Estrella Immunopharma, Inc. 10-K

Item 1. Business. Overview We are a clinical-stage biopharmaceutical company developing T-cell therapies to address treatment challenges for patients with cancers and autoimmune diseases. Our strategy is to harness the evolutionary power of the human immune system to provide patients with potentially safer, more efficacious T-cell therapies compared to traditional CAR-T therapies. Leveraging cutting-edge cellular engineering technologies, we aim to overcome the limitations of current CAR-T therapies, such as high toxicity and prohibitive costs, so that T-cell therapy treatments can be accessible to a larger patient population. Lead Program Status Our innovative ARTEMIS ® T Cell Receptor Platform uniquely designs T cells that, unlike a traditional CAR-T cell, are activated and regulated upon engagement with cancer targets using cellular mechanisms more resembling those from the endogenous T-cell receptor (TCR). Our lead product candidate, EB103, is a CD19-directed ARTEMIS T-cell therapy designed to address the unmet medical needs of patients with relapsed or refractory B-cell malignancies, especially those who are not eligible for currently approved T-cell therapies. EB103 is currently in the dose expansion portion of a Phase I/II clinical trial (STARLIGHT-1) in patients with relapsed/refractory B-cell Non-Hodgkin’s Lymphomas. As of December 2025, we have completed the second dose cohort in the Phase I dose-escalation portion of our STARLIGHT-1 Phase I/II clinical trial of EB103, and an independent Data Safety Monitoring Board (DSMB) has completed its review of safety data from the Phase I dose-escalation phase (n=9) and recommended advancing the trial into the Phase II expansion phase at the recommended Phase II dose (RP2D). In the Phase I dose-escalation phase, no treatment-related serious adverse events were reported, and the high-dose cohort achieved a 100% complete response rate at Month 1 in all evaluable patients, a majority of whom were considered high-risk and ineligible for currently available commercial CD19 products. Additional Product Candidates We are also developing EB104, which are T-cells that utilize ARTEMIS ® technology to target not only CD19, but also CD22. Like CD19, CD22 is expressed on the surface of most B-cell malignancies. EB104’s dual-targeting strategy has the potential to more effectively treat patients with lower surface CD19 density or a greater prevalence of CD22, thus potentially reducing relapse due to CD19 antigen loss. 1 Solid tumors represent approximately 90% of all cancers. To date, T-cell therapy such as CAR-T has demonstrated limited success in treating solid tumors. One major barrier limiting the potential of T-cell therapy is the lack of tumor-specific targets. We believe that, in collaboration with Imugene and Imugene’s product candidate, CF33-CD19t, an oncolytic virus, EB103 T-cells have the potential to overcome this barrier using a “mark and kill” strategy. This “mark and kill” strategy entails using CF33-CD19t, to induce solid tumor cells into expressing the CD19 protein on the cell surface. Our EB103 T-cells can then pursue and kill the solid tumor cells expressing exogenous CD19, offering a potential treatment to cancers that lack solid tumor-specific targets. Corporate History On June 28, 2022, pursuant to a Contribution Agreement between Estrella and Eureka, Eureka contributed certain assets related to T-cell therapies targeting CD19 and CD22 in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock (“Separation”), On September 29, 2023, Estrella completed a business combination (the “Business Combination”) with TradeUP Acquisition Corp. (“UPTD”), a blank-check company, under the terms of the Agreement and Plan of Merger dated September 30, 2022. Following the merger, Estrella became a wholly owned subsidiary of UPTD, and UPTD was renamed Estrella Immunopharma, Inc. On June 26, 2024, Estrella Immunopharma, Inc. merged with its wholly owned subsidiary, Estrella Biopharma, Inc., under Section 253 of the Delaware General Corporation Law. The merger, effective on June 30, 2024, was approved by the Board of Directors and resulted in Estrella Immunopharma, Inc. assuming all assets, liabilities, and obligations of Estrella Biopharma, Inc. On November 27, 2024, the Company established a wholly owned subsidiary in Hong Kong. Our Strategy Key elements of our business strategy include: ● Effectively progress EB103, our lead product candidate, through clinical development. We believe our autologous T-cell therapies have the potential to overcome major limitations of currently approved CAR-T cells with superior safety and efficacy, allowing access to significantly more patients. As of December 2025, we have completed the dosing of nine patients in the Phase I dose escalation phase of STARLIGHT-1 and have initiated Phase II dose expansion phase at the RP2D. We anticipate completing the Phase II portion of the STARLIGHT-1 clinical trial in 1H2027. ● Expand Total Addressable Market (TAM) in CD19-positive cancers through the demonstration of safety and efficacy of ARTEMIS T-cell in clinical settings for patients not eligible for currently approved T-cell therapies: EB103’s safety profile positions it for potential use in earlier-line treatments, broader adoption in community hospital settings rather than being restricted to specialized medical centers, and the ability to treat high-risk patient groups, thereby increasing market penetration and patient accessibility. ● Advance our second product candidate, EB104, into clinical development. We are compiling an Investigational New Drug (IND) filing for EB104 for the treatment of relapsed/refractory and high-risk B cell malignancies. Phase I trials may not commence until the FDA has approved the Investigational New Drug (“IND”) Application for EB104. ● Explore the use of EB103 in conjunction with CF33-CD19t for multiple indications of solid tumors through clinical development. If the Phase I/II Starlight-1 Clinical Trial is successful, we plan to submit an IND filing for the use of EB103 in conjunction with CF33-CD19t in the future. At this time, we have not determined the solid tumor indications to target or an exact timeframe for filing our IND application. 2 ● Continue to innovate to develop and advance a novel T-cell therapy pipeline. We are committed to developing more disruptive therapies that have the potential to be adopted in earlier lines of treatment and to be delivered in community outpatient settings, as well as treat patients in diverse indications beyond cancer, such as autoimmune diseases. Our Pipeline of Clinical Programs We intend to initially focus on advancing our CD19-Redirected ARTEMIS T Cell programs in relapsed/refractory and high-risk blood cancers. Meanwhile, we are advancing a robust pipeline for other hematologic malignancies, solid tumor and autoimmune disease. Our commitment to safety, accessibility, and cost-effectiveness positions us to redefine the T-cell therapy paradigm and deliver transformative solutions to more patients. The following chart summarizes our clinical programs: Our Therapeutic Focus Our primary focus is on developing innovative therapies for CD19-positive cancers, a significant subset of hematologic malignancies with high unmet medical needs. Currently approved therapies, such as Kymriah® (Novartis) and Yescarta® (Kite Pharma), have demonstrated efficacy in relapsed or refractory B-cell malignancies but face limitations due to: ● Severe Toxicities : High rates of Cytokine Release Syndrome (CRS) and immune effector cell-associated neurotoxicity syndrome (ICANS), often requiring hospitalization and intensive management. ● High Costs: Complex and individualized manufacturing processes that result in significant financial burdens. ● Restricted Access : Limited availability in specialized tertiary care centers. 3 Our Approach: EB103 aims to address these challenges by enhancing safety, scalability, and accessibility. Its excellent safety profile allows for broader patient eligibility, including individuals with comorbidities or advanced age and potentially expands treatment access to community settings. Our streamlined production process also enables us to lower the cost of manufacturing. Opportunities for Increasing Total Accessible Market (TAM) for Blood Cancers with a Best-in-Class CD19 T-cell Therapy Hematological Cancers Hematological cancers, or blood cancers, are cancers that begin in blood-forming tissues, such as the bone marrow, or in the body’s immune cells. Examples of hematologic cancers are leukemia, lymphoma, and multiple myeloma. Leukemia is a broad term for cancers of the blood cells. The type of leukemia depends on the type of blood cell that becomes cancerous and whether it grows quickly or slowly. The National Cancer Institute (NCI) estimates 66,890 new cases of leukemia in the United States in 2025, representing approximately 3.3% of all new cancer cases. B-cell lymphoma is a type of cancer that forms in B-cells (a type of immune system cell). B-cell lymphomas may be either indolent (slow-growing) or aggressive (fast-growing). NCI estimates 80,350 new cases of non-Hodgkin lymphoma (NHL) in 2025, and B-cell lymphomas make up most (about 85%) of NHL in the United States. There are many different types of B-cell non-Hodgkin lymphomas. These include Burkitt lymphoma (BL), chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL), diffuse large B-cell lymphoma (DLBCL), follicular lymphoma (FL), and mantle cell lymphoma (MCL). Limitations of Currently Approved T-cell Therapies The approvals of CAR-T therapies over the recent years demonstrate the viability of T-cell therapies as a new class of cancer immunotherapies. Analogous to the advent of monoclonal antibodies, we believe that T-cell therapies have the potential to become some of the most impactful cancer immunotherapy products over the next decade, but will first need to overcome certain limitations that have constrained widespread use: ● Hyperactivation of T-Cells Resulting in Severe Toxicities. The uncontrolled activation of T-cells can lead to CRS. Currently marketed CAR-T therapies include a boxed warning citing fatal or life-threatening risks of CRS and ICANS. We believe these severe toxicity risks will likely limit the incorporation of these therapies into earlier lines of therapy and their adoption in community outpatient settings. ● High Costs and Consequences of Toxicities. CRS and ICANS are very costly side effects to manage. The risk of these occurrences results in standard treatment protocols that can add significant indirect costs on top of direct reimbursement costs and are burdensome to patients and the healthcare system overall. Currently, the average cost of standard CAR-T cell treatment plans is approximately $400,000. ● Challenges in the Treatment of Solid Tumor Cancers. Due to its ability to target cancer-specific intracellular antigens, the currently preferred T-cell therapy platform to target solid tumors is engineered T-Cell Receptor T-cells, or TCR-T. However, TCR-T therapies face the following challenges: (i) T-cell receptors, or TCRs, have a suboptimal affinity for their target antigens; (ii) enhancing TCRs’ affinity for therapeutic purposes can introduce off-target toxicity; and (iii) engineered TCRs can mis-pair with endogenous TCRs, leading to cross-reactivity with unknown consequences. According to Grand View Research, the global CAR T-cell therapy market size was estimated at $5.82 billion in 2025 and is projected to reach $22.36 billion by 2033, growing at a compounded annual growth rate of 18.06% from 2026 to 2033. However, currently only about 20% of eligible patients are treated by current CAR-T therapies, due to their various limitations described above. We believe that EB103 and EB104 programs have the potential to overcome these limitations and capture the vast majority of untapped TAM through providing a more selective immune response, limiting tertiary costs associated with side effects of treatment, and attacking solid tumors with a “mark and kill” strategy. 4 Emerging opportunities in expanding the curative capacity of T-cell therapy to autoimmune diseases Autoimmune diseases occur when the immune system, which normally defends the body against harmful invaders, mistakenly attacks healthy tissues. These diseases can affect various organs, leading to chronic inflammation, tissue damage, and in some cases, life-threatening complications. Common examples include systemic lupus erythematosus (SLE), rheumatoid arthritis, and multiple sclerosis. The cause is often an overactive immune response, particularly involving autoreactive B cells that produce antibodies targeting the body’s own tissues. Traditional treatments for autoimmune diseases have focused on controlling symptoms and slowing disease progression. B-cell depletion therapies, such as CD20-targeting antibodies (e.g., Rituximab, Ocrelizumab) and BAFF inhibitors (e.g., Belimumab), have provided some relief for conditions like lupus and multiple sclerosis. These therapies aim to reduce the number of autoreactive B cells. However, most existing treatments only manage symptoms and are rarely curative. Long-term administration is often required, and patients may experience serious side effects, while the underlying disease continues to progress or return. We believe CD19-redirected T-cell therapy offers a promising new approach to treating autoimmune diseases. In recent clinical studies, CD19-redirected CAR T-cell therapy has demonstrated the potential to go beyond symptom management by depleting the entire population of autoreactive B cells, leading to rapid and durable disease remission. A notable study in lupus patients demonstrated that a single dose of CD19-targeting CAR T-cells resulted in significant improvements, with most patients entering remission and experiencing long-lasting benefits. We plan to expand our clinical investigation of our CD19-redirected ARTEMIS T-cell therapy into autoimmune diseases. Our EB201 program, in preclinical development, is being explored as a potential therapeutic approach targeting Systemic Lupus Erythematosus (SLE). Our Technology Platform: The ARTEMIS® T-Cell Receptor System We hold an exclusive license from Eureka Therapeutics (“Eureka”) to utilize the proprietary ARTEMIS® Cell Receptor platform to develop and commercialize T-cell therapies targeting CD19 and CD22 for the treatment of hematologic malignancies. Under our License Agreement, we hold exclusive rights to develop and commercialize ARTEMIS-based products targeting CD19 and CD22 in all territories worldwide, excluding Greater China and Association of Southeast Asian Nations (ASEAN) countries, which are retained by Eureka. The ARTEMIS platform utilizes an Antibody-T Cell Receptor (AbTCR) architecture designed to potentially overcome limitations associated with conventional chimeric antigen receptor (CAR) T-cell therapies, such as toxicity and exhaustion. Unlike conventional second-generation CAR-T therapies, which rely on synthetic fusion proteins that can drive chronic hyperactivation (tonic signaling) and premature T-cell exhaustion, the ARTEMIS AbTCR is designed to mimic the natural regulation of native T-cells by recruiting endogenous CD3 complex to initiate T-cell activation. A critical differentiating feature of our platform is that the co-stimulatory molecule is provided as a separate protein rather than being covalently linked to the activation domain. By separating these signals, the ARTEMIS platform is designed to mimic the body’s natural immune regulation, potentially limiting T-cell hyperactivation. Based on Eureka’s internal and published studies in Cell Discovery 1 (with CHOP/UPenn) and Cell Reports Medicine 2 (with NCI), we believe the ARTEMIS platform offers distinct advantages over conventional CAR-T constructs: ● Improved Safety Profile and Economic Potential : In head-to-head comparisons with market-standard CAR-T constructs, ARTEMIS T-cells demonstrated comparable or superior antitumor potency with significantly reduced release of inflammatory cytokines, such as IL-6, which are drivers of cytokine release syndrome (CRS) and neurotoxicity. We believe this improved safety profile has the potential to allow for the administration of our therapies in outpatient settings rather than dedicated cancer centers, thereby decreasing the costs associated with patient monitoring and hospital stays. 1 Cell Discovery 4, 62 (2018): doi:10.1038/s41421-018-0066-6 2 Cell Reports Medicine 6, 102378 (2025) doi: 10.1016/j.xcrm.2025.102378. 5 ● Efficacy in Low-Antigen Density Tumors : Conventional CAR-T therapies often fail when tumor cells express low levels of target antigen, leading to tumor escape. The NCI studies from 2025 (conducted with the ARTEMIS platform targeting GPC2 in solid tumors) demonstrated that ARTEMIS T-cells maintain cytotoxic function at antigen densities below the threshold required to activate conventional CAR-T cells. The ability for ARTEMIS T-cells to function at a lower antigen level can potentially expand the addressable patient population and reduce the risk of relapse. ● Superior T cell Phenotype : Preclinical data indicates that the ARTEMIS architecture promotes the expansion of stem-like memory T-cells (T SCM ) and reduces exhaustion markers compared to standard CAR-T constructs. The T SCM subset of T cells have been reported to be associated with long-term persistence and durability of clinical response. STARLIGHT-1: US Phase I/II Clinical Trial of EB103 EB103 is our lead CD19-targeted ARTEMIS® T-cell therapy product candidate designed to address high unmet medical needs in patients with relapsed or refractory aggressive B-cell non-Hodgkin lymphoma (r/r B-NHL). We are currently evaluating EB103 in an open-label, dose escalation, multi-center, Phase I/II clinical trial in the U.S. (STARLIGHT-1, NCT06343311) in adult subjects (≥ 18 years of age) with relapsed/refractory (R/R) B-cell NHL. The study includes a dose escalation phase followed by an expansion phase. A traditional dose escalation model was used to determine the RP2D. The trial began enrolling patients in 2024, with UC Davis Comprehensive Cancer Center as the first clinical site. A second site (Baylor Scott and White Research Institute in Texas) was activated in April 2025. As of December 2025, the Phase I dose escalation phase has been completed. The enrolled patient population (n=9) was heavily pretreated, with a median of three prior lines of therapy. Approximately 80% of the enrolled patients were considered high-risk, including patients with primary refractory disease, high-grade B-cell lymphoma, and primary CNS lymphoma. Notably, 33% of patients had undergone prior autologous stem cell transplantation, and 89% had received two or more prior regimens. Two dose levels were evaluated in Phase I: Dose Level 1 (DL1, n=3) at 2.5 million receptor-positive T cells/kg, and Dose Level 2 (DL2, n=6) at 5 million receptor-positive T-cells/kg. Among the 9 patients in Phase I, no treatment-related serious adverse events were reported, and the high-dose cohort achieved a 100% complete response rate at Month 1 in all 5 evaluable patients. Safety and tolerability EB103 has a favorable and manageable safety profile in the nine patients treated in Phase I. While Cytokine Release Syndrome (CRS) was observed in all treated patients, all CRS events were low grade (Grade 1 or 2) and managed with standard of care. There were no instances of Grade 3 or higher CRS observed at either dose level. A majority of patients also experienced transient low grade ICANS, though the clinical symptoms were easily managed and the median duration of the events was only two days 6 Clinical Efficacy In the Phase I study the high-dose cohort (DL2) achieved a 100% (n=5/5) complete response rate at Month 1 in all evaluable patients. One patient in the DL2 cohort experienced Grade 5 sepsis on Day 18; this event was determined by the investigator to be unrelated to the EB103 therapy. Consequently, this patient was not evaluable for efficacy response. Responses for all evaluable patients have been durable to date, with all patients remaining in remission as of the data cutoff date on January 28, 2026. Pharmacokinetics Analysis of peripheral blood samples confirmed robust cellular expansion of EB103. Pharmacokinetic data determined by quantification of the EB103 transgene vector copy number showed a median C max of 77,693 copies/ug gDNA with a median T max of 8 days. Development Plan In December 2025, an independent Data Safety Monitoring Board (DSMB) completed its review of safety data from the Phase I dose-escalation phase (n=9) and recommended advancing the trial into the Phase II expansion phase at the recommended Phase II dose (RP2D). Patient dosing for Phase II has commenced in January 2026 to further evaluate EB103 at RP2D in a larger patient cohort to confirm the Phase I results. 7 Manufacturing Pursuant to the Services Agreement and Statement of Work #001, among other services, Eureka agreed to provide Estrella with access to Eureka’s T-cell manufacturing and lentiviral vector (LVV) processes in connection with the IND application and clinical trials for EB103. See “ Material Agreements - Services Agreement and Statement of Work #001 ” below for additional information regarding the terms of the agreements. EB104 T-cells EB104 T-cells are engineered to express ARTEMIS ® cell receptors (i.e., the AbTCR and co-stimulatory molecule) on their cell surfaces in a manner similar to EB103. Like EB103, both the AbTCR and co-stimulatory molecule of EB104 are designed to recognize and bind the CD19 antigen. In addition, the AbTCR in EB104 T-cells recognizes and binds the CD22 antigen as well. Once infused, EB104 T-cells are able to engage CD19- and CD22-positive cancer cells. The AbTCR expressed on the EB104 T-cell by its nature associates, via its effector domain (γδ TCR chains), with the endogenous CD3 complex. When the AbTCR binds to its target, CD19 or CD22, expressed on the cancer cell, AbTCR/CD3 complex-mediated signal transduction within the EB104 T-cell is initiated. This signal transduction process ultimately leads to the activation of the EB104 T-cell. A second “enhancement” signal is generated when the co-stimulatory molecule expressed on the EB104 T-cells binds to its target, CD19, expressed on the cancer cell. Although the co-stimulatory molecule expressed on EB104 T-cells cannot bind to CD22, EB104 T-cells are able to engage CD19 or CD22 (with the AbTCR) while the co-stimulatory molecule binds to CD19. Like EB103, the main function of the co-stimulatory molecule is to “boost” AbTCR signaling, resulting in increased expansion and survival of EB104 T-cells inside the body, and the co-stimulatory molecule has also been optimized to provide EB104 T-cells with enhanced T-cell activation. In summary, EB104 T-cells seek out CD19 and CD22-positive cancer cells, bind to these cells, and destroy them. Despite impressive outcomes of CAR-T cell treatments over the past five years, more than 50% of patients treated with CD19-targeted CAR-T cell therapy experience progressive disease. In addition, many patients treated with CD19-target CAR-T cell therapies subsequently show absent or low CD19. Further, disease progression associated with loss of cell surface CD19 has been reported in 30 – 95% of relapses after CD19-targeted CAR-T therapy in B-cell acute lymphoblastic leukemia. We believe that this obstacle can be addressed by dual-targeting both CD19 and CD22 with EB104. For patients that may exhibit lower CD19 surface density, EB104 has the potential to bind to both CD19 and CD22 to increase the odds of effective T-cell therapy. EB104 Preclinical Data To test the anti-tumor activity of EB104 towards low or no CD19 surface expression cancer cells, in 2019, Eureka constructed a Nalm-6-CD19ko cell line, which is a B-cell precursor leukemia cell line, with the “knockout” of CD19 gene expression. This cell line mimics patients’ diminished CD19 surface expression after CD19-directed immunotherapies. To confirm if EB104 T-cells have the potential to overcome CD19 antigen loss in cancer cells, Eureka tested the activity of EB104 as well as EB103 cells in mice using NSG™ xenograft models (which are highly immunodeficient mice) of leukemia with Nalm-6 and Nalm-6-CD19ko cells with a bioluminescence reporter. The total flux from the bioluminescence reporter measured the tumor growth. In the experiments shown below, Eureka tested EB104, EB103, and mock T-cells head-to-head, against the NSG™ xenograft model, with six mice for each treatment group, respectively. Four days before the T-cells were infused, 0.5x106 leukemia cells Nalm-6 (expressing both CD19 and CD22) with bioluminescence reporter were injected into mice. Four days later, the mice were infused with a total of T-cells containing EB103 or EB104, or mock T cells, using the mock T-cells as the control group. The infusion of EB103 and EB104 showed tumor control until day 21, while the control group showed rapid tumor growth. 8 Furthermore, EB104 showed potentially better tumor control compared to EB103. At day 21, Nalm-6 cells with 1% Nalm-6-CD19ko (expressing CD22, but not CD19) cells were injected into mice that were previously treated by EB103 or EB104 as re-challenge. This re-challenge experiment mimicked the tumor relapse in patients due to CD19 antigen escape. Mice treated with EB104 showed “durable” tumor control, meaning that the tumor continued to respond to treatment without the cancer growing or spreading, and “clearance” of tumors, which refers to the complete killing of tumor cells, for a total of more than 60 days, or 40 days after the re-challenge. However, mice treated with EB103 showed rapid tumor growth after the re-challenge. These pre-clinical results showed that EB104 T-cells have the potential to eradicate Nalm-6 Primary Tumors and Nalm-6-CD19ko re-challenge tumors in the xenograft model, suggesting that EB104 T-cells have the potential to control the growth of tumor cells that do not express CD19. Our Collaboration with Imugene and CF33-CD19t CF33-CD19t and EB103 A major challenge for current T-cell therapies is the identification of antigens that are expressed only on tumors and not in healthy tissue. In the absence of such restricted expression, CAR-T cell therapy poses considerable safety concerns and potentially narrows therapeutic window for their application against solid tumors. CD19 has been an ideal target for CAR-T cells against hematological malignancies for several reasons, including its highly restricted expression on B cells and acceptable off-tumor and on-target properties. In addition to the shared expression of solid tumor antigens on normal tissue, most of these antigens also have heterogeneous and nonuniform expression patterns in tumors, limiting the potential for effective and durable antitumor responses. Many solid tumors, including triple-negative breast cancers and liver cancers, lack amenable tumor antigens for CAR-T cell development. To potentially address the issue of the lack of solid tumor-specific targets, we are collaborating with Imugene and its product candidate, CF33-CD19t, to research the use of EB103 in conjunction with CF33-CD19t to treat solid tumors using a “mark and kill” strategy. This “mark and kill” strategy entails first using CF33-CD19t to infect solid tumor cells which induces them to express the CD19 protein on the cell surface, thereby labeling the tumor cell as a target for EB103 T-Cells. The EB103 T-cells are then infused into the patient where they would target and kill the now CD19-positive solid tumor cells. Collaboration Agreement On October 29, 2021, Eureka entered into a collaboration agreement (the “Collaboration Agreement”) with Imugene, a clinical stage immuno-oncology company, to evaluate the use of CF33-CD19t in conjunction with Eureka’s CD19 ARTEMIS T-cell therapy for the treatment of solid tumors. 9 On July 28, 2022, as part of the Separation, Eureka contributed and assigned the Collaboration Agreement to Estrella. Pursuant to the Collaboration Agreement, Estrella and Imugene have each granted to the other a royalty free, non-exclusive, worldwide license, with the right to grant and authorize sublicenses, to their respective technologies to conduct the research activities each is responsible for performing under the research plan set forth in the Collaboration Agreement. The research plan under the Collaboration Agreement was completed as of August 30, 2023. Potential Uses and Expansion/Market Solid tumors represent approximately 1,600,000 new cancer cases, or 90% of total cancer diagnoses in the United States, each year. At this time, there are no FDA-approved CAR or TCR-T cell therapies approved for the treatment of solid tumors. Accordingly, it is currently difficult to estimate specific market projections and the potential for our “mark and kill” strategy. Our Team and Investors Pursuant to the Services Agreement entered into on June 28, 2022 and Statement of Work entered into on March 4, 2024, we are supported by Eureka’s scientific team, which is comprised of leaders in the biopharmaceutical, oncology, and T-cell cancer immunotherapy areas. We have leveraged their expertise to analyze preclinical data and design and implement our clinical trials. Our CEO and President, Dr. Cheng Liu, and members of our scientific advisory board are pioneers in their respective fields, each having spent their careers advancing next-generation technologies and providing treatments in these areas. Our Chief Financial Officer, Peter Xu, brings years of executive experience and investment management abilities. In August 2024 we welcomed Ms. Hong Zhang as our Chairperson of the Board. Ms. Zhang is a highly accomplished executive with over 25 years of experience in financial and corporate strategy. We believe the addition of Ms. Zhang to our Board will bring new opportunities to the company’s fundraising efforts. Our Board includes experienced industry leaders and investors who have been involved with many early-stage companies. Furthermore, we are supported by investors who share our belief that the world needs smarter medical treatments and our long-term vision that T-cell therapies have the potential to transform the way we fight cancer. Competition The biotechnology and pharmaceutical industries are characterized by rapid, unpredictable technological advancement and significant competition. These industries dedicate significant resources to developing novel and proprietary therapies for the treatment of cancer, which often incorporate innovative technologies and incorporate valuable intellectual property. We compete with companies in the cell therapy and immunotherapy space, as well as with companies developing other novel targeted therapies for cancer. If approved, our product candidates will compete with commercially available and development-stage innovative products in the fields of cell and immunotherapy, as well as against existing products generally accepted as the standard-of-care for indications in which we plan to seek marketing approval. We anticipate that we will face intense and increasing competition from many different sources, including new and established biotechnology and pharmaceutical companies, academic research institutions, governmental agencies, and public and private research institutions. Our product candidates cover both hematological malignancies and solid tumors, and we expect to face direct competition in both areas from companies focused on CAR-T and other cell-based therapies. There are currently ten total FDA-approved drugs or therapies targeting CD19, five of which are CD19-targeting T-cell therapies: COMPANY BRAND NAME YEAR FIRST APPROVED DISEASE(S) LOCATIONS APPROVED Novartis Kymriah 2017 Pediatric/Young Adult B-ALL; R/R DLBCL; R/R Follicular Lymphoma US, EU, UK Kite Pharma (Gilead) Yescarta 2017 R/R Large B-cell Lymphoma; R/R Follicular Lymphoma; R/R Primary CNS Lymphoma US, EU, UK Kite Pharma (Gilead) Tecartus 2020 R/R Mantle Cell Lymphoma (MCL); Adult B-ALL US, EU, UK Juno (Bristol Myers Squibb) Breyanzi 2021 R/R LBCL; CLL/SLL; Follicular Lymphoma; Mantle Cell Lymphoma; Marginal Zone Lymphoma US, EU, UK Autolus Aucatzyl 2024 Adult Relapsed/Refractory B-cell precursor Acute Lymphoblastic Leukemia (ALL) US, EU, UK Our competitors operating in the T-cell therapy space include, but are not limited to: ● Novartis (Product: Kymriah) ● Kite Pharma, Inc. (Products: Yescarta, Tecartus, KITE-753 and KITE-363) 10 ● Juno Therapeutics Inc. (Bristol Myers Squibb) (Product: Breyanzi) ● JW Therapeutics (Product: Carteyva/Relma-cel) ● Allogene Therapeutics (Product: Cema-cel) ● Mustang Bio (Product: MB-106) ● Poseida Therapeutics (Product Candidates: P-MUC1C-ALLO1, and P-CD19CD20-ALLO1) ● Autolus Therapeutics PLC (Product Candidates: obe-cel and Auto1/22) Our competitors pursuing CD19 targeted drugs outside of the T-cell therapy space include, but are not limited to: ● Amgen, Inc. (Product: Blincyto and Uplizna) ● MorphoSys AG (Novartis) (Product: Monjuvi) ● ADC Therapeutics SA (Product: Zynlonta) Universities and research institutes have been a proven new technology source in the field as well. We also face competition from treatments in the field of immunotherapy which are being developed and/or commercialized by several biotechnology companies as well as by large pharmaceutical companies, whose immuno-oncology programs focus on the same indications or antigen targets as our current pipeline. Other known types of immunotherapy, including but not limited to checkpoint inhibition and cancer vaccines, are not currently direct competitors to T-cell-based therapeutics. However, we cannot predict whether these other types of immunotherapy may eventually show efficacy in the indications for which we may seek marketing approval, and it is possible that we may face direct and substantial competition from such sources in the future. Many of our current or potential competitors, either alone or with a strategic partner, have significantly greater financial, technical, and human resources, as well as more expertise in research and development, manufacturing, preclinical testing, conducting clinical studies and trials and commercializing and marketing approved products. Competitors may compete with us in hiring scientific and management personnel, establishing clinical study sites, registering patients for clinical studies and acquiring technologies complementary to, or necessary for, our programs. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Intellectual Property Overview We own certain unregistered intellectual property rights that we use in connection with our business, including a common law trademark for Estrella™. We also own certain plasmids, cell lines, and materials related to CD19 and CD22 in connection with the ARTEMIS ® platform, and trade secrets and other intellectual property rights related thereto. A material portion of the intellectual property we use in our business is in-licensed from Eureka, as described below. License Agreement with Eureka On June 28, 2022, we entered into the License Agreement with Eureka and Eureka Therapeutics (Cayman), Inc. (the “License Agreement”) , under which Eureka granted the Company an exclusive license to certain intellectual property within all territories worldwide, excluding Greater China and the Association of Southeast Asian Nations (ASEAN) countries (“Licensed Territory”). This agreement provides the Company with the right to certain functions related to any T-cell products that incorporate (a) the ARTEMIS ® platform and (b)(i) the CD19 binder and/or (ii) the CD22 binder identified in the License Agreement (the “Licensed Product”). The License Agreement provides that, during the term, Eureka grants Estrella an exclusive license, with the right to grant sublicenses through multiple tiers to (a) make, import, use, sell or offer to sell the Licensed Products, (b) develop the Licensed Products solely for the purpose of obtaining regulatory approval of such Licensed Products, (c) commercialize such Licensed products and (d) manufacture the Licensed Products solely for developing the Licensed Products for the purposes of obtaining regulatory approval of such Licensed Products and for commercializing such Licensed Products. 11 Pursuant to the terms of the License Agreement, in partial consideration of Eureka’s grant of the rights and licenses to Estrella, Estrella agreed to pay Eureka a one-time, non-refundable, non-creditable payment of $1.0 million. As of December 31, 2025, $1.0 million has been paid to Eureka. Eureka is eligible to receive up to five one-time development milestone payments from Estrella in the aggregate amount of approximately $60.2 million if all five development milestones are achieved. Effective as of March 1, 2023, the parties further amended the License Agreement to provide that if any development milestone is achieved prior to the Closing of the Business Combination, the corresponding development milestone payment will not be due to Eureka until the Closing of the Business Combination. Eureka is also eligible to receive up to four one-time sales milestone payments from Estrella based on the aggregate net sales of all Licensed Products by or on behalf of Estrella or any of its affiliates or sublicensees in the Licensed Territory during any consecutive 12-month period in the aggregate amount of $225.0 million if all four sales milestones are achieved. Each sales milestone payment will only be paid once, regardless of the number of Licensed Products or the number of times a given sales milestone has been achieved. Estrella is also responsible (with input from Eureka) for the preparation, filing, prosecution, and maintenance of the patent rights, including all associated costs. In addition, during the applicable royalty term, Estrella will be required to pay to Eureka royalties in the amount of a single digit percentage of the aggregate Net Sales of all Licensed Products sold by or on behalf of Estrella or its affiliates or sublicensees in the Licensed Territory during a calendar year. Such amount is subject to certain reductions (not to exceed 50% of the amount otherwise payable) due to the expiration of valid claims of a licensed patent right in a given country in the Licensed Territory or due to 50% or greater declines in sales as a result of generic product competition in a given country in the Licensed Territory. The royalty term begins upon the first commercial sale of a Licensed Product in a country in the Licensed Territory and continues until the later of (a) the date on which such Licensed Product is no longer covered by a valid claim within Eureka’s licensed patent rights in such country, (b) the expiration of all exclusive marketing rights or data protection or other exclusivity rights (other than patent rights) conferred by any regulatory authority with respect to a product in a country or jurisdiction that prohibits the commercialization of a generic product, including orphan drug exclusivity or pediatric exclusivity for such Licensed Product in such country, and (c) 12 years after the first commercial sale of such Licensed Product in such country. The License Agreement will remain in effect on a Licensed Product-by-Licensed Product and country-by-country basis, until the expiration of the royalty term for a Licensed Product in a country and will finally expire upon expiration of the royalty term for the final Licensed Product. Estrella may terminate the License Agreement for any reason or no reason upon 120 days’ prior written notice to Eureka. Either party has the right to terminate the License Agreement upon material breach of the other party that is not cured within 90 days after the breaching party receives written notice of such breach from the non-breaching party. On January 30, 2023, one development milestone payment in the amount of $50,000 related to the submission of EB103 to the FDA was earned by Eureka under the Agreement, which was paid on October 10, 2023. With the dosing of the first patient in July 2024 in the STARLIGHT-1 clinical trial, the development milestone pursuant to Section 8.2.1 (First Patient Dosed in the First Clinical Trial of a Licensed Product) in the Licensing Agreement with Eureka was met. As a result, Estrella made a payment of $50,000 to Eureka for reaching this milestone. As of December 31, 2025, nine patients have been dosed in the STARLIGHT-1 clinical trial. No other development milestone, sales milestone, or royalty payment has been earned as of December 31, 2025, as we do not have any product candidates approved for sale and have not generated any revenue from product sales. Eureka Patent Information The patents owned by Eureka relating to EB103 and EB104 cover compositions of matter, uses, and processes in various jurisdictions, including Australia, Canada, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Russia, and the United States. These patents expire on October 21, 2036. 12 Government Regulation The U.S. Food and Drug Administration, or FDA, and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, sampling post-approval monitoring and post-approval reporting of biologics such as those we are developing. Any product candidates that we develop must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in those foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. U.S. Regulation Biologic Development Process In the United States, biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and other federal, state, local and foreign statutes and their implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. The process required by the FDA before biologics may be marketed in the United States generally involves the following: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s Good Laboratory Practice requirements, or GLP; ● submission to the FDA of an IND, which must become effective before clinical trials may begin; ● approval by an institutional review board, or IRB, or ethics committee at each clinical site before the trial is commenced; ● performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practice, or GCP, regulations and any additional requirements for the protection of human research subjects and their health information 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 Biologics License Application, or 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, if applicable, to assess compliance with the FDA’s current Good Tissue Practice, or cGTP, requirements for the use of human cellular and tissue products, and of selected clinical investigation sites to assess compliance with GCPs; ● potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA; and ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States. Before testing any biological product candidate in humans, the product candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs. 13 Prior to beginning the first clinical trial with a product candidate in the United States, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies. Some preclinical testing may continue even after the IND is submitted. 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. An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial. In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial. 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 involving recombinant or synthetic nucleic acid molecules are subject to oversight of institutional biosafety committees, or IBCs, as set forth in the National Institutes of Health, or NIH, Guidelines for Research Involving Recombinant DNA Molecules, or the NIH Guidelines. Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an 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. Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. 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. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial 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. 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. For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap or be combined: ● Phase 1 — The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism, and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness. In the case of some products for severe or life-threatening diseases, such as cancer, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. ● Phase 2 — The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages, dose tolerance, and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials. ● Phase 3 — The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of a BLA. 14 In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product in the intended therapeutic indication, particularly for long-term safety follow-up. Completion of these so-called Phase 4 studies may also be made a condition to approval of the BLA. Concurrent with clinical trials, companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate, and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the safety, purity, and potency of the final product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. BLA Submission and Review by the FDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. The BLA must include all relevant data available from preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of a use of the product, or from a number of alternative sources, including studies initiated by independent investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA. The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies. Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the FDA accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once a BLA has been accepted for filing, the FDA’s goal is to review standard applications within ten months after the filing date, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and priority reviews, the review process may also be extended by FDA requests for additional information or clarification. The FDA reviews a BLA to determine, among other things, whether a product is safe, pure, and potent and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA may also convene an advisory committee to provide clinical insight on application review questions. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving a BLA, the FDA will typically inspect the facility or facilities where the product is manufactured. 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. For a product candidate that is also a human cellular or tissue product, the FDA also will not approve the application if the manufacturer is not in compliance with cGTPs. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. 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. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. 15 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, or CRL. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL 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 CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling. In issuing the CRL, 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. 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 a CRL is issued, the sponsor must resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval. 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 Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks, or otherwise limit the scope of any approval. A REMS is a safety strategy implemented to manage a known or potential serious risk associated with a product 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. 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. The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies. Expedited Development and Review Programs The FDA offers a number of expedited development and review programs for qualifying product candidates. For example, new biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new biologic may request that the FDA designate the biologic as a fast track product at any time during the clinical development of the product. The sponsor of a fast track product has opportunities for more frequent interactions with the applicable FDA review team during product development and, once a BLA is submitted, the product candidate may be eligible for priority review. A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review. A product candidate can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers. 16 Any marketing application for a biologic submitted to the FDA for approval, including a product candidate with a fast track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product candidate is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new biological product designated for priority review in an effort to facilitate the review. For original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review). Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit. In addition, for products being considered for accelerated approval, the FDA generally requires, unless otherwise informed by FDA, that all advertising and promotional materials intended for dissemination or publication within 120 days of marketing approval be submitted to FDA for review during the pre-approval period. In 2017, the FDA established a new regenerative medicine advanced therapy, or RMAT, designation, which is intended to facilitate an efficient development program for, and expedite review of, any biologic that meets the following criteria: (i) the biologic 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; (ii) the biologic is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the biologic has the potential to address unmet medical needs for such a disease or condition. RMAT designation provides all the benefits of breakthrough therapy designation, including more frequent meetings with the FDA to discuss the development plan for the product candidate and eligibility for rolling review and priority review. Product candidates 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 clinical trial sites, including through expansion of trials to additional sites. RMAT-designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through 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 such therapy. Fast track designation, breakthrough therapy designation, priority review, accelerated approval, and RMAT designation do not change the standards for approval but may expedite the development or approval process. Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and 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 biologic. Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic identity of therapeutic agent 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. 17 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. In addition, if a product that has orphan drug designation subsequently receives the first FDA approval for a particular drug or biologic 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. 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. Competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Post-Approval Requirements Biologics are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual program fees for any marketed products. Biologic manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other laws, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Manufacturers and other parties involved in the drug supply chain for prescription drug products must also comply with product tracking and tracing requirements and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in the United States. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain GMP compliance. Changes to the manufacturing process or facility are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters, or untitled letters; 18 ● clinical holds on clinical studies; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals; ● product seizure or detention, or refusal to permit the import or export of products; ● consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ● mandated modification of promotional materials and labeling and the issuance of corrective information; ● the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ● injunctions or the imposition of civil or criminal penalties. The FDA also may require post-marketing testing, known as Phase 4 testing, and surveillance to monitor the effects of an approved product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating to safety and efficacy, purity, and potency that are approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. The federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined companies from engaging in off-label promotion. The FDA and other regulatory agencies have also required that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Physicians may prescribe, in their independent professional and medical judgment, legally available products for uses that are not described in the product’s labeling and that differ from those tested and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products. Biosimilars and Reference Product Exclusivity The Affordable Care Act, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars. 19 Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA 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 from the date on which the reference product was first licensed. 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 that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, government proposals have sought to reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty. Government Regulation Outside of the United States In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical studies and any commercial sales and distribution of our products. Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries. Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies. In the European Union, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed. The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country. In all cases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. 20 To obtain regulatory approval of an investigational biological product under European Union regulatory systems, we must submit a marketing authorization application. The application used to file the BLA in the United States is similar to that required in the European Union, with the exception of, among other things, country-specific document requirements. The European Union also provides opportunities for market exclusivity. For example, in the European Union, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic application. During the additional two-year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity. However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity. Products receiving orphan designation in the European Union can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional two years of market exclusivity in the European Union for pediatric studies. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications. The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. The application for orphan drug designation must be submitted before the application for marketing authorization. The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. 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 applicant consents to a second orphan medicinal product application; or ● The applicant cannot supply enough orphan medicinal product. For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing, and reimbursement vary from country to country. In all cases, again, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Other Healthcare Laws Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we research, as well as, sell, market and distribute any products for which we obtain marketing approval. Such laws include, without limitation, federal and state anti-kickback, fraud and abuse, false claims, data privacy and security and physician and other health care provider transparency laws and regulations. 21 In order to distribute products commercially, we must also comply with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, track and report gifts, compensation and other remuneration made to physicians and other healthcare providers, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws. If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. For information regarding risks related to these compliance requirements, see the section titled “Risk Factors — Risks Related to Government Regulations.” Coverage and Reimbursement Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. These third-party payors are increasingly reducing coverage and reimbursement for medical products, drugs and services. Obtaining coverage and adequate reimbursement for our product candidates may be particularly difficult because of the higher prices often associated with drugs administered under the supervision of a physician. Similarly, because our product candidates are physician-administered, separate reimbursement for the product itself may or may not be available. Instead, the administering physician may or may not be reimbursed for providing the treatment or procedure in which our product is used. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales. Healthcare Reform Payors, whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs and those methods are not always specifically adapted for new technologies such as gene therapy and therapies addressing rare diseases such as those we are developing. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably. 22 In the United States, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, each as amended, collectively known as the ACA, was enacted, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry. The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws. For example, the ACA: ● increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price; ● required collection of rebates for drugs paid by Medicaid managed care organizations; ● required manufacturers to participate in a coverage gap discount program, under which they 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 ● imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an Executive Order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The Executive Order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administrations or other efforts, if any, to challenge repeal or replace the ACA, will impact our business. Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. For example, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective since January 1, 2024. Further, in August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs, including aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032 unless additional action is taken by Congress. Pursuant to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, as well as subsequent legislation, these reductions were suspended from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic; they were limited to 1% from April 1, 2022 through June 30, 2022, and fully reinstated at 2% thereafter. However, under the Statutory Pay-As-You-Go Act of 2010, additional sequestration reductions of up to 4% have been triggered for 2026 in response to federal spending increases, resulting in a total effective reduction of 4% for Medicare payments in that year, as Medicare cuts are capped at 4% under the law. Further, 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 pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. 23 Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries, proposed and enacted legislation, and executive orders 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 for drug products. Key developments include the Inflation Reduction Act of 2022, which authorizes the Secretary of Health and Human Services to negotiate maximum fair prices for certain high-cost drugs covered under Medicare Part D starting in 2026 and Part B starting in 2028. The first set of negotiated prices for 10 Part D drugs took effect on January 1, 2026, resulting in discounts ranging from 38% to 79% off 2023 list prices and estimated annual savings of $6 billion for Medicare and $1.5 billion in out-of-pocket costs for beneficiaries. Additional cycles of negotiation are ongoing, with prices for 15 more Part D drugs effective in 2027 and the inclusion of Part B drugs in 2028. Further, in February 2026, Congress passed bipartisan legislation reforming pharmacy benefit managers (PBMs), banning spread pricing in Medicaid and requiring 100% rebate pass-throughs to employers, with PBM compensation shifting to flat fees starting in 2028. Under the current Trump administration, executive actions have advanced most-favored-nation (MFN) pricing, with agreements announced in December 2025 for nine pharmaceutical companies to align U.S. prices with those in other developed nations for certain products, extending to Medicaid programs. In January 2026, the Department of Health and Human Services issued guidance allowing manufacturers to offer lower-cost drugs directly to patients, including Medicare and Medicaid enrollees, under safeguards to comply with anti-kickback statutes. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Data Privacy and Security Laws We also are or will become subject to privacy laws in the jurisdictions in which we are established or in which we sell or market our products or run clinical trials. For example, in Europe we are subject to the GDPR in relation to our collection, control, processing and other use of personal data (i.e., data relating to an identifiable living individual). We process personal data in relation to participants in our clinical trials in the EEA, including health and medical information of these participants. The GDPR also provides that individual EEA countries may introduce further conditions of their own, including limitations which could limit our ability to collect, use and share personal data. The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework. It also requires data controllers to be transparent and disclose to data subjects (in a concise, intelligible and easily accessible form) how their personal information is to be used; imposes limitations on retention of personal data; defines pseudonymized (i.e., key-coded) data; introduces mandatory data breach notification requirements; and sets higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. Fines for certain breaches of the GDPR are significant: up to the greater of €20 million or 4% of total global annual turnover. A breach of the GDPR or other applicable privacy and data protection laws and regulations could also result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, or potential civil claims including class action type litigation. Further, we comply with the GDPR and separately the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The GDPR and the UK GDPR each have the ability to fine up to the greater of €20 million/£17 million or 4% of global turnover. The European Commission renewed the UK adequacy decisions under the GDPR and the Law Enforcement Directive in December 2025, extending them until December 2031, enabling continued free flow of personal data from EEA member states to the UK. These decisions are subject to a mid-term review after four years and may be renewed further based on ongoing assessments. These frameworks may lead to additional compliance costs and could increase our overall risk. In addition, the GDPR places restrictions on cross-border data transfers. Certain aspects of cross-border data transfers under the GDPR remain subject to ongoing regulatory guidance and enforcement. The GDPR will increase our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. We are also subject to European Union rules with respect to cross-border transfers of personal data out of the EEA. Recent legal developments in the European Union have created complexity and uncertainty regarding transfers of personal data from the EEA to other countries whose data protection standards have not been deemed “adequate” by the European Commission (including the United States). On July 10, 2023, the European Commission adopted an adequacy decision for the EU-US Data Privacy Framework, which remains in effect as of February 2026 and enables transfers of personal data from the EEA to US entities certified under the framework. As supervisory authorities issue further guidance on personal data export mechanisms, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. 24 Further, the exit of the United Kingdom, or UK, from the European Union, often referred to as Brexit, has created uncertainty with regard to data protection regulation in the UK. Specifically, the UK exited the European Union on January 1, 2020, subject to a transition period that ended December 31, 2020. Under the post-Brexit Trade and Cooperation Agreement between the European Union and the UK, the UK and European Union agreed that transfers of personal data to the UK from EEA member states will not be treated as ‘restricted transfers’ to a non-EEA country. The European Commission renewed the UK adequacy decisions in December 2025, extending them until December 2031, subject to a mid-term review after four years. These decisions enable the free flow of personal data from EEA member states to the UK without additional transfer mechanisms. 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 Federal Trade Commission 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 laws 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. For example, California enacted the CCPA, which creates individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling certain personal data of consumers or households. The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provide such consumers new ways to opt-out of certain sales or transfers of personal information, and provide consumers with additional causes of action. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. The CCPA became effective on January 1, 2020, and (a) allows the California Attorney General to impose civil penalties for violations and (b) authorizes private lawsuits to recover statutory damages for certain data breaches. In addition, laws in all 50 U.S. states require businesses to provide notice to consumers whose personal information has been disclosed as a result of a data breach. State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we would become subject if it is enacted. The CCPA may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information. Additionally, a new privacy law, the California Privacy Rights Act, or CPRA, has been in effect since January 1, 2023. The CPRA significantly modifies the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It also expands the types of data breaches subject to the CCPA’s private right of action, provides for increased penalties for CPRA violations concerning California residents under the age of 16 and creates a new California data protection agency authorized to issue substantive regulations, which has resulted in increased privacy and information security enforcement. New regulations under the CCPA and CPRA took effect on January 1, 2026, including requirements for risk assessments, cybersecurity audits, and opt-out confirmation mechanisms. Ensuring compliance with the CPRA could require us to incur additional costs and expenses. In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, track and report gifts, compensation and other remuneration made to physicians and other healthcare providers, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws. 25 If our operations are found to be in violation of any of the federal and state healthcare and privacy laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. For information regarding risks related to these compliance requirements, see the section titled “Risk Factors — Risks Related to Government Regulation.” Material Agreements Services Agreement Pursuant to the Services Agreement, we agreed to (i) pay Eureka $10.0 million in connection with the services thereunder payable in 12 equal monthly installments and (ii) reimburse Eureka on a monthly basis for reasonable pass-through costs incurred or paid to providers by Eureka in providing the services. In addition, we will be charged for other services performed by Eureka outside the scope of the services set forth in the Services Agreement, at a flat rate, by time or materials or as mutually agreed upon the parties in writing. As of December 31, 2025, we have settled all amounts owed under this agreement. Statement of Work #001 Pursuant to the Statement of Work #001 (“SOW”), effective March 4, 2024, as amended, we committed to paying Eureka $33.0 million for services related to the Phase I/II clinical trial of EB103, a T-cell therapy targeting CD19 using ARTEMIS® T-cell technology. As of December 31, 2025, Estrella has paid $3.5 million to Eureka for the fees associated with milestones achieved, and deposited $1.5 million for patient treatment expenses, which will be applied to the final invoice, with any unused portion refunded once all fees are settled. In addition, nine patient dosing and second site activation milestones have been completed as of December 31, 2025, and the Company has accrued approximately $12.4 million in accrued liability - related party and recorded $0.5 million in accounts payable – related party, for the corresponding dosing milestones. The amended SOW, as entered on May 13, 2024, clarifies that, in the event Estrella exercises its right to terminate or suspend the engagement with Eureka by providing written notice, Estrella will only be obligated to compensate Eureka for (i) services provided in connection with milestones achieved prior to the termination notice, (ii) reasonable and documented pass-through costs incurred prior to the termination notice, and (iii) amounts payable to third parties for commitments reasonably entered into prior to the termination notice, provided that Eureka makes commercially reasonable efforts to cancel or reduce such commitments. License Agreement An overview of the License Agreement with Eureka is provided above under “ Business — Intellectual Property .” Facilities Our corporate headquarters are located in Emeryville, California. We believe that our existing facilities are adequate for our near-term needs but expect to need additional space as we grow. We believe that suitable additional or alternative space would be available as required in the future on commercially reasonable terms. 26 Employees Most of our day-to-day operations to date have been related to technology research and development, including the clinical development of our lead product candidates. Many of the operational tasks that we require are managed by Eureka pursuant to the Services Agreement and SOW. As a result, we have a limited number of employees and do not expect to hire a significant number of new employees in the near future. Other Information Estrella Immunopharma, Inc. files reports with the Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. These filings are available on the SEC’s website at www.sec.gov. Estrella’s own website www.estrellabio.com also provides access to these reports free of charge as soon as reasonably practicable after filing with the SEC.