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Item 1. Business

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We are a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for patients with cancer.

We are developing first-in-class cell therapy product candidates based on a simple notion:

We are a clinical-stage biopharmaceutical company dedicated to bringing a first-in-class pipeline of programmed cellular immunotherapies to patients with cancer and autoimmune disorders.

Our development of first-in-class cell therapy product candidates is based on a simple notion:

we believe that better cell therapies start with better cells.

To create better cell therapies, we use a therapeutic approach that we generally refer to as cell programming.

We use human induced pluripotent stem cells (iPSCs) to generate a clonal master iPSC line having preferred biological properties, and we direct the fate of the clonal master iPSC line to create our cell therapy product candidate.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be used as a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, can be repeatedly mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf to treat many patients.

Utilizing this therapeutic approach, we are advancing a pipeline of programmed cellular immunotherapies, including off-the-shelf natural killer (NK) and T-cell product candidates derived from clonal master iPSC lines for the treatment of cancer.

The following table summarizes our programmed cellular immunotherapies currently under development:

To create better cell therapies, we have pioneered a therapeutic approach that we generally refer to as cell programming:

we create and engineer human induced pluripotent stem cells (iPSCs) to incorporate novel synthetic controls of cell function;

we generate a clonal master iPSC line for use as a renewable source of cell manufacture;

and we direct the fate of the clonal master iPSC line to produce our first-in-class cell therapy product candidate.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be used to mass produce multiplexed-engineered cellular immunotherapies which are well-defined and uniform in composition, can be stored in inventory for off-the-shelf availability, can be combined and administered with other therapies, and can have broader patient reach.

Utilizing this therapeutic approach, we are advancing a cell therapy pipeline comprised of off-the-shelf, multiplexed-engineered, iPSC-derived natural killer (NK) and T-cell product candidates that are selectively designed, incorporate novel synthetic controls of cell function, and are intended to deliver multiple mechanisms of therapeutic importance to patients for the treatment of cancer and autoimmune disease.

We have a deep pipeline of iPSC-derived, chimeric antigen receptor (CAR)-targeted NK and T-cell product candidates currently under development with multiple clinical trials ongoing:

CAR Target(s)

# of Synthetic Controls

Development Stage

CAR NK Cell Programs

Multiple Myeloma

B-cell Lymphoma

Autoimmune Disorders

CAR T-cell Programs

B-cell Lymphoma

Chronic Lymphocytic Leukemia

Other CAR-targeted Programs

Not disclosed

The use of human cells as therapeutic entities has disease-transforming potential, and compelling evidence of medical benefit for cell therapy exists across a broad spectrum of severe, life-threatening diseases.

Clinical investigation of cell-based cancer immunotherapy has been rapidly expanding.

One particular form of cell-based cancer immunotherapy, chimeric antigen receptor (CAR) T-cell therapy, has emerged as a revolutionary and potentially curative therapy for patients with certain hematologic malignancies, including refractory cancers.

In fact, multiple CAR T-cell therapies have now been approved by the United States Food and Drug Administration (FDA) for the treatment of relapsed / refractory B-cell precursor acute lymphoblastic leukemia (ALL), relapsed / refractory diffuse large B-cell lymphoma (DLBCL), and relapsed / refractory multiple myeloma (MM).

Clinical investigation of cellular immunotherapy has been rapidly expanding.

One particular form of cell-based cancer immunotherapy, CAR T-cell therapy, has emerged as a revolutionary and potentially curative therapy for patients with certain hematologic malignancies, including refractory cancers.

In fact, multiple CAR T-cell therapies have now been approved by the United States Food and Drug Administration (FDA) for the treatment of relapsed / refractory B-cell precursor acute lymphoblastic leukemia (ALL), relapsed / refractory diffuse large B-cell lymphoma, relapsed / refractory follicular lymphoma, relapsed / refractory mantle cell lymphoma, and relapsed / refractory multiple myeloma.

Cell-based cancer immunotherapies undergoing clinical investigation today most often rely on the use of autologous, or a patient’s own, cells.

The requirement to source, engineer, expand and deliver cells patient-by-patient is logistically complex, resource intensive and expensive, and can result in significant batch-to-batch variability in product identity, purity and potency as well as in manufacturing failures.

Significant hurdles remain to ensure that cell-based cancer immunotherapies can be consistently manufactured and reliably delivered, in a cost-effective manner and at the scale necessary, to support broad patient access and wide-spread commercialization.

Rather than rely on the use of a patient’s own cells, we seek to use clonal master iPSC lines to manufacture, develop and commercialize first-in-class cellular immunotherapies.

We believe our approach has the potential to improve cell product consistency and potency, reduce manufacturing costs, shorten time to treatment and reach more patients.

The key pillars of our strategy are to:

Exploit our leadership position in iPSC technology to develop and commercialize off-the-shelf cell products for the treatment of cancer.

Significant hurdles remain to ensure that cell-based cancer immunotherapies can be consistently manufactured and reliably delivered in a cost-effective manner and at the scale necessary to support broad patient access and widespread commercialization.

Rather than rely on the use of a patient’s own cells, we seek to use clonal master iPSC lines to manufacture, develop and commercialize off-the-shelf cellular immunotherapies that are selectively designed, incorporate novel synthetic controls of cell function, and are intended to deliver multiple mechanisms of therapeutic importance to patients.

Human iPSCs possess the unique dual properties of unlimited self-renewal and differentiation potential into all cell types of the body.

Our proprietary iPSC product platform combines multiplexed-engineering of human iPSCs with single-cell selection to create clonal master iPSC lines.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, clonal master iPSC lines can be used for manufacture of multiplexed-engineered cell products that are well-defined and uniform in composition, can be mass produced at significant scale in a cost-effective manner, and can be stored in inventory and delivered off-the-shelf to maximize patient reach.

As a result, we believe our platform is uniquely designed to overcome numerous limitations associated with the production of cell therapies using patient- or donor-sourced cells.

Our iPSC product platform is supported by an intellectual property portfolio of over 400 issued patents and 450 pending patent applications.

Our goal is to maintain and build upon our leadership position in bringing off-the-shelf, multiplexed-engineered, iPSC-derived cellular immunotherapy to patients with cancer and autoimmune disorders.

We believe achieving this goal has the potential to transform patient outcomes by improving cell product consistency and potency, shortening time to treatment, enabling combination with other complementary therapies, increasing scale of manufacture while reducing production costs, and reaching more patients including earlier in care.

The key pillars of our strategy include:

Capitalize on our leadership position in iPSC technology.

Human iPSCs, with their unique capacity to be indefinitely expanded and differentiated in culture into any type of cell in the body, hold revolutionary potential for creating better cell therapies.

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We are applying our expertise in iPSC biology to genetically engineer, isolate and select single-cell iPSCs for clonal expansion, characterization and cryopreservation as clonal master iPSC lines.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be made and used as a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, can be repeatedly mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf to treat many patients.

We have amassed significant expertise in the manufacture of NK cells and T cells from clonal master iPSC lines.

Our expertise includes:

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be used to mass produce multiplexed-engineered cellular immunotherapies which incorporate novel synthetic controls of cell function, are well-defined and uniform in composition, can be stored in inventory for off-the-shelf availability, can be combined and administered with other therapies, and can have broader patient reach.

We have amassed significant internal expertise in the Good Manufacturing Practice (GMP) production of NK cells and T cells from clonal master iPSC lines.

Our proprietary know-how includes:

generating, engineering, isolating and characterizing single-cell iPSC clones;

creating and cryopreserving clonal master iPSC lines;

differentiating these clonal master cell iPSC lines to produce NK cells and T cells;

and regulatory affairs experience to enable clinical investigation of iPSC-derived cell products.

We believe our iPSC-derived NK cell and T-cell product candidates have the potential to be administered in multi-dose, multi-cycle treatment regimens, including in combination with other cancer treatments, to drive deeper and more durable responses.

Forge collaborations with leading researchers and top medical centers to accelerate development of and rapidly translate our iPSC-derived cell product candidates into first-in-human clinical trials.

The research and development of iPSC-derived cell product candidates requires an exceptional team of people and scientific, manufacturing and clinical expertise across a range of disciplines.

We have and will continue to seek collaborations with leading researchers, investigators and top medical centers for the research, development, manufacture and clinical translation of our iPSC-derived cell product candidates.

Among our collaborations is a research partnership with the University of Minnesota, led by Dr.

Miller, a renowned NK cell biologist and clinical investigator, to support the development of certain of our iPSC-derived NK cell product candidates.

We also have a research partnership with Memorial Sloan Kettering Cancer Center, led by Dr.

Michel Sadelain, a renowned T-cell biologist and a recognized founder of CAR T-cell therapy, to support the development of our iPSC-derived CAR T-cell product candidates.

We believe this approach to research and development will maximize our potential to successfully build our iPSC product platform, accelerate the clinical translation and clinical investigation of our iPSC-derived cell product candidates, and efficiently establish clinical proof-of-concept for our iPSC-derived cell product candidates.

Selectively share our iPSC product platform with industry-leading strategic partners for the development of iPSC-derived cell therapies.

creating, qualifying, and cryopreserving clonal master iPSC lines;

differentiating these clonal master cell iPSC lines to manufacture NK cells and T cells at large scale to enable off-the-shelf availability for the general patient population;

and regulatory and quality expertise to enable clinical investigation of multiplexed-engineered, iPSC-derived NK cell and T-cell immunotherapy candidates.

We have established our own fully-integrated infrastructure and operations to support GMP production for all phases of clinical development as well as initial commercialization.

Exploit off-the-shelf, iPSC-derived CAR NK cells in combination with monoclonal antibody therapy to mount a multi-antigen targeted attack.

NK cells play a major role in the anti-tumor activity of certain tumor-targeting antibodies.

NK cells express CD16, an activating receptor that binds to the Fc domain of IgG antibodies.

Once activated through CD16, NK cells are able to destroy antibody-coated tumor cells and secrete cytokines, such as interferon gamma, to potentiate an adaptive immune response.

This mechanism of action, referred to as antibody-dependent cellular cytotoxicity (ADCC), is believed to be important for the treatment of a wide range of cancers.

CD16 consists of two genomic variants, 158V and 158F, that confer high or low binding affinity, respectively, to the Fc domain of IgG antibodies.

Numerous clinical trials with FDA-approved tumor-targeting antibodies, including rituximab (FDA-approved for certain cancers of the blood and lymphatic system), trastuzumab (FDA-approved for certain breast and gastric cancers) and cetuximab (FDA-approved for certain head and neck, non-small cell lung and colorectal cancers), have demonstrated

that patients homozygous for the 158V variant, which is present in only about 15% of patients, have improved clinical outcomes.

In addition, the expression of CD16 on NK cells has been shown to undergo considerable down-regulation in cancer patients, which can significantly limit anti-tumor activity.

Our off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell product candidates incorporate a proprietary CD16 Fc receptor, which has two unique features designed to augment ADCC:

a high-affinity homozygous 158V variant to promote high binding affinity and a modification to block its cleavage and down-regulation upon NK cell activation.

As a result, we believe our iPSC-derived CAR NK cell product candidates may be combined with monoclonal antibody (mAb) therapy to target more than one antigen expressed on tumor cells, which may lead to deeper and more durable responses.

For example, the CD38-targeted mAb therapy daratumumab is approved for the treatment of multiple myeloma and has been shown to induce cell death through multiple mechanisms, including ADCC.

However, because CD38 is also expressed on the body’s activated NK cells, daratumumab treatment can induce NK cell fratricide, which may impair the effectiveness of ADCC.

In addition, NK cell function is often suppressed or absent in patients with multiple myeloma as a result of the cancer itself as well as treatment therapy, further reducing the effectiveness of daratumumab.

FT576, our iPSC-derived, BCMA-targeted CAR NK cell product candidate for the treatment of multiple myeloma, incorporates four novel synthetic controls of cell function and is specifically designed to be administered in combination with CD38-targeted mAb therapy, and our clinical development strategy for FT576 involves assessing the unique therapeutic benefit of dual-antigen targeting of BCMA and CD38 expressed on plasma cells.

Bring off-the-shelf, iPSC-derived CAR T cells to patients with hematologic malignancies and solid tumors.

Autologous CAR T-cell therapies targeting CD19 for the treatment of B-cell lymphoma and targeting BCMA for the treatment of multiple myeloma have emerged as highly effective treatments for patients with relapsed / refractory disease.

Despite their potent activity, widespread adoption of CAR T-cell therapy has been relatively modest to date due to complex logistics, high cost, manufacturing capacity constraints, and toxicities that necessitate administration only in large hospitals and treatment centers with intensive care units, as compared to more accessible community hospitals and outpatient infusion centers.

According to a survey of academic centers in the U.S.

that specialize in administering CD19-targeted CAR T-cell therapy, only about half of eligible patients receive the treatment, with only 12% of patients able to receive treatment within one month.

We believe these limitations provide the opportunity for development of an off-the-shelf CAR T-cell therapy that can be delivered faster, more reliably, at greater scale, and at lower cost with the ability to reach more patients.

To that end, we are clinically investigating FT819 which, to our knowledge, is the first-ever off-the-shelf, iPSC-derived CAR T-cell therapy candidate to undergo clinical investigation, in a multi-center Phase 1 study for the treatment of adult patients with relapsed / refractory B-cell malignancies, including B-cell lymphoma and chronic lymphocytic leukemia.

FT819 incorporates two novel synthetic controls of cell function:

a novel 1XX CAR construct inserted directly into the T-cell receptor alpha constant (TRAC) locus that targets CD19;

and the complete disruption of T-cell receptor (TCR) expression for the prevention of graft-versus-host disease (GvHD), a potentially life-threatening complication associated with allogeneic T-cell therapy.

We are also conducting preclinical development of multiplexed-engineered, iPSC-derived, CAR T-cell therapy candidates for the treatment of solid tumors, where the application of autologous CAR T-cell therapy has been significantly hampered by tumor-associated antigen heterogeneity, inefficient CAR T-cell trafficking to the tumor, and immunosuppression inherent to the tumor microenvironment.

Our first multiplexed-engineered, iPSC-derived, CAR T-cell product candidate, FT825, is designed to target human epidermal growth factor receptor 2 (HER2)-expressing solid tumors.

FT825 incorporates seven novel synthetic controls of cell function, including a synthetic CXCR2 receptor to promote cell trafficking and a synthetic TGFβ

receptor to redirect immunosuppressive signals in the tumor microenvironment.

Under our collaboration with Ono Pharmaceutical Co.

(Ono), we are currently conducting Investigational New Drug (IND)-enabling activities for FT825, and plan to submit an IND application to the FDA in 2023 to enable the initiation of first-in-human clinical investigation for the treatment of certain solid tumors.

Continue to incorporate novel synthetic controls into our iPSC-derived cellular immunotherapy candidates to expand patient reach and disease application.

We believe off-the-shelf, iPSC-derived cellular immunotherapy has the unique potential to incorporate a multitude of novel synthetic controls that could deliver multiple mechanisms of therapeutic importance to patients, enable safe and effective combination with early line, standard-of-care treatment regimens, and allow for administration in the community setting on an outpatient basis.

One of the most significant barriers that limit patient reach and disease application is the requirement for patients receiving CAR T-cell therapy, whether autologous or allogeneic, to endure intense systemic lympho-conditioning, which is often results in severe blood cell deficiencies and related toxicities and can prevent effective combination with early line, standard-of-care treatment regimens.

We are exploring the integration of novel synthetic controls which may enable our off-the-shelf, iPSC-derived cellular immunotherapy candidates to be administered without intense chemotherapy conditioning and as part of standard-of-care immunomodulatory regimens.

For example, we have incorporated allo-immune defense receptor (ADR) technology licensed from the Baylor College of Medicine into FT522, our iPSC-derived, CD19-targeted CAR NK cell product candidate.

This technology is designed to (a) selectively recognize and destroy allo-reactive host immune cells that would otherwise be capable of rejecting the product candidate, (b) maintain other components of the host immune system to preserve hematopoietic function, and (c) activate the product candidate to enhance its potency and persistence.

Published preclinical studies have shown that ADR-armed allogeneic cells are protected from both T- and NK-cell mediated rejection (Mo et al.

Nature Biotechnology , 39, 56–63 (2021), providing proof-of-concept that ADR-armed allogeneic cells can persist and function in immunocompetent patients.

We are currently conducting IND-enabling activities for FT522, and plan to submit an IND application to the FDA in 2023 to enable the initiation of first-in-human clinical investigation for the treatment of relapsed / refractory B-cell lymphoma in combination with CD20-targeted mAb therapy.

In addition to our plans for the clinical investigation of FT522 in relapsed / refractory B-cell lymphoma, we are preclinically assessing the potential to expand our FT522 program beyond oncology into autoimmunity.

We believe the novel synthetic controls of FT522, in combination with CD38-targeted mAb therapy, may be uniquely suited to address a broad range of autoimmune diseases and disorders by resetting both of these autoantibody-producing lineages through the dual-targeting of CD19-expressing B cells and CD38-expressing plasma cells, leading to more complete removal of autoantibodies and improved clinical outcomes.

Efficiently develop and commercialize first-in-class, iPSC-derived cellular immunotherapies for severe, life-threatening diseases.

We are clinically developing first-in-class, iPSC-derived cellular immunotherapies to improve the lives of patients with severe, life-threatening diseases.

We seek to prioritize indications for development where the unmet need is significant and where regulatory agencies offer expedited development and review programs.

For example, for patients who have relapsed or are refractory to autologous CD19‑targeted CAR T-cell therapy, the prognosis is dismal and survival is measured in weeks to months.

No standard therapies are available for these post-CAR T-cell therapy patients, and recent retrospective analyses of real-world data presented at the 2021 American Society of Hematology Annual Meeting showed extremely poor treatment outcomes with complete response rates of administered therapies ranging from 5% to 25% and overall survival ranging from 5.2 months to 7.5 months.

We believe a single-arm study in a relatively small number of patients may serve as a potential registrational pathway for the treatment of these patients.

Selectively share our proprietary iPSC product platform with strategic partners.

The research, development and clinical investigation of cell therapies for the treatment of human diseases is rapidly expanding.

We believe we are uniquely positioned as an expert partner of choice for industry-leading developers seeking to develop iPSC-derived cell therapies for the treatment of human diseases, including cancer.

For example, we are collaborating with Ono Pharmaceutical Co.

(Ono) to develop and commercialize off-the-shelf, iPSC-derived CAR T-cells for the treatment of certain solid tumors, and we are collaborating with Janssen Biotech, Inc.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson, to develop and commercialize off-the-shelf, iPSC-derived CAR NK cell and CAR T-cell product candidates for the treatment of certain hematologic

malignancies and solid tumors.

Since iPSCs have the unique capacity to be genetically engineered, indefinitely expanded and differentiated in culture into any type of cell in the body, we believe there is significant opportunity to broadly exploit our industry-leading iPSC product platform and intellectual property position in other disease areas beyond cancer.

We will continue to seek partnerships with institutions and companies for the research, development and commercialization of iPSC-derived cell therapies for the treatment of human diseases.

Efficiently develop and commercialize first-in-class cellular immunotherapies for severe, life-threatening diseases where treatment options are limited.

We are clinically developing first-in-class cellular immunotherapies to improve the lives of patients with severe, life-threatening diseases, where the unmet need is significant and where regulatory agencies offer efficient and expedited development and review programs.

For example, in December 2021, the FDA granted regenerative medicine advanced therapy (RMAT) designation to FT516 for the treatment of relapsed / refractory DLBCL.

The RMAT program provides for early interactions with the FDA to discuss potential pathways for accelerated approval.

Due to high incidences of morbidity and mortality and the rare disease nature of certain of our target indications, we believe clinical trials that we conduct will generally require relatively small numbers of subjects and that our development path to approval may be efficient.

Our Off-the-shelf, iPSC-derived Cellular Immunotherapy Pipeline

We believe we are well positioned to form partnerships with third parties seeking to develop iPSC-derived cellular immunotherapies for the treatment of human diseases, including cancer.

For example, we are collaborating with Ono to develop and commercialize off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK and CAR T-cells for the treatment of certain solid tumors.

In addition, since iPSCs have the unique capacity to be genetically engineered, indefinitely expanded and differentiated in culture into any type of cell in the body, we believe there is significant opportunity to broadly exploit our iPSC product platform and intellectual property position in other disease areas beyond cancer.

In 2022, we formed Senescea Therapeutics, Inc., a majority-owned subsidiary of the Company, with Memorial Sloan Kettering Cancer Center to research and develop iPSC-derived cell therapies for the treatment of diseases associated with cell senescence.

We will continue to seek partnerships with companies and institutions for the research, development and commercialization of iPSC-derived cell therapies for the treatment of human diseases.

Our Off-the-shelf, Multiplexed-engineered, iPSC-derived Cellular Immunotherapy Pipeline

NK cells have an innate ability to rapidly seek and destroy abnormal cells, such as cancer or virally-infected cells, and represent one of the body’s first lines of immunological defense.

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indirect killing by producing and releasing proinflammatory and chemotactic cytokines that play a pivotal role in orchestrating the adaptive immune response;

and antibody-mediated targeted killing by binding to and enhancing the cancer-killing effect of endogenous and therapeutic antibodies through a process known as antibody-dependent cellular cytotoxicity (ADCC).

and antibody-mediated targeted killing by binding to and enhancing the activity of endogenous and therapeutic antibodies through ADCC.

T cells, or T-lymphocytes, play a critical role in adaptive immunity and are distinguished from other cells of the immune system by the presence of a T-cell receptor (TCR) on their surface.

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The majority of T cells, termed alpha beta T cells (αβ

T cells), rearrange their alpha and beta chains on the TCR, which confers specificity and enables T cells to recognize non-self molecules, known as non-self antigens, expressed on the surface of transformed or foreign cells.

Antigens inside a cell are bound to, and are routinely brought to the surface of a cell, by MHC class I molecules.

Antigens inside a target cell are bound to, and are routinely brought to the surface of a cell, by MHC class I molecules.

Upon antigen recognition, T cells bind to the MHC-antigen complex, become activated and destroy the targeted cell.

Unlike NK cells, T cells are limited by antigen-specific binding of their TCR in order to induce cellular cytotoxicity.

We are developing off-the-shelf, iPSC-derived NK cell and T-cell cancer immunotherapies, including cell product candidates intended to synergize with checkpoint inhibitor and monoclonal antibody therapies and to target tumor-associated antigens.

iPSC-derived, hnCD16 Engineered NK Cell Product Candidate

NK cells play a major role in the anti-tumor activity of certain tumor-targeting antibodies.

NK cells express CD16, an activating receptor that binds to the Fc domain of IgG antibodies.

Once activated through CD16, NK cells are able to destroy antibody-coated tumor cells and secrete cytokines, such as interferon gamma, to potentiate an adaptive immune response.

This mechanism of action, referred to as antibody-dependent cellular cytotoxicity (ADCC), is believed to be important for the treatment of a wide range of cancers.

CD16 consists of two genomic variants, 158V and 158F, that confer high or low binding affinity, respectively, to the Fc domain of IgG antibodies.

Numerous clinical studies with FDA-approved tumor-targeting antibodies, including rituximab (FDA-approved for certain cancers of the blood and lymphatic system), trastuzumab (FDA-approved for certain breast and gastric cancers) and cetuximab (FDA-approved for certain head and neck, non-small cell lung and colorectal cancers), have demonstrated that patients homozygous for the 158V variant, which is present in only about 15% of patients, have improved clinical outcomes.

In addition, the expression of CD16 on NK cells has been shown to undergo considerable down-regulation in cancer patients, which can significantly limit anti-tumor activity.

FT516 is an investigational off-the-shelf NK cell cancer immunotherapy derived from a clonal master iPSC line engineered to express a novel CD16 (hnCD16) Fc receptor.

Our novel CD16 Fc receptor incorporates two unique features designed to augment the anti-tumor activity of FT516:

a high-affinity homozygous 158V variant to promote high binding affinity and a modification to block its cleavage and down-regulation upon NK cell activation.

We are studying FT516 in an ongoing, multi-center Phase 1 clinical trial.

To our knowledge, FT516 is the first-ever engineered iPSC-derived cell therapy cleared for clinical investigation in the United States.

The Phase 1 trial is designed to assess the safety and

determine the maximum dose of FT516 in adult patients with selected hematologic malignancies.

The trial assesses two treatment regimens:

FT516 as a monotherapy in patients with relapsed / refractory acute myeloid leukemia (AML) testing three separate dose cohorts (90 million cells per dose;

300 million cells per dose;

900 million cells per dose) (Regimen A);

and FT516 in combination with CD20-targeted monoclonal antibody therapy in patients with advanced B-cell lymphoma (BCL) who have previously failed or progressed on CD20-targeted monoclonal antibody therapy testing four separate dose cohorts (30 million cells per dose;

90 million cells per dose;

300 million cells per dose;

900 million cells per dose) (Regimen B).

The treatment schedule consists of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), CD20-targeted monoclonal antibody therapy (Regimen B only), and three once-weekly doses of FT516 each with IL-2 cytokine support.

For those patients who are clinically stable at Day 29, a second treatment cycle may be administered.

We have reported interim Phase 1 clinical data for both Regimen A in relapsed / refractory AML and Regimen B in relapsed / refractory BCL:

Interim Phase 1 Clinical Data in AML.

We have reported interim Phase 1 clinical data for nine patients with relapsed / refractory AML treated with FT516 as monotherapy in the first and second dose cohorts (90 million and 300 million cells per dose, respectively) as of an April 16, 2021 cutoff date.

No dose-limiting toxicities (DLTs) and no events of any grade of cytokine release syndrome (CRS), immune effector cell-associated neurotoxicity syndrome (ICANS), or graft-versus-host disease (GvHD) were reported by investigators.

Six of the nine patients showed anti-leukemia activity following treatment with FT516 as evidenced by on-treatment reductions in bone marrow blasts, with four patients achieving an objective response reflecting complete clearance of leukemic blasts in the bone marrow.

Three of the four responding patients achieved a best overall response of complete remission with incomplete hematologic recovery (CRi) based on 2017 ELN response criteria.

We have completed dose escalation in Regimen A.

Interim Phase 1 Clinical Data in BCL.

We have reported interim Phase 1 clinical data for twenty patients with relapsed / refractory BCL treated with FT516 in combination with rituximab in the first, second, third, and fourth dose cohorts (30 million, 90 million, 300 million, and 900 million cells per dose, respectively) as of an October 18, 2021 cutoff date.

No DLTs and no events of any grade of CRS, ICANS, or GvHD were reported by investigators.

Of the 18 patients treated in the second, third, and fourth dose cohorts, 10 patients were naïve to treatment with autologous CD19-targeted chimeric antigen receptor (CAR) T-cell therapy and eight patients were previously treated with autologous CD19-targeted CAR T-cell therapy.

Of the 10 patients naïve to treatment with CAR T-cell therapy, eight patients achieved an objective response (80%), including five patients who achieved a complete response (50%), as assessed by PET-CT scan per Lugano 2014 criteria.

Of the eight patients previously treated with CAR T-cell therapy, three patients achieved an objective response (38%), all of which were complete responses, as assessed by PET-CT scan per Lugano 2014 criteria.

All 11 responding patients continued in ongoing response at three months following initiation of treatment (61%), and eight of these patients continued in ongoing response (44%) as of the data cutoff date at a median follow-up of 8.3 months.

We have completed dose escalation in Regimen B, and have initiated the dose-expansion stage of our Phase 1 study for the treatment of relapsed / refractory BCL at 900 million cells per dose.

We are enrolling patients in three disease-specific expansion cohorts:

patients with relapsed / refractory aggressive lymphomas who have previously been treated with CD19-targeted CAR T-cell therapy;

patients with relapsed / refractory aggressive lymphomas who are naïve to treatment with CD19-targeted CAR T-cell therapy;

and patients with relapsed / refractory follicular lymphoma.

In addition, we are also enrolling patients in an expansion cohort, without fludarabine and cyclophosphamide based lympho-conditioning chemotherapy that combines FT516 with rituximab-bendamustine (R-Benda), a standard-of-care regimen for the treatment of BCL.

In December 2021 we announced regenerative medicine advanced therapy (RMAT) Designation was granted by the FDA to FT516 for relapsed/refractory DLBCL.

RMAT designation is an FDA program designed to expedite the development and review of regenerative medicine therapies, including cell-based cancer immunotherapies, that have demonstrated the potential to address an unmet medical need based on preliminary clinical evidence.

The program allows for early and frequent interactions with the FDA, and enables regulatory authority guidance on efficient drug development, pathways for accelerated approval, and approaches to fulfill post-approval requirements.

We plan to engage with the FDA to discuss CMC, manufacturing, and clinical development considerations for late-stage development of FT516, including pathways for accelerated approval.

iPSC-derived, hnCD16, CAR19, IL15-RF Engineered NK Cell Product Candidate

CAR T-cell therapy has recently emerged as a revolutionary and potentially curative therapy for patients with certain hematologic malignancies, including refractory cancers.

Since 2017, three CAR T-cell therapies have been approved by the FDA for the treatment of relapsed / refractory B-cell precursor acute lymphoblastic leukemia (ALL) and relapsed / refractory diffuse large B-cell lymphoma (DLBCL).

While most researchers and clinical investigators continue to focus on the development of autologous or allogeneic CAR T-cell therapies, we are developing CAR NK cell product candidates derived from clonal master engineered iPSC lines as off-the-shelf cancer immunotherapies for the treatment of hematologic malignancies and solid tumors.

FT596 is an investigational off-the-shelf CAR NK cell cancer immunotherapy derived from a clonal engineered master iPSC line.

FT596 incorporates three anti-tumor functional modalities:

a proprietary CAR optimized for NK cell biology that targets B-cell antigen CD19;

a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to augment antibody-dependent cellular cytotoxicity, enabling targeting of tumor-associated antigens such as CD20;

and an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that promotes survival, proliferation and trans-activation of NK cells and CD8 T cells.

Together, these features are intended to enable multi-antigen targeting, of malignant B cells, augment ADCC, and enhance cell persistence.

We are studying FT596 in an ongoing, multi-center Phase 1 clinical trial for the treatment of relapsed / refractory B-cell malignancies.

The Phase 1 trial is designed to assess the safety and determine the maximum dose of FT596 in adult patients.

The trial includes five treatment regimens, each enrolling patients in up to four dose cohorts (30 million cells per dose;

90 million cells per dose;

300 million cells per dose and 900 million cells per dose):

FT596 as a monotherapy for patients with relapsed / refractory B-cell lymphoma (BCL) (Regimen A1);

FT596 in combination with rituximab for patients with relapsed / refractory BCL (Regimen B1);

FT596 in combination with obinutuzumab for patients with relapsed / refractory follicular lymphoma (FL) (Regimen B2);

FT596 as a monotherapy for patients with relapsed / refractory chronic lymphocytic leukemia (CLL) (Regimen A2);

and FT596 in combination with obinutuzumab for patients with relapsed / refractory CLL (Regimen B3).

The treatment schedule consists of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), CD20-targeted monoclonal antibody therapy (Regimens B1, B2, and B3 only), and up to two doses of FT596.

For those patients with evidence of clinical benefit at Day 29, a second treatment cycle may be administered.

At the ASH 2021 Annual Meeting, we have reported interim Phase 1 clinical data for both Regimens A1 and B1 as of an October 11, 2021 cutoff date:

Interim Phase 1 Clinical Data in Regimen A1 .

We have reported interim Phase 1 clinical data for 12 patients with relapsed / refractory BCL treated with FT596 as monotherapy in the first, second, and third single-dose cohorts (30 million, 90 million, and 300 million cells, respectively).

No DLTs and no events of any grade of ICANS or GvHD were reported by investigators.

One low-grade adverse event (Grade 1) of CRS was reported, which was of limited duration and resolved without intensive care treatment.

Of the 12 patients treated in the first (n=3), second (n=4), and third (n=5) dose cohorts, eight patients achieved an objective response (67%), including three patients who achieved a complete response (25%), as assessed by PET-CT scan per Lugano 2014 criteria.

Of the nine patients treated in the second and third dose cohorts, seven patients achieved an objective response (78%), including three patients who achieved a complete response (33%), as assessed by PET-CT scan per Lugano 2014 criteria.

Of the seven responding patients, five patients were treated with a second FT596 single-dose cycle and continued in ongoing response at a median follow-up of 4.1 months, including one patient in ongoing complete response at 8.1 months;

one patient was treated with only one FT596 single-dose cycle, reached six months in complete response, and subsequently had disease progression at 6.5 months;

and one patient was treated with only one FT596 single-dose cycle and had disease progression at 1.7 months.

Interim Phase 1 Clinical Data in Regimen B1 .

We have reported interim Phase 1 clinical data for 12 patients with relapsed / refractory BCL treated with FT596 in combination with rituximab in the first, second, and third single-dose cohorts (30 million, 90 million, and 300 million cells, respectively).

No DLTs and no events of any grade of ICANS or GvHD were reported by investigators.

Two low-grade adverse events (one Grade 1;

one Grade 2) of CRS were reported, which were of limited duration and resolved without intensive care treatment.

Of the 12 patients treated in the first (n=3), second (n=4), and third (n=5) dose cohorts, six patients achieved an objective response (50%), including five patients who achieved a complete response (42%), as assessed by PET-CT scan per Lugano 2014 criteria.

Of the nine patients treated in the second and third dose cohorts, six patients achieved an objective response (67%), including five patients who achieved a complete response (56%), as assessed by PET-CT scan per Lugano 2014 criteria.

All six responding patients were treated with a second FT596 single-dose cycle.

Five responding patients continued in ongoing response at a median follow-up of 4.6 months, including two patients in ongoing complete response at 6.0 and 10.8 months;

and one responding patient reached six months in complete response and subsequently had disease progression at 6.7 months.

Subsequent to the October 11, 2021 cutoff date, data from eight additional patients were reported, including an additional patient in the third single-dose cohort of Regimen B1 who was evaluable for initial anti-tumor response, and seven patients in the fourth single-dose cohorts (n=1 in Regimen A1;

n=6 in Regimen B1) who were evaluable for safety and initial anti-tumor response.

No DLTs and no events of any grade of CRS, ICANS or GvHD were reported by investigators.

Of these eight patients, five patients –

all of whom were treated in the fourth single-dose cohort of Regimen B1 –

achieved an objective response, including four patients who achieved a complete response, as assessed by PET-CT scan per Lugano 2014 criteria following completion of the first FT596 single-dose cycle.

Enrollment in the dose-escalation stage is currently ongoing in Regimens A1 and B1 in relapsed / refractory BCL and in Regimens A2 and B3 in relapsed / refractory CLL.

In April 2020, the FDA allowed a second IND application for the clinical investigation of FT596 for the prevention of relapse in patients with BCL who have undergone autologous hematopoietic stem cell transplant (HSCT) and are considered high risk for early relapse.

The Phase 1 clinical trial, which is sponsored by investigators from the Masonic Cancer Center, University of Minnesota, is designed to assess the safety and determine the maximum dose of FT596 in combination with CD20-targeted monoclonal antibody therapy.

The ongoing clinical trial is expected to enroll up to 18 patients in up to three dose cohorts (90 million cells per dose;

300 million cells per dose and 900 million cells per dose).

FT596 is administered as a single dose with CD20-targeted monoclonal antibody therapy approximately 30 days following HSCT.

iPSC-derived, hnCD16, IL15-RF, CD38KO Engineered NK Cell Product Candidate

Multiple myeloma is a hematologic malignancy characterized by the proliferation of malignant plasma cells.

In multiple myeloma, malignant plasma cells accumulate in the bone marrow and produce abnormal antibodies called M proteins, which can cause kidney damage, bone destruction, and impaired immune function.

While multiple approved drugs with novel mechanisms have improved disease management over the past decade, multiple myeloma is rarely curable and a significant majority of patients are expected to relapse.

Daratumumab is an IgG1 monoclonal antibody approved by the FDA in November 2015 for the treatment of multiple myeloma.

Daratumumab effectively targets CD38, which is expressed on multiple myeloma cells, and induces cell death through multiple mechanisms, including ADCC.

However, because CD38 is also expressed on activated NK cells, daratumumab treatment can induce NK cell fratricide, which may impair the effectiveness of ADCC.

Collectively, preclinical and clinical observations suggest a potential therapeutic benefit of maintaining NK cell numbers and function to support ADCC in patients with multiple myeloma.

FT538 is an investigational off-the-shelf NK cell cancer immunotherapy derived from a clonal engineered master iPSC line.

FT538 incorporates three functional modifications:

a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to augment ADCC;

an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that promotes survival, proliferation and trans-activation of NK cells and CD8 T cells;

and the complete elimination of CD38 expression to mitigate the potential for NK cell fratricide.

Together, these features are intended to augment ADCC, enhance cell persistence and prevent anti-CD38 monoclonal antibody-induced fratricide.

We are studying FT538 in an ongoing, multi-center Phase 1 clinical trial designed to assess the safety and determine the maximum dose of FT538 in up to 105 adult patients.

The trial includes two treatment regimens, each enrolling patients in up to four dose cohorts (100 million cells per dose;

300 million cells per dose;

1 billion cells per dose;

and 1.5 billion cells per dose):

FT538 as monotherapy for patients with relapsed / refractory AML (Regimen A);

and FT538 in combination with daratumumab for patients with relapsed / refractory multiple myeloma who have failed at least two lines of therapy (Regimen B).

The treatment schedule consists of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), daratumumab (Regimen B only), and three once-weekly doses of FT538.

Dose escalation is currently ongoing in Regimens A and B.

We have reported interim Phase 1 clinical data for Regimen A in relapsed / refractory AML:

Interim Phase 1 Clinical Data in AML .

We have reported interim Phase 1 clinical data for three patients with relapsed / refractory AML treated with FT538 as monotherapy in the first dose cohort (100 million cells per dose) as of an April 16, 2021 cutoff date.

Of the three patients enrolled in the first dose cohort, two were evaluable for safety and anti-leukemic activity and one patient discontinued from the study prior to completion of the first treatment cycle due to clinical evidence of failure to respond to therapy.

No DLTs and no events of any grade of CRS, ICANS, or GvHD were reported by investigators.

Both evaluable patients showed anti-leukemic activity following treatment with FT538 as evidenced by on-treatment reduction in bone marrow blasts, with one patient achieving a best overall response of CRi based on 2017 ELN response criteria.

The FDA also allowed a second IND application for the clinical investigation of FT538 for the treatment of relapsed / refractory AML.

The Phase 1 clinical trial, which is sponsored and managed by investigators from the Masonic Cancer Center, University of Minnesota, is designed to assess the safety and determine the maximum dose of FT538 in combination with daratumumab in up to 50 adult patients.

The treatment schedule consists of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), daratumumab, and three once-weekly doses of FT538.

Enrollment in the dose-escalation stage is currently ongoing.

In March 2021, the FDA allowed our IND application for the clinical investigation of FT538 in combination with monoclonal antibody therapy for the treatment of advanced solid tumors.

We are studying FT538 in an ongoing, multi-center Phase 1 clinical trial designed to assess the safety and determine the maximum dose of FT538 in up to 189 adult patients.

The clinical protocol includes assessment of FT538 in combination with one of four monoclonal antibodies:

EGFR-targeted cetuximab;

HER2-targeted trastuzumab;

PDL1-targeted avelumab;

and PD1-targeted pembrolizumab.

Each patient is eligible to receive up to two FT538 treatment cycles, with

each cycle consisting of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), monoclonal antibody therapy, and three once-weekly doses of FT538.

Enrollment in the dose-escalation stage is currently ongoing.

iPSC-derived, hnCD16, IL15-RF, CD38-KO, CAR-BCMA Engineered NK Cell Product Candidate

In addition to CD38 targeting in multiple myeloma, targeting of other tumor-associated antigens expressed on malignant plasma cells has been explored.

Of these antigens, the TNF-superfamily member B-cell Maturation Antigen (BCMA) is among the most researched and is under development by multiple groups as a CAR target.

Several clinical trials in multiple myeloma have shown promising initial results targeting BCMA with CAR T cells;

however, there remains significant opportunity to improve both rates of relapse and treatment of relapsed patients.

We are developing a first-in-class cell therapy pipeline comprised of off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell and CAR T-cell product candidates that are selectively designed, incorporate novel synthetic controls of cell function, and can deliver multiple mechanisms of therapeutic importance to patients for the treatment of cancer and autoimmune disease.

We have a deep pipeline of product candidates currently under development with multiple clinical trials ongoing, including in combination with mAb therapy to promote multi-antigen recognition, binding, and killing of target cells.

CAR NK Cell Program for Multiple Myeloma

Multiple myeloma is a deadly form of blood cancer that is characterized by uncontrolled growth of plasma cells, a type of immune cell that is found mainly in the bone marrow and is responsible for making and secreting antibodies to fight infection.

While the underlying cause of multiple myeloma is unknown, abnormal plasma cells can accumulate in the bone marrow, inhibiting the body’s normal production of red blood cells, platelets, and other white blood cells, and can form tumors in the bone that spread throughout the body.

There are approximately 100,000 patients suffering from multiple myeloma in the United States, with 35,000 new cases and nearly 13,000 deaths from the disease annually according to the American Cancer Society.

Multiple myeloma occurs more commonly in men than in women, and predominantly affects the elderly with an average age of onset of approximately 66 years.

For patients less than 70 years old with no comorbidities, autologous stem cell therapy is the preferred treatment option.

For transplant ineligible patients, the current treatment paradigm for multiple myeloma begins with chemotherapy, proteasome inhibitors and immunomodulatory drugs.

Several drugs that directly target plasma cells, including CD38-targeted mAb therapy, have also been approved for multiple myeloma and have been incorporated into the current treatment paradigm.

In addition, autologous CAR T-cell therapies have shown significant promise in multiple myeloma, and the first autologous CAR T-cell therapy targeting B-cell maturation antigen (BCMA) expressed on plasma cells was approved by the FDA in 2021.

The great majority of patients become refractory to these drugs and/or relapse, creating a high unmet need for treatments for relapsed / refractory patients.

Multiple myeloma is rarely cured, with the majority of patients dying from the disease.

In August 2019, we entered into a license agreement with the Max Delbrück Center for Molecular Medicine (MDC) under which we were granted certain exclusive rights to intellectual property covering novel humanized CAR constructs that uniquely and specifically bind BCMA.

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Additionally, in in vivo proof-of-concept studies, MDC scientists demonstrated that anti-BCMA CAR T cells mediated anti-tumor activity in xenotransplant mouse models of multiple myeloma and of mature B-cell non-Hodgkin lymphoma, where BCMA surface expression is up to 4-fold lower as compared to mouse models of multiple myeloma.

FT576 is an investigational off-the-shelf NK cell cancer immunotherapy derived from a clonal engineered master iPSC line.

FT576 incorporates four functional modifications:

We are clinically developing FT576, an investigational off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell cancer immunotherapy derived from a clonal master iPSC line.

FT576 incorporates four novel synthetic controls of cell function:

a proprietary CAR that targets BCMA;

a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to augment ADCC;

an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that promotes survival, proliferation and trans-activation of NK cells and CD8 T cells;

and the complete elimination of CD38 expression to mitigate the potential for NK cell fratricide.

Together, these features are intended to enable multi-antigen targeting of myeloma cells, augment ADCC, enhance cell persistence and prevent anti-CD38 monoclonal antibody-induced fratricide.

We are studying FT576 in an ongoing, multi-center Phase 1 clinical trial designed to assess the safety and determine the maximum dose of FT576 following outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine) in up to 168 adult patients.

The trial includes four treatment regimens:

Regimen A as a single dose of FT576;

Regimen A1 as two doses of FT576;

Regimen B as a single dose of FT576 in combination with daratumumab;

and Regimen B1 as two doses of FT576 in combination with daratumumab.

Enrollment in the dose-escalation stage is currently ongoing.

iPSC-derived, hnCD16, IL15-RF, CD38-KO, CAR-MICA/B Engineered NK Cell Product Candidate

The major histocompatibility complex (MHC) class I related proteins A (MICA) and B (MICB) are induced by cellular stress, damage or transformation, and the expression of MICA and MICB proteins has been reported for many tumor types.

Cytotoxic lymphocytes, such as NK cells and CD8+ T cells, can detect and bind the membrane-distal alpha-1 and -2 domains of MICA/B, activating a potent cytotoxic response.

However, advanced cancer cells frequently evade immune cell recognition by proteolytic shedding of these domains.

The clinical importance of proteolytic shedding is reflected in the association of high serum concentrations of shed MICA/B with disease progression in many solid tumors.

Several recent publications have shown that therapeutic antibodies targeting the membrane-proximal alpha-3 domain strongly inhibited MICA/B shedding, resulting in a substantial increase in the cell surface density of MICA/B and restoration of NK cell-mediated tumor immunity.

In addition, a recent publication by scientists from Dana-Farber Cancer Institute (DFCI) demonstrated that cancers with B2M and JAK1 inactivating mutations resulting in loss of MHC class I expression can be effectively targeted with alpha-3 domain-specific antibodies to restore NK cell-mediated immunity against solid tumors resistant to cytotoxic T cells.

Therapeutic approaches aimed at targeting the alpha-3 domain of MICA/B therefore represent a potentially promising novel strategy to overcome this prominent evasion mechanism as a means of restoring anti-tumor immunity in patients with solid tumors.

In April 2020, we entered into a license agreement with DFCI under which we were granted certain exclusive rights to intellectual property covering novel antibody fragments that uniquely and specifically bind the alpha-3 domain of MICA/B.

FT536 is an investigational off-the-shelf NK cell cancer immunotherapy derived from a clonal engineered master iPSC line.

FT536 incorporates four functional modifications:

a proprietary CAR that targets the alpha-3 domain of MICA/B;

a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to augment ADCC;

an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that promotes survival, proliferation and trans-activation of NK cells and CD8 T cells;

and the complete elimination of CD38 expression to mitigate the potential for NK cell fratricide.

In December 2021, the FDA allowed our IND application for the clinical investigation of FT536 as monotherapy and in combination with monoclonal antibody therapy for the treatment of advanced solid tumors.

We are initiating a multi-center Phase 1

clinical trial designed to assess the safety and determine the maximum dose of FT536.

The clinical protocol includes assessment of FT536 in combination with one of five monoclonal antibodies:

EGFR-targeted cetuximab;

HER2-targeted trastuzumab;

EGFR- and cMet-targeted amivantamab;

PDL1-targeted avelumab;

and PD1-targeted pembrolizumab.

Each patient is eligible to receive up to two FT536 treatment cycles, with each cycle consisting of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), monoclonal antibody therapy, and three once-weekly doses of FT536.

iPSC-derived, CAR NK Cell Product Candidate Targeting B7H3

B7H3 (CD276) belongs to the B7 superfamily of immune checkpoint molecules.

B7H3 protein is aberrantly overexpressed in a wide variety of cancers, with limited expression at low level in normal tissues, and is often associated with poor prognosis.

Recent studies have shown that B7H3 is a critical promoter of tumorigenesis and metastasis, and its expression is a metabolic hallmark of cancer.

Multiple modalities targeting B7H3 have shown early clinical activity in patients with advanced solid tumors.

We are developing FT573, a preclinical NK cell product candidate derived from a clonal engineered master iPSC line.

FT573 incorporates a B7H3-targeted CAR construct comprised of a single-domain targeting sequence derived from a novel anti-B7H3 camelid antibody.

Camelid antibody-derived single-domain fragments are desirable antigen binding strategies as they maintain high target affinity and specificity associated with conventional antibodies, while at the same time demonstrate good physiochemical stability, reduced immunogenicity, and preferred agility associated with their reduced size.

In in vitro preclinical studies, we have shown that FT573 cells exhibit antigen-specific cytotoxicity as evidenced by enhanced cytokine release and degranulation.

iPSC-derived, TCR-KO, TRAC-targeted CAR19 Engineered T-Cell Product Candidate

In addition to our development of iPSC-derived CAR NK cell product candidates, we are also developing CAR T-cell product candidates derived from clonal master engineered iPSC lines as off-the-shelf cancer immunotherapies for the treatment of hematologic malignancies and solid tumors.

In September 2016, we announced a multi-year research partnership with Memorial Sloan Kettering Cancer Center for the development of off-the-shelf engineered T-cell product candidates using clonal master iPSC lines and, in July 2019, we extended the partnership for an additional three years.

Research and development activities under the collaboration are being led by Dr.

a novel high-affinity 158V, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to prevent its down-regulation and to enhance ADCC;

an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that is intended to augment NK cell activity;

and the complete elimination of CD38 expression to promote persistence and function in high oxidative stress environments.

In combination with CD38-targeted mAb therapy, these features of FT576 are designed to enable dual-antigen targeting of BCMA and CD38 antigens expressed on plasma cells, extend functional persistence, and mitigate the risk of rejection.

In preclinical studies, FT576 demonstrated that the high-avidity binding of the BCMA-targeted CAR construct enabled sustained tumor control against various multiple myeloma cell lines, including in long-term in vivo xenograft mouse models.

Additionally, preclinical data published in November 2022 demonstrated that single-dose administration of FT576 controlled tumor growth in vivo , with deeper and more sustained anti-tumor activity observed through multi-dose administration of FT576 as well as in combination with CD38-targeted mAb therapy (Cichocki et al.

Nature Communications .

13, 7341, 2022).

We are currently studying FT576 in an ongoing, multi-center Phase 1 clinical trial designed to assess its safety and clinical activity in adult patients with relapsed / refractory multiple myeloma, and to determine the recommended Phase 2 dose and schedule, as monotherapy (Regimen A) and in combination with CD38-targeted mAb therapy to simultaneously target BCMA and CD38 antigens (Regimen B).

At the 2022 American Society of Hematology (ASH) Annual Meeting, we presented interim clinical data as of an October 7, 2022 data cutoff date for nine patients treated with a single dose of FT576, including six patients in Regimen A and three patients in Regimen B.

Patients had received standard conditioning chemotherapy consisting of cyclophosphamide (Cy) at 300 mg/m2 and fludarabine (Flu) at 30 mg/m2 for three days prior to the initiation of each regimen.

Patients were heavily pre-treated having had received a median of five prior lines of therapy (range 3-10), including six patients (67%) that were refractory to last therapy.

Safety Data .

No dose-limiting toxicities (DLTs), and no events of any grade of cytokine release syndrome (CRS), immune effector cell-associated neurotoxicity syndrome (ICANS), or GvHD, were observed.

Both regimens were well tolerated.

Two patients (22%) experienced Grade 3 or greater FT576-related adverse events (AEs), with one patient having Grade 3 diarrhea and one patient having two episodes of Grades 3 through 4 neutropenia and three episodes of Grade 3 anemia, all of which resolved.

There were no serious AEs related to FT576.

There were no study discontinuations or deaths due to treatment-emergent AEs (TEAEs).

Regimen A Activity .

Six patients were treated with a single dose of FT576 as monotherapy in the first dose cohort at 100 million cells (n=3) and the second dose cohort at 300 million cells (n=3).

In the second dose cohort, one patient, who had received five prior lines of therapy, was triple-refractory to an immunomodulatory drug, a proteasome inhibitor, and anti-CD38 mAb therapy, and was refractory to last therapy (pomalidomide, daratumumab and dexamethasone), achieved a very good partial response with the other two patients showing stable disease.

Further evidence of FT576 activity was observed in the second dose cohort, with two patients for whom serum BCMA levels were evaluable showing a substantial treatment-induced decrease in soluble BCMA.

Regimen B Activity .

Three patients were treated with a single dose of FT576 in combination with a CD38-targeted mAb therapy in the first dose cohort at 100 million cells, with one patient achieving a partial response (PR) and one patient achieving a minor response (MR).

All three patients showed a substantial treatment-induced decrease in soluble BCMA.

We have initiated enrollment of two-dose escalation cohorts at 300 million cells per dose in both regimens, and we plan to initiate enrollment of three-dose escalation cohorts at 300 million cells per dose in both regimens and continue dose escalation.

CAR NK Cell Program for B-cell Lymphoma and Autoimmune Disorders

Non-Hodgkin lymphoma (NHL) is a type of blood cancer that originates in the body’s lymphatic system.

In NHL, white blood cells, called lymphocytes, grow abnormally and can form tumors throughout the body.

The most common subtype of NHL is B-cell lymphoma, which represents over 85% of all newly-diagnosed NHL cases per year.

B-cell lymphoma can be rapidly growing, or aggressive, such as diffuse large B-cell lymphomas, or it can be slow growing, or indolent, such as follicular lymphoma.

There are over 80,000 new cases of NHL diagnosed per year in the United States, with over 20,000 deaths from the disease annually, according to the American Cancer Society.

Patients with newly-diagnosed B-cell lymphoma are generally treated with chemotherapy plus a CD20-targeted mAb, with the R-CHOP chemotherapy combination (rituximab, cyclophosphamide, doxorubicin, vincristine, and prednisone) established as standard of care for newly-diagnosed diffuse large B-cell lymphoma patients.

While the frontline approach of chemotherapy plus a CD20-targeted mAb is highly effective for many NHL patients, most patients suffer from disease that is refractory to initial treatment or recurrent after an initial response.

Each year there are over 20,000 patients that require second-line treatment and nearly 10,000 patients that require third-line or later lines of therapy.

For patients with refractory or relapsed disease, prognosis worsens with each subsequent line of therapy.

Autologous CD19-targeted CAR T-cell therapy has been highly successful in treating patients with relapsed / refractory B-cell lymphoma.

While the autologous approach has demonstrated compelling efficacy in many patients, several key challenges limit its adoption and reach including the need to co-administer intense chemotherapy conditioning, to hospitalize patients for treatment and monitoring, and to deliver bridging therapy during product manufacture.

In registrational trials of CD19-targeted CAR T-cell therapy, up to 31% of patients on an intent-to-treat basis did not receive therapy primarily due to interval complications from the underlying disease prior to delivery of therapy or failure to manufacture therapy.

Additionally, patients with relapsed / refractory disease can have a T-cell compartment that is damaged or weakened, which may impair product manufacture, viability, potency, and/or response.

The manufacture and delivery of autologous CAR T-cell therapy is logistically complex and costly and, as a result, its availability is limited to select specialized centers.

We are preclinically developing FT522, an off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell cancer immunotherapy derived from a clonal master iPSC line.

FT522 incorporates five novel synthetic controls of cell function:

a proprietary CAR that targets CD19;

a novel high-affinity 158V, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to prevent its down-regulation and to enhance ADCC;

an IL-15/IL-15 receptor fusion (IL-15RF), a potent cytokine complex that is intended to augment NK cell activity;

the complete elimination of CD38 expression to promote persistence and function in high oxidative stress environments;

and a novel alloimmune defense receptor (ADR) that targets the cell surface receptor 4-1BB (CD137), a member of the tumor necrosis factor receptor superfamily that is upregulated on activated CD4+, CD8+, and regulatory T cells as well as activated NK cells of the host immune system.

In combination with CD20-targeted mAb therapy, these features of FT522 are designed to enable dual-antigen targeting of CD19 and CD20 antigens expressed on B cells, extend functional persistence, and mitigate the risk of rejection.

Preclinical proof-of-concept data for FT522 presented at the 2022 ASH Annual Meeting showed that, in an in vitro co-culture assay with allogeneic peripheral blood mononuclear cells (allo PBMCs), ADR-armed, CD19-targeted, iPSC-derived CAR NK cells expanded, persisted, and selectively eliminated 4-1BB+ allo PBMCs in contrast to ADR-null, CD19-targeted, iPSC-derived CAR NK cells,

which were depleted.

In addition, in a disseminated Nalm6 leukemia model comprised of allo-reactive T cells and tumor cells resistant to T-cell killing (MHC class 1-null), ADR-armed, CD19-targeted, iPSC-derived CAR NK cells exhibited uncompromised effector function in vivo compared to ADR-null, CD19-targeted, iPSC-derived CAR NK cells, suggesting that ADR-armed NK cells functionally persist, proliferate, and durably kill tumor cells while resisting rejection by allo-reactive T cells.

In addition to our plans for the clinical investigation of FT522 in relapsed / refractory B-cell lymphoma, we are assessing in preclinical studies the potential to expand our FT522 program beyond oncology into autoimmunity.

Autoimmune diseases are conditions in which the body's immune system mistakenly attacks the body's own organs and tissues.

The role of B cells in autoimmune diseases involves different cellular functions, including autoantigen presentation, autoreactive T-cell activation, and autoantibody production.

Therapeutic strategies designed to deplete B cells, including treatment with CD20-targeted mAb therapy, have been shown effective for induction and maintenance of remission in patients with certain autoimmune diseases.

In addition, autologous CD19-targeted CAR T-cell therapy has been shown to induce durable remissions in patients with severe, refractory systemic lupus erythematosus.

Aberrant production of autoantibodies by long-lived plasma cells is also an inherent characteristic of autoimmune diseases.

Notably, recent findings suggest that long-lived plasma cells often accumulate later in the course of disease and are refractory to immunosuppressants and B-cell depletion therapies, leading to the persistent secretion of autoantibodies despite B-cell targeted intervention strategies.

We believe the novel synthetic controls of FT522, in combination with CD38-targeted mAb therapy, may be uniquely suited to address a broad range of autoimmune diseases and disorders by resetting both of these autoantibody-producing lineages through the dual-targeting of CD19-and CD20- expressing B cells and CD38-expressing plasma cells, leading to more complete removal of autoantibodies and improved clinical outcomes.

CAR T-cell Program for B-cell Lymphoma and Chronic Lymphocytic Leukemia

In addition to our development of iPSC-derived CAR NK cell product candidates, we are also developing CAR T-cell product candidates derived from clonal master iPSC lines as off-the-shelf cancer immunotherapies for the treatment of hematologic malignancies and solid tumors.

In support of our development of iPSC-derived CAR T-cell product candidates, we are conducting a multi-year research partnership with Memorial Sloan Kettering Cancer Center (MSKCC) that is being led by Dr.

Michel Sadelain, Director of the Center for Cell Engineering and the Stephen and Barbara Friedman Chair at Memorial Sloan Kettering Cancer Center.

In connection with the formation of our research partnership with Memorial Sloan Kettering Cancer Center, we exclusively licensed from Memorial Sloan Kettering foundational intellectual property covering iPSC-derived cellular immunotherapy, including T cells and NK cells derived from iPSCs engineered with CARs, for human therapeutic use.

We also secured an option to exclusively license intellectual property arising from all research and development activities under the partnership.

In May 2018, we licensed from Memorial Sloan Kettering Cancer Center additional intellectual property covering compositions of novel CAR constructs, including the 1XX CAR construct, and of genetically engineered CAR T cells, including methods of making these cells using CRISPR for certain targeted gene modifications.

In addition, we have exclusively licensed from MSKCC foundational intellectual property covering iPSC-derived cellular immunotherapy, including T cells and NK cells derived from iPSCs engineered with CARs, for human therapeutic use.

We have also licensed from MSKCC intellectual property covering compositions of novel CAR constructs, including the use of a novel 1XX co-stimulatory domain, and of genetically engineered CAR T cells, including methods of making these cells using CRISPR for certain targeted gene modifications.

Embodiments of this additional intellectual property include preclinical data published by Dr.

Sadelain demonstrating that directing a CD19-specific CAR to the T-cell receptor (TCR) alpha constant (TRAC) locus results in uniform CAR expression in human peripheral blood T cells, enhances T-cell potency, and delays effector T-cell differentiation and exhaustion, and that CAR T cells utilizing a novel 1XX CAR signaling domain exhibited enhanced antitumor activity, persistence and long-term cytotoxicity as well as a decrease in T-cell exhaustion.

FT819 is an investigational off-the-shelf CAR T-cell cancer immunotherapy derived from a clonal engineered master iPSC line with complete elimination of TCR expression and the novel 1XX CAR targeting CD19 inserted into the TRAC locus.

Together, these features are intended to induce antigen-specific cytotoxicity, enhance CAR activity through TRAC-regulated expression and completely eliminate TCR expression to mitigate GvHD.

In preclinical studies, we have shown that FT819 cells:

display antigen-specific anti-tumor potency in vitro , including cytokine release and targeted cellular cytotoxicity, comparable to peripheral blood CD19-specific CAR T-cells;

do not respond or proliferate against HLA-mismatched (CD19-) peripheral blood mononuclear cells as targets in a mixed lymphocyte reaction, indicating the risk of GvHD is alleviated;

control tumor progression in vivo comparable to peripheral blood CD19-specific CAR T cells in a preclinical mouse model of acute lymphoblastic leukemia;

enhance tumor clearance and durable control of leukemia in vivo , as compared to primary CAR19 T cells, in a xenograft mouse model of disseminated lymphoblastic leukemia.

We are studying FT819 in an ongoing, multi-center Phase 1 clinical trial designed to assess the safety and determine the maximum dose of FT819 following outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine) in up to 297 adult patients across three types of B-cell leukemias and lymphomas.

The trial includes assessment of three treatment regimens, with enrollment to each occurring independently among the three disease types:

Regimen A as a single dose of FT819;

Regimen B as a single dose of FT819 with IL-2 cytokine support;

and Regimen C as three doses of FT819.

Enrollment in the dose-escalation stage is currently ongoing.

Initial Proof-of-Concept Clinical Studies

Our first clinical investigation of an off-the-shelf NK cell cancer immunotherapy derived from a clonal master iPSC line was the conduct of a Phase 1 clinical trial of FT500, which was designed to assess the safety and tolerability of FT500 in adult patients with advanced solid tumors both as a monotherapy and in combination with FDA-approved immune checkpoint inhibitor (ICI) therapies in patients that have failed prior ICI therapy.

To our knowledge, FT500 was the first-ever iPSC-derived cell therapy cleared for clinical investigation in the United States.

In November 2021, we reported clinical data from the dose-expansion stage of the Phase 1 clinical trial of FT500 as of an October 1, 2021 cutoff date.

The Phase 1 dose-expansion treatment schedule consisted of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), checkpoint inhibitor therapy, and three once-weekly doses of FT500 each with IL-2 cytokine support.

For those patients clinically stable at Day 29, a second treatment cycle, without lympho-conditioning chemotherapy, was available for administration.

Ten heavily pre-treated patients with classical Hodgkin lymphoma or non-small cell lung cancer (NSCLC) were administered FT500.

No events of any grade of CRS, ICANS, or GvHD, were reported by investigators.

Enrollment in the Phase 1 clinical trial of FT500 is closed, and we do not plan to conduct any further development of FT500.

We also conducted a Phase 1 clinical trial of FT516 to assess its safety and activity in combination with avelumab, an anti-PDL1 checkpoint inhibitor therapy, in adult patients with advanced solid tumors.

In November 2021, we reported clinical data from the dose-escalation stage of the Phase 1 clinical trial of FT516 as of an October 1, 2021 cutoff date.

The Phase 1 dose-escalation treatment schedule consisted of outpatient lympho-conditioning chemotherapy (cyclophosphamide and fludarabine), avelumab, and three once-weekly doses of FT516 each with IL-2 cytokine support.

For those patients clinically stable at Day 29, a second treatment cycle, with lympho-conditioning chemotherapy, was available for administration.

Twelve heavily pre-treated patients with advanced solid tumors were administered FT516.

No events of any grade of ICANS or GvHD, were reported by investigators.

A single case of Grade 1 CRS was reported.

Enrollment in the Phase 1 clinical trial of FT516 is closed, and we do not plan to conduct any further development of FT516 in advanced solid tumors.

Our Partnerships

Janssen Biotech

In April 2020, we entered into a collaboration and option agreement with Janssen Biotech, Inc.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson, for the development and commercialization of off-the-shelf, iPSC-derived CAR NK cell and CAR T-cell product candidates directed to up to four tumor-associated antigen targets.

We are conducting research and preclinical development of collaboration candidates.

We granted to Janssen, during a specified period of time, the right to exercise an exclusive option and obtain an exclusive license under certain intellectual property rights to develop and commercialize each collaboration candidate.

Subject to the exercise of such exclusive option, Janssen is solely responsible for the worldwide clinical development and commercialization of such collaboration candidate.

Upon attainment of clinical proof-of-concept, we have the right to elect to co-commercialize and share equally in the profits and losses in the United States, subject to sharing in certain development costs, of such collaboration candidate.

We are primarily responsible for the manufacture, at Janssen’s cost, of collaboration candidates.

Under the terms of the agreement, we received $100.0 million as of the effective date of the agreement, of which $50.0 million was an upfront, non-refundable and non-creditable cash payment and $50.0 million was in the form of an equity investment by Johnson & Johnson Innovation - JJDC, Inc.

Additionally, as consideration for our conduct of research, preclinical development and IND-enabling activities for collaboration candidates, Janssen pays us research and development fees as set forth in an annual budget.

We are eligible to receive upon the achievement of specified development, regulatory and sales milestones (i) with respect to the first tumor-associated antigen target, payments of up to $898.0 million for the first collaboration candidate and up to $460.0 million for each additional collaboration candidate;

and with respect to each of the second, third and fourth tumor-associated antigen targets, payments of up to $706.0 million for each of the first collaboration candidates and up to $340.0 million for each additional collaboration candidate.

Certain milestone payments are subject to reduction in the event we elect to co-commercialize and share equally in the profits and losses in the United States of a collaboration candidate.

We are further eligible to receive double-digit tiered royalties ranging up to the mid-teens on net sales of collaboration candidates that are commercialized by Janssen, subject to reduction under certain circumstances.

Janssen may terminate the agreement with respect to one or more tumor-associated antigen targets, or in its entirety, at any time on or after the second anniversary of the effective date of the agreement, and we may terminate the agreement with respect to a particular tumor-associated antigen target if a collaboration candidate has not been selected for IND-enabling studies for such tumor-associated antigen target within specified time periods under certain conditions.

The agreement contains customary provisions for termination by either party in the event of a material breach of the agreement, subject to cure, by the other party and in the event of any bankruptcy, insolvency or similar events with respect to the other party.

During 2021, we achieved a pre-defined research milestone associated with a product candidate directed to a first tumor-associated antigen under the Janssen Agreement and received a cash payment of $3.0 million.

Ono Pharmaceutical

In September 2018, we entered into a collaboration and option agreement with Ono Pharmaceutical Co.

(Ono) for the joint development and commercialization of two off-the-shelf, iPSC-derived CAR T-cell product candidates.

The first off-the-shelf, iPSC-derived CAR T-cell candidate (Candidate 1) targets an antigen expressed on certain lymphoblastic leukemias, and the second off-the-shelf, iPSC-derived CAR T-cell candidate (Candidate 2) targets a novel antigen identified by Ono expressed on certain solid tumors (each a Candidate and, collectively, the Candidates).

We granted to Ono, during a specified period of time, an option to obtain an exclusive license under certain intellectual property rights to develop and commercialize (a) Candidate 1 in Asia, where we retained rights for development and commercialization in all other territories of the world and (b) Candidate 2 in all territories of the world, where we retain rights to co-develop and co-commercialize Candidate 2 in the United States and Europe under a joint arrangement with Ono under which we are eligible to share at least 50% of the profits and losses.

For each Candidate, the option expires upon the earliest of:

(a) the achievement of the pre-defined preclinical milestone, (b) termination by Ono of research and development activities for the Candidate and (c) the date that is the later of (i) four years after the effective date and (ii) completion of all applicable activities contemplated under the joint development plan.

We maintain worldwide rights of manufacture for Candidates.

Under the terms of the agreement, Ono paid us an upfront, non-refundable and non-creditable payment of $10.0 million in connection with entering into the agreement.

Additionally, as consideration for our conduct of research and preclinical development under a joint development plan, Ono pays us annual research and development fees set forth in the annual budget included in the joint development plan, which fees are estimated to be $20.0 million in aggregate over the course of the joint development plan.

In December 2020, we entered into a letter agreement with Ono pursuant to which Ono nominated and delivered to us proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2.

In connection with such nomination and delivery, Ono paid us a milestone fee of $10.0 million for further research and development of Candidate 2.

In addition, Ono terminated further development with respect to Candidate 1, and we retain all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

Ono has agreed to pay us up to an additional $20.0 million, subject to the exercise by Ono of its option to develop and commercialize Candidate 2.

Subject to Ono’s exercise of the option and to the achievement of certain clinical, regulatory and commercial milestones with respect to Candidate 2 in specified territories, we are entitled to receive an aggregate of up to $885.0 million in milestone payments for Candidate 2, with the applicable milestone payments for the United States and Europe subject to reduction by 50% if we elect to co-develop and co-commercialize Candidate 2 as described above.

We are also eligible to receive tiered royalties ranging from the mid-single digits to the low-double digits based on annual net sales by Ono of Candidate 2 in specified territories, with such royalties subject to certain reductions.

The agreement will terminate with respect to a Candidate if Ono does not exercise its option for a Candidate within the option period, or in its entirety if Ono does not exercise any of its options for the Candidates within their respective option periods.

In addition, either party may terminate the agreement in the event of breach, insolvency or patent challenges by the other party;

provided, that Ono may terminate the agreement in its sole discretion (x) on a Candidate-by-Candidate basis at any time after the second anniversary of the effective date of the agreement or (y) on a Candidate-by-Candidate or country-by-country basis at any time after the expiration of the option period, subject to certain limitations.

The agreement will expire on a Candidate-by-Candidate and country-by-country basis upon the expiration of the applicable royalty term, or in its entirety upon the expiration of all applicable payment obligations under the agreement.

Sadelain demonstrating that directing a CD19-specific CAR to the TRAC locus resulted in uniform CAR expression in human peripheral blood T cells, enhanced T-cell potency, and delayed effector T-cell differentiation and exhaustion (Eyquem et al.

543, 113–117, 2017), and that CAR T cells utilizing a novel 1XX CAR signaling domain exhibited enhanced antitumor activity, persistence and long-term cytotoxicity as well as a decrease in T-cell exhaustion (Feucht et al.

Nature Medicine .

25, 82–88, 2019).

We are clinically developing FT819, an investigational off-the-shelf, iPSC-derived CAR T cell cancer immunotherapy derived from a clonal master iPSC line.

FT819 incorporates two novel synthetic controls of cell function:

a novel 1XX CAR construct inserted directly into the TRAC locus that targets CD19;

and the complete disruption of TCR expression for the prevention of GvHD, a potentially life-threatening complication associated with allogeneic T-cell therapy.

Together, these features of FT819 are designed to induce antigen-specific cytotoxicity, enhance CAR activity through TRAC-regulated expression, and completely eliminate TCR expression to mitigate GvHD.

In preclinical studies, we have shown that iPSC-derived TCR-CAR+ CAR T cells targeting CD19:

displayed antigen-specific anti-tumor potency in vitro , including cytokine release and targeted cellular cytotoxicity, comparable to peripheral blood CD19-specific CAR T-cells;

did not respond or proliferate against HLA-mismatched (CD19-) peripheral blood mononuclear cells as targets in a mixed lymphocyte reaction, indicating the risk of GvHD is alleviated;

controlled tumor progression in vivo comparable to peripheral blood CD19-specific CAR T cells in a preclinical mouse model of acute lymphoblastic leukemia;

enhanced tumor clearance and durable control of leukemia in vivo , as compared to primary CAR19 T cells, in a xenograft mouse model of disseminated lymphoblastic leukemia.

Additional preclinical data published in August 2022 showed the generation of iPSC-derived TCR-CAR+ CD8αβ

T cells, which were able to repeatedly lyse tumor cells in vitro and durably control leukemia in vivo , with persistence in the bone marrow, spleen, and blood, in a systemic NALM6 leukemia model (Sjoukje et al.

Nature Biomedical Engineering .

6, 1284–1297, 2022).

We are currently studying FT819 in an ongoing, multi-center Phase 1 clinical trial designed to assess its safety and clinical activity in adult patients with relapsed / refractory B-cell malignancies, including B-cell lymphoma and chronic lymphocytic

leukemia, and to determine the recommended Phase 2 dose and schedule, in three treatment regimens:

single dose of FT819 (Regimen A);

single dose of FT819 with IL-2 cytokine support (Regimen A1);

and three fractionated doses of FT819 on Days 1, 3, and 5 (Regimen B).

At the 2022 ASH Annual Meeting, we presented interim clinical data as of a September 8, 2022 data cutoff date for 10 patients with aggressive large B-cell lymphoma treated with FT819, including eight patients in Regimen A and two patients in Regimen B (see Table 1).

Patients had received standard conditioning chemotherapy consisting of cyclophosphamide (Cy) at 500 mg/m2 and fludarabine (Flu) at 30 mg/m2 for three days prior to the initiation of each regimen.

Patients were heavily pre-treated having had received a median of four prior lines of therapy (range 3-7), including 7 of 10 patients (70%) having previously received autologous CD19-targeted CAR T-cell therapy.

Regimen A Activity .

Of the eight patients with aggressive large B-cell lymphoma (median of 4.5 prior lines of therapy [range 3-7]) treated with a single dose of FT819 ranging from 90 million cells to 360 million cells, one of two patients naïve to CAR T-cell therapy achieved an objective response at Day 30, which was a complete response in a patient with diffuse large B-cell lymphoma previously treated with five prior lines of therapy;

and two of six patients previously treated with CAR T-cell therapy achieved an objective response at Day 30, which included a complete response in a patient with diffuse large B-cell lymphoma previously treated with seven prior lines of therapy who did not respond to autologous CD19-targeted CAR T-cell therapy.

Regimen B Activity .

Two patients with aggressive large B-cell lymphoma (each of whom received three prior lines of therapy) treated with three fractionated doses at 30 million cells per dose did not respond to therapy at Day 30.

Aggressive Large B-cell Lymphoma 1,2,3

FT819 Regimen A:

Single Dose (n=8)

CAR T-cell Therapy Naïve

Prior CAR T-cell Therapy

FT819 Regimen B:

Three Fractionated Doses (n=2)

CAR T-cell Therapy Naïve

Prior CAR T-cell Therapy

OR = objective response;

CR = complete response;

1 As of data cutoff date of September 8, 2022

2 Includes diffuse large B-cell lymphoma (n=8) and high-grade B-cell lymphoma (n=2)

3 Day 30 protocol-defined response assessment per Lugano 2014 criteria

Five additional patients with relapsed / refractory B-cell lymphoma had been treated with FT819 as of the September 8, 2022 data cutoff date:

one patient with Grade 3a follicular lymphoma (with 5 prior lines of therapy, including CAR T-cell therapy) treated in Regimen A with a single dose of FT819 at 180 million cells achieved a complete response at Day 30;

and four patients with Richter’s Transformation (median of 5.5 prior lines of therapy [range 2-9]) did not respond to therapy at Day 30.

No DLTs, and no Grade 3 or greater FT819-related AEs or serious AEs, were observed.

Of the 15 patients treated in Regimens A and B, three patients (20%) experienced Grade 2 CRS characterized by fever, hypotension, and hypoxia, and which resolved with single-dose tocilizumab and supportive care.

No TEAEs of any grade of ICANS or GvHD were reported by investigators.

The FT819 treatment regimen was well tolerated.

There were no study discontinuations or deaths due to TEAEs other than one patient with stable disease who died on Day 38 due to sepsis not considered related to FT819 by the study investigator.

Dose escalation is currently ongoing in Regimen A as a single dose of FT819 at 360 million cells and in Regimen B with three fractionated doses at 60 million cells per dose.

The Company has also amended the FT819 study protocol to allow for the use of bendamustine at 90 mg/m2 for two days as an alternative to Cy / Flu conditioning chemotherapy.

CAR T-cell Program for Solid Tumors

Although autologous CAR T-cell therapies approved by the FDA have shown significant efficacy in treating hematologic malignancies, its wider application to solid tumors has been hampered by tumor-associated antigen heterogeneity, inefficient CAR T-cell trafficking to the tumor, and immunosuppression inherent to the tumor microenvironment.

We are researching and preclinically developing multiplexed-engineered, iPSC-derived CAR T-cell product candidates, which are specifically designed to address these challenges and enable the safe and effective treatment of solid tumors as monotherapy and in combination with mAb therapy.

We are preclinically developing FT825, a multiplexed-engineered, iPSC-derived, CAR T-cell product candidate targeting human epidermal growth factor receptor 2 (HER2)-expressing solid tumors, under our collaboration with Ono (see "Our Partnership with Ono Pharmaceutical").

HER2, also known as Human Epidermal Growth Factor Receptor 2, is a receptor tyrosine kinase that is overexpressed on many solid tumors, such as breast, gastric, bladder, and lung cancers.

FT825 incorporates seven novel synthetic controls of cell function:

a novel 1XX CAR construct inserted directly into the TRAC locus that is armed with a differentiated HER2 binding domain;

a novel high-affinity 158V, non-cleavable CD16 (hnCD16) Fc receptor that has been modified to prevent its down-regulation and to enhance ADCC and to overcome challenges associated with tumor heterogeneity;

a synthetic IL-7/IL-7 receptor fusion (IL-7RF), a potent cytokine complex that is intended to promote T-cell stemness;

a synthetic CXCR2 receptor to promote cell trafficking;

a synthetic TGFβ

receptor to redirect immunosuppressive signals in the tumor microenvironment;

the complete elimination of CD38 expression to promote persistence and function in high oxidative stress environments;

and the complete disruption of TCR expression for the prevention of GvHD, a potentially life-threatening complication associated with allogeneic T-cell therapy.

In preclinical studies of FT825 presented at the 2022 Society for Immunotherapy of Cancer (SITC) Annual Meeting, the product candidate’s HER2 binding domain showed a highly selective and differentiated targeting profile including in comparison to other HER2-directed agents, exhibited robust dose-dependent cytolytic activity against both HER2-high and HER2-low cell lines from multiple tumor types, demonstrated limited activity against HER2-expressing cell lines from healthy tissue, and exhibited enhanced trafficking and migration properties in vitro and in vivo.

In addition to its CAR-mediated anti-tumor activity against HER2, co-activation of the product candidate’s HER2-targeted CAR and hnCD16 Fc receptor through combination with mAb therapy showed enhanced anti-tumor activity in preclinical models.

Under our collaboration with Ono, we are currently conducting IND-enabling activities for FT825, and plan to submit an IND application to the FDA in 2023 to enable the initiation of first-in-human clinical investigation for the treatment of certain solid tumors.

Discontinued Product Candidates

Janssen Collaboration.

On January 3, 2023, we received notice of termination from Janssen Biotech, Inc.

(Janssen) of our collaboration and option agreement dated April 2, 2020 by and between the parties (the Janssen Agreement), pursuant to which the companies had agreed to collaborate to develop iPSC-derived CAR NK- and CAR T-cell product candidates for the treatment of cancer.

During 2022, Janssen exercised a commercial option for two collaboration candidates:

an iPSC-derived, CAR-targeted NK cell product candidate for the treatment of B-cell lymphoma, for which the FDA allowed an IND application in December 2022;

and an iPSC-derived, CAR-targeted NK cell product candidate for the treatment of multiple myeloma, for which the companies were preparing to submit an IND application to the FDA in early 2023.

In addition, the companies were researching and preclinically developing two iPSC-derived, CAR-targeted T-cell programs for the treatment of solid tumors.

The termination will be finalized on April 3, 2023 and, during the first quarter of 2023, we will wind down our activities with Janssen, including discontinuing development of all collaboration products.

Under the terms of the Janssen Agreement, in connection with the termination, (i) all licenses and other rights granted to either party pursuant to the Janssen Agreement will terminate, subject to limited exceptions set forth in the Janssen Agreement;

(ii) both parties will wind down any development, commercialization and manufacturing activities under the Janssen Agreement;

(iii) neither party will have any right to continue to develop, manufacture or commercialize any collaboration candidate or collaboration product or use the other party’s materials;

and (iv) neither party is restricted from independently developing, manufacturing, or commercializing any product, including any products directed to the same antigens as those of any collaboration candidate or collaboration product.

Internal Programs.

On January 5, 2023, we announced the completion of a strategic review of our NK cell programs and our election to focus on advancing our most innovative and differentiated product candidates, which have a multiplexed-engineered cellular framework of novel synthetic controls designed to promote multi-antigen targeting, increase potency, extend functional persistence, and enable patient dosing with reduced conditioning chemotherapy.

As a result of our NK cell program prioritization, our FT516, FT596, FT538, and FT536 NK cell programs are being discontinued.

Workforce Reduction.

As a result of the termination of the Janssen collaboration and the NK cell program prioritization, during the first quarter of 2023 we are reducing our workforce to approximately 220 employees.

We expect that we will incur charges of approximately $12 million to $16 million for severance and other employee termination-related costs in the first quarter of 2023.

The restructuring is expected to extend our cash runway into the second half of 2025.

Our Partnership with Ono Pharmaceutical

Under a collaboration and option agreement with Ono Pharmaceutical Co.

(Ono) entered into in September 2018 and amended in June 2022 (the Ono Agreement), we are conducting research and preclinical development of off-the-shelf, iPSC-derived, CAR-targeted effector cells for the treatment of solid tumors.

In November 2022, we announced that Ono had exercised its preclinical option to FT825/ONO-8250, a multiplexed-engineered, iPSC-derived CAR T-cell product candidate targeting HER2-expressing solid

tumors (also referred to as Candidate 2 below), and that we exercised our preclinical option to co-develop and co-commercialize FT825/ONO-8250 in the United States and Europe under a joint arrangement with Ono.

As a result, we are owed an option exercise fee of $12.5 million from Ono.

The companies are currently conducting IND-enabling activities for FT825/ONO-8250, and plan to submit an IND application to the FDA in 2023 to enable the initiation of a first-in-human clinical investigation.

The companies are also currently conducting preclinical development of a second off-the-shelf, iPSC-derived, CAR-targeted effector cell product candidate for the treatment of solid tumors (referred to as Candidate 3 below) under the Ono Agreement.

Under the Ono Agreement entered into in September 2018, we and Ono intended to research and preclinically develop two iPSC-derived CAR T-cell product candidates, one of which was designated to target an antigen expressed on certain lymphoblastic leukemias (Candidate 1) and the second of which was designated to target an antigen expressed on certain solid tumors (Candidate 2) (each a Candidate and, collectively, the Candidates).

We granted to Ono, during a specified period of time, a preclinical option to obtain an exclusive license under certain intellectual property rights to develop and commercialize:

(a) Candidate 1 in Asia, where we retained rights for development and commercialization in all other territories of the world;

and (b) Candidate 2 in all territories of the world, where we retained rights to co-develop and co-commercialize Candidate 2 in the United States and Europe under a joint arrangement with Ono under which we are eligible to share at least 50% of the profits and losses.

We maintained worldwide rights of manufacture for each Candidate.

For each Candidate, the preclinical option expired upon the earliest of:

(a) the achievement of the pre-defined preclinical milestone under the joint development plan;

(b) termination by Ono of research and development activities for the Candidate;

and (c) the date that is the later of (i) four years after the effective date, and (ii) completion of all applicable activities contemplated under the joint development plan.

Ono paid us an upfront, non-refundable and non-creditable payment of $10.0 million in connection with entering into the Ono Agreement.

Additionally, as consideration for our conduct of research and preclinical development under a joint development plan, Ono agreed to pay us annual research and development fees set forth in the annual budget included in the joint development plan, which fees were estimated to be $20.0 million in aggregate over the course of the joint development plan.

In December 2020, we entered into a letter agreement with Ono pursuant to which Ono delivered to us proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2 and paid us a milestone fee of $10.0 million for further research and development of Candidate 2.

In addition, Ono terminated all further research and development with respect to Candidate 1, and we retained all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

In June 2022, we entered into an amendment with Ono to the Ono Agreement (the Ono Amendment).

Pursuant to the Ono Amendment, the companies agreed to designate an additional antigen expressed on certain solid tumors for research and preclinical development, and Ono agreed to contribute to us proprietary antigen binding domains targeting such additional solid tumor antigen (Candidate 3).

In addition, for both Candidate 2 and Candidate 3, the companies expanded the scope of the collaboration to include the research and development of iPSC-derived CAR NK cell product candidates (in addition to iPSC-derived CAR T-cell product candidates) targeting the designated solid tumor antigens.

Similar to Candidate 2, we granted to Ono, during a specified period of time, a preclinical option to obtain an exclusive license under certain intellectual property rights, subject to payment of an option exercise fee to us by Ono, to develop and commercialize Candidate 3 in all territories of the world, where we retained rights to co-develop and co-commercialize Candidate 3 in the United States and Europe under a joint arrangement with Ono under which we are eligible to share at least 50% of the profits and losses.

We maintained worldwide rights of manufacture for Candidate 3.

The preclinical option expires upon the earlier of:

(a) September 30, 2024, or (b) the achievement of the pre-defined preclinical milestone under the joint development plan for Candidate 3.

Subject to payment to us of an extension fee by Ono, Ono may choose to defer its decision to exercise the preclinical option until no later than June 2026.

Ono agreed to pay us annual research and development fees set forth in the annual budget included in the joint development plan for Candidate 3.

Under the terms of the Ono Agreement, for Candidate 2 and for Candidate 3 (subject to exercise by Ono of its preclinical option to Candidate 3), we are eligible to receive additional payments upon the achievement of certain clinical, regulatory and commercial milestones (the Ono Milestones) with respect to each Candidate in an amount up to $843.0 million in aggregate, with the applicable milestone payments for the United States and Europe subject to reduction by 50% if we elect to co-develop and co-commercialize the Candidate in the United States and Europe as described above.

In addition, in those territories where Ono has exclusive rights of commercialization, we are eligible to receive tiered royalties (Royalties) ranging from the mid-single digits to the low-double digits based on annual net sales by Ono for each Candidate in such territories, with such royalties subject to certain reductions.

The Ono Agreement will terminate with respect to a Candidate if Ono does not exercise its option for a Candidate within the option period, or in its entirety if Ono does not exercise any of its options for the Candidates within their respective option periods.

In addition, either party may terminate the Ono Agreement in the event of breach, insolvency or patent challenges by the other party;

provided, that Ono may terminate the Ono Agreement in its sole discretion (x) on a Candidate-by-Candidate basis at any time after the second anniversary of the effective date of the Ono Agreement or (y) on a Candidate-by-Candidate or country-by-country basis at any time after the expiration of the option period, subject to certain limitations.

The Ono Agreement will expire on a Candidate-by-Candidate and country-by-country basis upon the expiration of the applicable royalty term, or in its entirety upon the expiration of all applicable payment obligations under the agreement.

Our Intellectual Property

We seek to protect our product candidates and our cell programming technology through a variety of methods, including seeking and maintaining patents intended to cover our products and compositions, their methods of use and processes for their manufacture, our platform technologies and any other inventions that are commercially important to the development of our business.

We seek to obtain domestic and international patent protection and, in addition to filing and prosecuting patent applications in the

United States, we typically file counterpart patent applications in additional countries where we believe such foreign filing is likely to be beneficial, including Europe, Japan, Canada, Australia and China.

We seek to obtain domestic and international patent protection and, in addition to filing and prosecuting patent applications in the United States, we typically file counterpart patent applications in additional countries where we believe such foreign filing is likely to be beneficial, including Europe, Japan, Canada, Australia and China.

We continually assess and refine our intellectual property strategy in order to best fortify our position, and file additional patent applications when our intellectual property strategy warrants such filings.

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David Gladstone Institutes (Gladstone) intellectual property covering the generation of iPSCs using CRISPR-mediated gene activation.

This approach for inducing pluripotency uses CRISPR to directly target a specific location of the genome and activate endogenous gene expression, and does not rely on established methods of cellular reprogramming that require the transduction of multiple transcription factors.

This approach for inducing pluripotency uses CRISPR to directly target

a specific location of the genome and activate endogenous gene expression, and does not rely on established methods of cellular reprogramming that require the transduction of multiple transcription factors.

patents that may issue from patent applications pending in the U.S.

and internationally in this portfolio are expected to have a statutory expiration date in 2038.

We also have licensed exclusive rights to four families of patent applications from the University of Minnesota.

As of February 18, 2022 this portfolio includes over 70 issued patents or pending patent applications in the United States and foreign jurisdictions directed to compositions of NK cells, including adaptive memory NK cells and genetically-engineered NK cells, and therapeutic

strategies for the treatment of cancer using these NK cells.

We also have licensed exclusive rights to five families of patent applications from the University of Minnesota.

As of February 18, 2023 this portfolio includes over 70 issued patents or pending patent applications in the United States and foreign jurisdictions directed to compositions of NK cells, including adaptive memory NK cells and genetically-engineered NK cells, and therapeutic strategies for the treatment of cancer using these NK cells.

These applications also describe methods of enhancing NK cell cytotoxicity by genetically engineering the CD16 Fc receptor in immune cells, including iPSC-derived NK cells, and describe methods of increasing NK cell tumor specificity and cytotoxicity by incorporating CARs on NK cells.

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In December 2016, we entered into a license agreement with the Regents of the University of Minnesota for rights relating to compositions and methods relating to NK cells, to modifications of cytotoxic receptors naturally expressed on NK cells including the CD16 Fc receptor, and to CARs for expression on NK cells.

Under our agreement with the University of Minnesota, we acquired an exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell licensed products in all fields for commercial purposes.

Under our agreement with the University of Minnesota, we acquired an

exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell licensed products in all fields for commercial purposes.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to the Programming of Hematopoietic Cells.”

The University of Minnesota retains the right to practice the patent rights for research, teaching and educational purposes, including in corporate-sponsored research subject to certain limitations during the initial three years of the license agreement.

The University of Minnesota also retains the right to license other academic and non-profit research institutes to practice

the patent rights for research, teaching and educational purposes, but not for corporate-sponsored research.

The University of Minnesota also retains the right to license other academic and non-profit research institutes to practice the patent rights for research, teaching and educational purposes, but not for corporate-sponsored research.

Our license is also subject to pre-existing rights of the U.S.

25 unchanged sentences

The agreement will continue until the abandonment of all patent rights or expiration of the last to expire licensed patent.

Memorial Sloan Kettering Cancer Center may terminate the agreement if we default in the performance of any of our obligations and fail to cure the default within a specified grace period, if we cease to carry out our business or become bankrupt or insolvent, or if we institute a proceeding to challenge the patent rights.

institute a proceeding to challenge the patent rights.

We may terminate the agreement for any reason upon prior written notice to Memorial Sloan Kettering Cancer Center.

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Manufacturing

Off-the-shelf, iPSC-derived Cellular Immunotherapies

The manufacture of our off-the-shelf, iPSC-derived cellular immunotherapy product candidates involves a three-stage process:

Off-the-shelf, Multiplexed-engineered, iPSC-derived Cellular Immunotherapies

The manufacture of our off-the-shelf, multiplexed-engineered, iPSC-derived cellular immunotherapy product candidates involves a three-stage process:

The first stage is intended to generate a clonal master iPSC line and generally consists of the following steps:

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(ii) induction of pluripotency in the donor cells using a proprietary transgene integration-free and footprint-free method of reprogramming;

(iii) genetic engineering, where applicable, of iPSCs;

(iii) genetic engineering of iPSCs;

and (iv) isolation and selection of a single iPSC, followed by clonal expansion of the single iPSC to produce a clonal master iPSC line for cell product manufacture.

10 unchanged sentences

We do not currently have long-term commitments or supply agreements in place to obtain certain key components used in the manufacture of our iPSC-derived cell product candidates.

We are manufacturing our iPSC-derived cell product candidates for use in research, preclinical development, and clinical development.

In September 2019, we opened our first cGMP compliant manufacturing facility for the clinical production of our iPSC-derived cell product candidates.

This cGMP facility, located in San Diego, California, is custom designed for the manufacture of off-the-shelf cell product candidates using clonal master iPSC lines as the starting cell source.

The state-of-the-art facility has been commissioned and qualified, and we have been issued a drug manufacturing license by the State of California, Department of Health Services, Food and Drug Branch.

In January 2020, we entered into a new lease agreement for office, laboratory, and manufacturing space (the Premises), which is also designed to include cGMP manufacturing.

The Premises are located in San Diego, California and we moved our corporate headquarters to the Premises in August 2021.

We intend to extend the manufacture of our iPSC-derived cell product candidates to this facility starting in 2022.

We also contract with third parties, including medical center cell therapy facilities and contract manufacturing organizations (CMOs), for the conduct of some or all of the activities required for manufacturing our iPSC-derived cell product candidates for use in clinical investigation.

We expect that we will continue to contract with third parties, including medical center cell therapy facilities and CMOs, for the conduct of some or all of the activities required for manufacturing our iPSC-derived cell product candidates.

We currently manufacture our iPSC-derived cell product candidates for use in research, preclinical development, and clinical development.

We operate two cGMP-compliant manufacturing facilities for the clinical production of our iPSC-derived cell product candidates.

Both of our manufacturing facilities are located in San Diego, California, and are custom designed for the production of off-the-shelf cell product candidates using clonal master iPSC lines as the starting cell source.

Each of these state-of-the-art facilities have been commissioned and qualified, and we have been issued drug manufacturing licenses for each facility by the State of California, Department of Health Services, Food and Drug Branch.

With the extension of manufacturing to our new corporate headquarters in 2022, we are positioned to support manufacturing and production of our product candidates for all phases of clinical development as well as initial commercialization.

We also contract with third parties, including medical center cell therapy facilities and contract manufacturing organizations (CMOs), for the conduct of some of the activities required to manufacture our iPSC-derived cell product candidates for use in clinical investigation.

We expect that we will continue to contract with third parties, including medical center cell therapy facilities and CMOs, for the conduct of certain of the activities required to manufacture our iPSC-derived cell product candidates.

Marketing, Market Access, & Sales

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We currently have no experience in marketing, market access or selling therapeutic products.

We may need to further evaluate and generate evidence beyond what is generated in our clinical program that would satisfy the needs of payers and healthcare technology assessment (HTA) bodies.

We may need to further evaluate and generate evidence beyond what is generated in our clinical programs that would satisfy the needs of payers and healthcare technology assessment (HTA) bodies.

To market any of our products independently would also require us to develop a sales force with technical expertise along with establishing commercial infrastructure and capabilities.

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Government Regulation

In the United States, the FDA regulates biological products under the Federal Food, Drug, and Cosmetic Act (the FDCA) and the Public Health Service Act (the PHS Act) and related regulations, and drugs under the FDCA and related regulations.

Biological products and drugs are also subject to other federal, state, local, and foreign statutes and regulations.

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of biological products and drugs.

In the United States, the FDA regulates biological products under the Federal Food, Drug, and Cosmetic Act (the FDCA) and the Public Health Service Act (the PHS Act) and related regulations.

Biological products are also subject to other federal, state, local, and foreign statutes and regulations.

These agencies and other federal, state, local, and foreign entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, packaging, labeling, storage, distribution, record keeping, reporting, approval or licensing, advertising and promotion, and import and export of our products.

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Marketing Approval

The process required by the FDA before biological products and drugs may be marketed in the United States generally involves the following:

The process required by the FDA before biological products may be marketed in the United States generally involves the following:

completion of nonclinical laboratory and animal tests according to good laboratory practices (GLPs) and applicable requirements for the humane use of laboratory animals or other applicable regulations;

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approval of the protocol and related documentation by an independent institutional review board, or IRB, or ethics committee at each clinical trial site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (GCPs) and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product or drug for its intended use or uses;

for a biological product, submission to the FDA of a Biologics License Application (BLA) for marketing approval that includes substantive evidence of safety, purity, and potency from results of nonclinical testing and clinical trials, and, for a drug, submission of a New Drug Application (NDA) that includes substantive evidence of the product’s safety and efficacy;

submission to the FDA of a Biologics License Application (BLA) for marketing approval that includes substantive evidence of safety, purity, and potency from results of nonclinical testing and clinical trials;

satisfactory completion of an FDA pre-approval inspection of manufacturing facilities where the product is produced to assess compliance with the FDA’s cGMPs to assure that the facilities, methods and controls are adequate, and, if applicable, current good tissue practices (cGTPs) for the use of human cellular and tissue products to prevent the introduction, transmission or spread of communicable diseases;

potential FDA audit of the nonclinical study sites and clinical trial sites that generated the data in support of the BLA or NDA;

potential FDA audit of the nonclinical study sites and clinical trial sites that generated the data in support of the BLA;

review of the product candidate by an FDA advisory committee, where appropriate if applicable;

payment of user fees for FDA review of the BLA or NDA (unless fee waiver applies);

FDA review and approval, or licensure, of the BLA and review and approval of the NDA which must occur before a biological product and a drug can be marketed or sold.

payment of user fees for FDA review of the BLA (unless fee waiver applies);

FDA review and approval, or licensure, of the BLA which must occur before a biological product can be marketed or sold.

Biological Products and Drug Development Process

Before testing any biological product or drug candidate in humans, nonclinical tests, including laboratory evaluations and animal studies to assess the potential safety and activity of the product candidate, are conducted.

Before testing any biological product candidate in humans, nonclinical tests, including laboratory evaluations and animal studies to assess the potential safety and activity of the product candidate, are conducted.

The conduct of the nonclinical tests must comply with federal regulations and requirements including GLPs.

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Some nonclinical testing may continue even after the IND application is submitted.

The IND application

automatically becomes effective 30 days after receipt by the FDA unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial and places the trial on a clinical hold.

The IND application automatically becomes effective 30 days after receipt by the FDA unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial and places the trial on a clinical hold.

In such case, the sponsor of the IND application must resolve any outstanding concerns with the FDA before the clinical trial may begin.

The FDA also may impose a clinical hold on ongoing clinical trials due to safety concerns or non-compliance.

If a clinical hold is imposed, a trial may not recommence without FDA authorization and then only under terms authorized by the FDA.

If a clinical hold is imposed, a trial may not recommence without

FDA authorization and then only under terms authorized by the FDA.

A clinical hold may either be a full clinical hold or a partial clinical hold that would limit a trial, for example, to certain doses or for a certain length of time or to a certain number of subjects.

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Information about certain clinical studies must be submitted with specific timeframes to the National Institutes of Health for public dissemination at www.clinicaltrials.gov.

For purposes of BLA or NDA approval, human clinical trials are typically conducted in three sequential phases that may overlap:

For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap:

Phase 1—The investigational product is initially introduced into healthy human subjects and tested for safety.

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Phase 4 –

In some cases, the FDA may condition approval of a BLA or NDA for a product candidate on the sponsor’s agreement to conduct additional clinical studies to further assess the drug’s safety and effectiveness after approval.

In some cases, the FDA may condition approval of a BLA for a product candidate on the sponsor’s agreement to conduct additional clinical studies to further assess the candidate’s safety and effectiveness after approval.

Such post-approval trials are typically referred to as Phase 4 clinical trials.

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Regulatory authorities, a data safety monitoring board or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the trial is not being conducted in accordance with the IRB’s requirements or if

the investigated product has been associated with unexpected serious harm to patients, and the trial may not recommence without the IRB’s authorization.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the trial is not being conducted in accordance with the IRB’s requirements or if the investigated product has been associated with unexpected serious harm to patients, and the trial may not recommence without the IRB’s authorization.

Typically, if a product is intended to treat a chronic disease, safety and efficacy data must be gathered over an extended period of time, which can range from six months to three years or more.

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This requirement applies on the earlier of the first initiation of a Phase 2 or Phase 3 trial of the investigational drug, or as applicable, 15 days after the drug receives a designation as a breakthrough therapy, fast track product, or RMAT.

Further, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 (the Right to Try Act) among other things, provides a federal framework for certain patients to request access to certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

Further, the Right to Try Act of 2017 among other things, provides a federal framework for certain patients to request access to certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

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.

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In order to obtain approval to market a biological product in the United States, a BLA must be submitted to the FDA that provides data establishing to the FDA’s satisfaction the safety, purity and potency of the investigational product for the proposed indication.

Similarly, for a drug, an NDA must be submitted to the FDA that provides data demonstrating the drug is safe and effective.

Both a BLA and an NDA include all data available from nonclinical studies and clinical trials, together with detailed information relating to the product’s manufacture and composition, and proposed labeling.

Under the Prescription Drug User Fee Act (PDUFA), as amended, each BLA and NDA must be accompanied by a user fee.

A BLA includes all data available from nonclinical studies and clinical trials, together with detailed information relating to the product’s manufacture and composition, and proposed labeling.

Under the Prescription Drug User Fee Act (PDUFA), as amended, each BLA must be accompanied by a user fee.

The FDA adjusts the PDUFA user fees on an annual basis.

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Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business having fewer than 500 employees.

Additionally, no user fees are assessed on BLAs or NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA has 60 days from its receipt of a BLA or NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review.

The FDA may refuse to file any BLA or NDA that it deems incomplete or not properly reviewable at the time of submission and may request additional information.

In this event, the BLA or NDA must be resubmitted with the additional information.

Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review.

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.

After the BLA or NDA submission is accepted for filing, the FDA reviews the BLA or NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMPs to assure and preserve the product’s identity, safety, strength, quality, potency, and purity, and for a biological product, whether it meets the biological product standards.

After the BLA submission is accepted for filing, the FDA reviews the BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMPs to assure and preserve the product’s identity, safety, strength, quality, potency, and purity, and for a biological product, whether it meets the biological product standards.

The FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically comprised of clinicians and other experts, for evaluation and a recommendation as to whether the application should be approved and, if so, 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 or NDA, the FDA will inspect the facilities at which the product is manufactured.

Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured.

The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

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FDA regulations also require tissue establishments to register and list their human cells, tissues, and cellular and tissue based products (HCT/Ps) with the FDA and, when applicable, to evaluate donors through screening and testing.

Additionally, before approving a BLA or NDA, the FDA may inspect clinical sites to assure that the clinical trials were conducted in compliance with IND study requirements and GCPs.

If the FDA determines the manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often

will require the facility to take corrective action and provide documentation evidencing the implementation of such corrective action, which may delay further review of the application.

If the FDA finds that a clinical site did not conduct the clinical trial in accordance with GCPs, the FDA may determine the data generated by the site should be excluded from the primary efficacy analyses provided in the BLA or NDA, and request additional testing or data.

Additionally, before approving a BLA, the FDA may inspect clinical sites to assure that the clinical trials were conducted in compliance with IND study requirements and GCPs.

If the FDA determines the manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often will require the facility to take corrective action and provide documentation evidencing the implementation of such corrective action, which may delay further review of the application.

Additionally, the FDA ultimately may still decide that the application does not satisfy the regulatory criteria for approval.

The FDA also has authority to require a Risk Evaluation and Mitigation Strategy (REMS) from manufacturers to ensure that the benefits of a biological product or drug outweigh its risks.

A sponsor may also voluntarily propose a REMS as part of the BLA or NDA submission.

The need for a REMS is determined as part of the review of the BLA or NDA.

The FDA also has authority to require a Risk Evaluation and Mitigation Strategy (REMS) from manufacturers to ensure that the benefits of a biological product outweigh its risks.

A sponsor may also voluntarily propose a REMS as part of the BLA submission.

The need for a REMS is determined as part of the review of the BLA.

Based on statutory standards, elements of a REMS may include “dear doctor letters,”

a medication guide, more elaborate targeted educational programs, and in some cases restrictions on distribution.

These elements are negotiated as part of the BLA or NDA approval, and in some cases may delay the approval date.

These elements are negotiated as part of the BLA approval, and in some cases may delay the approval date.

Once adopted, REMS are subject to periodic assessment and modification.

After the FDA completes its initial review of a BLA or NDA, it will communicate to the sponsor that the biological product will either be approved, or it will issue a complete response letter to communicate that the BLA or NDA will not be approved in its current form.

The complete response letter usually describes all of the specific deficiencies in the BLA or NDA identified by the FDA.

After the FDA completes its initial review of a BLA, it will communicate to the sponsor that the biological product will either be approved, or it will issue a complete response letter to communicate that the BLA will not be approved in its current form.

The complete response letter usually describes all of the specific deficiencies in the BLA identified by the FDA.

The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials.

Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval.

If a complete response letter is issued, the applicant may either resubmit the BLA or NDA to address all of the deficiencies identified in the letter, or withdraw the application, or request a hearing.

One of the performance goals of the FDA under PDUFA is to review 90% of standard BLAs and NDAs in 10 months and 90% of priority BLAs and NDAs in six months, whereupon a review decision is to be made.

The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and NDAs and its review goals are subject to change from time to time.

The review process and the PDUFA goal data may be extended by three months if the FDA requests or the BLA or NDA applicant otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

If a complete response letter is issued, the applicant may either resubmit the BLA to address all of the deficiencies identified in the letter, or withdraw the application, or request a hearing.

One of the performance goals of the FDA under PDUFA is to review 90% of standard BLAs in 10 months and 90% of priority BLAs in six months, whereupon a review decision is to be made.

The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time.

The review process and the PDUFA goal data may be extended by three months if the FDA requests or the BLA applicant otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

Even if a product candidate receives regulatory approval, the approval may be limited to specific disease states, patient populations and dosages, or the indications for use may otherwise be limited.

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Products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things, requirements relating to monitoring, record-keeping, advertising and promotion, reporting of adverse experiences, and limitations on industry-sponsored scientific and educational activities.

Further, if there are any modifications to the drug or biologic, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or NDA or a BLA or NDA supplement, which may require the development of additional data or preclinical studies and clinical trials.

Further, if there are any modifications to the drug or biologic, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or a BLA supplement, which may require the development of additional data or preclinical studies and clinical trials.

FDA regulations require that approved products be manufactured in specific approved facilities and in accordance with cGMP regulations which require, among other things, quality control and quality assurance, the maintenance of records and documentation, and the obligation to investigate and correct any deviations from cGMP.

Manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their establishments with the FDA and certain state agencies, and are subject to periodic announced and unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other regulatory requirements.

Manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics, and those supplying products, ingredients, and components of them, are required to register their establishments with the FDA and certain state agencies, and are subject to periodic announced and unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other regulatory requirements.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

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However, the FDA does restrict an applicant’s communications on the subject of off-label use of their products.

The FDA and other agencies actively enforce the laws prohibiting the marketing and promotion of off-label uses, and a company that is found to have improperly marketed or promoted off-label use

may be subject to significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from participation in federal healthcare programs, and mandatory compliance programs.

The FDA and other agencies actively enforce the laws prohibiting the marketing and promotion of off-label uses, and a company that is found to have improperly marketed or promoted off-label use may be subject to significant liability, including criminal and civil penalties under the FDCA and False Claims Act, exclusion from participation in federal healthcare programs, and mandatory compliance programs.

The FDA also may require post-marketing testing, known as Phase 4 testing, and surveillance to monitor the effects of an approved product.

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status to product candidates that are intended to treat serious or life-threatening diseases or conditions and demonstrate the potential to address an unmet medical need for the condition.

Fast track is a process designed to facilitate the development and expedite the review of such product candidates by providing, among other things, more frequent meetings with the FDA to discuss the product candidate’s development plan and rolling review, which allows submission of individually completed sections of an NDA or BLA for FDA review before the entire submission is completed.

Fast track is a process designed to facilitate the development and expedite the review of such product candidates by providing, among other things, more frequent meetings with the FDA to discuss the product candidate’s development plan and rolling review, which allows submission of individually completed sections of an BLA for FDA review before the entire submission is completed.

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

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Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

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

As a condition of approval, the FDA may require that a sponsor of a biological product or drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials with due diligence and, under the Food and Drug Omnibus Reform Act of 2022 (FDORA), the FDA is now permitted to require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product granted accelerated approval.

In addition, the FDA currently requires, unless otherwise informed by the agency, pre-approval of promotional materials for products being considered for accelerated approval.

Under FDORA, the FDA has increased authority for expedited procedures to withdraw approval of a drug or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product.

Breakthrough Therapy Designation.

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A BLA for a product candidate that has received RMAT designation may be eligible for priority review or accelerated approval through (1) surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit or (2) reliance upon data obtained from a meaningful number of sites.

Benefits of such designation also include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval.

designated RMAT product candidate that is granted accelerated approval and is subject to post approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records;

Benefits of such designation also include

early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval.

A designated RMAT product candidate that is granted accelerated approval and is subject to post approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records;

the collection of larger confirmatory data sets;

or post approval monitoring of all patients treated with such therapy prior to its approval.

Fast Track designation, priority review, accelerated approval, breakthrough therapy designation, and RMAT designation do not change the standards for approval but may expedite the development or approval process.

Moreover, even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Designated Platform Technology Status.

Under FDORA, a platform technology incorporated within or utilized by a drug or biological product is eligible for designation as a designated platform technology if (1) the platform technology is incorporated in, or utilized by, a drug approved under a BLA or NDA;

(2) preliminary evidence submitted by the sponsor of the approved or licensed drug, or a sponsor that has been granted a right of reference to data submitted in the application for such drug, demonstrates that the platform technology has the potential to be incorporated in, or utilized by, more than one drug without an adverse effect on quality, manufacturing, or safety;

and (3) data or information submitted by the applicable person indicates that incorporation or utilization of the platform technology has a reasonable likelihood to bring significant efficiencies to the drug development or manufacturing process and to the review process.

A sponsor may request the FDA to designate a platform technology as a designated platform technology concurrently with, or at any time after, submission of an IND application for a drug that incorporates or utilizes the platform technology that is the subject of the request.

If so designated, the FDA may expedite the development and review of any subsequent original BLA for a drug that uses or incorporates the platform technology.

Designated platform technology status does not ensure that a drug will be developed more quickly or receive FDA approval.

In addition, the FDA may revoke a designation if the FDA determines that a designated platform technology no longer meets the criteria for such designation.

Fast Track designation, priority review, accelerated approval, breakthrough therapy designation, RMAT designation, and designated platform technology status do not change the standards for approval but may expedite the development or approval process.

Moreover, even if a product candidate or platform technology qualifies for one or more of these programs, the FDA may later decide that the product candidate or platform technology no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Patent Term Restoration and Marketing Exclusivity

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

The period of patent term restoration is generally one-half the time between the effective date of an IND application (falling after issuance of the patent) and the submission date of a BLA or NDA, plus the time between the submission date of the BLA or NDA and the approval of that application, provided the sponsor acted with diligence.

The period of patent term restoration is generally one-half the time between the effective date of an IND application (falling after issuance of the patent) and the submission date of a BLA, plus the time between the submission date of the BLA and the approval of that application, provided the sponsor acted with diligence.

Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent.

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Under the Orphan Drug Act, the FDA may grant orphan drug designation to biological products and drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making a biological product or drug in the United States for this type of disease or condition will be recovered from sales of the product.

Orphan drug designation must be requested before submitting a BLA or NDA.

Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the identity of the applicant, the name of the therapeutic agent and its designated orphan use are disclosed publicly by the FDA.

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Pediatric Research Equity Act

Under the Pediatric Research Equity Act (PREA), as amended, a BLA or NDA or supplement must contain data to assess the safety and effectiveness of the biological product or drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

Under the Pediatric Research Equity Act (PREA), as amended, a BLA or supplement must contain data to assess the safety and effectiveness of the biological product or drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The intent of PREA is to compel sponsors whose products have pediatric applicability to study those products in pediatric populations.

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which goes beyond the data able to be generated within our clinical programs.

Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of their cost.

In the United States, for example, principal decisions about reimbursement for new products are typically made by the Centers for Medicare & Medicaid Services, or CMS, which decides whether and to what extent a new product will be covered and reimbursed under Medicare.

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Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor.

As a result, coverage determination is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

As a result, coverage determination is often a

time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

Further, coverage policies and third-party payor reimbursement rates may change at any time.

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Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Increasingly, third-party payors are also requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

We cannot be sure that reimbursement will be available for any product candidate that we commercialize and, if reimbursement is available, the level of reimbursement.

In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing vary widely from country to country.

For example, the European Union provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies.

A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates.

Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.

Healthcare Reform and Other Regulatory Changes

In the United States and some foreign jurisdictions, there have been, and likely will continue to be, a number of legislative and regulatory changes and proposed changes regarding the healthcare system directed at broadening the availability of healthcare, improving the quality of healthcare, and containing or lowering the cost of healthcare.

For example, 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 in the United States.

For example, in 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 in the United States.

The ACA includes measures that have significantly changed, and are expected to continue to significantly change, the way healthcare is financed by both governmental and private insurers.

The ACA contained a number of provisions, including those governing enrollment in federal

healthcare programs, reimbursement adjustments and changes to fraud and abuse laws.

The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws.

Among the provisions of the ACA of greatest importance to the pharmaceutical industry are that the ACA:

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made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’

rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs to 23.1% of average manufacturer price (AMP), and adding a new rebate calculation for “line extensions”

(i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP;

imposed a requirement on manufacturers of branded drugs to provide a 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) point-of-sale discount off the negotiated price of branded drugs dispensed to Medicare Part D beneficiaries in the coverage gap (i.e., “donut hole”) as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D;

rebate liability;

extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations.

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.

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:

On August 2, 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.

Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted include the following:

The Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

This includes 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 2030 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 have been suspended from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.

Then, a 1% payment reduction will occur beginning April 1, 2022 through June 30, 2022, and the 2% payment reduction will resume on July 1, 2022.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which further reduced Medicare payments to several types of providers.

On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.

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.

On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

On December 20, 2019, former President Trump signed into law the Further Consolidated Appropriations Act (H.R.

1865), which repealed the Cadillac tax, the health insurance provider tax, and the medical device excise tax.

It is impossible to determine whether similar taxes could be instated in the future.

At the federal level, President Biden signed an Executive Order on July 9, 2021 affirming the administration’s policy to (i) support legislative reforms that would lower the prices of prescription drug and biologics, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and, by supporting the development and market entry of lower-cost generic drugs and biosimilars;

and (ii) support the enactment of a public health insurance option.

Among other things, the Executive Order also directs HHS to provide a report on actions to combat excessive pricing of prescription drugs, enhance the domestic drug supply chain, reduce the price that the Federal government pays for drugs, and address price gouging in the industry;

and directs the FDA to work with states and Indian Tribes that propose to develop section 804 Importation Programs in accordance with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and the FDA’s implementing regulations.

FDA released such implementing regulations on September 24, 2020, which went into effect on November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada.

On September 25, 2020, CMS stated drugs imported by states under this rule will not be eligible for federal rebates under Section 1927 of the Social Security Act and manufacturers would not report these drugs for “best price”

or Average Manufacturer Price purposes.

Since these drugs are not considered covered outpatient drugs, CMS further stated it will not publish a National Average Drug Acquisition Cost for these drugs.

If implemented, importation of drugs from Canada may materially and adversely affect the price we receive for any of our product candidates.

Further, on November 20, 2020 CMS issued an Interim Final Rule implementing the Most Favored Nation, or MFN, Model under which Medicare Part B reimbursement rates would have been calculated for certain drugs and biologicals based on the lowest price drug manufacturers receive in Organization for Economic Cooperation and Development countries with a similar gross domestic product per capita.

However, on December 29, 2021 CMS rescinded the Most Favored Nations rule.

Additionally, on November 30, 2020, HHS published a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

Pursuant to court order, the removal and addition of the aforementioned safe harbors were delayed and recent legislation imposed a moratorium on implementation of the rule until January 1, 2026.

The Inflation Reduction Act (the IRA) includes several provisions that may impact our business to varying degrees, including provisions that create a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, impose new manufacturer financial liability on certain drugs under Medicare Part D, allow the U.S.

government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs without generic or biosimilar competition, require companies to pay rebates to Medicare for drug prices that increase faster than inflation, and delay the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries.

Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one rare disease designation and for which the only approved indication is for that disease or condition.

If a product receives multiple rare disease designations or has multiple approved indications, it may not qualify for the orphan drug exemption.

The effect of IRA on our business and the healthcare industry in general is not yet known.

The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United States.

To date, there have been several recent U.S.

congressional inquiries, as well as proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

President Biden has issued multiple executive orders that have sought to reduce prescription drug costs.

Although a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs.

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A person or entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it.

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

Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs.

The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other.

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The federal civil and criminal false claims laws, including the FCA, and civil monetary penalty laws, which prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government or knowingly making, using or causing to be made or used a false record or statement, including providing inaccurate billing or coding information to customers or promoting a product off-label, material to a false or fraudulent claim to the federal government.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand”

As a result of a

modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand”

for money or property presented to the federal government.

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to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.

The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.

Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose, among other things, specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates as well as their covered subcontractors.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their respective implementing regulations, which impose, among other things, specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates as well as their covered subcontractors.

HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’

fees and costs associated with pursuing federal civil actions;

The federal legislation commonly referred to as the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Effective January 1, 2022, covered manufacturers also are required to report information regarding their payments and other transfers of value to physician assistants, and nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year;

The federal legislation commonly referred to as the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other transfers of value made to physicians, other licensed care professionals and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs;

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Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect our business in an adverse way.

regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example:

Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example:

(i) changes to our manufacturing arrangements;

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The failure to comply with any of these laws or regulatory requirements subjects companies to possible legal or regulatory action.

Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.

Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant penalties,

including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.

Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical company to incur significant legal expenses and divert management’s attention from the operation of the business.

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On November 3, 2020, California passed the California Privacy Rights Act (CPRA) which builds on the CCPA and expands consumer privacy rights.

The CPRA will go into effect on January 1, 2023 and will apply to information collected on or after January 1, 2022.

The CPRA went into effect on January 1, 2023 and applies to information collected on or after January 1, 2022.

While there is currently an exception in the CCPA and CPRA for protected health information that is subject to HIPAA, the CCPA and CPRA may impact our business activities.

Virginia and Colorado have also passed comprehensive privacy laws that will become effective in 2013 and other U.S.

Virginia and Colorado have also passed comprehensive privacy laws that became effective in 2023 and other U.S.

states also are considering omnibus privacy legislation, and industry organizations regularly adopt and advocate for new standards in these areas.

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Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.

Although the UK is regarded as a third country under the EU’s GDPR, the European Commission (“EC”) has now issued a decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EU to the UK remain unrestricted.

Although the UK is regarded as a third country under the EU’s GDPR, the European Commission (EC) has now issued a decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EU to the UK remain unrestricted.

Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection.

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While we believe that our technology, scientific knowledge and experience in the field of cellular immunotherapy provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions, as well as standard-of-care treatments, new products undergoing development and combinations of existing and new therapies.

Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies, including combinations thereof, that may become available in the future.

Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies, including antibody-based therapies such as bi-specific antibodies, and combinations thereof, that may become available in the future.

Cellular immunotherapies for the treatment of cancer have recently been an area of significant research and development by academic institutions and biopharmaceutical companies.

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(Kite) were the first to obtain FDA approval for autologous CAR T-cell therapies for the treatment of certain cancers.

Novartis obtained FDA approval to commercialize Kymriah in August 2017 for the treatment of children and young adults with relapsed / refractory B-cell acute lymphoblastic leukemia and, in May 2018, for the treatment of adults with relapsed / refractory diffuse large B-cell lymphoma.

Novartis obtained FDA approval to commercialize Kymriah in August 2017 for the treatment of children and young adults with relapsed / refractory B-cell acute lymphoblastic leukemia, in May 2018, for the treatment of adults with relapsed / refractory diffuse large B-cell lymphoma, and in May 2022 for the treatment of adult patients with relapsed / refractory follicular lymphoma.

In October 2017, Kite obtained FDA approval to commercialize Yescarta for the treatment of adults with relapsed / refractory diffuse large B-cell lymphoma.

More recently Bristol-Myers Squibb received FDA approval in 2021 for two new, autologous T-cell therapy products –

Bristol-Myers Squibb received FDA approval in 2021 for two new, autologous T-cell therapy products –

Breyanzi for the treatment of relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, and Abecma for the treatment of adult patients with relapsed or refractory multiple myeloma.

More recently, Janssen Biotech, Inc.

received FDA approval in February 2022 for Carvykti for the treatment of adult patients with relapsed / refractory multiple myeloma.

We are developing our off-the-shelf NK- and T-cell product candidates for the treatment of cancer.

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We believe that our relationship with our employees is good, and we provide all employees with the opportunity to share their opinions in open dialogues with our human resources department and senior management.

In January 2023, we implemented a corporate restructuring to streamline our operations, reduce our operating expenses, extend our cash runway and focus our resources on our most promising programs.

In connection with the restructuring, we committed to a reduction in our total workforce by approximately 60%, to approximately 220 employees.

Equity, Diversity, and Inclusion

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We are committed to actively seeking out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences.

As of December 31, 2021, women made up 49% of our workforce and represented 47% of leadership positions at the Director level and above.

As of January 6, 2023, women made up 53.4% of our workforce and represented 42.9% of leadership positions at the Director level and above.

Health and Safety

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Our benefits program includes a choice of medical plans, vision and dental coverage, flexible spending accounts for health and dependent day care needs, and income protection through life, AD&D, short term and long term disability coverage, sick leave, paid family leave, and generous paid time off.

We offer a 401(k) retirement plan with company matching, an employee assistance program, and onsite fitness centers at no cost to our employees.

We offer a 401(k) retirement plan with company matching a percentage of employee contributions, an employee assistance program, and onsite fitness centers at no cost to our employees.

Employee Development and Engagement

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We provide all employees with the opportunity to share their opinions in open dialogues with our human resources department and senior management.

We provide all

employees a wide range of professional development experiences, both formal and informal.

We provide all employees a wide range of professional development experiences, both formal and informal.

The safety and wellbeing of our employees is a paramount value for us.

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In addition to salaries, these programs can include annual bonuses, stock-based compensation awards, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and family care resources.

Further, in an effort to protect the health and safety of our employees, we took proactive action from the earliest signs of the COVID-19 outbreak, which included implementing social distancing policies at our facilities, facilitating remote working arrangements and imposing employee travel restrictions.

Corporate Information

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Available Information

We post our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on the Investors section of our public website (www.fatetherapeutics.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We post our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on the Investors section of our public website (www.fatetherapeutics.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

In addition, you can read our SEC filings over the Internet at the SEC’s website at www.sec.gov.

You can access these filings on our website or from the SEC free of charge.

The contents of these websites are not incorporated into this Annual Report on Form 10-K.

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We may delay or cancel our ongoing and planned clinical development activities or research and development activities for any of our product candidates for a variety of reasons, including:

determining that a product candidate is ineffective, causes harmful side effects, or otherwise presents unacceptable safety risks during clinical trials or has an unfavorable toxicity profile in preclinical studies to support clinical investigation;

difficulties in optimizing the right dose and schedule for our product candidates, which might result in a determination that a product candidate is ineffective, causes harmful side effects, or otherwise presents unacceptable safety risks during clinical trials or has an unfavorable toxicity profile in preclinical studies to support clinical investigation;

difficulties in manufacturing or distributing a product candidate, including the inability to manufacture and distribute a product candidate in a sufficient quantity, suitable form, or in a cost-effective manner, or under protocols and processes and with materials and facilities acceptable to the FDA for the conduct of clinical trials or for marketing approval;

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difficulty establishing predictive preclinical models for demonstration of safety and efficacy of a product candidate in one or more potential therapeutic areas for clinical development.

For example, in January 2023, we announced the discontinuation of our FT516, FT596, FT538, and FT536 NK cell programs to focus our resources on advancing our most innovative and differentiated programs.

We also announced the termination of our Collaboration and Option Agreement with Janssen, which will take effect on April 3, 2023.

As a result of the termination, we will wind down all collaboration activities in the first quarter of 2023, including development of two product candidates that were expected to enter the clinic in 2023.

Additionally, we will only be able to obtain regulatory approval to market a product candidate if we can demonstrate, to the satisfaction of the FDA or comparable foreign regulatory authorities, in well-designed and conducted clinical trials that such product candidate is manufactured in accordance with applicable regulatory requirements, is safe, pure and potent, or effective, and otherwise meets the appropriate standards required for approval for a particular indication.

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Securing regulatory approval also requires the submission of information about product manufacturing operations to, and inspection of manufacturing facilities by, the relevant regulatory authority.

The final results of our current and future clinical trials may not meet the FDA’s or other regulatory agencies’

The results of our current and future clinical trials may not meet the FDA’s or other regulatory agencies’

requirements to approve a product candidate for marketing, and the regulatory agencies may otherwise determine that our manufacturing operations are insufficient to support approval.

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difficulties in identifying eligible patients for participation in clinical trials of our product candidates, due in part to our focus on the development of certain of our product candidates for the treatment of rare diseases;

difficulties enrolling a sufficient number of suitable patients to conduct clinical trials of our product candidates, including difficulties resulting from patients enrolling in studies of therapeutic product candidates sponsored by us or our competitors and difficulties resulting from patient availability as a result of shelter-in-place orders, mandated travel restrictions, prioritization of hospital and other medical resources toward pandemic efforts, policies and procedures implemented at clinical sites with respect to the conduct of clinical trials, and other precautionary measures taken in treating patients or in practicing medicine in response to the ongoing COVID-19 pandemic;

difficulties enrolling a sufficient number of suitable patients to conduct clinical trials of our product candidates, including difficulties resulting from patients enrolling in studies of therapeutic product candidates sponsored by us or our competitors and difficulties resulting from patient availability as a result of mandated travel restrictions, prioritization of hospital and other medical resources toward pandemic efforts, policies and procedures implemented at clinical sites with respect to the conduct of clinical trials, and other precautionary measures taken in treating patients or in practicing medicine in response to the ongoing COVID-19 pandemic;

difficulties determining suitable doses and schedules of our novel cell product candidates for evaluation in clinical trials;

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securing and maintaining the support of clinical investigators and investigational sites, including investigators and sites who may conduct clinical trials under an investigator-sponsored IND with our financial support, and obtaining institutional review board (IRB) approval at each site for the conduct of our clinical trials;

governmental or regulatory delays, including any delays due to limitations on the availability of governmental and regulatory agency personnel to review regulatory filings, conduct site inspections or engage in discussions with us as a result of the COVID-19 pandemic, failure to obtain regulatory approval, or uncertainty or changes in U.S.

or foreign regulatory requirements, policy or guidelines;

limitations on clinical trial conduct at our clinical trial sites resulting from prioritization of hospital and other medical resources toward COVID-19 pandemic efforts, policies and procedures implemented at clinical sites with respect to the conduct of clinical trials including those relating to site initiation, study monitoring, and data collection and analysis, and other precautionary measures taken in treating patients or in practicing medicine in response to the COVID-19 pandemic;

reaching agreement on acceptable terms with third-party service providers and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different service providers and clinical trial sites;

failure, by us or third parties that we contract with, to manufacture certain of our product candidates consistently, and in sufficient quantities, in accordance with our protocol-specified manufacturing requirements and applicable regulatory requirements;

failure or delays in obtaining sufficient quantities of suitable raw materials, components, and equipment necessary for the conduct of our clinical trials or the manufacture of any product candidate, including any inability to obtain materials as a result of supply chain issues related to the COVID-19 pandemic and the ongoing conflict in Ukraine;

failure or delays by us or by our clinical sites to obtain sufficient quantities of components and supplies necessary for the conduct of our clinical trials, including any inability to obtain agents such as cyclophosphamide or fludarabine which are often required to condition patients for treatment with our product candidates, or certain monoclonal antibodies which are intended for administration to patients in combination with many of our product candidates in certain of our clinical trials;

challenges in distributing our product candidates to clinical trial sites, or failure to establish effective protocols for the supply and transport of our product candidates;

the costs of conducting clinical trials or manufacturing of our product candidates being greater than we anticipate, including due to rising inflation rates, or the timelines for these activities being longer than we anticipate;

our failure, or the failure of investigators, third-party service providers, or clinical trial sites, to ensure the proper and timely conduct of and analysis of data from clinical trials of our product candidates;

inability to reach agreement on clinical trial design and parameters with regulatory authorities, investigators, and IRBs;

failure or delays in obtaining sufficient quantities of suitable raw materials, components, and equipment necessary for the manufacture of any product candidate, including any inability to obtain materials as a result of supply chain issues related to the COVID-19 pandemic;

challenges in distributing our product candidates to clinical trial sites, or failure to establish effective protocols for the supply and transport of our product candidates;

the costs of conducting clinical trials or manufacturing of our product candidates being greater than we anticipate or the timelines for these activities being longer than we anticipate;

regulatory authorities or data monitoring committees requiring or recommending suspension, termination or a clinical hold for various reasons, including concerns about patient safety or the safety of novel therapeutics derived from pluripotent or genome edited therapies;

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approval of competitive agents that may materially alter the standard of care on which a clinical development plan was based, which may require new or additional trials, or render our product candidates or clinical trial designs obsolete;

governmental or regulatory delays, including any delays due to limitations on the availability of governmental and regulatory agency personnel to review regulatory filings, conduct site inspections or engage in discussions with us as a result of the ongoing COVID-19 pandemic, failure to obtain regulatory approval, or uncertainty or changes in U.S.

or foreign regulatory requirements, policy or guidelines;

limitations on clinical trial conduct at our clinical trial sites resulting from prioritization of hospital and other medical resources toward other efforts, such as the COVID-19 pandemic or other public health concerns, policies and procedures implemented at clinical sites with respect to the conduct of clinical trials including those relating to site initiation, study monitoring, and data collection and analysis, and other precautionary measures taken in treating patients or in practicing medicine in response to various public health concerns.

If there are delays in initiating or conducting any clinical trials of our product candidates or any of these clinical trials are terminated before completion, the commercial prospects of our product candidates will be harmed.

In addition, any delays in initiating, conducting or completing our clinical trials or adjustments to certain of our study protocols and procedures, including as a result of the COVID-19 pandemic, will increase our costs, slow down our product candidate development and regulatory approval process, and jeopardize our ability to gain regulatory approval, commence product sales and generate revenues.

In addition, any delays in initiating, conducting or completing our clinical trials or adjustments to certain of our study protocols and procedures, including as a result of any shortage of materials or agents necessary to conduct our studies or as a result of the COVID-19 pandemic or other factors, will increase our costs, slow down our product candidate development and regulatory approval process, and jeopardize our ability to gain regulatory approval, commence product sales and generate revenues.

Furthermore, many of the factors that cause, or lead to, a delay in the initiation, conduct or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

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For our iPSC-derived product candidates, these complex processes include reprogramming human fibroblasts to obtain iPSCs, in some cases genetically engineering these iPSCs, and differentiating the iPSCs to obtain the desired cell product candidate.

As a result of the complexities in manufacturing biologics and distributing cell therapies, the cost to manufacture and distribute biologics and cell therapies in general, and our cell product candidates in particular, is generally higher than traditional small molecule chemical compounds.

In addition, our cost of goods development is at an early stage.

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We are still developing optimized and reproducible manufacturing processes for clinical and commercial-scale manufacturing of our product candidates, and none of our manufacturing processes have been validated for commercial production of our product candidates.

We may face several challenges as we scale our manufacturing for large-scale clinical trials or commercial-scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with good manufacturing practices, lot consistency and timely availability of raw materials.

In addition, we are still optimizing our protocols for the supply and transport of our product candidates for distribution to clinical trial sites.

We may face multiple challenges as we scale our manufacturing for large-scale clinical trials or commercial-scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with good manufacturing practices, lot consistency and timely availability of raw materials.

In addition, we are continuing to optimize our protocols for the supply and transport of our product candidates for distribution to clinical trial sites.

Although we are working to develop reproducible and commercially viable manufacturing processes for our product candidates, and effective protocols for the supply and transport of our product candidates, doing so is a difficult and uncertain task.

We may make changes or be required by the FDA to make changes to our manufacturing processes, including materials used in manufacturing our product candidates, as we continue to develop and refine the manufacturing and distribution processes for our product candidates for advanced clinical trials and commercialization, and we cannot be sure that even minor changes in these processes will not cause our product candidates to perform differently and affect the results of our ongoing and planned clinical trials or the performance of the product once commercialized.

We may make changes or be required by the FDA to make changes to our manufacturing processes, including materials and equipment used in manufacturing our product candidates, as we continue to develop and refine the manufacturing and distribution processes for our product candidates for advanced clinical trials and commercialization, and we cannot be sure that even minor changes in these processes, materials, and equipment will not cause our product candidates to perform differently and affect the results of our ongoing and planned clinical trials or the performance of the product once commercialized.

In some circumstances, changes in our manufacturing operations, including to our protocols, processes, materials or facilities used, may require us to perform additional preclinical or comparability studies, or to collect additional clinical data from patients prior to undertaking additional clinical studies or filing for regulatory approval for a product candidate.

These requirements may lead to delays in our clinical development and commercialization plans for our product candidates, and may increase our development costs substantially.

The manufacturing processes for any products that we may develop are subject to FDA and foreign regulatory authority approval requirements, and we will need to meet, and our contract manufacturing organizations (CMOs) or other third party manufacturers will need to meet, all applicable FDA and foreign regulatory authority requirements on an ongoing basis.

The manufacturing processes for any products that we may develop are subject to FDA and foreign regulatory authority approval requirements, and we will need to meet, and our CMOs or other third party manufacturers will need to meet, all applicable FDA and foreign regulatory authority requirements on an ongoing basis.

Our existing product candidates are currently manufactured by us or by third-party cell processing facilities or CMOs, including facilities operated by or affiliated with our clinical sites, and our current manufacturing operations, including protocols, processes, materials, and facilities, may not support regulatory approval of our existing product candidates.

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In addition, we may be required to make changes to our protocols for the supply and transport of our product candidates to enable effective distribution of our product candidates.

Any modifications to our manufacturing and supply protocols,

processes, materials or facilities, and any delays in, or inability to, establish acceptable manufacturing and supply operations for our product candidates could require us to incur additional development costs or result in delays to our clinical development.

Any modifications to our manufacturing and supply protocols, processes, materials or facilities, and any delays in, or inability to, establish acceptable manufacturing and supply operations for our product candidates could require us to incur additional development costs or result in delays to our clinical development.

If we or our CMOs or other third-party manufacturers are unable to reliably produce products to specifications acceptable to the FDA or other regulatory authorities, we may not obtain or maintain the regulatory approvals we need to commercialize such products.

Even if we obtain regulatory approval for any of our product candidates, there is no assurance that either we or our CMOs or other third-party manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand.

Even if we obtain regulatory approval for any of our product candidates, there is no assurance that either we or our CMOs or other third-party manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities and on the requisite timelines to meet the requirements for the potential launch of the product, or to meet potential future demand.

Additionally, changes in regulatory requirements may require us or our third-party manufacturers to perform additional studies or to modify protocols, processes, materials or facilities for the manufacture of our product candidates or any components thereof.

Any of these challenges could delay initiation or completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations and prospects.

A variety of risks associated with conducting research and clinical trials abroad and marketing our product candidates internationally could materially adversely affect our business.

We plan to develop and potentially commercialize our product candidates worldwide.

Accordingly, we expect that we will be subject to additional risks related to operating in foreign countries, including:

differing regulatory requirements in foreign countries;

unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

increased difficulties in managing the logistics and transportation of storing and shipping product candidates produced in the U.S.

and shipping the product candidate to the patient abroad;

import and export requirements and restrictions;

economic weakness, including inflation, or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

difficulties staffing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the U.S.;

differing payor reimbursement regimes, governmental payors or patient self-pay systems, and price controls;

potential liability under the FCPA or comparable foreign regulations;

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the U.S.;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

business interruptions resulting from geo-political actions, including war and terrorism, such as the ongoing conflict in Ukraine.

These and other risks associated with our potential international operations may materially adversely affect our ability to attain or maintain profitable operations, which could have a material adverse effect on our business and results of operations.

We plan to conduct clinical trials for our product candidates outside the United States, and the FDA may not accept data from trials conducted in such locations.

To date, we have only conducted clinical trials in the United States.

However, we may in the future choose to conduct one or more of our clinical trials or include sites in current or future clinical trials outside the United States.

Although the FDA may accept data from sites or clinical trials outside the United States, acceptance of these data is subject to conditions imposed by the FDA.

The FDA will generally not consider the data from a foreign clinical trial not conducted under an IND unless (i) the trial was well-designed and well-conducted in accordance with GCP requirements, including requirements for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials in a way that provides assurance that the data and reported results are credible and accurate and that the rights, safety, and well-being of trial subjects are protected, and (ii) the FDA is able to validate the data from the trial through an onsite inspection, if necessary.

In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S.

population and U.S.

medical practice;

(ii) the trials were performed by clinical investigators of recognized competence;

and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such as inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.

Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering must be met.

Many foreign regulatory authorities have similar approval requirements.

In addition, while these clinical trials or trial sites are subject to the applicable local laws where the trials are conducted, FDA acceptance of the data will depend on its determination that the trials or trial sites also complied with all applicable U.S.

laws and regulations.

There can be no assurance that the FDA will accept data from trials conducted outside the United States.

If the FDA does not accept the data from any trial or trial site outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and would delay or halt our development of the applicable product candidates.

A disruption to our manufacturing operations, or our or our third-party suppliers’

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We have not yet caused any of our product candidates to be manufactured or processed on a commercial scale and may not be able to do so for any of our product candidates.

We are substantially dependent on our own internal manufacturing facilities in San Diego, California for the production of our product candidates, and we rely, and expect to continue to rely, on third parties for the manufacture of certain components and also to manufacture our product candidates for use in conducting clinical trials.

We are substantially dependent on our own internal manufacturing facilities in San Diego, California for the production of our product candidates, and we rely, and expect to continue to rely, on third parties for the manufacture of certain components to manufacture our product candidates for use in conducting clinical trials.

The facilities used to manufacture our product candidates, including our own facilities, must be evaluated by the FDA or other foreign regulatory agencies pursuant to inspections that will be conducted after we submit an application to the FDA or other foreign regulatory agencies.

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This would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

Because we rely on our own manufacturing facility to produce our product candidates and on third parties for the manufacture of certain components and the product candidates themselves, we are required to transfer certain manufacturing process know-how and certain intermediates to third parties, including larger-scale facilities operated by a CMO or by us, to facilitate manufacture of our product candidates for clinical trials and commercialization.

Because we rely on our own manufacturing facilities to produce our product candidates and on third parties for the manufacture of certain components, we are required to transfer certain manufacturing process know-how and certain intermediates to third parties, including larger-scale facilities operated by a CMO or by us, to facilitate manufacture of our product candidates for clinical trials and

commercialization.

Transferring manufacturing testing and processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time.

In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility.

We and any CMOs or third parties that we engage for manufacturing our product candidates will need to conduct significant development work to transfer these processes and manufacture each of our product candidates for clinical trials and commercialization.

We and any CMOs or third parties that we engage to manufacture our product candidates will need to conduct significant development work to transfer these processes and manufacture each of our product candidates for clinical trials and commercialization.

In addition, we may be required to demonstrate the comparability of material generated by any CMO or third parties that we engage for manufacturing our product candidates with material previously produced and used in testing.

Any inability to manufacture comparable drug product by us or our CMOs could delay the continued development of our product candidates.

In addition to relying on third parties for the manufacture of our product candidates, we also manufacture certain of our product candidates ourselves, and intend to manufacture some or all of the clinical supply of our iPSC-derived NK-cell and T-cell product candidates for our ongoing and planned clinical trials.

In addition to relying on third parties for the manufacture of certain components for the manufacture of our product candidates, we manufacture our product candidates ourselves, and intend to manufacture some or all of the clinical supply of our iPSC-derived NK-cell and T-cell product candidates for our ongoing and planned clinical trials.

To do so, we will need to scale up our own manufacturing operations, as we do not currently have the infrastructure or capability internally to manufacture sufficient quantities of each of our product candidates to support the conduct of each of our clinical trials or commercialization of each of our product candidates, if approved.

Accordingly, we will be required to make significant investments to expand our existing GMP manufacturing capabilities and facilities, establish additional GMP manufacturing facilities, conduct GMP production, and process and scale up development and technology transfer activities for the manufacture of our product candidates, and our efforts to scale our own manufacturing operations may not succeed.

costs and yields, quality control, stability of the product, quality assurance testing, operator error, shortages of qualified personnel, facility shutdowns due to the ongoing COVID-19 pandemic, natural disasters or other reasons, as well as compliance with strictly enforced federal, state and foreign regulations, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient supplies of our product candidates for our ongoing and planned clinical trials or eventual commercialization.

For example, in response to governmental shelter-in-place orders resulting from the COVID-19 pandemic, we or our third-party manufacturers have been, and may from time to time be required to limit our or their on-site staff’s availability to conduct manufacturing activities at our or their respective facilities, and we and our third-party manufacturers may encounter problems with shortages of qualified personnel and key contractors, and delays or pauses in the production and delivery of laboratory equipment, materials and supplies necessary for the manufacture of our product candidates.

These problems may include workforce reductions, employee absenteeism and attrition, and supply chain failures or delays relating to the COVID-19 pandemic or other events affecting raw material supply or manufacturing capabilities.

Several vaccines for COVID-19 have been granted Emergency Use Authorization by the FDA, and two of those later received marketing approval.

Additional vaccines may be authorized or approved in the future.

The resultant demand for vaccines and potential for manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, may make it more difficult to obtain materials or manufacturing slots for the product candidates needed for our clinical trials, which could lead to delays in these trials.

Accordingly, we will be required to make significant investments to maintain and expand our existing GMP manufacturing capabilities and facilities, establish additional GMP manufacturing facilities, conduct GMP production, and process and scale up development and technology transfer activities for the manufacture of our product candidates, and our efforts to scale our own manufacturing operations may not succeed.

Even if we are successful in developing manufacturing capabilities sufficient for clinical and commercial supply, problems with our manufacturing operations or those of the third-party manufacturers upon which we rely, including difficulties with production costs and yields, quality control, stability of the product, quality assurance testing, operator error, shortages of qualified personnel, facility shutdowns due to the ongoing COVID-19 pandemic or other public health concerns, the ongoing conflict in Ukraine, natural disasters or other reasons, as well as compliance with strictly enforced federal, state and foreign regulations, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient supplies of our product candidates for our ongoing and planned clinical trials or eventual commercialization.

Further, delays in regulatory inspections, commissioning and receiving regulatory approvals for our manufacturing capabilities or facilities, including new facilities, as a result of limited governmental resources due to the COVID-19 pandemic or otherwise, could delay our development plans, including the initiation and conduct of our ongoing and planned clinical trials.

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Any such events could delay or prevent our ability to obtain regulatory approval for or commercialize our product candidates, which would adversely affect our business, prospects, financial condition and results of operations.

We are subject to risks associated with the ongoing spread of the coronavirus, SARS-CoV-2 (COVID-19), and the global pandemic could seriously impact the research and development of our product candidates.

The ongoing COVID-19 pandemic has broadly affected the global economy, resulted in significant travel and work restrictions in many regions and put a significant strain on healthcare resources.

The pandemic has had, and we expect it will continue to have, an impact on our operations and on the operations of our collaborators, third-party contractors and other entities, including governmental agencies with which we interact.

In particular, state and local regulations requiring during certain periods that a significant portion of our employees work remotely has had an impact on our operations and research and development of our product candidates.

We have also experienced delays in obtaining materials and supplies needed to maintain our operations and manufacture our product candidates as a result of production shortages experienced by our suppliers.

Additionally, at times we have been subject to temporary pauses in enrollment and dosing implemented by some clinical trial sites due to COVID-19, and some clinical trial sites have also restricted initiation of new trials at times as well as visits by sponsors and clinical research organizations (CROs) for ongoing trials to protect both site staff and patients from possible COVID-19 exposure.

The COVID-19 pandemic, including the emergence of new variants, has impacted, and may in the future impact, the clinical development of our product candidates if we are subject to restrictions or limitations on, or delays in, the performance of study procedures (particularly any procedures that may be deemed non-essential), participant dosing, distribution of our product candidates or clinical trial materials, study monitoring, or site inspections and data analysis, including as a result of changes in hospital or research institution policies, federal, state or local regulations, prioritization of hospital and other medical resources toward pandemic efforts, reduced availability of site staff supporting the conduct of clinical trials, heightened risks of exposure of study participants, principal investigators or site staff to COVID-19 if an outbreak occurs in their geographic region, or other reasons related to the pandemic.

Quarantine or other travel limitations (whether voluntary or required) also may impede participant movement, affect access to study sites, or interrupt healthcare services.

Furthermore, the pandemic could cause delays in review and response times by the FDA and other regulatory agencies, or such health regulatory agencies may refuse to accept data from our clinical trials due to mitigation strategies we implement in response to the COVID-19 pandemic and current regulatory guidance.

In addition, our ability to manufacture and ship our product candidates for

our clinical trials may be impacted if we, or any third parties which manufacture and supply materials used in either the manufacture of our product candidates or the conduct of our research and development activities, or which perform certain testing relating to our product candidates, are adversely impacted by restrictions resulting from the coronavirus outbreak.

There is also the potential that manufacturing facilities, equipment, and materials required for manufacture or administration of our product candidates could be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, which may make it more difficult to obtain materials, equipment, or manufacturing slots necessary for the clinical supply of our product candidates.

The extent to which the pandemic affects our operations and the research and development of our product candidates will depend on continuously changing circumstances, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, including the emergence of new variants of the virus, such as the Delta and Omicron variants, which may impact rates of infection and vaccination efforts, developments or perceptions regarding the safety of vaccines, future waves of infection, and the effectiveness of actions taken to contain the pandemic or mitigate its impact, including vaccination campaigns.

While the ultimate impact of the COVID-19 pandemic on our business is highly uncertain, any negative impacts that materialize could materially adversely affect our clinical development and operations, financial performance and stock price.

Because our approach to the development of product candidates is based on novel and unproven technologies, it is subject to a substantial degree of technological uncertainty and we may not succeed in developing any of our product candidates.

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In addition, our product candidates may demonstrate different chemical and pharmacological properties in patients than they do in laboratory studies.

It may take many years before we develop a full understanding of the pharmacological properties of our product candidates, and we may never know precisely how they function in vivo .

It may take many years before we develop a full understanding of the pharmacological properties of our product

candidates, and we may never know precisely how they function in vivo .

Moreover, our genome editing approach may cause unintended changes to the DNA such as a non-target site gene editing, a large deletion or a DNA translocation, any of which could lead to oncogenesis or other adverse effects.

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eligibility criteria for the trials in question;

perceived risks and benefits of the product candidate under study, including any perceived risks associated with iPSC-derived product candidates, which we believe are the first ever iPSC-derived cell therapies cleared by the FDA for clinical investigation in the United States;

perceived risks and benefits of the product candidate under study, including any perceived risks associated with our iPSC-derived product candidates, which we believe are the first ever iPSC-derived cell therapies cleared by the FDA for clinical investigation in the United States;

the availability of competing therapies and clinical trials;

efforts to facilitate timely enrollment in clinical trials;

the availability of time and resources at the limited number of institutions at which our clinical trials are or will be conducted, including any constraints on resources, or policies and procedures implemented, at hospitals and clinical trial sites as a result of the COVID-19 pandemic;

the availability of cells suitable for the manufacture of our clinical product candidates from eligible and qualified donors for certain of our product candidates;

the availability of components and agents necessary to enroll and treat prospective patients in our clinical trials, including agents such as cyclophosphamide and fludarabine which are often required to condition patients and the latter of which is reported to be in short supply in the United States and worldwide, or monoclonal antibodies which are intended for administration to patients in combination with our product candidates, in certain of our clinical trials;

the ability to monitor patients adequately during and after treatment, including through remote monitoring if required as a result of precautionary changes implemented at certain clinical trial sites as a result of the COVID-19 pandemic;

the proximity and availability of clinical trial sites for prospective patients.

In addition, certain of our clinical trial sites at times have delayed or paused patient enrollment in clinical trials as a result of the COVID-19 pandemic, and quarantines or other travel limitations relating to the COVID-19 pandemic may impede patient movement and affect access to study sites, which may further impact patient enrollment in our clinical trials.

In addition, certain of our clinical trial sites at times have delayed or paused patient enrollment in clinical trials as a result of the COVID-19 pandemic and supply chain shortages, and quarantines or other travel limitations relating to the COVID-19 pandemic may impede patient movement and affect access to study sites, which may further impact patient enrollment in our clinical trials.

The extent and duration of such delays and disruptions, and the overall impact on the timing and conduct of our clinical trials, are uncertain.

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Because our iPSC product platform is designed to enable rapid incorporation of novel functional product features in an evolving clinical setting, we may elect to incorporate these discoveries into next-generation product candidates that render our existing product candidates, including product candidates under clinical development, obsolete.

Additionally, because we have limited financial and personnel resources, we may elect or be required to abandon or delay the pursuit of opportunities with existing or future product candidates, including those that may be more advanced in development than those we ultimately elect to pursue.

in development than those we ultimately elect to pursue.

We are also expanding our research and development efforts into areas outside of oncology, such as autoimmune diseases, where we have limited or no experience.

Due to these factors, our spending on current and future research and development programs and product candidates and the scientific innovation arising from these expenditures, may not yield commercially viable product candidates.

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Animal models and assays may not accurately predict the safety and efficacy of our product candidates in our target patient populations, and appropriate models and assays may not exist for demonstrating the safety and purity of our product candidates, as required by the FDA and other regulatory authorities for ongoing clinical development and regulatory approval.

biopharmaceutical product candidates due to a lack of prior experiences on the side of both developers and regulatory agencies.

The preclinical and clinical development, manufacture, and regulatory requirements for approval of novel product candidates such as ours can be more expensive and take longer than for other more well-known or extensively studied pharmaceutical or biopharmaceutical product candidates due to a lack of prior experiences on the side of both developers and regulatory agencies.

Additionally, due to the uncertainties associated with the preclinical and clinical development, manufacture, and regulatory requirements for approval of our product candidates, we may be required to modify or change our preclinical and clinical development plans or our manufacturing activities and plans, or be required to meet stricter regulatory requirements for approval.

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Cellular immunotherapies, and iPSC-derived cell therapies in particular, represent relatively new therapeutic areas, and the FDA has cautioned consumers about potential safety risks associated with cell therapies.

To date, there are relatively few approved cell therapies, and in October 2021, it was reported that the FDA placed a clinical hold on all allogeneic CAR T-cell clinical studies being conducted by a company that reported a chromosomal abnormality in a patient treated with one of their product candidates highlighting the technical and regulatory risk of working with new technology.

To date, there are relatively few approved cell therapies, and the development of any cell therapy may be placed on hold by the FDA upon the detection of any unexpected safety event to evaluate the potential relevance of such novel technology to the occurrence of such safety event, highlighting the technical and regulatory risk of working with new technology.

As a result, the regulatory approval process for product candidates such as ours is uncertain and may be more expensive and take longer than the approval process for cell therapy product candidates based on other, better known or more extensively studied technologies and therapeutic approaches.

Regulatory requirements in the United States and in other countries governing cell therapy products have changed frequently and the FDA or other regulatory bodies may change the requirements, or identify different regulatory pathways, for approval for any of our product candidates.

For example, within the FDA, the Center for Biologics Evaluation and Research, or CBER, restructured and created a new Office of Tissues and Advanced Therapies to better align its oversight activities with FDA Centers for Drugs and Medical Devices.

It is possible that over time new or different divisions may be established or be granted the responsibility for regulating cell and/or gene therapy products, including iPSC-derived cell products, such as ours.

Regulatory requirements in the United States and in other countries governing the development of cell therapy products have changed frequently and the FDA or other regulatory bodies may change the requirements, or identify different regulatory pathways, for approval for any of our product candidates.

The FDA previously established the Office of Tissues and Advanced Therapies (OTAT) within the Center for Biologics Evaluation and Research (CBER) to consolidate the review of cell therapy and related products, and to advise CBER on its review.

In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products (OTP) and elevation of OTP to a "Super Office" to meet its growing cell and gene therapy workload and new commitments under the Prescription Drug User Fee Act agreement for fiscal years 2023-2027.

It is possible that over time new or different divisions may be established or be granted the responsibility for regulating cell and/or gene therapy products, including iPSC-derived cell

products, such as ours.

As a result, we may be required to change our regulatory strategy or to modify our applications for regulatory approval, which could delay and impair our ability to complete the preclinical and clinical development and manufacture of, and obtain regulatory approval for, our product candidates.

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clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo.

Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at

different dose levels.

Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels.

Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment.

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Preliminary or interim data from clinical trials that we are conducting are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues, the duration of treatment increases and more patient data become available.

For example, although we reported positive interim clinical data from our FT516 and FT596 programs for patients with relapsed / refractory B-cell lymphoma, we may encounter dose-limiting toxicities or unacceptable side effects for these product candidates as dose escalation and expansion progresses in our clinical trials and additional patient data become available.

For example, although we have, from time to time, reported positive interim clinical data for certain of our clinical programs, we may encounter dose-limiting toxicities or unacceptable side effects for these product candidates as dose escalation and expansion progresses in our clinical trials and additional patient data become available.

Our preliminary or interim results and related conclusions also are subject to change following a more comprehensive review of the data related to the particular study or trial.

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In addition, the standard of care may change with the approval of new products for the same indications that we are studying.

We are subject to risks associated with the ongoing global COVID-19 pandemic, which could seriously impact the research and development of our product candidates.

The ongoing COVID-19 pandemic has broadly affected the global economy, resulted in significant travel and work restrictions in many regions and put a significant strain on healthcare resources.

The pandemic has had, and may continue to have, an impact on our operations and on the operations of our collaborators, third-party contractors and other entities, including governmental agencies with which we interact.

For example, in the first two years of the pandemic, state and local regulations required a significant portion of our employees to work remotely, which had an impact on our operations and research and development of our product candidates.

Quarantine or other travel limitations (whether voluntary or required) also may impede participant movement, affect access to study sites, or interrupt healthcare services.

In addition, our ability to manufacture and ship our product candidates for our clinical trials may be impacted if we, or any third parties which manufacture and supply materials used in either the manufacture of our product candidates or the conduct of our research and development activities, or which perform certain testing relating to our product candidates, are adversely impacted by restrictions resulting from the coronavirus outbreak.

The extent to which the pandemic affects our operations and the research and development of our product candidates will depend on continuously changing circumstances, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, including the continued emergence of new variants of the virus, which may impact rates of infection and vaccination efforts and effectiveness, developments or perceptions regarding the safety of vaccines, future waves of infection, and the effectiveness of actions taken to contain the pandemic or mitigate its impact, including vaccination campaigns.

While the ultimate

impact of the COVID-19 pandemic on our business is highly uncertain, any negative impacts that materialize could materially adversely affect our clinical development and operations, financial performance and stock price.

Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.

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Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product.

Additionally, under FDORA, sponsors of approved drugs and biologics must provide 6 months' notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list of discontinued products, which would revoke the product's ability to be marketed.

The FDA closely regulates the post-approval marketing and promotion of pharmaceutical and biological products to ensure such products are marketed only for the approved indications and in accordance with the provisions of the approved labeling.

Later discovery of previously unknown problems with our product candidates, manufacturing operations, or failure to comply with regulatory requirements, may lead to various adverse conditions, including significant delays in bringing our product candidates to market and/or being precluded from manufacturing or selling our product candidates, any of which could significantly harm our business.

We have received regenerative medicine advanced therapy, or RMAT, designation for the treatment of relapsed/refractory diffuse large B-cell lymphoma, and we may in the future seek RMAT designation for some of our other product candidates, but such designation may not actually lead to a faster development or regulatory review or approval process and we may be unable to obtain or maintain the benefits associated with such designation.

We have received regenerative medicine advanced therapy, or RMAT, designation from the FDA for FT516 for the treatment of relapsed/refractory diffuse large B-cell lymphoma.

We may seek regenerative medicine advanced therapy, or RMAT, designation for certain of our product candidates, but such designation may not actually lead to a faster development or regulatory review or approval process and we may be unable to obtain or maintain the benefits associated with such designation.

We may seek regenerative medicine advanced therapy, or RMAT, designation from the FDA for certain of our product candidates.

A product candidate is eligible for RMAT designation if:

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In any event, the receipt of RMAT designation for a product candidate may not result in a faster development process, review or approval compared to product candidates considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.

In addition, even if one or more of our product candidates qualifies for RMAT designation, the FDA may later decide that the product candidate no longer meet the conditions for qualification.

In addition, even if one or more of our product candidates qualifies for RMAT designation, the FDA may later decide that the product candidate no longer meets the conditions for qualification.

We may rely on orphan drug status to develop and commercialize certain of our product candidates, but orphan drug designations may not confer marketing exclusivity or other expected commercial benefits and we may not be able to obtain orphan drug designations for our other product candidates.

We may rely on orphan drug exclusivity for product candidates that we may develop.

Orphan drug status confers seven years of marketing exclusivity in the United States under the Federal Food, Drug, and Cosmetic Act, and up to ten years of marketing exclusivity in Europe for a particular product in a specified indication, subject to certain conditions.

Orphan drug status confers seven years of marketing exclusivity in the United States under the FDCA, and up to ten years of marketing exclusivity in Europe for a particular product in a specified indication, subject to certain conditions.

However, we may be unable to obtain orphan drug designations for any of our product candidates that we are currently developing or may pursue.

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Further, the seven-year marketing exclusivity would not prevent competitors from obtaining approval of the same product candidate as ours for indications other than those in which we have been granted orphan drug designation, or for the use of other types of products in the same indications as our orphan product.

We may seek designation for our cell programming technology as a designated platform technology, but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process.

We may seek designation for our cell programming technology as designated platform technology.

If so designated, the FDA may expedite the development and review of any subsequent original BLA or NDA for a drug that uses or incorporates the platform technology.

Even if we believe our cell programming technology meets the criteria for such designation, the FDA may disagree and instead determine not to grant such designation.

In addition, the receipt of such designation for a platform technology does not ensure that a drug will be developed more quickly or lead to a faster FDA review or approval process and does not assure ultimate FDA approval of a drug.

Moreover, the FDA may revoke a designation if the FDA determines that a designated platform technology no longer meets the criteria for such designation.

We may be subject to certain regulations, including federal and state healthcare fraud and abuse laws, physician payment transparency laws, anti-bribery and anti-corruption laws and health information privacy and security laws.

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These laws may impact, among other things, our proposed sales, marketing and education programs.

Additionally, we may be subject to state and foreign equivalents of such healthcare laws and regulations, some of which may be broader in scope and may apply regardless of the payor, as well as patient privacy regulation by both the federal government and the

states in which we conduct our business.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge and may not comply under one or more of such laws, regulations, and guidance.

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If our operations, including our arrangements with physicians and other healthcare providers are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs (such as Medicare and Medicaid), and imprisonment, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our financial results.

See section entitled “

Business - Government Regulation –

Other Healthcare Laws and Compliance Requirements .”

The scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.

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Our business could be harmed if those third parties fail to perform satisfactorily.

We currently rely, and expect to continue to rely, on third parties to manufacture our product candidates, or certain components required for the manufacture of our product candidates, for use in conducting clinical trials and for commercial sale upon approval of any of our product candidates.

While we currently manufacture our iPSC-derived cell product candidates at our cGMP facilities located in San Diego, California, we also rely, on third parties to manufacture certain components required for the manufacture of our product candidates, and we may rely on third parties to conduct some or all aspects of manufacturing of our product candidates for use in conducting later stage clinical trials and for commercial sale upon approval of any of our product candidates.

Reliance on third parties for manufacture of our product candidates and components utilized in manufacturing our product candidates entails certain risks, including reliance on the third party for regulatory compliance and quality assurance, the possibility that the third-party manufacturer does not maintain the financial, personnel or other resources to meet its obligations, the possibility that the third party fails to manufacture such components, or our product candidates or any products we may eventually commercialize, in accordance with our specifications, misappropriation of our proprietary information, including our trade secrets and know-how, and the possibility of termination of our manufacturing relationship by the third party, based on its own business priorities, at a time that is costly or damaging to us.

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In addition, if we are required to change contract manufacturers for any reason, we will be required to verify that the new CMO maintains facilities and procedures that comply with quality standards and with all applicable regulations.

We will also need to verify, such as through a manufacturing comparability

study, that any new manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority.

We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority.

The delays associated with the verification of a new CMO could negatively affect our ability to develop product candidates or commercialize our products in a timely manner or within budget.

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Any disruption to or loss of supply from any of these suppliers could delay our clinical development and commercialization efforts, which would adversely affect our business, prospects, results of operations and financial condition.

We depend on strategic partnerships and collaboration arrangements, such as our collaboration arrangements with Janssen and Ono, for the development and commercialization of certain of our product candidates in certain indications or geographic territories, and if these arrangements are unsuccessful, this could result in delays and other obstacles in the development, manufacture or commercialization of any of our product candidates and materially harm our results of operations.

The termination of our collaboration with Janssen will have a material impact on our business and could result in disruptions to our operations that have a material adverse effect on our business and financial condition.

The termination of our Collaboration and Option Agreement with Janssen is expected to take effect on April 3, 2023.

As a result of this termination, we have discontinued development of two collaboration candidates that were expected to enter clinical development in 2023.

We have also prioritized our pipeline and substantially reduced our operating costs, including by implementing

a company-wide reduction in force, to fund our operations into the second half of 2025.

For more information on the termination of our collaboration with Janssen, see the section titled, " Business - Discontinued Product Candidates" .

For more information on the risks associated with our reduction in force, see "- Risks Related to Our Business and Industry" .

We depend on strategic partnerships and collaboration arrangements for the development and commercialization of certain of our product candidates in certain indications or geographic territories, and if these arrangements are unsuccessful, this could result in delays and other obstacles in the development, manufacture or commercialization of any of our product candidates and materially harm our results of operations.

Our strategy for fully developing and commercializing our product candidates is dependent upon maintaining our current arrangements and establishing new arrangements with research collaborators, corporate collaborators and other third parties.

We currently have corporate collaboration agreements with Janssen and Ono.

These corporate collaboration agreements provide for, among other things, research funding and significant future payments should certain development, regulatory and commercial milestones be achieved.

Under these arrangements, our corporate collaborators are typically responsible for:

We currently have a corporate collaboration agreement with Ono;

our collaboration with Janssen will terminate effective April 2023.

Our collaboration agreement with Ono provides for, among other things, research funding and significant future payments should certain development, regulatory and commercial milestones be achieved.

Under our arrangement with Ono and any future corporate arrangements that we may form, our corporate collaborators may be responsible for:

electing to advance product candidates through preclinical and into clinical development;

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commercializing any resulting products.

As a result, we may not be able to conduct these corporate collaborations in the manner or on the time schedule we currently contemplate, which may negatively impact our business operations.

This lack of control over the research funding for, and the development and commercialization of, certain of our product candidates could cause delays or other difficulties in the development and commercialization of any of our product candidates, which may prevent completion of research and development activities and intended regulatory filings in a timely fashion, if at all.

Because we expect to continue to rely on our current corporate collaborators and to enter into new collaborations in the future, the development and commercialization of any of our product candidates could be substantially delayed, and our ability to receive future funding could be substantially impaired if one or more of our current or future collaborators:

As a result, we may not be able to conduct such corporate collaborations in the manner or on the time schedule we currently contemplate, which may negatively impact our business operations.

Our lack of control over the research funding for, and the development and commercialization of, certain of our product candidates being developed under the Ono Agreement and any other product candidates that we may develop under a future arrangement could cause delays or other difficulties in the development and commercialization of any of our product candidates, which may prevent completion of research and development activities and intended regulatory filings in a timely fashion, if at all.

Because we expect to continue to rely on our current collaborator and to enter into new collaborations in the future, the development and commercialization of any of our product candidates could be substantially delayed, and our ability to receive future funding could be substantially impaired if one or more of our current or future collaborators:

shifts its priorities and resources away from our collaborations due to a change in business strategies, or a merger, acquisition, sale or downsizing of its company or business unit;

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encounters regulatory, resource or quality issues and be unable to meet demand requirements;

exercises its rights under the agreement to terminate the collaboration, or otherwise withdraws support for, or otherwise impairs development under the collaboration;

exercises its rights under the agreement to terminate the collaboration, as Janssen did in January 2023, or otherwise withdraws support for, or otherwise impairs development under the collaboration;

disagrees on the research, development or commercialization of a product candidate resulting in a delay in milestones, royalty payments or termination of such product candidate;

uses our proprietary information or intellectual property in such a way as to jeopardize our rights in such property.

In addition, the termination of the Janssen Agreement or the Ono Agreement or any future strategic partnership or collaboration arrangement that we enter into may prevent us from receiving any milestone, royalty payment, sharing of profits, and other benefits under such agreement.

Furthermore, disagreements with these parties could require or result in litigation or arbitration, which would be time-consuming and expensive.

In addition, the termination of the Ono Agreement or any future strategic partnership or collaboration arrangement that we enter into may prevent us from receiving any milestone, royalty payment, sharing of profits, and other benefits under such agreement.

Furthermore, disagreements with these parties could require or result in litigation or arbitration, which would be time-consuming and

Any of these events could have a material adverse effect on our ability to develop and commercialize any of our product candidates and may adversely impact our business, prospects, financial condition, and results of operations.

Cell-based therapies depend on the availability of reagents and specialized materials and equipment which in each case are required to be acceptable to the FDA and foreign regulatory agencies, and such reagents, materials, and equipment may not be available to us on acceptable terms or at all.

We rely on third-party suppliers for various components, materials and equipment required for the manufacture of our product candidates and do not have supply arrangements for certain of these components.

Manufacturing our product candidates requires many reagents and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial biologics production.

We rely on third-party suppliers for various components, materials and equipment required for the conduct of our clinical trials and the manufacture of our product candidates and do not have supply arrangements for certain of these components.

The development and manufacturing of our product candidates requires many reagents and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial biologics production.

To date, we and our CMOs have purchased equipment, materials and disposables used for the manufacture of our existing product candidates from third-party suppliers.

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Even if we are able to enter into such contracts, we may be limited to a sole third-party for the supply of certain required components and equipment.

As a result of the ongoing COVID-19 pandemic, the business and operations of our suppliers may be disrupted or delayed, and we in turn may experience disruptions or delays in our supply chain.

A delay or inability to continue to source product from any of these suppliers, which could be due to the impacts of the COVID-19 pandemic, regulatory actions or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands, or quality issues, could adversely affect our ability to manufacture our product candidates and our ability to conduct clinical trials, which could significantly harm our business.

In addition, the clinical development of our product candidates depends on the availability of certain materials and agents used in our clinical trials.

For example, certain of our clinical trial protocols require the use of cyclophosphamide and fludarabine, agents which are routinely used in oncology studies, and which we use in our clinical trial protocols to condition patients for treatment with our product candidates.

Further, we intend to develop certain of our product candidates as a combination therapy with other cancer therapies, such as monoclonal antibodies, requiring availability and use of these monoclonal antibodies in certain of our clinical trial protocols.

Recently, the FDA has reported a shortage of fludarabine, and some clinical trial sites may in the future institute enrollment holds or halt enrollment of patients if sufficient quantities of fludarabine cannot be secured.

We cannot predict the extent and duration of this shortage of fludarabine, although any failure or delays by us or by our clinical sites to obtain sufficient quantities of fludarabine, monoclonal antibodies required under our protocols, or other components and agents necessary for the conduct of our clinical trials, may delay our ability to enroll and treat patients in, or complete, our current or future clinical trials of our product candidates on time, if at all.

As a result of the ongoing COVID-19 pandemic or other public health crises, the business and operations of our suppliers and other third parties which produce agents and materials used in our clinical trials or manufacturing of our product candidates may be disrupted or delayed, and we in turn may experience disruptions or delays in our supply chain.

A delay or inability to continue to source product or materials from any of these suppliers or third parties, which could be due to the impacts of the COVID-19 pandemic or other pandemics, the ongoing conflict in Ukraine, regulatory actions or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands, or quality issues, could adversely affect our ability to manufacture our product candidates and our ability to conduct clinical trials, which could significantly harm our business.

If we are required to change suppliers, or modify the components, equipment, materials or disposables used for the manufacture of our product candidates, we may be required to change our manufacturing operations or clinical trial protocols or to provide additional data to regulatory authorities in order to use any alternative components, equipment, materials or disposables, any of which could set back, delay, or increase the costs required to complete our clinical development and commercialization of our product candidates.

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Our collaborators or strategic partners, however, may develop, either alone or with others, products in related fields that are competitive with the products or potential products that are the subject of these collaborations.

Competing products, either developed by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of our collaborator’s or partner’s support for our product candidates.

Competing products, either developed by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of our collaborators' or partners' support for our product candidates.

Some of our collaborators or strategic partners could also become our competitors in the future.

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patent offices.

our patents or the patents of our licensors is narrowed, or if a patent of ours or our licensors is judged invalid or unenforceable, in any such proceedings.

The scope, validity or enforceability of our patents or the patents of our licensors may be challenged in such proceedings in either the courts or patent offices in the United States and abroad, and our business may be harmed if the coverage of our patents or the patents of our licensors is narrowed, or if a patent of ours or our licensors is judged invalid or unenforceable, in any such proceedings.

We depend on our licensors to prosecute and maintain patents and patent applications that are material to our business.

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In addition, disputes may arise under our license agreements with third parties, which could prevent or impair our ability to maintain our current licensing arrangements on acceptable terms and to develop and commercialize the affected product candidates.

We may be involved in litigation or other proceedings relating to the enforcement or defense of patent and other intellectual property rights, which could cause us to divert our resources and could put our intellectual property at risk.

If we choose to go to court to stop another party from using the inventions claimed in any patents we obtain, that individual or company has the right to ask the court to rule that such patents are invalid or should not be enforced against that third party.

In addition to patent infringement lawsuits, we may be required to file interferences, oppositions, ex parte reexaminations, post-grant review, or inter partes review proceedings before the U.S.

We may be involved in litigation or other proceedings from time to time relating to the enforcement or defense of patent and other intellectual property rights, which could cause us to divert our resources and could put our intellectual property at risk.

To prevent infringement or unauthorized use of our intellectual property, we have in the past, and may in the future, need to file infringement claims.

For example, in May 2022, we filed a patent infringement lawsuit in the Southern District of California against Shoreline Biosciences, Inc.

Refer to Item 3.

Legal Proceedings in this Annual Report on Form 10-K for a more detailed description of this matter.

When we pursue litigation to stop another party from using the inventions claimed in any patents we own or control, that party has the right to ask the court to rule that such patents are invalid or should not be enforced against that third party.

In addition to patent infringement lawsuits, we may decide to file interferences, oppositions, ex parte reexaminations, post-grant review, or inter partes review proceedings before the U.S.

Patent and Trademark Office (the USPTO) and corresponding foreign patent offices.

Litigation and other proceedings relating to intellectual property are unpredictable and expensive, and would consume time and resources and divert the attention of managerial and scientific personnel even if we were successful in any such proceeding.

Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for research, development, and other activities.

Litigation and other proceedings relating to intellectual property are unpredictable and expensive, and may consume time and resources and divert the attention of managerial and scientific personnel.

Such litigations and proceedings could substantially increase our operating losses and reduce the resources available for research, development, and other activities.

We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings or may be required to divert such resources from our ongoing and planned research and development activities.

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There also is a risk that a court or patent office in such proceeding will decide that our patents or the patents of our licensors are not valid or are not enforceable, and that we do not have the right to stop the other party from using the inventions.

There is also the risk that, even if the validity of such patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to such patents.

If we were not successful in defending our intellectual property, our competitors could develop and market products based on our discoveries, which may reduce demand for our products.

Additionally, even if the validity of such patents is upheld, the court may refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to such patents.

If we are not successful in enforcing or defending our intellectual property, our competitors could develop and market products based on our discoveries and technologies, which may reduce the commercial viability of, and demand for, our product candidates and any future products.

We or our strategic partners may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing, or increase the costs of commercializing, our product candidates.

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and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates.

As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

We cannot be certain that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction.

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Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products.

We may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a third-party’s pending application will issue with claims of relevant scope.

We may incorrectly determine that our products are not covered by a third-party patent or intellectual property rights, or may incorrectly predict whether a third-party’s pending application will issue with claims of relevant scope.

Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates.

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For example, our programs may involve additional technologies or product candidates that may require the use of additional proprietary rights held by third parties.

Furthermore, other pharmaceutical or biotechnology companies and academic institutions may also have filed or are planning to file patent applications potentially relevant to our business.

Furthermore, other pharmaceutical or biotechnology companies and academic institutions may also have filed or are planning to file patent applications

potentially relevant to our business.

From time to time, in order to avoid infringing these third-party patents, we may be required to license technology from additional third parties to further develop or commercialize our product candidates.

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We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all, and as a result we may be unable to develop or commercialize the affected product candidates, which would harm our business.

We may need to cease use of the compositions or methods covered by such third-party intellectual property rights, and may need to seek to develop alternative approaches that do not infringe on such intellectual property rights which may entail additional costs and development delays, even if we were able to

develop such alternatives, which may not be feasible.

We may need to cease use of the compositions or methods covered by such third-party intellectual property rights, and may need to seek to develop alternative approaches or technology that do not infringe on such intellectual property rights which may entail additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible.

Even if we are able to obtain a license under such intellectual property rights, any such license may be non-exclusive, which may allow our competitors’

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if enforced, a court may not hold that our patents are valid, enforceable and infringed;

we may need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose;

we may from time to time initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose;

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property;

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Trade secrets, however, may be difficult to protect, and any disclosure, either intentional or unintentional, by our employees or third-party consultants and vendors that we engage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties (such as through a cybersecurity breach) of our trade secrets or proprietary information could enable competitors to duplicate or surpass our technological achievements, thus eroding our competitive position in our market.

Although we use reasonable efforts to protect our trade secrets, our employees, consultants, outside scientific advisors, contractors, and collaborators might intentionally or inadvertently disclose our trade secret information to competitors.

Although we use reasonable efforts to protect our trade secrets, our employees or former employees, consultants, outside scientific advisors, contractors, and collaborators might intentionally or inadvertently disclose our trade secret information to competitors.

In addition, competitors may otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

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Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States.

As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad.

As a result, we may encounter significant problems in

protecting and defending our intellectual property both in the United States and abroad.

If we are unable to prevent unauthorized material disclosure of our intellectual property to third parties, or misappropriation of our intellectual property by third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results, and financial condition.

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In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or

other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.

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We do not have experience marketing any product candidates and do not have a sales force or distribution capabilities, and if our products are approved we may be unable to commercialize them successfully.

We currently have no experience in marketing and selling therapeutic products.

We currently have no experience in marketing and selling therapeutic products, including obtaining and maintaining adequate pricing and reimbursements.

If any of our product candidates are approved for marketing, we intend to establish marketing and sales capabilities internally or we may selectively seek to enter into partnerships with other entities to utilize their marketing and distribution capabilities.

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the effectiveness of our marketing strategy;

obtaining and maintaining adequate pricing and reimbursement;

sufficient third-party insurance coverage or governmental reimbursement, which may depend on our ability to provide compelling evidence that a product meaningfully improves health outcomes to support such insurance coverage or reimbursement.

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Because our product candidates represent new approaches to the treatment of cancer, there is significant uncertainty as to the insurance coverage and reimbursement status of any product candidates for which we may receive regulatory approval.

In the United States, the principal decisions about reimbursement for new medicines are typically made by CMS, an agency within the U.S.

In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services (CMS), an agency within the U.S.

Department of Health and Human Services.

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and (v) neither experimental nor investigational.

See section entitled “

Business - Government Regulation –

Coverage and Reimbursement .”

For more information regarding the risks related to insurance coverage and reimbursement please see "Business - Government Regulation - Coverage and Reimbursement."

In addition, reimbursement agencies in foreign jurisdictions may be more conservative than those in the United States.

Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates.

Moreover, increasing efforts by

governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates.

Failure to obtain or maintain adequate reimbursement for any products for which we receive marketing approval will adversely affect our ability to achieve commercial success, and could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.

Additionally, net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

We cannot be sure that reimbursement will be available for any product candidate that we commercialize and, if reimbursement is available, the level of reimbursement.

In addition, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price, or ASP, and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Further, these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing vary widely from country to country.

Historically, products launched in the European Union do not follow price structures of the U.S.

and generally prices tend to be significantly lower.

If the market opportunities for our product candidates are smaller than we believe they are, our revenues may be adversely affected and our business may suffer.

If the market opportunities for our product candidates are restricted or smaller than we believe they are, our revenues may be adversely affected and our business may suffer.

Because the target patient populations of our product candidates are small, we must be able to successfully identify patients and capture a significant market share to achieve and maintain profitability.

We focus our research and development on product candidates for rare diseases, including cancer.

Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on estimates.

These estimates may prove to be incorrect, and new studies may change the estimated incidence or prevalence of these diseases.

The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.

Additionally, because our target patient populations are small, we will be required to capture a significant market share to achieve and maintain profitability.

We focus our research and development on product candidates for rare diseases, including cancer and autoimmune disorders.

The FDA often approves new therapies initially only for use in patients with relapsed or refractory advanced disease.

We expect to initially seek approval of our product candidates in this setting.

Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval in earlier lines of treatment.

There is no guarantee that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we will have to conduct additional clinical trials, including potentially comparative trials against approved therapies.

Certain of our product candidates also target similar patient populations as autologous cell therapy product candidates, including approved autologous CAR T products.

Our therapies may not be as safe and effective as approved autologous CAR T therapies and as a result, such product candidates may only be approved for patients who are ineligible for autologous CAR T therapy.

Our projections of the number of people who have or will have the diseases we may be targeting, as well as the subset of patients with these cancers in a position to receive second or later lines of therapy and who have the potential to benefit from treatment with our product candidates, may prove to be incorrect.

Further, new studies may change the estimated incidence or prevalence of these diseases.

The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected, or the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates, all of which would adversely affect our results of operations and our business.

Additionally, because our target patient populations are small, we may never achieve profitability without capturing a significant market share or obtaining regulatory approval for additional indications for our products.

We may be subject to healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.

Although we do not currently have any products on the market, if we obtain FDA approval for any of our product candidates and begins commercializing our products, we may be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal government and the states and foreign governments in which we conduct our business.

Healthcare providers, physicians, third-party payors, and others play a primary role in the recommendation and prescription of our product candidates, if approved.

Our future arrangements with third-party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute our product candidates, if we obtain marketing approval.

For more information regarding the risks related to such laws and regulations please see "Business - Government Regulation - Other Healthcare Laws and Compliance Requirements."

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.

Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Even if precautions are taken, it is possible that governmental authorities will conclude that our business practices could, despite efforts to comply, be subject to challenge under current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion of drugs from government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, reputational harm and the curtailment or restructuring of our operations.

If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect our business in an adverse way.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with

different compliance or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

Healthcare legislative or regulatory reform measures may have a negative impact on our business and results of operations.

In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

See section entitled “

Business - Government Regulation –

Healthcare Reform and Other Regulatory Changes .”

Additionally, there has been heightened governmental scrutiny in the United States of pharmaceutical and biologics pricing practices in light of the rising cost of prescription drugs and biologics.

Such scrutiny has resulted in various congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

On July 9, 2021, President Biden issued an executive order directing the FDA to, among other things, continue to clarify and improve the approval framework for generic drugs and biosimilars, including the standards for interchangeability of biological products, facilitate the development and approval of biosimilar and interchangeable products, clarify existing requirements and procedures related to the review and submission of BLAs, and identify and address any efforts to impede generic drug and biosimilar competition.

Payors, whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs.

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.

Additional changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, rules regarding prescription drug benefits under the health insurance exchanges and fraud and abuse and enforcement.

Continued implementation of the ACA and the passage of additional laws and regulations may result in the expansion of new programs such as Medicare payment for performance initiatives, and may impact existing government healthcare programs, such as by improving the physician quality reporting system and feedback program.

For each state that does not choose to expand its Medicaid program, there likely will be fewer insured patients overall, which could impact the sales, business and financial condition of manufacturers of branded prescription drugs.

Where patients receive insurance coverage under any of the new options made available through the ACA, the possibility exists that manufacturers may be required to pay Medicaid rebates on that resulting drug utilization, a decision that could impact manufacturer revenues.

federal government also has announced delays in the implementation of key provisions of the ACA.

The implications of these delays for our and our partners’

business and financial condition, if any, are not yet clear.

For more information regarding the risks related to such recently enacted and future legislation please see “Business –

Government Regulation –

Healthcare Reform and Other Regulatory Changes.”

We expect that additional U.S.

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federal government will pay for healthcare drugs and services, which could result in reduced demand for our drug candidates or additional pricing pressures.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain drug access and marketing cost disclosure and transparency measures,

and designed to encourage importation from other countries and bulk purchasing.

Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, financial condition, results of operations and prospects.

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Any adverse developments in the fields of cellular immunotherapy or genome edited therapy will negatively affect our ability to develop and commercialize our product candidates.

We face intense competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

The biotechnology and pharmaceutical industries, and the immune-oncology industry specifically, are intensely competitive and characterized by rapid and significant innovation.

We face competition from biotechnology and pharmaceutical companies, universities, and other research institutions, and many of our competitors have greater financial and other resources, such as larger research and development staff and more experienced marketing and manufacturing organizations and facilities.

In particular, there are several companies and institutions developing products that may be competitive to our iPSC-derived product candidates or candidates in our research and development pipeline, or may render our product candidates obsolete or noncompetitive.

Should one or more of these products be successful, the market for our products may be reduced or eliminated, and we may not achieve commercial success.

For additional information regarding our competition, see “Item 1.

Business—Competition”

in our Annual Report.

We face intense competition from other biotechnology and pharmaceutical companies that are commercializing, have developed or may develop product candidates for the treatment of the diseases that we may target, including companies developing novel therapies and platform technologies.

If these companies develop product candidates or platform technologies more rapidly than we do, if their commercialized products or product candidates are more effective or have fewer side effects, or if they compete in various other aspects of our business, our ability to develop and successfully commercialize product candidates and to execute on our business plans will be adversely affected.

The biotechnology and pharmaceutical industries are intensely competitive and characterized by rapid and significant innovation, particularly in the areas of immune-oncology and the development and commercialization of cell therapies.

We compete with a variety of large pharmaceutical companies, multinational biopharmaceutical companies, other biopharmaceutical companies and specialized biotechnology companies, as well as technology and/or therapeutics being developed at universities and other research

institutions.

Many of our competitors have greater financial and other resources, such as larger research and development staff, more experienced manufacturing organizations and facilities and greater sales and marketing organizations.

Third parties are commercializing, have developed, are developing or may develop product candidates, platform technologies and processes that compete with ours.

Competitive therapeutic treatments include those that have already been approved and accepted by the medical community, as well as novel treatments that are currently in preclinical or clinical development or may otherwise enter the market.

We believe that a significant number of product candidates are currently under development, including various cellular immunotherapies as well as multifunctional targeted antibodies, such as bi-specific and tri-specific T-cell engagers, which may become commercially available in the future for the treatment of indications, including a variety of cancers, for which we are developing or may try to develop our product candidates.

Should one or more of these competing product candidates or other competing product candidates of which we are not aware receive regulatory approval or otherwise achieve clinical or commercial success, our regulatory strategy could be impaired, our ability to obtain regulatory approval could be delayed or prevented, or the market for our products may be reduced or eliminated, thereby harming or preventing our commercial success.

Even if we successfully obtain approval for any product candidate, we will face competition based on many different factors, including the relative safety and efficacy of our product candidates, the actual or perceived quality of patient life while undergoing treatment with our product candidates, the ease with which our product candidates can be administered, the timing and scope of regulatory approvals for these product candidates, the availability and cost of manufacturing, marketing and sales capabilities, pricing, reimbursement coverage and patent positions, and the relative prioritization of our product candidates by physicians and healthcare providers among available therapies.

Competing products and product candidates could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more effectively than any products we may develop.

Competitive products and product candidates may also make any product we develop obsolete or noncompetitive before we recover the expense of developing and commercializing such product.

We could also face competition from other companies for collaboration partners, employees, advisors and service providers, which could negatively impact our ability to execute our business plans.

The loss of any member of our senior management team or our inability to attract and retain key personnel and consultants could adversely affect our business.

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If we are not able to retain and attract necessary personnel and consultants to perform the requisite operational roles and accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.

We expect to continue to expand our development and manufacturing operations, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We are experiencing rapid growth and as of December 31, 2021, we had 449 employees.

We expect continued growth in the number of our employees and the scope of our operations, particularly to continue our clinical and research operations, and to expand our regulatory, quality, and manufacturing operations.

This expected growth may place a strain on our administrative and operational

infrastructure, and managing this growth may impose significant added responsibilities on members of management and divert a substantial amount of attention from day-to-day activities.

To manage our anticipated future growth, we will continue to implement and improve our managerial, operational, and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel.

Due to our limited financial resources and the complexity in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.

Any inability to manage our expected growth and the expansion of our operations may result in loss of business opportunities, loss of employees and reduced productivity among remaining employees, weaknesses in our infrastructure, and operational mistakes, including in the operation and qualification of our GMP manufacturing operations and facility, and could delay the execution of our business plans or disrupt our operations.

The expansion of our operations may lead to significant costs and may divert our management and business development resources.

Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

The global COVID-19 pandemic could adversely impact various aspects of our business, results of operations and financial condition.

The COVID-19 pandemic has dramatically impacted the global health and economic environment, including millions of confirmed cases and deaths, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in government requirements, regulatory challenges, inflationary pressures and market volatility.

Although we have, to date, managed to continue most of our operations, we cannot predict the future course of events nor can we assure that this global pandemic, including its economic impact, will not have a material adverse impact on our business, results of operations and financial condition.

As a result of the ongoing COVID-19 pandemic, various aspects of our business operations have been, and could continue to be, disrupted.

The pandemic likely will continue to impact our workforce, including impacts on staffing levels (as a result of illnesses, quarantine, isolation and absenteeism), adjusted work locations and schedules and access to our facilities.

The pandemic may require us to continue to take extraordinary measures to protect the health and well-being of our employees.

For example, since the start of the pandemic we have implemented a range of health and safety measures, which have included, at various times, imposing onsite occupancy limits, restricting on-site staff to only those required to execute certain laboratory, manufacturing and related support activities, and requiring self-health testing prior to coming onsite.

The increase in working remotely could increase our cybersecurity risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations or delay necessary interactions with local and federal regulators, ethics committees, manufacturing sites, and clinical trial sites.

If our on-site staff conducting research and development, preclinical studies, and manufacturing activities are not able to access our laboratories or manufacturing space, whether due to quarantine/isolation orders, travel restrictions or other government restrictions, these core activities may be significantly limited or curtailed, possibly for an extended period of time, which could impair our ability to complete IND-enabling studies or select future development candidates.

Our business operations may be further disrupted if our manufacturing facility becomes subject to a viral contamination requiring a suspension of manufacturing activities, or if any of our employees, officers or directors, or their respective personal or business contacts, contract an illness related to COVID-19, including new variants of the virus, that renders them unable to perform their duties as a result.

The macroeconomic impacts of the pandemic, including a tightened labor market and evolving government requirements, including those related to vaccinations, will also likely continue to affect our company.

They may further affect our ability to hire, develop and retain our talented and diverse workforce, to maintain performance levels, and to maintain our corporate culture.

We expect to continue to incur additional costs as a result of the COVID-19 pandemic, including to protect the health and well-being of our employees and to respond to government requirements, which costs we may not be fully able to recover.

The pandemic has impacted and may continue to impact the company’s supply chains.

If our suppliers have increased challenges with their workforce (including as a result of illness, absenteeism, reactions to health and safety or government requirements), facility closures, timely access to necessary components, materials and other supplies at reasonable prices, access to capital, and access to fundamental support services (such as shipping and transportation), they may be unable to provide the agreed-upon goods and services in a timely, compliant and cost-effective manner.

We have incurred and may in the future incur additional costs and delays in our business, including as a result of higher prices, schedule delays or the need to identify and develop alternative suppliers.

In addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic.

As a result, we may face difficulties raising capital through equity or debt financings, or such financing transactions may be on unfavorable terms.

While the potential economic impact brought by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruptions and uncertainties in global financial markets, which may reduce our ability to access capital either at all or on favorable terms.

a recession, depression or other sustained adverse market event resulting from the spread of COVID-19, including new variants of the virus, could materially and adversely affect our business and the value of our common stock.

The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change.

For example, the emergence of the Delta and Omicron variants in 2021 significantly impacted rates of infection and prompted public health officials to reconsider certain health and safety measures that had been adopted to date, including vaccination requirements, guidance around quarantine and isolation periods, and mask wearing.

We do not yet know the full extent of potential delays or impacts on our business, our clinical and preclinical programs, our research, manufacturing, and regulatory activities, healthcare systems or the global economy as a whole.

However, these effects could have a material adverse impact on our operations, and we will continue to monitor the situation closely.

Our recent reduction in force undertaken to better align our workforce with the needs of our business and product pipeline prioritization may not achieve our intended outcome.

In January 2023, we announced a reduction in force affecting approximately 60% of our workforce to better align our workforce with the needs of our business and focus our capital resources on select product candidates, helping to provide that we are appropriately resourced into the second half of 2025.

This reduction in force may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the reduction in force.

In addition, while certain positions have been eliminated, certain functions necessary to our operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees.

The reduction in workforce could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives.

If we are unable to realize the anticipated benefits from the reduction in force, or if we experience significant adverse consequences from the reduction in force, our business, financial condition, and results of operations may be materially adversely affected.

Our business could be adversely affected by the effects of health pandemics or epidemics, including the COVID-19 pandemic, which could also cause significant disruption in the operations of CMOs, CROs, or other third parties upon whom we rely.

Our business has been, and could be, adversely affected by the effects of health pandemics or epidemics, which could also cause significant disruption in the operations of clinical trial sites, CMOs, CROs and other third parties upon whom we rely.

For example, as

a result of the ongoing COVID-19 pandemic, we have experienced disruptions to our supply chain, ongoing and future clinical trials and development of our product candidates.

In response to the COVID-19 pandemic, we implemented a remote work model for all employees except certain key essential members involved in business-critical activities.

While most of our office-based employees have returned to the office under flexible work guidelines, a remote work model may need to be reinstated at some point in the future as the effects of the COVID-19 pandemic or other public health emergencies require.

The effects of a remote and flexible work model may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, and could also increase our cybersecurity risk.

We may also face challenges or disruptions upon a return back to the workplace, including re-integration challenges by our employees and distractions to management related to such transition.

Additionally, in response to COVID-19 or other future pandemics or epidemics, quarantines, stay at home orders, travel restrictions and other state and local restrictions on the conduct of business operations could occur, and any such restrictions could impact personnel at CMOs in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

Further, global public health concerns and pandemics, such as the COVID-19 pandemic, which caused a broad impact globally, may materially affect our financial condition and prospects.

The ultimate impact of the COVID-19 pandemic or a similar health pandemic or epidemic is highly uncertain, although any negative effects could have a material adverse impact on our operations, or the operations of third parties on whom we rely.

If we engage in an acquisition, reorganization or business combination, we will incur a variety of risks that could adversely affect our business operations or our stockholders.

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During the course of treatment, patients may suffer adverse events, including death, for a variety of reasons.

Such events, whether or not resulting from our product candidates, could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively affect or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts.

Such events, whether or not resulting from our product candidates, could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively

affect or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts.

Even in a circumstance in which we do not believe that an adverse event is related to our products, the investigation into the circumstance may be time-consuming or inconclusive.

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We and our partners and vendors may be subject to various federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address privacy and data security).

In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (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 collaborators, including the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and privacy and security requirements under HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH).

In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (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 collaborators, including HIPAA and privacy and security requirements under HIPAA, as amended by HITECH.

Depending on the facts and circumstances, we could be subject to civil, criminal, and administrative penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.

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Our collection of personal information generally (e.g., of employees currently and/or of patients in the future) may subject us to state data privacy laws governing the processing of personal information and requiring notification of affected individuals and state regulators in the event of a breach of such personal information.

These state laws include the California Consumer Privacy Act (CCPA) and its related regulations, and (once effective) the California Privacy Rights Act (CPRA) amending the CCPA, which establish additional data privacy rights for residents of the State of California, with corresponding obligations on businesses related to transparency, deletion rights, and opt-out of the selling of personal information, and grants a private right of action for individuals in the event of certain security breaches.

Similar laws relating to data privacy and security have been proposed in other states and at the federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging, require us to expend significant resources to come into compliance, and restrict our ability to process certain personal information.

These state laws include the CCPA and its related regulations, and the CPRA amending the CCPA, which establish additional data privacy rights for residents of the State of California, with corresponding obligations on businesses related to transparency, deletion rights, and opt-out of the selling of personal information, and grants a private right of action for individuals in the event of certain security breaches.

Similar laws relating to data

privacy and security have been proposed in other states and at the federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging, require us to expend significant resources to come into compliance, and restrict our ability to process certain personal information.

Certain state laws may be more stringent or broader in scope than the CPRA, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts.

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Our internal computer systems, or those used by our third-party research institution collaborators, CROs or other contractors or consultants, may fail or suffer security breaches.

Despite the implementation of security measures, our internal computer systems and those of our future CROs and other contractors, vendors, and consultants may be vulnerable to damage from cyber risks, including attempts to gain unauthorized access to and to harm sensitive information and networks, insider threats, and ransomware .

Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors, vendors, and consultants may be vulnerable to damage from cyber risks, including attempts to gain unauthorized access to and to harm sensitive information and networks, insider threats, and ransomware.

These vulnerabilities may be heightened as a result of remote work policies implemented by us and our third-party contractors in response to the COVID-19 pandemic.

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Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Furthermore, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’

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continued progress in our research and development programs, including preclinical studies, process development, manufacturing and other research activities that may be necessary in order for an IND application to go into effect for a prospective clinical development candidate, as well as potential future clinical trials of any additional product candidates we may identify for development;

the extent to which we are required to pay milestone or other payments under our existing in-license agreements and any in-license agreements that we may enter into in the future, and the timing of such payments, including payments owed to Memorial Sloan-Kettering in connection with the stock price appreciation milestones;

the extent to which we are required to pay milestone or other payments under our existing in-license agreements and any in-license agreements that we may enter into in the future, and the timing of such payments, including payments owed to MSK in connection with the stock price appreciation milestones;

our ability and the ability of our investigators to initiate and conduct, and the progress, results, size, timing and costs of, clinical trials of our product candidates that will be necessary to support any application for regulatory approval;

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the cost of manufacturing, distribution, and commercialization activities and arrangements, including the manufacturing of our product candidates, establishment of effective protocols for the supply and transport of our product candidates, and the establishment of a sales and marketing organization either internally or in partnership with a third party;

our ability to establish and maintain strategic arrangements and alliances with third-party collaborators including our existing collaborations with Janssen Biotech, Inc., Ono Pharmaceutical Co., Ltd., the University of Minnesota, and Memorial Sloan Kettering, to advance the research, development and commercialization of therapeutic products.

our ability to establish and maintain strategic arrangements and alliances with third-party collaborators including our existing collaborations with Ono, the University of Minnesota, and MSK, to advance the research, development and commercialization of therapeutic products.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

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The sale of additional equity or convertible securities would dilute all of our stockholders.

The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or

license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

The incurrence of indebtedness would result in increased fixed payment and interest obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to

acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

We could also be required to seek funds through arrangements with collaborative partners or otherwise at a different stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

In addition, while the overall impact of the COVID-19 pandemic on the global economy is currently unknown and difficult to predict, the pandemic has caused significant disruptions and created uncertainties in the global financial markets, and the economic impacts of the pandemic could materially and adversely affect our ability to raise capital through equity or debt financings in the future.

In addition, while the overall impacts of the COVID-19 pandemic and the ongoing conflict in Ukraine on the global economy remain unknown and difficult to predict, these events caused significant disruptions and created uncertainties in the global financial markets, and the economic impacts of these and other similar global events could materially and adversely affect our ability to raise capital through equity or debt financings in the future.

If we cannot raise additional capital or obtain adequate funds, we may be required to curtail significantly our research and clinical programs or may not be able to continue our research or clinical development of our product candidates.

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We have not yet obtained regulatory approval for any of our product candidates or generated any revenues from therapeutic product sales.

Since inception, we have incurred significant net losses in each year and, as of December 31, 2021, we had an accumulated deficit of $769.1 million.

Since inception, we have incurred significant net losses in each year and, as of December 31, 2022, we had an accumulated deficit of $1.05 billion.

We expect to continue to incur losses for the foreseeable future as we continue to fund our ongoing and planned clinical trials of our product candidates, and our other ongoing and planned research and development activities.

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developments related to the FDA or to regulations applicable to cellular immunotherapies generally or our product candidates in particular including, but not limited to, regulatory pathways and clinical trial requirements for approvals;

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments, such as our recent announcement of the termination of our collaboration with Janssen;

developments related to proprietary rights including patents, litigation matters and our ability to obtain patent protection for our technologies;

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fluctuations in our operating results (including changes related to stock-based compensation from performance-based awards);

general economic and market conditions.

These and other market and industry factors, including the effects of the COVID-19 pandemic on the global economy, may cause the market price and demand for our common stock to fluctuate substantially regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.

acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from the conflicts in Ukraine;

general economic and market conditions, including inflationary pressures and stock market volatility.

These and other market and industry factors, including the effects of the COVID-19 pandemic, the ongoing conflict in Ukraine, and global economic conditions, may cause the market price and demand for our common stock to fluctuate substantially regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.

Changes in our stock price may also trigger financial obligations under our licensing arrangements.

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rights, the market price of our common stock and on our operations and may require us to relinquish rights to some of our technologies, intellectual property or product candidates, issue additional equity or debt securities, or otherwise agree to terms unfavorable to us.

Further, in November 2021 we filed a Form S-3 pursuant to which we may issue up to $350.0 million in common stock in sales deemed to be an “at the market offering”

Further, in November 2021 we filed a registration statement on Form S-3 pursuant to which we may issue up to $350.0 million in common stock in sales deemed to be an “at the market offering”

as defined by the Securities Act of 1933, as amended (the Securities Act) and, so long as we qualify as a “well-known seasoned issuer”

as defined in Rule 405 of the Securities Act, an unlimited amount of shares of our common stock, preferred stock, debt securities, warrants and/or units.

Any sale or issuance of securities pursuant to a registration statement or otherwise may result in dilution to our stockholders and may cause the market price of our stock to decline, and new investors could gain rights superior to our existing stockholders.

In addition, any debt financings that we may enter into in the future may impose restrictive covenants or otherwise adversely affect the holdings or the rights of our stockholders, and any additional equity financings will be dilutive to our stockholders.

Any sale or issuance

of securities pursuant to a registration statement or otherwise may result in dilution to our stockholders and may cause the market price of our stock to decline, and new investors could gain rights superior to our existing stockholders.

In addition, any debt financings that we may enter into in the future may subject us to unfavorable repayment terms, including increased interest rates, impose restrictive covenants or otherwise adversely affect the holdings or the rights of our stockholders, and any additional equity financings will be dilutive to our stockholders.

Furthermore, additional equity or debt financing might not be available to us on reasonable terms, if at all.

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the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

or combine with us.

Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or discouraging a potential acquisition proposal or tender offer could limit the opportunity for our stockholders to achieve liquidity for their shares of our common stock, even if the acquisition proposal or tender offer is at a premium over the then-current market price for our common stock, and could also affect the price that some investors are willing to pay for our common stock.

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General Risk Factors

We could be subject to securities class action litigation.

We are and could be further subject to securities class action litigation and other types of stockholder litigation.

The stock market in general, and the Nasdaq Global Market and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.

This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results, or financial condition.

Securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.

For example, in January 2023, a purported stockholder filed a lawsuit against us and certain of our officers captioned Hadian v.

Fate Therapeutics, Inc.

District Court for the Southern District of California (see "Item 3.

Legal Proceedings" )We could also be subject to other types of litigation, which may involve claims of breach of fiduciary duties by our directors or officers for misuse/mismanagement of company assets/resources or conflicts of interest.

Any such litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results, or financial condition.

Additionally, the dramatic increase in the cost of directors’

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liability insurance may cause us to opt for lower overall policy limits or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs.

Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations.

From time to time, we may become involved in disputes, claims and lawsuits relating to our business operations.

For example, we have in the past and we may, from time to time, face or initiate claims related to intellectual property matters, employment matters, or commercial disputes.

Any dispute, claim or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim or lawsuit, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.

Litigation related to these disputes may be costly and time-consuming and could materially and adversely impact our financial position and results of operations if resolved against us.

In addition, the uncertainty associated with litigation could lead to increased volatility in our stock price.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our ability to invest in and expand our business and meet our financial obligations, to attract and retain third-party contractors and collaboration partners and to raise additional capital depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic and political conditions and financial, business, regulatory and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States, political influences and inflationary pressures, and fluctuations in costs, particularly due to changes in labor costs and material costs.

Our ability to invest in and expand our business and meet our financial obligations, to attract and retain third-party contractors and collaboration partners and to raise additional capital depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic and political conditions and financial, business, regulatory and other factors beyond our control, such as the rate of unemployment, rate of inflation, the number of uninsured persons in the United States, political influences and inflationary pressures, and fluctuations in costs, particularly due to changes in labor costs and material costs.

For example, an overall decrease in or loss of insurance coverage among individuals in the United States due to high levels of unemployment (particularly as a result of the COVID-19 pandemic), underemployment or the repeal of certain provisions of the ACA may decrease the demand for healthcare services and pharmaceuticals.

Additionally, the availability of healthcare services and resources is currently constrained due to the COVID-19 pandemic.

If fewer patients are seeking medical care because they do not have insurance coverage or are unable

to obtain medical care for their conditions due to resource constraints on the healthcare system, we may experience difficulties in any eventual commercialization of our product candidates and our business, results of operations, financial condition and cash flows could be adversely affected.

If fewer patients are seeking medical care because they do not have insurance coverage or are unable to obtain medical care for their conditions due to resource constraints on the healthcare system, we may experience difficulties in any eventual commercialization of our product candidates and our business, results of operations, financial condition and cash flows could be adversely affected.

In addition, if we are unable to manage cost fluctuations and inflationary pressures, including prices of materials, costs of labor, it may adversely impact our operating performance, expenses and results.

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In the past, global financial crises have caused extreme volatility and disruptions in the capital and credit markets.

A severe or prolonged economic downturn, including as a result of the COVID-19 pandemic, could result in a variety of risks to our business, including a reduced ability to raise additional capital when needed on acceptable terms, if at all, and weakened demand for our product candidates.

A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the COVID-19 pandemic, current economic climate and financial market conditions could adversely impact our business.

A severe or prolonged economic downturn, including as a result of the COVID-19 pandemic, the ongoing conflict in Ukraine, interest rate fluctuations, rising inflations or recession, could result in a variety of risks to our business, including a reduced ability to raise additional capital when needed on acceptable terms, if at all, and weakened demand for our product candidates.

A weak or declining economy, and rising inflation could also strain our suppliers, possibly resulting in supply disruption.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the COVID-19 pandemic, the ongoing conflict in Ukraine, current economic climate and financial market conditions could adversely impact our business.

Volatility in capital markets and lower market prices for our securities may affect our ability to access new capital through sales of shares of our common stock or issuance of indebtedness, which may harm our liquidity, limit our ability to grow our business, pursue acquisitions or improve our operating infrastructure and restrict our ability to compete in our markets.

Our operations consume substantial amounts of cash, and we intend to continue to make significant investments to support our business growth, respond to business challenges or opportunities, develop new product candidates, retain or expand our current levels of personnel, improve our existing products, enhance our operating infrastructure, and potentially acquire complementary businesses and technologies.

Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to:

finance unanticipated working capital requirements;

continue the research and development or our existing product candidates and develop or enhance our technological infrastructure;

pursue acquisitions, in-licenses or other strategic relationships;

respond to competitive pressures.

Accordingly, we may need to pursue equity or debt financings to meet our capital needs.

With uncertainty in the capital markets and other factors, such financing may not be available on terms favorable to us or at all.

If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.

financing secured by us in the future could involve additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, we could face significant limitations on our ability to invest in our operations and otherwise suffer harm to our business.

Recent increases in interest rates could affect our ability to obtain working capital through borrowings such as bank credit lines and public or private sales of debt securities, which may result in lower liquidity, reduced working capital and other adverse impacts on our business.

To meet our liquidity needs, we have previously relied, in part, on borrowed funds, and may do so again in the future.

Continued increases in interest rates will increase the cost of new indebtedness and could materially and adversely affect our results of operations, financial condition, liquidity and cash flows.

Geopolitical risks associated with the ongoing military conflict between Russia and Ukraine could have an adverse impact on our business, financial condition and results of operations, including our clinical trials.

In February 2022, Russia commenced a military invasion of Ukraine, and sustained conflict and disruption in the region is likely.

Although the conflict has had little direct impact on our business to date, the uncertainty and ripple effects created by this conflict may have unknown indirect impacts.

For instance, the ongoing conflict has resulted in significant volatility in certain equity, debt and currency markets, material increases in certain commodity prices, and economic uncertainty.

It is not possible to predict the broader or longer-term consequences of this conflict, although a prolonged conflict may result in adverse effects on microeconomic conditions including inflation;

disruptions to our global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion;

adverse changes in international trade policies and relations;

disruptions in global supply chains;

our exposure to foreign currency fluctuations;

and constraints, volatility, or disruption in the capital markets, any of which could negatively impact our business, financial performance and financial condition.

Sanctions imposed by the U.S., Canada, EU, and other countries in response to the conflict between Russia and Ukraine and the potential response to such sanctions may also have an adverse impact our business, including our clinical trials, the financial markets and the global economy.

We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and other countries may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and third parties with whom we conduct business.

We or the third parties upon whom we depend may be adversely affected by earthquakes, fires, or other natural disasters, including epidemics and pandemics such as COVID-19, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

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If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our manufacturing facilities or those of our CMOs, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

For example, as a result of the COVID-19 pandemic, we may experience delays or disruptions in our clinical development activities, our research and development activities, and in the supply of drug product for our clinical trials.

Any continued or subsequent measures taken by governmental authorities or businesses to contain the spread of COVID-19, or the perception that such measures may be required in the future should another outbreak occur, could adversely affect our business, operations, financial condition, prospects or results of operations by restricting our ability to conduct our clinical trials and research and development activities, and limiting our and our third-party manufacturers’

ability to manufacture product and forcing temporary closure of our facilities and facilities that we rely upon.

The disaster recovery and business continuity plans we have in place currently are limited and may not prove adequate for protecting and continuing our business in the event that our business is disrupted as a result of the COVID-19 pandemic or other serious disaster or similar event.

We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.

If we fail to maintain an effective system of disclosure controls and procedures and internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we are required to comply with the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act), and the related rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules.

Company responsibilities required by the Sarbanes-Oxley Act include establishing and maintaining corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures.

Effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent financial fraud.

We cannot assure that we will not have material weaknesses or significant deficiencies in our internal control over financial reporting.

If we are unable to successfully remediate any material weakness or significant deficiency in our internal control over financial reporting, or identify any material weaknesses or significant deficiencies that may exist, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, and our stock price may decline materially as a result.

If we fail to comply with environmental, health, and safety laws and regulations, including regulations governing the handling, storage or disposal of hazardous materials, we could become subject to fines or penalties or incur costs that could harm our business.

We are subject to numerous environmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials and wastes.

Our operations involve the use of hazardous materials, including chemicals, biological materials and infectious agents.

Our operations also may produce hazardous waste products.

We generally contract with third parties for the disposal of these materials and wastes.

We will not be able to eliminate the risk of contamination or injury from these materials.

In the event of contamination or injury resulting from any use by us

of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources.

We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

Although we maintain workers’

compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.

We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health, and safety laws and regulations.

These current or future laws and regulations may impair our research, development, or production efforts.

Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Changes in tax law may adversely affect us or our investors.

The rules dealing with U.S.

federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, or IRS, and the U.S.

Treasury Department.

Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock.

In recent years, many such changes have been made and changes are likely to continue to occur in the future.

For example, the Tax Cuts and Jobs Act, or the TCJA, was enacted in 2017 and made significant changes to corporate taxation, including the reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, the limitation of the tax deduction for net interest expense to 30% of adjusted taxable income (except for certain small businesses), the limitation of the deduction for net operating losses to 80% of current year taxable income and the elimination of net operating loss carrybacks (though any such net operating losses may be carried forward indefinitely), and the modification or repeal of many business deductions and credits.

Additionally, the Coronavirus Aid, Relief, and Economic Security Act, which, among other things, suspended the 80% limitation on the deduction for net operating losses in taxable years beginning before January 1, 2021, permits a 5-year carryback of net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, and generally caps the limitation on the deduction for net interest expense at 50% of adjusted taxable income for taxable years beginning in 2019 and 2020.

It cannot be predicted whether, when, in what form, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’

tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.

Our business could be negatively impacted by corporate citizenship and environmental, social and corporate governance (ESG) matters and/or our reporting of such matters.

There is an increasing focus from certain investors, consumers, and other stakeholders concerning corporate citizenship and sustainability matters.

We could be perceived as not acting responsibly in connection with these matters.

Our business could be negatively impacted by such matters.

Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.

Unresolve d Staff Comments

Not Applicable.

As of December 31, 2021, we occupied approximately 200,000 square feet of office, laboratory and GMP manufacturing space in San Diego, California under a non-cancelable operating lease through May 2036.

In addition, we have additional operating leases for office and laboratory space in San Diego, California, San Francisco, California, and New York, New York.

We believe that these facilities are adequate for our current needs.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business