substantial additional funding, and if we are unable to raise a sufficient amount of capital when needed on acceptable terms, or at all, we may be forced to delay, reduce or eliminate some or all of our research programs, product development activities and commercialization efforts.

The process of identifying product candidates and conducting preclinical or greenhouse studies and clinical or field trials is time consuming, expensive, uncertain and takes years to complete.

We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue the research and development of, initiate and continue clinical or field trials of, and seek marketing approval for, product candidates.

In addition, if any therapeutic product candidate that we develop alone or with collaborators obtains marketing approval, we may incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution efforts.

Furthermore, with the closing of our IPO, we expect to continue to incur additional costs associated with operating as a public company.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

If we are unable to raise sufficient capital when needed, we may be forced to delay, reduce or eliminate current or future research programs, product development activities and/or commercialization efforts.

We expect that our existing cash and cash equivalents will be sufficient to fund our expected operating expenses and capital expenditure requirements into 2021.

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

Our operating plans and other demands on our cash resources may change as a result of many factors, including factors unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations.

We do not currently expect future grant revenues to be a material source of revenue.

Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop product candidates.

Our future capital requirements will depend on many factors, including:

the timing, scope, progress, costs, results and analysis of results of research activities, preclinical or greenhouse studies and clinical or field trials for any of our product candidates;

the costs of future activities, including product manufacturing, sales, marketing and distribution activities for any product candidates that receive regulatory approval;

the success of our existing collaborative relationships;

the extent to which we exercise any development or commercialization rights under collaborative relationships;

our ability to establish and maintain additional collaborative relationships on favorable terms, or at all;

the extent to which we expand our operations and the timing of such expansion, including with respect to facilities, employees and product development platforms;

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending intellectual property-related claims;

the extent to which we acquire or in-license other technologies or product candidates;

the extent to which we acquire or invest in other businesses;

the costs of continuing to operate as a public company;

the amount of revenues, if any, received from commercial sales of any products that we develop alone or with collaborators that receive regulatory approval.

Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or in light of specific strategic considerations.

Adequate additional financing may not be available to us on acceptable terms, or at all.

If we are unable to obtain sufficient funding on a timely basis or on favorable terms, we may be required to significantly delay, reduce or eliminate one or more of our research or product development programs and/or commercialization efforts.

We may also be unable to expand our operations or otherwise capitalize on business opportunities as desired.

Any of these events could materially adversely affect our financial condition and business prospects.

Provisions of our debt instruments may restrict our ability to pursue our business strategies.

In May 2019, we entered into a loan and security agreement with Pacific Western Bank, or PWB, pursuant to which we may request advances on a revolving line of credit of up to an aggregate principal of $50.0 million, or the Revolving Line.

The maturity date of the Revolving Line is May 15, 2022.

As of December 31, 2019, we had no borrowings under our Revolving Line.

Under the loan and security agreement, we granted PWB a security interest in substantially all of our assets, excluding any of the intellectual property now or hereafter owned, acquired or received by us (but including any rights to payment from the sale or licensing of any such intellectual property).

Our loan and security agreement with PWB requires us, and any debt instruments we may enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:

dispose of assets;

change our name, location, executive office or executive management, business, fiscal year, or control;

complete mergers or acquisitions;

incur indebtedness;

encumber assets;

pay dividends or make other distributions to holders of our capital stock;

make specified investments;

make capitalized expenditures in excess of $40 million in the aggregate during each fiscal year;

engage in certain transactions with our affiliates.

These restrictions could inhibit our ability to pursue our business strategies.

In addition, we are subject to financial covenants based on minimum cash balances.

Raising additional capital may cause dilution to our stockholders restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financings and collaborations, licensing agreements or other strategic arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.

To the extent that we raise additional capital through debt financing, it would result in increased fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness.

In addition, debt financing may involve agreements that include restrictive covenants that impose operating restrictions, such as restrictions on the incurrence of additional debt, the making of certain capital expenditures or the declaration of dividends.

To the extent we raise additional capital through arrangements with collaborators or otherwise, we may be required to relinquish some of our technologies, research programs,

product development activities, product candidates and/or future revenue streams, license our technologies and/or product candidates on unfavorable terms or otherwise agree to terms unfavorable to us.

Furthermore, any capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to advance research programs, product development activities or product candidates.

We have a limited operating history, which makes it difficult to evaluate our current business and future prospects and may increase the risk of your investment.

We are a genome editing company with a limited operating history.

We formed our company in 2006 and spent the first nine years of our company’s history developing and refining our core technology, and only during the past several years have we focused our efforts on advancing the development of product candidates.

Investment in biopharmaceutical and agricultural biotechnology product development is a highly speculative endeavor.

It entails substantial upfront capital expenditures, and there is significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, obtain any required regulatory approvals or become commercially viable.

Our genome editing platform and the technologies we are using are new and unproven.

We have initiated a Phase 1/2a clinical trial in patients with relapsed or refractory, or R/R, non-Hodgkin lymphoma, or NHL, and R/R B-cell acute lymphoblastic leukemia, or B-ALL, but we have not commenced field trials for any of our product candidates from our food platform.

We have not yet demonstrated an ability to successfully complete any clinical or field trials, obtain any required marketing approvals, manufacture products, conduct sales, marketing and distribution activities, or arrange for a third party to do any of the foregoing on our behalf.

Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a history of successfully developing and commercializing products.

Additionally, we encounter risks and difficulties frequently experienced by new and growing companies in rapidly developing and changing industries, including challenges in forecasting accuracy, determining appropriate investments of our limited resources, gaining market acceptance of our technology, managing a complex regulatory landscape and developing new product candidates, which may make it more difficult to evaluate our likelihood of success.

Our current operating model may require changes in order for us to adjust to these challenges or scale our operations efficiently.

Our limited operating history, particularly in light of the rapidly evolving nature of the biopharmaceutical and agricultural biotechnology industries and the genome editing field, may make it difficult to evaluate our technology and business prospects or to predict our future performance.

Additionally, due to the stage of our operations, we expect that our financial condition and operating results may fluctuate significantly from quarter to quarter as a result of many factors as we build our business, and you should not rely upon the results of any particular quarterly or annual period as indications of future operating performance.

We may expend our limited resources on pursuing particular research programs or product candidates that may be less successful or profitable than other programs or product candidates.

Research programs to identify new product candidates and product development platforms require substantial technical, financial and human resources.

We may focus our efforts and resources on potential programs, product candidates or product development platforms that ultimately prove to be unsuccessful.

Any time, effort and financial resources we expend on identifying and researching new product candidates and product development platforms may divert our attention from, and adversely affect our ability to continue, development and commercialization of existing research programs, product candidates and product development platforms.

Clinical trials or field trials, as applicable, of any of our product candidates may never commence despite the expenditure of significant resources in pursuit of their development, and our spending on current and future research and development programs, product candidates and product development platforms may not yield any commercially viable products.

As a result of having limited financial and managerial resources, we may forego or delay pursuit of opportunities that later prove to have greater commercial potential.

Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities.

Additionally, if we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other strategic arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

We expect to take advantage of a Research and Development Tax Incentive program in Australia, which could be amended or changed.

We may be eligible to receive a financial incentive from the Australian government as part of its Research and Development Tax Incentive program, or R&D Tax Incentive program.

The R&D Tax Incentive program is one of the key elements of the Australian government’s support for Australia’s innovation system and, if eligible, provides the recipient with a 43.5% refundable tax offset for research and development activities in Australia.

There have been recent proposals to change the structure of the innovation and research and development funding landscape in Australia, which may impact the research and development tax incentive receivable

for the 2019 financial year and beyond.

There can be no assurance that we will qualify and be eligible for such incentives or that the Australian government will continue to provide incentives, offset, grants and rebates on similar terms or at all.

Risks Related to the Identification, Development and Commercialization of Our Product Candidates

ARCUS is a novel technology, making it difficult to predict the time, cost and potential success of product candidate development.

We have not yet been able to assess the safety and efficacy of most of our product candidates in humans, and have only limited safety and efficacy information in humans to date regarding one of our product candidates.

Our success depends on our ability to develop and commercialize product candidates using our novel genome editing technology.

The novel nature of our technology makes it difficult to accurately predict the developmental challenges we may face for product candidates as they proceed through research, preclinical or greenhouse studies and clinical or field trials.

There have been a limited number of clinical trials of products created with genome editing technologies, only one of which has utilized our technology, and only two therapeutic products created with other genome editing technologies have received marketing approval in the United States.

Because our therapeutic research programs are all in preclinical or early clinical stages, we have only been able to assess limited safety and efficacy data for one of our product candidates in a human trial.

Current or future product candidates may not meet safety and efficacy requirements for continued development or ultimate approval in humans and may cause significant adverse events or toxicities.

All of our product candidates are designed to act at the level of DNA, and because animal DNA differs from human DNA, it will be difficult for us to test our therapeutic product candidates in animal models for either safety or efficacy, and any testing that we conduct may not translate to their effects in humans.

Moreover, animal models may not exist for some of the targets, diseases or indications that we intend to pursue.

Similarly, we and our collaborators have not yet completed field trials for any agricultural product candidates created with our technology.

Our product candidates may not be able to properly implement desired genetic edits with sufficient accuracy to be viable therapeutic or agricultural products, and there may be long-term effects associated with them that we cannot predict at this time.

Any problems we experience related to the development of our genome editing technology or any of our or our collaborators’ research programs or product candidates may cause significant delays or unanticipated costs, and we may not be able to satisfactorily solve such problems.

These factors may prevent us or our collaborators from completing our preclinical or greenhouse studies or any clinical or field trials that we or our collaborators may initiate, or profitably commercializing any product candidates on a timely basis, or at all.

We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process as we develop and prepare to commercialize product candidates.

These factors make it more difficult for us to predict the time, cost and potential success of product candidate development.

If our product development activities take longer or cost more than anticipated, or if they ultimately are not successful, it would materially adversely affect our business and results of operations.

The genome editing field is relatively new and evolving rapidly, and other existing or future technologies may provide significant advantages over our ARCUS platform, which could materially harm our business.

To date, we have focused our efforts on optimizing our proprietary genome editing technology and exploring its potential applications.

ARCUS is a novel genome editing technology using sequence-specific DNA-cutting enzymes, or nucleases, that is designed to perform modifications in the DNA of living cells and organisms.

Other companies have previously undertaken research and development of genome editing technologies using zinc finger nucleases, transcription activator-like effector nucleases, or TALENs, and clustered regularly interspaced short palindromic repeats associated protein-9 nuclease, or CRISPR/Cas9, although none has obtained marketing approval for a product candidate developed using such technologies.

Other genome editing technologies in development or commercially available, or other existing or future technologies, may lead to treatments or products that may be considered better suited for use in human therapeutics or agriculture, which could reduce or eliminate our commercial opportunity.

We are heavily dependent on the successful development and translation of ARCUS, and due to the early stages of our product development operations, we cannot give any assurance that any product candidates will be successfully developed and commercialized.

We are at an early stage of development of the product candidates currently in our programs and are continuing to develop our ARCUS technology.

To date, we have invested substantially all of our efforts and financial resources to develop ARCUS and advance our current product development programs, including conducting preclinical studies, early stage clinical trials and other early research and development activities, and providing general and administrative support for these operations.

Our future success is dependent on our ability to successfully develop and, where applicable, obtain regulatory approval for, including marketing approval for, and then successfully commercialize, product candidates, either alone or with collaborators.

We have not yet developed and commercialized any product candidates, and we may not be able to do so, alone or with collaborators.

Our research and development programs may not lead to the successful identification, development or commercialization of any products.

The success of our business depends primarily upon our ability to identify, develop and commercialize products using our genome editing technology.

With the exception of our CD19 product candidate, all current product candidates and product development programs are still in the discovery, preclinical or greenhouse stages.

We may be unsuccessful in advancing those product candidates into clinical development or field trials or in identifying any developing additional product candidates.

Our ability to identify and develop product candidates is subject to the numerous risks associated with preclinical and early stage biotechnology development activities, including that:

the use of ARCUS may be ineffective in identifying additional product candidates;

we may not be able to assemble sufficient resources to acquire or discover additional product candidates;

we may not be able to enter into collaborative arrangements to facilitate development of product candidates;

competitors may develop alternatives that render our product candidates obsolete or less attractive;

our product candidates may be covered by third parties’ patents or other exclusive rights;

the regulatory pathway for a product candidate may be too complex, expensive or otherwise difficult to navigate successfully;

our product candidates may be shown to not be effective, have harmful side effects or otherwise pose risks not outweighed by such product candidate’s benefits or have other characteristics that may make the products impractical to manufacture, unlikely to receive any required marketing approval, unlikely to generate sufficient market demand or otherwise not achieve profitable commercialization.

Our product candidates currently being investigated in clinical trials, or that are expected to be investigated in clinical trials, and other product candidates we may identify may never be approved.

Failure to successfully identify and develop new product candidates and obtain regulatory approvals for our products would have a material adverse effect on our business and financial condition and could cause us to cease operations.

If our product candidates do not achieve projected development milestones or commercialization in the announced or expected timeframes, the further development or commercialization of such product candidates may be delayed, and our business will be harmed.

We sometimes estimate, or may in the future estimate, the timing of the accomplishment of various scientific, clinical, manufacturing, regulatory and other product development objectives.

These milestones may include our expectations regarding the commencement or completion of scientific studies or clinical or field trials, the submission of regulatory filings, the receipt of marketing approval or the realization of other commercialization objectives.

The achievement of many of these milestones may be outside of our control.

All of these milestones are based on a variety of assumptions, including assumptions regarding capital resources, constraints and priorities, progress of and results from development activities and the receipt of key regulatory approvals or actions, any of which may cause the timing of achievement of the milestones to vary considerably from our estimates.

If we or our collaborators fail to achieve announced milestones in the expected timeframes, the commercialization of the product candidates may be delayed, our credibility may be undermined, our business and results of operations may be harmed, and the trading price of our common stock may decline.

Adverse public perception of genome editing may negatively impact the developmental progress or commercial success of products that we develop alone or with collaborators.

The developmental and commercial success of our current product candidates, or any that we develop alone or with collaborators in the future, will depend in part on public acceptance of the use of genome editing technology for the prevention or treatment of human diseases or for application in food or agricultural products.

Adverse public perception of applying genome editing technology for these purposes may negatively impact our ability to raise capital or enter into strategic agreements for the development of product candidates.

The commercial success of any food or agricultural products that we develop alone or with collaborators may be adversely affected by claims that biotechnology plant products are unsafe for consumption or use, pose risks of damage to the environment or create legal, social or ethical dilemmas.

Additionally, the public may perceive any potential food or agricultural products created with ARCUS to constitute genetically modified organisms, or GMO, even if they do not constitute genetically modified organisms under relevant regulatory requirements, and may be unwilling to consume them because of negative opinions regarding consumption of genetically modified organisms.

This may result in expenses, delays or other impediments to development programs in our food platform or the market acceptance and commercialization of any potential food or agricultural products.

Any therapeutic product candidates may involve editing the human genome.

The commercial success of any such potential therapeutic products, if successfully developed and approved, may be adversely affected by claims that genome editing is unsafe, unethical or immoral.

This may lead to unfavorable public perception and the inability of any therapeutic product candidates to gain the acceptance of the public or the medical community.

Unfavorable public perceptions may also adversely impact our or our collaborators’ ability to enroll clinical trials for therapeutic product candidates.

Moreover, success in commercializing any therapeutic product candidates that receive regulatory approval will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of such product candidates in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.

Publicity of any adverse events in, or unfavorable results of, preclinical studies or clinical trials for any current or future product candidates, or with respect to the studies or trials of our competitors or of academic researchers utilizing genome editing technologies, even if not ultimately attributable to our technology or product candidates, could negatively influence public opinion.

Negative public perception about the use of genome editing technology in human therapeutics and food or agricultural products, whether related to our technology or a competitor’s technology, could result in increased governmental regulation, delays in the development and commercialization of product candidates or decreased demand for the resulting products, any of which may have a negative impact on our business and financial condition.

We face significant competition in industries experiencing rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop product candidates or treatments that are safer or more effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any of our product candidates.

The development and commercialization of new drug products is highly competitive, and the genome editing field is characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property.

We will face competition with respect to our current and future therapeutic product candidates from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.

Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization of products.

Competition for improving plant genetics comes from conventional and advanced plant breeding techniques, as well as from the development of advanced biotechnology traits.

Other potentially competitive sources of improvement in crop yields include improvements in crop protection chemicals, fertilizer formulations, farm mechanization, other biotechnology and information management.

Programs to improve genetics and crop protection chemicals are generally concentrated within a relatively small number of large companies, while non-genetic approaches are underway with a broader set of companies.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we have research programs.

Some of these competitive products and therapies are based on scientific approaches that are similar to our approach, and others are based on entirely different approaches.

We principally compete with others developing and utilizing genome editing technology in the human health and plant sciences sectors, including companies such as Cellectis S.A., CRISPR Therapeutics, AG, Editas Medicine, Inc., Intellia Therapeutics, Inc.

and Sangamo Therapeutics, Inc.

Several companies, including Novartis Pharmaceuticals Corp.

and Gilead Sciences, Inc., or Gilead, have obtained FDA approval for autologous immunotherapies, and a number of companies, including Cellectis S.A., Celgene Corp., Allogene Therapeutics and CRISPR Therapeutics AG, are pursuing allogeneic immunotherapies.

We expect that our operations focused on developing products for in vivo gene correction will face substantial competition from others focusing on gene therapy treatments, especially those that may focus on conditions that our product candidates target.

Moreover, any human therapeutics products that we develop alone or with collaborators will compete with existing standards of care for the diseases and conditions that our product candidates target and other types of treatments, such as small molecule, antibody or protein therapies.

Our competitors in the agricultural biotechnology space include Pairwise Plants, LLC, Caribou Biosciences, Inc., Corteva Agriscience, Tropic Biosciences UK LTD, Calyxt, Inc., Benson Hill Biosystems and Cibus.

Many of our current or potential competitors, either alone or with their collaborators, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical or greenhouse testing, conducting clinical or field trials, obtaining regulatory approvals and marketing approved products than we do.

Mergers and acquisitions in the pharmaceutical, biotechnology and agricultural biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products we develop alone or with collaborators or that would render any such products obsolete or non-competitive.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we or our collaborators may obtain approval for any that we develop, which could result in our competitors establishing a strong market position before we are able to enter the market.

Additionally, technologies developed by our competitors may render our product candidates uneconomical or obsolete, and we or our collaborators may not be successful in marketing any product candidates we may develop against competitors.

The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any products that we develop alone or with collaborators.

Our future profitability, if any, depends in part on our and our collaborators’ ability to penetrate global markets, where we would be subject to additional regulatory burdens and other risks and uncertainties associated with international operations that could materially adversely affect our business.

Our future profitability, if any, will depend in part on our ability and the ability of our collaborators to commercialize any products that we or our collaborators may develop in markets throughout the world.

Commercialization of products in various markets could subject us to risks and uncertainties, including:

obtaining, on a country-by-country basis, the applicable marketing authorization from the competent regulatory authority;

the burden of complying with complex and changing regulatory, tax, accounting, labor and other legal requirements in each jurisdiction that we or our collaborators pursue;

reduced protection for intellectual property rights;

differing medical and agricultural practices and customs affecting acceptance in the marketplace;

import or export licensing requirements;

governmental controls, trade restrictions or changes in tariffs;

economic weakness, including inflation, or political instability in particular non-U.S.

economies and markets;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

longer accounts receivable collection times;

longer lead times for shipping;

language barriers;

foreign currency exchange rate fluctuations;

foreign reimbursement, pricing and insurance regimes;

the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.

We have no prior experience in these areas, and our collaborators may have limited experience in these areas.

Failure to successfully navigate these risks and uncertainties may limit or prevent market penetration for any products that we or our collaborators may develop, which would limit their commercial potential and our revenues.

Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any products that we develop alone or with collaborators.

We face an inherent risk of product liability and professional indemnity exposure related to the testing in clinical or field trials of our product candidates.

We will face an even greater liability risk if we commercially sell any products that we or our collaborators may develop for human use or consumption.

Manufacturing defects, errors in product distribution or storage processes, improper administration or application and known or unknown side effects of product usage may result in liability claims against us or third parties with which we have relationships.

These actions could include claims resulting from acts by our collaborators, licensees and subcontractors over which we have little or no control.

For example, our liability could be sought by patients participating in clinical trials for potential therapeutic product candidates as a result of unexpected side effects, improper product administration or the deterioration of a patient’s condition, patient injury or even death.

Criminal or civil proceedings might be filed against us by patients, regulatory authorities, biopharmaceutical companies and any other third party using or marketing any product candidates or products that we develop alone or with collaborators.

On occasion, large judgments have been awarded in class action lawsuits based on products that had unanticipated adverse effects.

If we cannot successfully defend ourselves against claims that product candidates or products we develop alone or with collaborators caused harm, we could incur substantial liabilities.

Regardless of merit or eventual outcome, liability claims may result in:

significant time and costs to defend the related litigation;

injury to our reputation and significant negative media attention;

diversion of management’s attention from pursuing our strategy;

withdrawal of clinical trial participants;

delay or termination of clinical trials;

decreased demand for any products that we develop alone or with collaborators;

substantial monetary awards to trial participants or patients;

product recalls, withdrawals or labeling, marketing or promotional restrictions;

loss of revenue;

the inability to further develop or commercialize any products.

Although the clinical trial process is designed to identify and assess potential side effects, clinical development does not always fully characterize the safety and efficacy profile of a new medicine, and it is always possible that a drug or biologic, even after regulatory approval, may exhibit unforeseen side effects.

If our product candidates were to cause adverse side effects during clinical trials or after approval, we may be exposed to substantial liabilities.

Physicians and patients may not comply with any warnings that identify known potential adverse effects and patients who should not use our product candidates.

If any of our product candidates are approved for commercial sale, we will be highly dependent upon consumer perceptions of us and the safety and quality of such products.

We could be adversely affected if we are subject to negative publicity associated with illness or other adverse effects resulting from patients’ use or misuse of such products or any similar products distributed by other companies.

Although we maintain product liability insurance coverage, it may not be adequate to cover all liabilities that we may incur.

We anticipate that we will need to increase our insurance coverage if we or our collaborators successfully commercialize any products.

Insurance coverage is increasingly expensive.

We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liabilities to which we may become subject.

Additional Risks Related to the Identification, Development and Commercialization of Our Therapeutic Product Candidates

The regulatory landscape that will apply to development of therapeutic product candidates by us or our collaborators is rigorous, complex, uncertain and subject to change, which could result in delays or termination of development of such product candidates or unexpected costs in obtaining regulatory approvals.

Regulatory requirements governing products created with genome editing technology or involving gene therapy treatment have changed frequently and will likely continue to change in the future.

Approvals by one regulatory agency may not be indicative of what any other regulatory agency may require for approval, and there has historically been substantial, and sometimes uncoordinated, overlap in those responsible for regulation of gene therapy products, cell therapy products and other products created with genome editing technology.

For example, in the United States, the FDA has established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review.

Our product candidates will need to meet safety and efficacy standards applicable to any new biologic under the regulatory framework administered by the FDA.

In addition to the submission of an IND to the FDA, before initiation of a clinical trial in the United States, certain human clinical trials subject to the NIH Guidelines are subject to review and oversight by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution.

The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial.

While the NIH Guidelines are not mandatory unless the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.

We are subject to significant regulatory oversight by the FDA, and in addition to the government regulators, the applicable IBC and institutional review board, or IRB, of each institution at which we or our collaborators conduct clinical trials of our product candidates, or a central IRB if appropriate, would need to review and approve the proposed clinical trial.

The same applies in the European Union, or the EU.

The European Medicines Agency, or the EMA, has a Committee for Advanced Therapies, or CAT, that is responsible for assessing the quality, safety and efficacy of advanced-therapy medicinal products.

Advanced-therapy medical products include gene therapy medicine, somatic-cell therapy medicines and tissue-engineered medicines.

The role of the CAT is to prepare a draft opinion on an application for marketing authorization for a gene therapy medicinal candidate that is submitted to the EMA.

In the EU, the development and evaluation of a gene therapy medicinal product must be considered in the context of the relevant EU guidelines.

The EMA may issue new guidelines concerning the development and marketing authorization for gene therapy medicinal products and require that we comply with these new guidelines.

Similarly complex regulatory environments exist in other jurisdictions in which we might consider seeking regulatory approvals for our product candidates, further complicating the regulatory landscape.

As a result, the procedures and standards applied to gene therapy products and cell therapy products may be applied to any of our gene therapy or genome editing product candidates, but that remains uncertain at this point.

The clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to evaluate the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products.

The regulatory approval process for product candidates created with novel genome editing technology such as ours can be more lengthy, rigorous and expensive than the process for other better known or more extensively studied product candidates and technologies.

Since we are developing novel treatments for diseases in which there is little clinical experience with new endpoints and methodologies, there is heightened risk that the FDA, the EMA or comparable regulatory bodies may not consider the clinical trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze.

This may be a particularly significant risk for many of the genetically defined diseases for which we may develop product candidates alone or with collaborators due to small patient populations for those diseases, and designing and executing a rigorous clinical trial with appropriate statistical power is more difficult than with diseases that have larger patient populations.

Regulatory agencies administering existing or future regulations or legislation may not allow production and marketing of products utilizing genome editing technology in a timely manner or under technically or commercially feasible conditions.

Even if our product candidates obtain required regulatory approvals, such approvals may later be withdrawn as a result of changes in regulations or the interpretation of regulations by applicable regulatory agencies.

Changes in applicable regulatory guidelines may lengthen the regulatory review process for our product candidates, require additional studies or trials, increase development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of such product candidates, or lead to significant post-approval limitations or restrictions.

Additionally, adverse developments in clinical trials conducted by others of gene therapy products or products created using genome editing technology, such as products developed through the application of a CRISPR/Cas9 technology, or adverse public perception of the field of genome editing, may cause the FDA, the EMA and other regulatory bodies to revise the requirements for approval of any product candidates we may develop or limit the use of products utilizing genome editing technologies, either of which could materially harm our business.

Furthermore, regulatory action or private litigation could result in expenses, delays or other impediments to our research programs or the development or commercialization of current or future product candidates.

As we advance product candidates alone or with collaborators, we will be required to consult with these regulatory and advisory groups and comply with all applicable guidelines, rules and regulations.

If we fail to do so, we or our collaborators may be required to delay or terminate development of such product candidates.

Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a product candidate to market could decrease our ability to generate sufficient product revenue to maintain our business.

We may not be able to file IND applications to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed.

We plan to submit IND applications to enable us to conduct clinical trials for additional product candidates in the future, and we expect to file IND amendments to enable us to conduct additional clinical trials under existing INDs.

We cannot be sure that submission of an IND application or IND amendment will result in us being allowed to proceed with clinical trials, or that, once begun, issues will not arise that could result in the suspension or termination such clinical trials.

The manufacturing of allogeneic CAR T cell therapy remains an emerging and evolving field.

Accordingly, we expect chemistry, manufacturing and controls-related topics, including product specifications, will be a focus of IND reviews, which may delay receipt of authorization to proceed under INDs.

Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or clinical trial application, we cannot guarantee that such regulatory authorities will not change their requirements in the future.

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

We and any collaborators are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval from the FDA.

Foreign regulatory authorities, such as the EMA, impose similar requirements.

The time required to obtain approval by the FDA, the EMA and comparable foreign authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including substantial discretion of the regulatory authorities and sufficient resources at the FDA.

In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.

To date, we have not submitted a biologics license application, or BLA, or other marketing authorization application to the FDA or similar drug approval submissions to comparable foreign regulatory authorities for any product candidate.

We and any collaborators must complete additional preclinical or nonclinical studies and clinical trials to demonstrate the safety and efficacy of our product candidates in humans to the satisfaction of the regulatory authorities before we will be able to obtain these approvals.

Our product candidates could fail to receive regulatory approval for many reasons, including the following:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our or our collaborators’ clinical trials;

we or our collaborators may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;

the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

we or our collaborators may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

the FDA or comparable foreign regulatory authorities may disagree with our or our collaborators’ interpretation of data from preclinical studies or clinical trials;

the data collected from clinical trials of product candidates may not be sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere;

the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we or our collaborators contract for clinical and commercial supplies;

the FDA or comparable foreign regulatory authorities may fail to approve the companion diagnostics we contemplate developing with collaborators;

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our or our collaborators’ clinical data insufficient for approval.

This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.

In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may impose significant limitations in the form of narrow indications, warnings, or a Risk Evaluation and Mitigation Strategy, or REMS.

Regulatory authorities may not approve the price we or our collaborators intend to charge for products we may develop, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Clinical trials are difficult to design and implement, expensive, time-consuming and involve an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business.

Clinical testing is expensive and usually takes many years to complete, and its outcome is inherently uncertain.

Failure can occur at any time during the clinical trial process, and product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials.

We have initiated a Phase 1/2a clinical trial in patients with R/R NHL or R/R B-ALL, and expect to initiate an additional Phase 1/2a clinical trial in subjects with NHL, chronic lymphocytic leukemia and small lymphocytic lymphoma in the first quarter of 2020.

We do not know whether any current or planned clinical trials will need to be redesigned, recruit and enroll patients on time or be completed on schedule, or at all.

Clinical trials can be delayed, suspended or terminated for a variety of reasons, including in connection with:

the inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of clinical trials;

applicable regulatory authorities disagreeing as to the design or implementation of the clinical trials;

obtaining regulatory authorization to commence a trial;

reaching an agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

obtaining IRB approval at each site;

developing and validating the companion diagnostic to be used in a clinical trial, if applicable;

insufficient or inadequate supply or quality of product candidates or other materials, including identification of lymphocyte donors meeting regulatory standards necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials;

recruiting and retaining enough suitable patients to participate in a trial;

having enough patients complete a trial or return for post-treatment follow-up;

adding a sufficient number of clinical trial sites;

inspections of clinical trial sites or operations by applicable regulatory authorities, or the imposition of a clinical hold;

clinical sites deviating from trial protocol or dropping out of a trial;

the inability to demonstrate the efficacy and benefits of a product candidate;

discovering that product candidates have unforeseen safety issues, undesirable side effects or other unexpected characteristics;

addressing patient safety concerns that arise during the course of a trial;

receiving untimely or unfavorable feedback from applicable regulatory authorities regarding the trial or requests from regulatory authorities to modify the design of a trial;

non-compliance with applicable regulatory requirements by us or third parties or changes in such regulations or administrative actions;

suspensions or terminations by IRBs of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, for such trial or by the FDA or other regulatory authorities due to a number of factors, including those described above;

third parties being unable or unwilling to satisfy their contractual obligations to us;

changes in our financial priorities, greater than anticipated costs of completing a trial or our inability to continue funding the trial.

Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Additionally, we or our collaborators may experience unforeseen events during or resulting from clinical trials that could delay or prevent receipt of marketing approval for or commercialization of product candidates.

For example, clinical trials of product candidates may produce negative, inconsistent or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon development programs.

Regulators may also revise the requirements for approving the product candidates, or such requirements may not be as we anticipate.

If we or our collaborators are required to conduct additional clinical trials or other testing of product candidates beyond those that we or our collaborators currently contemplate, if we or our collaborators are unable to successfully complete clinical trials or other testing of such product candidates, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:

incur unplanned costs;

be delayed in obtaining or fail to obtain marketing approval for product candidates;

obtain marketing approval in some countries and not in others;

obtain marketing approval for indications or patient populations that are not as broad as intended or desired;

obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;

be subject to additional post-marketing testing requirements;

be subject to changes in the way the product is administered;

have regulatory authorities withdraw or suspend their approval of the product or impose restrictions on its distribution;

experience damage to our reputation.

If we or our collaborators experience delays in the commencement or completion of our clinical trials, or if we or our collaborators terminate a clinical trial prior to completion, we may experience increased costs, have difficulty raising capital and/or be required to slow down the development and approval process timelines.

Furthermore, the product candidates that are the subject of such trials may never receive regulatory approval, and their commercial prospects and our ability to generate product revenues from them could be impaired or not realized at all.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services.

Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities.

The FDA or comparable foreign regulatory authorities may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.

The FDA or comparable foreign regulatory authorities may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.

This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authorities, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

Any product candidates that we or our collaborators may develop will be novel and may be complex and difficult to manufacture, and if we experience manufacturing problems, it could result in delays in development and commercialization of such product candidates or otherwise harm our business.

Our product candidates involve or will involve novel genome editing technology and will require processing steps that are more complex than those required for most small molecule drugs, resulting in a relatively higher manufacturing cost.

Moreover, unlike small molecules, the physical and chemical properties of biologics generally cannot be fully characterized.

As a result, assays of the finished product may not be sufficient to ensure that such product will perform in the intended manner.

Although we intend to employ multiple steps to control the manufacturing process, we may experience manufacturing issues with any of our product candidates that could cause production interruptions, including contamination, equipment or reagent failure, improper installation or operation of equipment, facility contamination, raw material shortages or contamination, natural disasters, disruption in utility services, human error, disruptions in the operations of our suppliers, inconsistency in cell growth and variability in product characteristics.

encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or other comparable applicable standards or specifications with consistent and acceptable production yields and costs.

For example, the FDA has required us to conduct testing of our allogeneic CAR T cell product candidates for the presence of certain human viruses prior to release of such products for clinical use.

If the FDA concludes that further such viral testing of our product candidates is required and that any lots testing positive may not be used in clinical trials, we may need to produce new clinical trial materials, which could delay our clinical trials and result in higher manufacturing costs.

Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions.

If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which such product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Our manufacturing process for any allogeneic CAR T cell product candidate that we develop alone or with collaborators will be susceptible to product loss or failure due to the quality of the raw materials, failure of the products to meet specifications, logistical issues associated with the collection of white blood cells, or starting material, from healthy third-party donors, shipping such material to the manufacturing site, ensuring standardized production batch-to-batch in the context of mass production, freezing the manufactured product, shipping the final product globally and infusing patients with such product.

Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, delays in initiating or completing clinical trials, product recalls, product liability claims or insufficient inventory.

As product candidates are developed through preclinical to late-stage clinical trials towards approval and commercialization, we expect that various aspects of the development program, such as manufacturing methods, may be altered along the way in an effort to help optimize processes and results.

Such changes carry the risk that they will not achieve the intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of future clinical trials or our reliance on results of trials that have previously been conducted using the product candidate in its previous form.

If the manufacturing process is changed during the course of product development, we or our collaborators may be required to repeat some or all of the previously conducted trials or conduct additional bridging trials, which could increase our costs and delay or impede our ability to obtain marketing approval.

We expect our manufacturing strategy for one or more of our product candidates may involve the use of contract manufacturing organizations, or CMOs, as well as our newly opened manufacturing facility, the MCAT.

The facilities used by us and our contract manufacturers to manufacture therapeutic product candidates must be approved by the FDA pursuant to inspections that will be conducted after we submit our BLA to the FDA.

We do not control the manufacturing process of, and are currently completely dependent on, our contract manufacturing partners for compliance with cGMP, for the manufacture of our product candidates.

We may establish multiple manufacturing facilities as we expand our commercial footprint to multiple geographies, which will be costly and time consuming and may lead to regulatory delays.

Even if we are successful, our manufacturing capabilities could be affected by cost-overruns, potential problems with scale-out, process reproducibility, stability issues, lot inconsistency, timely availability of reagents or raw materials, unexpected delays, equipment failures, labor shortages, natural disasters, utility failures, regulatory issues and other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a material adverse effect on our business.

The FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any lot of any product that may receive approval together with the protocols showing the results of applicable tests at any time.

Under some circumstances, the FDA, the EMA or other foreign regulatory authorities may require that we not distribute a lot until the relevant agency authorizes its release.

Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls.

Lot failures or product recalls could cause us or our collaborators to delay product launches or clinical trials, which could be costly to us and otherwise harm our business.

Problems in our manufacturing process also could restrict our or our collaborators’ ability to meet market demand for products.

Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development opportunities.

We will rely on donors of T cells to manufacture product candidates from our allogeneic CAR T immunotherapy platform, and if we do not obtain an adequate supply of T cells from qualified donors, development of those product candidates may be adversely impacted.

We are developing a pipeline of allogeneic T cell product candidates that are engineered from healthy donor T cells, which vary in type and quality.

This variability in type and quality of a donor’s T cells makes producing standardized product candidates more difficult and makes the development and commercialization pathway of those product candidates more uncertain.

We have developed a screening process designed to enhance the quality and consistency of T cells used in the manufacture of our CAR T cell product candidates.

If we are unable to identify and obtain T cells from donors that satisfy our criteria in sufficient quantity, to obtain such cells in a timely manner or to address variability in donor T cells, development of our CAR T cell product candidates may be delayed or there may be inconsistencies in the product candidates we produce, which could negatively impact development of such product candidates, harm our reputation and adversely impact our business and prospects.

Failure to achieve operating efficiencies from MCAT may require us to devote additional resources and management time to manufacturing operations and may delay our product development timelines.

We have leased approximately 33,600 square feet of space for MCAT at a location approximately seven miles from our headquarters in Durham, North Carolina.

We intend to begin using this new manufacturing center to create clinical trial material for certain of our planned clinical trials in 2020.

We may not experience the anticipated operating efficiencies as we commence manufacturing.

Any delays in manufacturing may disrupt or delay the supply of our product candidates if we have not maintained a sufficient back-up supply of such product candidates through third-party manufacturers.

Moreover, changing manufacturing facilities may also require that we or our collaborators conduct additional studies, make notifications to regulatory authorities, make additional filings to regulatory authorities, and obtain regulatory authority approval for the new facilities, which may be delayed or which we may never receive.

We will further need to comply with the FDA’s and applicable foreign regulatory authorities’ cGMP requirements for the production of product candidates for clinical trials and, if approved, commercial supply, and will be subject to FDA and comparable foreign regulatory authority inspection.

These requirements include the qualification and validation of our manufacturing equipment and processes.

We may not be able to develop or acquire the internal expertise and resources necessary for compliance with these requirements.

Should we fail to comply with cGMP requirements, the opening of our manufacturing facility will be delayed.

If we fail to achieve the operating efficiencies that we anticipate, our manufacturing and operating costs may be greater than expected, which could have a material adverse impact on our operating results.

We also may encounter problems hiring and retaining the experienced scientific, quality-control and manufacturing personnel needed to operate our manufacturing processes.

If we experience unanticipated employee shortage or turnover in any of these areas, we may not be able to effectively manage our ongoing manufacturing operations and we may not achieve the operating efficiencies that we anticipate from the new facility, which may negatively affect our product development timeline or result in difficulties in maintaining compliance with applicable regulatory requirements.

Any such problems could result in the delay, prevention or impairment of clinical development and commercialization of our product candidates.

We or our collaborators may experience delays or difficulties in enrolling patients in clinical trials, which could delay or prevent receipt of regulatory approvals.

We or our collaborators may not be able to initiate or continue clinical trials on a timely basis or at all for any product candidates we or our collaborators identify or develop if we or our collaborators are unable to locate and enroll a sufficient number of eligible patients to participate in the trials as required by applicable regulations or as needed to provide appropriate statistical power for a given trial.

Additionally, some of our competitors may have ongoing clinical trials for product candidates that would treat the same indications as one or more of our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in our competitors’ clinical trials.

Patient enrollment may also be affected by many factors, including:

severity and difficulty of diagnosing of the disease under investigation;

size of the patient population and process for identifying subjects;

eligibility and exclusion criteria for the trial in question;

our or our collaborators’ ability to recruit clinical trial investigators with the appropriate competencies and experience;

design of the trial protocol;

availability and efficacy of approved medications or therapies, or other clinical trials, for the disease or condition under investigation;

perceived risks and benefits of the product candidate under trial or testing, or of the application of genome editing to human indications;

availability of genetic testing for potential patients;

efforts to facilitate timely enrollment in clinical trials;

patient referral practices of physicians;

ability to obtain and maintain subject consent;

risk that enrolled subjects will drop out before completion of the trial;

ability to monitor patients adequately during and after treatment;

proximity and availability of clinical trial sites for prospective patients.

We expect that some of our product candidates will focus on rare genetically defined diseases with limited patient pools from which to draw for enrollment in clinical trials.

The eligibility criteria of our clinical trials will further limit the pool of available trial participants.

In addition to the factors identified above, patient enrollment in any clinical trials we or our collaborators may conduct may be adversely impacted by any negative outcomes our competitors may experience, including adverse side effects, clinical data showing inadequate efficacy or failures to obtain regulatory approval.

Furthermore, our or our collaborators’ ability to successfully initiate, enroll and conduct a clinical trial outside the United States is subject to numerous additional risks, including:

difficulty in establishing or managing relationships with CROs and physicians;

differing standards for the conduct of clinical trials;

differing standards of care for patients with a particular disease;

an inability to locate qualified local consultants, physicians and partners;

the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.

Enrollment delays in clinical trials may result in increased development costs for any of our product candidates, which may cause the value of our company to decline and limit our ability to obtain additional financing.

If we or our collaborators have difficulty enrolling a sufficient number of patients to conduct clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which may have an adverse effect on our results of operations and prospects.

Results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials.

Our product candidates may not have favorable results in later clinical trials, if any, or receive regulatory approval.

Preclinical and clinical drug development is expensive and can take many years to complete, and its outcome is inherently uncertain.

Failure can occur at any time during the preclinical study or clinical trial process.

Despite promising preclinical or clinical results, any product candidate can unexpectedly fail at any stage of preclinical or clinical development.

The historical failure rate for product candidates in our industry is high.

The results from preclinical studies or early clinical trials of a product candidate may not be predictive of the results from later preclinical studies or clinical trials, and interim results of a clinical trial are not necessarily indicative of final results.

Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through preclinical studies and initial clinical trials.

Many companies in the biopharmaceutical and biotechnology industries have suffered significant setbacks at later stages of development after achieving positive results in early stages of development, and we may face similar setbacks.

These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including previously unreported adverse events.

Moreover, non-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain regulatory approval.

With the exception of our allogeneic anti-CD19 CAR T product candidate, which has undergone limited testing in humans to date, our gene editing technology and our product candidates have never undergone testing in humans and have only been tested in a limited manner in animals, and results from animal studies may not be predictive of clinical trial results.

Even if product candidates progress to clinical trials, these product candidates may fail to show the safety and efficacy in clinical development required to obtain regulatory approval, despite the observation of positive results in animal studies.

Our or our collaborators’ failure to replicate positive results from early research programs and preclinical or greenhouse studies may prevent us from further developing and commercializing those or other product candidates, which would limit our potential to generate revenues from them and harm our business and prospects.

For the foregoing reasons, we cannot be certain that any ongoing or future preclinical studies or clinical trials will be successful.

Any safety or efficacy concerns observed in any one of our preclinical studies or clinical trials in a targeted area could limit the prospects for regulatory approval of product candidates in that and other areas, which could have a material adverse effect on our business and prospects.

Interim “top-line” and initial data from studies or trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim “top-line” or initial data from preclinical or greenhouse studies or clinical or field trials.

For example, we recently reported initial results from our ongoing Phase 1/2a clinical trial of PBCAR0191.

Interim data are subject to the risk that one or more of the outcomes may materially change as more data become available.

We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.

As a result, the top-line results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.

Initial or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from these initial data we previously published.

As a result, interim and initial data should be viewed with caution until the final data are available.

Additionally, interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.

Adverse differences between initial or interim data and final data could significantly harm our business prospects.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.

In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure.

Any information we determine not to disclose may ultimately be deemed significant by you or others with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business.

If the top-line data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, product candidates may be harmed, which could significantly harm our business prospects.

If any of our product candidates do not work as intended or cause undesirable side effects, it could hinder or prevent receipt of regulatory approval or realization of commercial potential for them or our other product candidates and could substantially harm our business.

Our product candidates may be associated with off-target editing or other serious adverse events, undesirable side effects or unexpected characteristics.

Results of clinical trials could reveal severe or recurring side effects, toxicities or unexpected events, including death.

Off-target cuts could lead to disruption of a gene or a genetic regulatory sequence at an unintended site in the DNA.

In those instances where we also provide a segment of DNA, it is possible that following off-target cut events, such DNA could be integrated into the genome at an unintended site, potentially disrupting another important gene or genomic element.

There may also be delayed adverse events following exposure to therapeutics made with genome editing technologies due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.

In addition to serious adverse events or side effects caused by product candidates we develop alone or with collaborators, the administration process or related procedures may also cause undesirable side effects.

Any side effects may not be appropriately recognized or managed by the treating medical staff.

We or our collaborators expect to have to educate medical personnel using any product candidates we may develop to understand the side effect profiles for our clinical trials and upon any commercialization of such product candidates.

Inadequate recognition or management of the potential side effects of such product candidates could result in patient injury or death.

If any such events occur, clinical trials or commercial distribution of any product candidates or products we develop alone or with collaborators could be suspended or terminated, and our business and reputation could suffer substantial harm.

Treatment-related side effects could affect patient recruitment and the ability of enrolled patients to complete the trial or result in potential liability claims.

Regulatory authorities could order us or our collaborators to cease further development of, deny approval of or require us to cease selling any product candidates or products for any or all targeted indications.

If we or our collaborators elect, or are required, to delay, suspend or terminate any clinical trial or commercialization efforts, the commercial prospects of such product candidates or products may be harmed, and our ability to generate product revenues from them or other product candidates that we develop may be delayed or eliminated.

Additionally, if we successfully develop a product candidate alone or with collaborators and it receives marketing approval, the FDA could require us to adopt a REMS to ensure that the benefits of treatment with such product candidate outweigh the risks for each potential patient, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry.

We or our collaborators may also be required to adopt a REMS or engage in similar actions, such as patient education, certification of health care professionals or specific monitoring, if we or others later identify undesirable side effects caused by any product that we develop alone or with collaborators.

Such identification could also have several additional significant negative consequences, such as:

regulatory authorities may suspend, withdraw or limit approvals of such product, or seek an injunction against its manufacture or distribution;

regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product;

we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

we may be required to change the way a product is administered or conduct additional trials;

the product may become less competitive;

we or our collaborators may decide to remove the product from the marketplace;

we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

we could be sued and be held liable for harm caused to patients;

our reputation may suffer.

Any of these events could prevent us or our collaborators from achieving or maintaining market acceptance of any potential product.

We are subject to federal, state and non-U.S.

healthcare and data privacy and security laws and regulations relating to our business, and could face substantial penalties if we are determined not to have fully complied with such laws, which would have an adverse impact on our business.

Our business operations, as well as our current and anticipated future arrangements with investigators, healthcare professionals, consultants, third-party payors, customers and patients, expose or will expose us to broadly applicable foreign, federal, and state fraud and abuse and other healthcare and privacy laws and regulations.

These laws constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute any potential products for which we may obtain marketing approval.

Such laws include:

federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a U.S.

healthcare program such as Medicare and Medicaid.

A person or entity does not need to have actual knowledge of the U.S.

federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation;

federal civil and criminal false claims laws, including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, among other things, individuals and entities from knowingly presenting, or causing to be presented, to the U.S.

government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S.

In addition, the government may assert that a claim including items or services resulting from a violation of the U.S.

federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;

Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services.

Similar to the U.S.

federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain other health care professionals beginning in 2022, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the Centers for Medicare and Medicaid Services, or CMS, ownership and investment interests held by the physicians described above and their immediate family members;

analogous state and non-U.S.

laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by the patients themselves;

state laws that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.

government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

state and local laws and regulations that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information;

state and local laws which require the registration of pharmaceutical sales representatives.

Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.

It is possible that governmental authorities may conclude that our business practices, including our relationships with certain physicians, some of whom are compensated in the form of stock options for consulting services provided, do not comply with current or future statutes, regulations, agency guidance or case law involving applicable healthcare laws.

If our operations are found to be in violation of any of these or any other health regulatory laws that may apply to us, we may be subject to significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other U.S.

healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources.

Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

If any of the above occur, it could adversely affect our ability to operate our business and our results of operations.

Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.

The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and security of personal data, such as information that we may collect in connection with clinical trials in the U.S.

Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.

This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.

The cost of compliance with these laws, regulations and standards can be high and is likely to increase in the future.

Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.

In the U.S., HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information on covered entities (defined as health plans, health care clearinghouses and certain health care providers) and their respective business associates, individuals or entities that create, received, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.

HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and if the breach is large enough, the media.

Entities that are found to be in violation of HIPAA as the result of a breach of unsecured protected health information, a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

Even when HIPAA does not apply, according to the Federal Trade Commission or the FTC, failing to take appropriate

steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 U.S.C § 45(a).

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Individually identifiable health information is considered sensitive data that merits stronger safeguards.

The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule .

Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.

In addition, California enacted the California Consumer Privacy Act (CCPA) on June 28, 2018, which went into effect on January 1, 2020.

The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states.

In the event that we are subject to or affected by HIPAA, the CCPA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

In Europe, the European Union General Data Protection Regulation (GDPR) went into effect in May 2018 and introduces strict requirements for processing the personal data of EU data subjects.

Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements.

We are also subject to evolving EU laws on data export, as we may transfer personal data from the EU to other jurisdictions.

Following Brexit, we will have to comply with the GDPR and the UK GDPR, each regime having the ability to fine up to the greater of €20 million/ £17 million or 4% of global turnover.

The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear, e.g.

how data transfers between EU member states.

These changes will lead to additional costs and increase our overall risk.

Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply.

Any failure or perceived failure by us or our employees, representatives, contractors, consultants, CROs, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.

We have received orphan drug designation for PBCAR0191 for the treatment of ALL , PBCAR20A for the treatment of mantle cell lymphoma, or MCL, and PBCAR269A for the treatment of multiple myeloma, and we may seek orphan drug designation for some or all of our other product candidates, but we may be unable to obtain such designations or to maintain the benefits associated with orphan drug designation, which may negatively impact our ability to develop or obtain regulatory approval for such product candidates and may reduce our revenue if we obtain such approval.

We may seek orphan drug designation for some or all of our product candidates in specific orphan indications in which there is a medically plausible basis for the use of these products.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic.

Orphan drug designation must be requested before submitting a biologics license application, or BLA.

In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA.

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

We have received orphan drug designation in the United States for PBCAR0191 for the treatment of ALL.

Although we may seek orphan product designation for some or all of our other product candidates, we may never receive such designations.

If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority to the product with orphan product exclusivity or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can ensure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Even if we or our collaborators obtain orphan drug designation for a product candidate, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products.

Exclusive marketing rights in the United

States may be limited if we or our collaborators seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Further, even if a product obtains orphan drug exclusivity, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties can be approved for the same condition.

Even after an orphan drug is approved, the FDA can subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later drug is safer, more effective, or makes a major contribution to patient care.

Furthermore, the FDA can waive orphan exclusivity if we or our collaborators are unable to manufacture sufficient supply of the product.

Similarly, in Europe, a medicinal product may receive orphan designation under Article 3 of Regulation (EC) 141/2000.

This applies to products that are intended for a life-threatening or chronically debilitating condition and either (1) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (2) the product, without the benefits derived from orphan status, would be unlikely to generate sufficient returns in the EU to justify the necessary investment.

Moreover, in order to obtain orphan designation in the EU it is necessary to demonstrate that 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.

In the EU, orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and applicants can benefit from specific regulatory assistance and scientific advice.

Products receiving orphan designation in the EU can receive 10 years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market.

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

However, the 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation—for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity.

Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

the first applicant consents to a second orphan medicinal product application;

the first applicant cannot supply enough orphan medicinal product.

If we or our collaborators do not receive or maintain orphan drug designation for product candidates for which we seek such designation, it could limit our ability to realize revenues from such product candidates.

We may seek fast track designation, breakthrough therapy designation, Regenerative Medicine Advanced Therapy, or RMAT, designation, or priority review from the FDA or access to the PRIME scheme from the EMA for some or all of our product candidates, but we may not receive such designations, and even if we do, it may not lead to a faster development or regulatory review or approval process, and will not increase the likelihood that such product candidates will receive marketing approval.

We may seek fast track designation, breakthrough therapy designation, Regenerative Medicine Advanced Therapy, or RMAT, designation or priority review from the FDA, or access to the PRIME scheme from the EMA for some or all of our product candidates.

If a drug is intended for the treatment of a serious or life-threatening condition or disease, and nonclinical or clinical data demonstrate the potential to address an unmet medical need, the product may qualify for FDA fast track designation, for which sponsors must apply.

The FDA has broad discretion whether or not to grant this designation.

If granted, fast track designation makes a drug eligible for more frequent interactions with FDA to discuss the development plan and clinical trial design, as well as rolling review of the application, which means that the company can submit completed sections of its marketing application for review prior to completion of the entire submission.

Products with fast track designation may also be eligible for accelerated approval and priority review, if the relevant criteria are met.

Breakthrough therapy designation is intended to expedite the development and review of product candidates that treat serious or life-threatening diseases when "preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development." The designation of a product candidate as a breakthrough therapy provides the same potential benefits as a fast track designation, with more intensive FDA guidance on an efficient development program and an organizational commitment at FDA involving senior managers.

A company may also request RMAT designation of its product candidate, which designation may be granted if the drug meets the following criteria:

(1) it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions;

(2) it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition;

and (3) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.

Like breakthrough therapy designation, RMAT

designation provides potential benefits that include more frequent meetings with FDA to discuss the development plan for the product candidate, and potential eligibility for rolling review and priority review.

Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.

RMAT- designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence (such as electronic health records);

through the collection of larger confirmatory data sets;

or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.

PRIME is a scheme provided by the EMA to enhance support for the development of medicines that target an unmet medical need.

To qualify for PRIME, product candidates require early clinical evidence that the therapy has the potential to offer a therapeutic advantage over existing treatments or benefits patients without treatment options.

Among the benefits of PRIME are the appointment of a rapporteur to provide continuous support and help build knowledge ahead of a marketing authorization application, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review earlier in the application process.

There is no assurance that we will obtain fast track designation, breakthrough therapy designation, RMAT designation or access to PRIME for any of our product candidates.

Fast track designation, breakthrough therapy designation, RMAT designation and PRIME eligibility do not change the standards for product approval, and there is no assurance that any such designation or eligibility will result in expedited review or approval or that the approved indication will not be narrower than the indication covered by the fast track designation, breakthrough therapy designation, RMAT designation or PRIME eligibility.

Additionally, fast track designation, breakthrough therapy designation, RMAT designation and access to PRIME can each be revoked if the criteria for eligibility cease to be met as clinical data emerges.

If the product candidates that we or our collaborators may develop receive regulatory approval in the United States or another jurisdiction, they may never receive approval in other jurisdictions, which would limit market opportunities for such product candidate and adversely affect our business.

Approval of a product candidate in the United States by the FDA or by the requisite regulatory agencies in any other jurisdiction does not ensure approval of such product candidate by regulatory authorities in other countries or jurisdictions.

The approval process varies among countries and may limit our or our collaborators’ ability to develop, manufacture, promote and sell product candidates internationally.

Failure to obtain marketing approval in international jurisdictions would prevent the product candidates from being marketed outside of the jurisdictions in which regulatory approvals have been received.

In order to market and sell product candidates in the EU and many other jurisdictions, we and our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.

The approval procedure varies among countries and may involve additional preclinical studies or clinical trials both before and after approval.

In many countries, any product candidate for human use must be approved for reimbursement before it can be approved for sale in that country.

In some cases, the intended price for such product is also subject to approval.

Further, while regulatory approval of a product candidate in one country does not ensure approval in any other country, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others.

If we or our collaborators fail to comply with the regulatory requirements in international markets or to obtain all required marketing approvals, the target market for a particular potential product will be reduced, which would limit our ability to realize the full market potential for the product and adversely affect our business.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize any product candidates we or our collaborators develop and may adversely affect the prices for such product candidates.

In the United States and certain non-U.S.

jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our or our collaborators’ ability to profitably sell any product candidates that obtain marketing approval.

For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively the Affordable Care Act, was enacted in the United States.

Among the provisions of the Affordable Care Act of importance to our product candidates, the Affordable Care Act established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;

increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations, expanded eligibility criteria for Medicaid programs, expanded the entities eligible for discounts under the Public Health program, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, created a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D, and created a licensure framework for follow-on biologic products.

On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the entire Affordable Care Act is invalid based primarily on the fact that the TCJA enacted on December 22, 2017, repealed the tax-based shared responsibility payment imposed by the Affordable Care Act, on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the “individual mandate”.

On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

I t is unclear how these decision s , subsequent appeals, if any, or other efforts to challenge, repeal or replace the Affordable Care Act will impact the law or our business .

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

Further, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

Senate and House of Representatives, respectively.

Department of Health and Human Services has begun soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existing authority.

Although a number of these, and other potential measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or the Right to Try Act, was signed into law.

The law, among other things, provides a framework for certain patients with life-threatening diseases or conditions to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program.

There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act.

We expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that we or our collaborators may receive for any approved or cleared product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad.

If we or our collaborators are slow or unable to adapt to new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, any of our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements, which may result in significant additional expense.

Even if products we develop alone or with collaborators receive regulatory approval, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, distribution, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information, among other things.

Any regulatory approvals received for such products may also be subject to limitations on the approved indicated uses for which they may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing and surveillance studies.

For example, the holder of an approved BLA in the United States is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA.

FDA guidance advises that patients treated with some types of gene therapy undergo follow-up observations for potential adverse events for as long as 15 years.

Similarly, in the EU, pharmacovigilance obligations are applicable to all medicinal products.

In addition to those, holders of a marketing authorization for gene or cell therapy products must detail, in their application, the measures they envisage to ensure follow-up of the efficacy and safety of these products.

In cases of particular concern, marketing authorization holders for gene or cell therapy products in the EU may be required to design a risk management system with a view to identifying, preventing or minimizing risks and may be obliged to carry out post-marketing studies.

In the United States, the holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process.

Similar provisions apply in the EU.

Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

Similarly, in the EU any promotion of medicinal products is highly regulated and, depending on the specific jurisdiction involved, may require prior vetting by the competent national regulatory authority.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or foreign marketing application.

If we, our collaborators or a regulatory agency discovers previously unknown problems with a product such as adverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory agency may impose restrictions relative to that product, the manufacturing facility or us or our collaborators, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

Moreover, if any of our product candidates are approved, our product labeling, advertising, promotion and distribution will be subject to regulatory requirements and continuing regulatory review.

The FDA strictly regulates the promotional claims that may be made about drug products.

In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling.

If we or our collaborators fail to comply with applicable regulatory requirements following approval of any potential products we may develop, authorities may:

issue an untitled enforcement letter or a warning letter asserting a violation of the law;

seek an injunction, impose civil and criminal penalties, and impose monetary fines, restitution or disgorgement of profits or revenues;

suspend or withdraw regulatory approval;

suspend or terminate any ongoing clinical trials or implement requirements to conduct post-marketing studies or clinical trials;

refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto) submitted by us or our collaborators;

restrict the labeling, marketing, distribution, use or manufacturing of products;

seize or detain products or otherwise require the withdrawal or recall of products from the market;

refuse to approve pending applications or supplements to approved applications that we or our collaborators submit;

refuse to permit the import or export of products;

refuse to allow us or our collaborators to enter into government contracts.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.

The occurrence of any event or penalty described above may inhibit our or our collaborators’ ability to commercialize products and our ability to generate revenues.

In addition, the FDA’s policies, and policies of foreign regulatory agencies, may change, and additional regulations may be enacted that could prevent, limit or delay regulatory approval of product candidates.

For example, in December 2016, the 21st Century Cures Act, or the Cures Act, was signed into law.

The Cures Act, among other things, is intended to modernize the regulation of biologics and spur innovation, but its ultimate implementation is unclear.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

For example, certain policies of the Trump administration may impact our business and industry.

Namely, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine oversight activities such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing applications.

It is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority.

If these executive actions impose restrictions on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

If we or our collaborators are slow or unable to adapt to changes in existing requirements or the adoption of new requirements, or if we or our collaborators are unable to maintain regulatory compliance, marketing approval that has been obtained may be lost and we may not achieve or sustain profitability.

Even if any product we develop alone or with collaborators receives marketing approval, such product may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

The commercial success of any potential therapeutic products we develop alone or with collaborators will depend upon their degree of market acceptance by physicians, patients, third-party payors and others in the medical community.

Even if any potential therapeutic products we develop alone or with collaborators receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community.

The degree of market acceptance of any product we develop alone or with collaborators, if approved for commercial sale, will depend on a number of factors, including:

the efficacy and safety of such product as demonstrated in clinical trials;

the prevalence and severity of any side effects;

the clinical indications for which the product is approved by FDA, the EMA or other regulatory authorities;

product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling;

public attitudes regarding genome editing technologies;

our and any collaborators’ ability to educate the medical community about the safety and effectiveness of the product;

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies, as well as their willingness to accept a therapeutic intervention that involves the editing of the patient’s genome;

the potential and perceived advantages compared to alternative treatments;

convenience and ease of administration compared to alternative treatments;

any restrictions on the use of such product together with other treatments or products;

market introduction of competitive products;

publicity concerning such product or competing products and treatments;

the ability to offer such product for sale at a competitive price;

the strength of marketing and distribution support;

sufficient third-party coverage and adequate reimbursement.

If any products we develop alone or with collaborators do not achieve an adequate level of acceptance, we may not generate significant product revenues, and we may not become profitable.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any products we develop alone or with collaborators, the commercialization of such products may not be successful if and when they are approved.

We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of biopharmaceutical or other commercial products.

To achieve commercial success for any approved products for which we retain sales and marketing responsibilities, we must either develop a sales and marketing organization or outsource these functions to third parties.

In the future, we may choose to build a focused sales, marketing and commercial support infrastructure to sell, or participate in sales activities with our collaborators for, certain product candidates if and when they are approved.

There are risks involved with both establishing our own commercial capabilities and entering into arrangements with third parties to perform these services.

For example, restricted or closed distribution channels may make it difficult to distribute products to segments of the patient population, and the lack of complementary medicines to be offered by sales personnel may put us at a competitive disadvantage relative to companies with more extensive product lines.

Recruiting and training a sales force or reimbursement specialists are expensive and time consuming and could delay any product launch.

If the commercial launch of a product for which we recruit a sales force and establish marketing and other commercialization capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses, and our investment would be lost if we cannot retain or reposition our commercialization personnel.

Factors that may inhibit our efforts to commercialize products on our own include:

unforeseen costs and expenses associated with creating an independent commercialization organization;

our inability to recruit, train, retain and effectively manage adequate numbers of effective sales, marketing, customer service and other support personnel, including for reimbursement or medical affairs;

the inability of sales personnel to educate adequate numbers of physicians on the benefits of our future medicines;

the inability of reimbursement professionals to negotiate arrangements for formulary access, reimbursement and other acceptance by payors.

If we choose to enter into arrangements with third parties to perform sales, marketing, commercial support or distribution services, we may not be successful in entering into such arrangements or may be unable to do so on terms that are favorable to us.

Entering into such third-party arrangements may subject us to a variety of risks, including:

product revenues or profitability to us being lower than if we were to market and sell any products we or our collaborators may develop ourselves;

our inability to exercise direct control over sales and marketing activities and personnel;

failure of the third parties to devote necessary resources and attention to, or other inability to, sell and market any products we or our collaborators may develop;

potential disputes with third parties concerning sales and marketing expenses, calculation of royalties and sales and marketing strategies;

unforeseen costs and expenses associated with sales and marketing.

If we do not establish effective commercialization capabilities, either on our own or in collaboration with third parties, we will not be successful in commercializing any of our product candidates that may receive approval.

If the market opportunities for any products we develop alone or with collaborators are smaller than our estimates, or if we are unable to successfully identify enough patients, our revenues may be adversely affected.

We focus some of our research and product development on treatments for rare genetic diseases.

Our and our collaborators’ projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with product candidates we may develop, are based on estimates.

These estimates may prove to be incorrect, and new studies may change the estimated incidence or prevalence of these diseases.

The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected, and patients may not be amenable to treatment with products that we may develop alone or with collaborators, or may become increasingly difficult to identify or gain access to, any of which would decrease our ability to realize revenue from any such products for such diseases.

The successful commercialization of potential products will depend in part on the extent to which governmental authorities and health insurers establish coverage, and the adequacy of reimbursement levels and pricing policies, and failure to obtain or maintain coverage and adequate reimbursement for any potential products that may receive approval, could limit marketability of those products and decrease our ability to generate revenue.

The availability of coverage and adequacy of reimbursement by government healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors is essential for most patients to be able to afford prescription medications such as the potential therapeutic products we develop alone or with collaborators.

The ability to achieve acceptable levels of coverage and reimbursement for any potential products that may be approved by governmental authorities will have an effect on our and our collaborators’ ability to successfully commercialize such products.

Even if products we develop alone or with collaborators obtain coverage by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high.

If coverage and reimbursement in the United States, the EU or elsewhere is not available for any products we develop alone or with collaborators that may be approved, or any reimbursement that may become available is decreased or eliminated in the future, we and our collaborators may be unable to commercialize such products.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved drugs and biologics.

In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs and biologics will be covered.

In August 2019, the CMS published its decision to cover autologous treatment for cancer with T-cells expressing at least one CAR when administered at healthcare facilities enrolled in the FDA risk evaluation and mitigation strategies and used for an FDA-approved indication or for other uses when the product has been FDA-approved and the use is supported in one or more CMS-approved compendia.

The Medicare and Medicaid programs increasingly are used as models in the United States for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs and biologics.

Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies.

We cannot predict at this time what third-party payors will decide with respect to the coverage and reimbursement for any product that we develop alone or with collaborators.

No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States.

Therefore, coverage and reimbursement for products can differ significantly from payor to payor.

As a result, the coverage determination process is often a time-consuming and costly process that will require us or our collaborators to provide scientific and clinical support for the use of any potential products that may be approved to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on short notice.

Obtaining coverage and adequate reimbursement for products we develop alone or with collaborators may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician.

In certain instances, payors may not separately reimbursement for the product itself, but only for the treatments or procedures in which such product is used.

A decision by a third-party payor not to cover or separately reimburse for products that we develop alone or with collaborators or procedures using such products, could reduce physician utilization of any such products that may receive approval.

Third-party payors are increasingly challenging prices charged for pharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs or biologics when an equivalent generic drug, biosimilar or a less expensive therapy is available.

If approved, it is possible that a third-party payor may consider any products that we develop alone or with collaborators as substitutable and only offer to reimburse patients for the less expensive product.

Pricing of existing third-party therapeutics may limit the amount we will be able to charge for any products that may receive approval even if we or our collaborators show improved efficacy or improved convenience of administration such products.

These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in the product.

If reimbursement is not available or is available only at limited levels, we or our collaborators may not be able to successfully commercialize any of the products that we develop, even if approved, and we may not be able to obtain a satisfactory financial return on them.

Moreover, increasing efforts by governmental and third-

party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for any products we develop alone or with collaborators that may receive approval.

We expect to experience pricing pressures in connection with the sale of any products that may receive approval due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes.

The downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical procedures and other treatments, has become intense.

As a result, increasingly high barriers are being erected to the entry of new products.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe and elsewhere have and will continue to put pressure on the pricing and usage of any products we develop alone or with collaborators that may receive approval.

In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems.

Other countries allow companies to fix their own prices for medical products, but monitor and control company profits.

Additional international price controls or other changes in pricing regulation could restrict the amount that we or our collaborators are able to charge for products that we develop that may receive approval.

Accordingly, in markets outside the United States, the reimbursement for such products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

If we are successful in achieving regulatory approval to commercialize any biologic product candidate we develop alone or with collaborators, it may face competition from biosimilar products.

In the United States, our product candidates are regulated by the FDA as biologic products subject to approval under the BLA pathway.

The Biologics Price Competition and Innovation Act of 2009, or the BPCIA, created an abbreviated pathway for the approval of biosimilar and interchangeable biologic products following the approval of an original BLA.

The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product.

Under the BPCIA, an application for a biosimilar product may not be submitted until four years following the date that the reference product was first licensed by the FDA.

In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years after the reference product was first licensed by the FDA.

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

The law is complex and is still being interpreted and implemented by the FDA.

As a result, its ultimate impact, implementation, and meaning are subject to uncertainty.

While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for biological product candidates.

We believe that any of our product candidates that are approved as biological products under a BLA should qualify for the 12-year period of exclusivity.

However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider such product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

Moreover, the extent to which a biosimilar product, once approved, will be substituted for any one of our or our collaborators’ reference products in a way that is similar to traditional generic substitution for non-biologic products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

If competitors are able to obtain marketing approval for biosimilars referencing any products that we develop alone or with collaborators that may be approved, such products may become subject to competition from such biosimilars, with the attendant competitive pressure and potential adverse consequences.

Additional Risks Related to the Identification, Development and Commercialization of Our Food and Agricultural Product Candidates

The regulatory landscape that may govern any potential food or agricultural products that we or our collaborators may develop is uncertain and may adversely impact the development and commercialization activities of our food platform.

In the United States, the United States Department of Agriculture, or the USDA, regulates, among other things, the introduction (including the importation, interstate movement or release into the environment) of organisms and products altered or produced through genetic engineering determined to be plant pests or for which there is reason to believe are plant pests.

Such organisms and products are considered “regulated articles.” However, a petitioner may submit a request for a determination by the USDA of “nonregulated status” for a particular article.

A petition for determination of nonregulated status must include detailed information, including relevant experimental data and publications, field trial reports and a description of the genotypic differences between the regulated article and the nonmodified recipient organism, among other things.

Neither we nor, to our knowledge, our collaborators

have obtained a determination from the USDA that any product candidates are not “regulated articles” under these regulations.

We cannot predict whether the USDA, advocacy groups or other third parties will contend that these products are regulated articles.

The USDA’s regulations also require that companies obtain a permit or file a notification before engaging in the introduction (including the importation, interstate movement or release into the environment such as in field trials) of “regulated articles.” Additionally, a change in the way the USDA interprets its regulations, or a change in its regulations, could subject our or our collaborators’ products to more burdensome regulations, thereby substantially increasing the time and costs associated with developing product candidates.

Complying with the USDA’s Part 340 regulations, including permitting requirements, is a costly, time-consuming process and could delay or prevent the commercialization of any potential food or agricultural products we or our collaborators may develop.

Any potential food or agricultural products that we or our collaborators develop may also be subject to extensive FDA food product regulations.

Under sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act, or the FDCA, any substance that becomes or is reasonably expected to become a component of food is a food additive and is therefore subject to FDA premarket review and approval, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use (generally recognized as safe, or GRAS), or unless the use of the substance is otherwise excluded from the definition of a food additive, and any food that contains an unsafe food additive is considered adulterated under section 402(a)(2)(C) of the FDCA.

The FDA may classify some or all of the potential food or agricultural products that we or our collaborators may develop as containing a food additive that is not GRAS or otherwise determine that such products contain significant compositional differences from existing plant products that require further review.

Such classification would cause these potential products to require pre-market approval, which could delay the commercialization of these products.

In addition, the FDA is currently evaluating its approach to the regulation of gene-edited plants.

For example, on January 19, 2017, the FDA issued a notice in the Federal Register requesting public comment on the use of genome editing techniques to produce new plant varieties that are used for human or animal food or foods that are derived from such new plant varieties produced using genome editing.

Among other things, the notice asked for data and information in response to questions about the safety of foods from gene-edited plants, such as whether categories of gene-edited plants present food safety risks different from other plants produced through traditional plant breeding.

If the FDA enacts new regulations or policies with respect to gene-edited plants, such policies could result in additional compliance costs and delay or even prevent the commercialization of any of our product candidates, which could negatively affect our profitability.

Any delay in the regulatory consultation process, or a determination that any potential products we or our collaborators may develop do not meet regulatory requirements by the FDA or other regulators, could cause a delay in, or prevent, the commercialization of our products, which may lead to reduced acceptance by the public and an increase in competitor products that may directly compete with ours, or could otherwise negatively impact our business, prospects and results of operations.

On May 4, 2018, the USDA issued a proposed rule implementing the National Bioengineered Food Disclosure Standard, with a proposed compliance date of January 1, 2020.

Under this proposed rule, the label of a bioengineered, or BE, food must include a disclosure that the food is a BE food or contains a BE ingredient, with certain exceptions.

This proposed rule defines BE food as “a food that contains genetic material that was has been modified through in vitro recombinant deoxyribonucleic acid, or DNA, techniques and for which the modification could not otherwise be obtained through conventional breeding or found in nature,” except in the case of an incidental additive present in food at an insignificant level and that does not have any technical or functional effect in the food.

If this proposed rule is passed and products developed by our collaborators based on our ARCUS technology are required to be labeled “BE,” consumer perception of these products may be adversely affected.

In the EU, genetically modified foods, or GM foods, can only be authorized for sale on the market once they have been subject to rigorous safety assessments.

The procedures for evaluation and authorization of GM foods are governed by Regulation (EC) 1829/2003 on GM food and feed and Directive 2001/18/EC on the release of genetically modified organisms, or GMOs, into the environment.

If the GMO is not to be used in food or feed, then an application must be made under Directive 2001/18/EC.

If the GMO is to be used in food or feed (but it is not grown in the EU) then a single application for both food and feed purposes under Regulation 1829/2003 should be made.

If the GMO is used in feed or food and it is also grown in the EU, an application for both cultivation and food/feed purposes needs to be carried out under Regulation (EC) 1829/2003.

A different EU regulation, Regulation (EC) 1830/2003, regulates the labeling of products that contain GMOs that are placed on the EU market.

Directive 2001/18/EC was amended by Directive (EU) 2015/412 which gives EU Member States more flexibility to allow, restrict or prohibit growing GMOs in their territory, on a range of environmental grounds, even if such crops were previously authorized at EU level.

Under Directive 2015/412, EU Member State restrictions or prohibitions can only cover cultivation, and not the free circulation and import of genetically modified seeds and plant propagation material, and should be in conformity with the internal market rules of the EU Treaties.

In March 2018, the Commission adopted Commission Directive (EU) 2018/350 amending Directive 2001/18/EC as regards the environmental risk assessment of GMOs.

This measure aims to bring the assessment of the environmental risk of GM foods in the EU up to date with developments in scientific knowledge and technical progress.

Member States have to transpose the Directive by September 29, 2019.

Further EU level legislation on GM foods includes Directive 2009/41/EC on contained use of genetically modified micro-organisms and Regulation (EC) 1946/2003 on transboundary movements of GMOs.

We cannot predict whether or when any governmental authority will change its regulations with respect to any potential food or agricultural products that we develop alone or with collaborators.

Advocacy groups have engaged in publicity campaigns and filed lawsuits in various countries against companies and regulatory authorities seeking to halt biotechnology approval activities or influence public opinion against genetically engineered products.

In addition, governmental reaction to negative publicity concerning genetically edited agricultural products could result in greater regulation of genetic research and derivative products or regulatory costs that render our or our collaborators’ development of potential food or agricultural products cost prohibitive.

Our collaborators may use or integrate our products or technology into other products in ways that could subject those collaborators or products to additional regulation.

The overall agricultural industry is susceptible to agricultural price changes, and we may be exposed to risks from changes in commodity prices.

Changes in the prices of agricultural products could result in changes in demand for and prices of food and agricultural products that we or our collaborators may develop.

We may be susceptible to these changes as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls and government regulations, subsidies or market export tariffs.

If demand for agricultural products that we or our collaborators may develop is negatively impacted, our potential revenues under collaboration agreements for such products may decline, which could adversely affect our results of operations.

The successful commercialization of any food or agricultural products we develop will depend in part on our collaborators’ ability to produce high-quality plants and seeds cost-effectively on a large scale and to accurately forecast demand for such potential products, and they may be unable to do so.

The production of commercial-scale quantities of food or agricultural products or seeds for them requires the multiplication of the plants or seeds through a succession of plantings and seed harvests.

The cost-effective production of high-quality, high-volume quantities of such products or seeds may depend in part on our collaborators’ abilities to scale production processes to produce plants and seeds in sufficient quantity to meet demand.

Our collaborators’ existing or future plant and seed production techniques may not enable timely meeting of large-scale production goals cost-effectively for any potential food or agricultural products that we and our collaborators may develop.

Although we have worked with some of the largest plant biotechnology companies to edit gene targets and develop potential product candidates in a variety of crop plants, no commercial food or agricultural products have ever been developed using our technology.

In addition, because of the length of time it takes to produce commercial quantities of marketable plants and seeds, our collaborators will need to make seed production decisions well in advance of food product sales.

The ability to accurately forecast demand can be adversely affected by a number of factors outside of their control, including changes in market conditions, environmental factors, such as pests and diseases, and adverse weather conditions.

The commercial success of any consumer-centric food or agricultural products that we or our collaborators may develop is reliant on the needs of food manufacturers and the recognition of shifting consumer preferences.

The commercial success of any consumer-centric products depends in part on the ability of the food manufacturer to accurately determine the shifting needs and desires of the ultimate consumer.

We will not control the marketing, distribution labeling or any other aspects of the sale and commercialization of the manufacturers’ food products.

Consumer preferences may be a significant driver in the success of food manufacturers in their efforts to sell food and agricultural products, including products that we or our collaborators may develop.

While current trends indicate that consumer preferences may be moving towards “healthier” options, we cannot predict whether such trends will continue or which types of food products will be demanded by consumers in the future.

Additionally, as health and nutritional science continues to progress, consumer perception of what foods, nutrients and ingredients are considered “healthy” may shift.

We and our collaborators may not be dynamic enough in responding to consumer trends and creating products that will be demanded by consumers in the future.

In addition, if consumer demand is lower than our estimates or those of our collaborators, our ability to realize revenues from potential food or agricultural products may be limited.

Failure by our collaborators to successfully recognize consumer trends could lower demand for potential food or agricultural products that we or our collaborators may develop, which could harm our business, results of operations and financial condition.

Some of the potential food products we develop alone or with collaborators may be distributed into markets or countries in which they have not received regulatory approval, which may result regulatory challenges or lawsuits.

The scale of the agricultural industry may make it difficult to monitor and control the distribution of any potential food products that we develop alone or with collaborators.

As a result, such products may be sold inadvertently within jurisdictions where they are not approved for distribution.

Such sales may lead to regulatory challenges or lawsuits against us, which could result in significant expenses and divert our management’s attention, which could harm our business, results of operations and financial condition.

Risks Related to Our Reliance on Third Parties

We have entered into significant arrangements with collaborators and expect to depend on collaborations with third parties for certain research, development and commercialization activities, and if any such collaborations are not successful, it may harm our business and prospects.

We have sought in the past, and anticipate that we will continue to seek in the future, third-party collaborators for the research, development and commercialization of certain product candidates and the research and development of certain technologies.

For example, we are party to the Servier Agreement, pursuant to which we are focused on research and development of allogeneic CAR T cell therapies for up to six oncology targets that utilize or incorporate our genome editing technologies, and we are also party to a collaboration with Gilead focused on research and development of therapeutic product candidates for the treatment of Hepatitis B using ARCUS nucleases.

In addition, our food platform is based on a consumer-centric model, whereby our research and development activities and potential revenues are based on the needs and commercial success of our collaborators.

For example, we are a party to a commercial license agreement with Cargill focused on targeting and modifying certain genes related to saturated oil production in canola plants.

Our likely collaborators for other product research and development arrangements include large and mid-size pharmaceutical and biotechnology companies biotechnology and food, beverage, nutrition and agricultural biotechnology companies, and our likely collaborators for other technology research and development arrangements include universities and other research institutions.

Working with collaborators poses several significant risks.

We have limited control over the amount and timing of resources that our collaborators dedicate to the product candidates or technologies we may seek to develop with them.

A variety of factors may impact resource allocation decisions of collaborators, such as study or trial results, changes in the collaborator’s strategic focus, turnover in personnel responsible for the development activities, financial capacity or external factors such as a business combination or change in control that diverts resources or creates competing priorities.

Collaboration agreements may not lead to development or commercialization of product candidates or the development of technologies in the most efficient manner or at all.

Resource allocation and other developmental decisions made by our collaborators may result in the delay or termination of research programs, studies or trials, repetition of or initiation of new studies or trials or provision of insufficient funding or resources for the completion of studies or trials or the successful marketing and distribution of any product candidates that may receive approval.

Collaborators could independently develop, or develop with third parties, product candidates or technologies that compete directly or indirectly with our product candidates or technologies if the collaborators believe that competitive products or technologies are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours.

Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way that could jeopardize or invalidate our proprietary information or expose us to potential litigation.

Disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization activities or that result in costly litigation or arbitration that diverts management attention and resources.

Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

If our collaborations do not result in the successful development and commercialization of product candidates or technologies, or if one of our collaborators terminates its agreement with us, we may not receive any future funding or milestone or royalty payments under the collaboration.

If we do not receive the funding we expect under these agreements, our development of product candidates or technologies could be delayed, and we may need additional resources to develop such product candidates or technologies.

In addition, if one of our collaborators terminates its agreement with us, we may be unable to find a suitable replacement collaborator or any replacement collaborator or attract new collaborators and may need to raise additional capital to pursue further development or commercialization of the applicable product candidates or technologies.

These events could delay development programs, negatively impact the perception of our company in business and financial communities or cause us to have to cease development of the product candidate covered by the collaboration arrangement.

Failure to develop or maintain relationships with any current collaborators could result in the loss of opportunity to work with that collaborator or reputational damage that could impact our relationships with other collaborators in the relatively small industry communities in which we operate.

Moreover, all of the risks relating to product development, regulatory approval and commercialization described in this Annual Report on Form 10-K apply to the activities of our collaborators.

If our existing collaboration agreements or any collaborative or strategic relationships we may establish in the future are not effective and successful, it may damage our reputation and business prospects, delay or prevent the development and commercialization of product candidates and inhibit or preclude our ability to realize any revenues.

If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our research, development and commercialization plans.

Our research and product development programs and the potential commercialization of any product candidates we develop alone or with collaborators will require substantial additional cash to fund expenses, and we expect that we will continue to seek collaborative arrangements with others in connection with the development and potential commercialization of current and future product candidates or the development of ancillary technologies.

We face significant competition in establishing relationships with appropriate collaborators.

In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

Those factors may include, among other things and as applicable for the type of potential product or technology, an assessment of the opportunities and risks of our technology, the design or results of studies or trials, the likelihood of approval, if necessary, by the USDA, the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products and technologies and industry and market conditions generally.

Current or future collaborators may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us.

Additionally, we may be restricted under existing collaboration agreements from entering into future agreements on certain terms or for certain development activities with potential collaborators.

For example, we have granted exclusive rights or options to Servier and Gilead for certain targets, and during the terms of our respective collaboration agreements with them we will be restricted from granting rights to other parties to use our ARCUS technology to pursue potential products that address those targets.

Similarly, our collaboration agreements have in the past and may in the future contain non-competition provisions that could limit our ability to enter into strategic collaborations with future collaborators.

Collaborations are complex and time-consuming to negotiate and document.

We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.

If we do enter into additional collaboration agreements, the negotiated terms may force us to relinquish rights that diminish our potential profitability from development and commercialization of the subject product candidates or others.

If we are unable to enter into additional collaboration agreements, we may have to curtail the research and development of the product candidate or technology for which we are seeking to collaborate, reduce or delay research and development programs, delay potential commercialization timelines, reduce the scope of any sales or marketing activities or undertake research, development or commercialization activities at our own expense.

If we elect to increase our expenditures to fund research, development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

We expect to rely on third parties to conduct, supervise and monitor our clinical trials and some aspects of our research and preclinical testing, and if those third parties do not successfully carry out their contractual duties, comply with regulatory requirements, or otherwise perform in a satisfactory manner, we may not be able to obtain regulatory approval or commercialize product candidates, or such approval or commercialization may be delayed, and our business may be substantially harmed.

We may rely on medical institutions, universities, clinical investigators, contract laboratories and other third parties, such as CROs, to conduct preclinical studies and future clinical trials for our product candidates.

Nevertheless, we will be responsible for ensuring that each of our studies and trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on such third parties will not relieve us of our regulatory responsibilities.

Although we intend to design the trials for our product candidates either alone or with collaborators, third parties may conduct all of the trials.

As a result, many important aspects of our research and development programs, including their conduct and timing, will be outside of our direct control.

Our reliance on third parties to conduct future studies and trials will also result in less direct control over the management of data developed through studies and trials than would be the case if we were relying entirely upon our own staff.

Communicating with outside parties can also be challenging, potentially leading to mistakes and difficulties in coordinating activities.

Outside parties may have staffing difficulties, fail to comply with contractual obligations, experience regulatory compliance issues, undergo changes in priorities, become financially distressed or form relationships with other entities, some of which may be our competitors.

We also face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs or other third parties, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology.

For any violations of laws and regulations during the conduct of our preclinical studies and future clinical trials, we could be subject

We may use our website as a distribution channel of material information about the Company.

Financial and other important information regarding the Company is routinely posted on and accessible through the Investors and Media section of our website at www.precisionbiosciences.com .

In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” option under Investor Tools of the Investors and Media section of our website at www.precisionbiosciences.com .

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