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Item 1. Business

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

Our development of programmed cellular immunotherapies is based on a simple notion:

we believe that better cell therapies start with better cells.

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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:

and we direct the fate of the clonal master iPSC line to produce 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 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 standard-of-care therapies, and can have significant patient reach.

Utilizing our proprietary iPSC product platform, we are advancing off-the-shelf, multiplexed-engineered natural killer (NK) cell and T-cell product candidates which are selectively designed, incorporate novel synthetic controls of cell function, and are intended to deliver multiple therapeutic mechanisms to patients for the treatment of cancer and autoimmune disease.

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

CAR Target(s)

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Development Stage

CAR NK Cell Programs

Multiple Myeloma

B-cell Lymphoma

Autoimmune Disorders

CAR T-cell Programs

Oncology - Hematologic Malignancies

B-cell Malignancies

B-cell Lymphoma

Chronic Lymphocytic Leukemia

Other CAR-targeted Programs

Multiple Myeloma

Oncology - Solid Tumors

Not disclosed

Autoimmune Diseases

Systemic Lupus Erythematosus

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 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.

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

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 malignancies 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 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.

Rather than rely on the use of donor cells, or a patient’s own cells, we seek to use clonal master iPSC lines to manufacture, develop and commercialize CAR NK cell and CAR T-cell product candidates which are selectively designed, incorporate novel synthetic controls of cell function, can be mass produced at significant scale in a cost-effective manner, are well-defined and uniform in composition, and can be stored in inventory and delivered off-the-shelf to maximize patient reach.

We believe our therapeutic approach is uniquely designed to overcome numerous limitations associated with the production of cell therapies using patient- or donor-sourced cells.

Our proprietary iPSC product platform is supported by an intellectual property portfolio of over 500 issued patents and 500 pending patent applications.

Our mission is to bring off-the-shelf, iPSC-derived cellular immunotherapies with disease-transforming potential to patients with cancer and autoimmune diseases.

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.

• Advance our industry-leading iPSC product platform.

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

The groundbreaking discovery that fully-differentiated human cells can be induced to a pluripotent state through the expression of certain genes was recognized with the 2012 Nobel Prize in Science and Medicine.

We believe iPSCs can be used to overcome key limitations inherent in many of the cell therapy product candidates undergoing development today, including the requirement to source, isolate, engineer and expand cells from an individual patient or healthy donor with each batch of production.

We believe iPSCs can be used to overcome key limitations inherent to the manufacture, development and commercialization of today’s cell therapies, including the requirement to source, isolate, engineer and expand cells from an individual patient or healthy donor with each batch of production.

These batch-to-batch manufacturing requirements are logistically complex and expensive, and can result in variable cell product identity, purity and potency as well as manufacturing failures.

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 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:

We have established a proprietary iPSC product platform and have amassed significant internal expertise in the production of off-the-shelf, multiplexed-engineered, iPSC-derived NK and T-cell product candidates for therapeutic use.

Our proprietary iPSC product platform includes:

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

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.

differentiating clonal master cell iPSC lines to produce NK cells and T-cells at scale;

cryopreserving and storing iPSC-derived NK cells and T-cells under conditions that support multi-year stability;

applying our regulatory experience and quality expertise to enable clinical investigation of off-the-shelf, multiplexed-engineered, iPSC-derived cellular immunotherapy candidates.

We have established and operate our own fully-integrated Good Manufacturing Practice (GMP) facility for scaled manufacture of iPSC-derived NK cells and T-cells, which is intended to support all phases of clinical development as well as initial commercialization.

• Apply our proprietary iPSC product platform to develop and commercialize off-the-shelf, iPSC-derived, cell-based cancer immunotherapies.

While autologous CAR T-cell therapies have emerged as highly effective treatments for patients with relapsed / refractory hematologic malignancies, adoption of FDA-approved 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 outpatient infusion centers and community hospitals.

In addition, autologous CAR T-cell therapies for the treatment of solid tumors have been hampered by tumor-associated antigen heterogeneity, inefficient CAR T-cell trafficking to the tumor, and immunosuppression inherent to the tumor microenvironment, and there are no FDA-approved CAR T-cell therapies for the treatment of solid tumors.

We believe there is significant opportunity for the development of iPSC-derived, cell-based cancer immunotherapies which have the potential to be selectively designed to incorporate multiple therapeutic mechanisms of action, stored in inventory for off-the-shelf availability, and combined and administered with standard-of-care, outpatient treatment regimens to increase patient reach.

We are currently advancing multiple off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell and CAR T-cell cancer immunotherapy candidates in first-in-human clinical studies.

In conducting these studies of our product candidates, we seek to treat patients with cancer who are relapsed or refractory to FDA-approved therapies where the unmet need is high.

We also seek to mount a multi-antigen attack against cancer by combining our product candidates with standard-of-care therapies, such as monoclonal antibody therapy.

To this end, we have incorporated a proprietary high-affinity, non-cleavable CD16 (hnCD16) Fc receptor into several of our CAR-targeted cell product candidates, which receptor has two unique features designed to augment antibody-dependent cellular

cytotoxicity (ADCC):

a high-affinity homozygous 158V variant to promote binding to the Fc domain of IgG antibodies, and a modification to block its cleavage and down-regulation upon receptor activation.

As a result, certain of our CAR NK cell and CAR T-cell product candidates target more than one antigen expressed on tumor cells in combination with monoclonal antibody therapy, which may lead to deeper and more durable responses in cancer patients.

Additionally, in the setting of solid tumors, we also seek to overcome certain of the key limitations that have stifled anti-tumor activity of autologous CAR T-cell therapy by incorporating novel synthetic receptors into our cell product candidates including, for example, a novel synthetic CXCR2 receptor to promote effector cell trafficking to the tumor site and a novel synthetic TGFβ receptor to resist immunosuppressive signals in the tumor microenvironment.

• Expand the potential therapeutic reach of our off-the-shelf, iPSC-derived CAR NK cell and CAR T-cell product candidates to patients with severe, life-threatening autoimmune diseases.

Autoimmune diseases affect organs throughout the body and are often characterized by the presence of auto-antibodies, which are produced by aberrant B cells and can attack healthy cells and tissues.

The chronic and debilitating nature of autoimmune diseases leads to both high medical costs and reduced quality of life, creating a significant burden for patients, their families and the health care system.

Over 80 diseases are classified as autoimmune diseases affecting up to 8% of the U.S.

Despite the availability of many approved drugs, there remains substantial unmet clinical need, as existing therapies are rarely considered curative and the majority of patients do not adequately respond to these therapies.

In a ground-breaking academic clinical study published in Nature Medicine in September 2022, an investigational autologous CD19-targeted CAR T-cell therapy was administered to five patients with systemic lupus erythematosus (SLE).

Rapid B-cell depletion and elimination of auto-antibody production was observed following infusion of therapy, and all patients achieved clinical remission with significant improvement in Systemic Lupus Erythematosus Disease Activity Index 2000 (SLEDAI-2K) score.

Given that the targeting and rapid depletion of B cells are common mechanisms of action for the successful treatment of B-cell malignancies and certain autoimmune diseases, we believe that our off-the-shelf CAR NK cell and CAR T-cell product candidates may be uniquely suited to address a broad range of autoimmune diseases through the potential reset of the CD19+ B-cell lineage.

We are currently conducting study start-up of a multi-center, Phase 1 clinical trial of our FT819 CAR T-cell program for the treatment of patients with moderate to severe SLE, including those with active lupus nephritis or with active extrarenal lupus.

In addition, we are currently assessing the potential to expand our FT522 and FT576 CAR NK programs beyond oncology into autoimmunity, including each program’s potential to treat certain autoimmune diseases by more broadly targeting autoantibody-producing lineages.

• Discover and incorporate novel synthetic controls of cell function into our off-the-shelf, iPSC-derived CAR NK cell and CAR T-cell product candidates that significantly expand patient reach and enhance therapeutic differentiation.

One of the most significant barriers that limit patient reach and disease application of cellular immunotherapy is the requirement for patients to receive and endure intense conditioning chemotherapy.

Conditioning chemotherapy often results in severe blood cell deficiencies and related toxicities, thereby requiring administration in large hospitals and treatment centers with intensive care units, and prevents effective combination with standard-of-care treatment regimens widely used in the community setting.

We are exploring the integration of novel synthetic controls into our iPSC product platform that may enable our off-the-shelf, iPSC-derived cell product candidates to be administered without intense conditioning chemotherapy and in the community setting on an outpatient basis.

We believe that the use of a more tolerable treatment paradigm for cellular immunotherapies may significantly expand patient reach and enhance therapeutic differentiation.

FT522 is our first iPSC-derived cell product candidate to incorporate our novel alloimmune defense receptor (ADR) technology, which is designed to reduce or eliminate the need for administration of intense conditioning chemotherapy to patients receiving cellular immunotherapy.

FT522 incorporates a synthetic ADR receptor 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.

The ADR receptor is designed to (a) selectively recognize and destroy alloreactive 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 cell 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.

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

We believe we have the opportunity to establish clinical proof-of-concept for our ADR technology early in dose escalation of our ongoing multi-center, Phase 1 study for FT522 in B-cell lymphoma.

In addition, we are preclinically assessing the potential to expand our FT522 program into autoimmune diseases.

• 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 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.

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

We believe we are well positioned to form partnerships with third parties seeking to develop and commercialize iPSC-derived cell therapies for the treatment of human diseases.

For example, we are collaborating with Ono to research and develop off-the-shelf,

multiplexed-engineered, iPSC-derived CAR NK cell and CAR T-cell product candidates for the treatment of solid tumors.

In addition, we formed Senescea Therapeutics, Inc., a majority-owned subsidiary of the Company, with Memorial Sloan Kettering Cancer Center (MSKCC) 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.

NK cells have the unique ability to selectively identify and destroy abnormal cells through multiple mechanisms while leaving normal healthy cells unharmed.

These cytotoxic mechanisms include:

direct innate killing by binding to stress ligands expressed by abnormal cells and releasing toxic granules;

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 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.

TCRs are generated by DNA rearrangement and positively selected for their capacity to engage host major histocompatibility complex (MHC) molecules.

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 target cells.

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 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.

In data published by MDC scientists, anti-BCMA CAR T cells equipped with its unique humanized extracellular antigen-binding domains show higher affinity and greater specificity than other anti-BCMA antigen-binding domains.

These differentiated properties conveyed both greater selectivity in recognizing target B cells and more robust killing of target B cells in vitro , including malignant B cells with low expression levels of BCMA.

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.

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 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 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.

Utilizing our proprietary iPSC product platform, we are developing off-the-shelf, multiplexed-engineered CAR NK cell and CAR T-cell product candidates for the treatment of cancer and autoimmune diseases.

Our iPSC-derived cell product candidates are selectively designed to incorporate novel synthetic controls of cell function, can be mass produced at significant scale in a cost-effective manner, are well-defined and uniform in composition, and can be stored in inventory and delivered off-the-shelf to maximize patient reach.

We believe our therapeutic approach is uniquely designed to overcome numerous limitations associated with the production of cell therapies using patient- or donor-sourced cells.

CAR T-cell Program

FT819 is our first iPSC-derived CAR T-cell product candidate and, to our knowledge, is the first-ever iPSC-derived CAR T-cell product candidate to undergo clinical investigation in the world.

FT819 was developed under an ongoing sponsored research collaboration with MSKCC that is being led by Michel Sadelain, M.D., Ph.D., Director of the Center for Cell Engineering and the Stephen and Barbara Friedman Chair at MSKCC.

Sadelain was awarded the 2024 Breakthrough Prize in Life Sciences for trailblazing the development of CAR T-cell immunotherapy.

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 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.

Sadelain demonstrating that directing a CD19-specific CAR to the T-cell receptor alpha chain (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.

25, 82–88, 2019).

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.

and the complete disruption of TCR expression for the prevention of graft-versus-host disease (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 mitigate risk of GvHD.

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

3 unchanged sentences

• 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.

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.

6, 1284–1297, 2022).

We are currently evaluating FT819 in an ongoing, multi-center, Phase 1 clinical trial to assess its safety, pharmacokinetics, clinical activity, and to determine the recommended Phase 2 dose, in patients with relapsed / refractory B-cell malignancies, including B-cell lymphoma (BCL).

In addition, we have expanded our clinical investigation into autoimmune diseases.

In July 2023, the FDA allowed our Investigational New Drug (IND) application for the conduct of a multi-center, Phase 1 clinical trial of FT819 to assess its safety and clinical activity, and to determine the recommended Phase 2 dose, in patients with moderate to severe SLE, including those with active lupus nephritis or active extrarenal lupus.

B-cell Malignancies

At the 2022 American Society of Hematology (ASH) Annual Meeting, we presented interim clinical data for 8 patients with aggressive large B-cell lymphoma (LBCL) treated with a single dose of FT819 in our ongoing Phase 1 study (see table below).

Patients were heavily pre-treated having received a median of 4.5 prior lines of therapy (range 3-7), including 6 of 8 patients (75%) having previously received autologous CD19-targeted CAR T-cell therapy.

Each of the 8 patients received standard conditioning chemotherapy consisting of cyclophosphamide (Cy) at 500 mg/m 2 and fludarabine (Flu) at 30 mg/m 2 for three days followed by a single dose of FT819 ranging from 90 million cells to 360 million cells.

As of a September 8, 2022 data cutoff date:

• Tolerability.

The FT819 treatment regimen was well tolerated.

No dose-limiting toxicities (DLTs), and no Grade 3 or greater FT819-related treatment-emergent adverse events (TEAEs) or serious TEAEs, were observed.

With respect to TEAEs of special interest, there were no observations of immune effector-cell associated neurotoxicity syndrome (ICANS) or GvHD, and one patient experienced Grade 2 cytokine release syndrome (CRS).

There were no study discontinuations or deaths due to TEAEs.

One of two patients naïve to CAR T-cell therapy achieved an objective response at Day 30, which was a complete response (CR) in a patient with diffuse large B-cell lymphoma (DLBCL) previously treated with 5 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 CR in a patient with DLBCL previously treated with 7 prior lines of therapy who did not respond to autologous CD19-targeted CAR T-cell therapy.

Aggressive Large B-cell Lymphoma 1,2,3

1 unchanged sentence

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

2 unchanged sentences

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)

2 Includes diffuse large B-cell lymphoma and high-grade B-cell lymphoma

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;

We amended the FT819 clinical protocol to allow for the use of bendamustine at 90 mg/m 2 for two days as an alternative to Cy / Flu conditioning chemotherapy.

Dose escalation in the multi-center, Phase 1 clinical trial of FT819 is currently ongoing at a single dose of FT819 at 1.08 billion cells for BCL.

We currently do not plan to assess FT819 at a dose level above 1.08 billion cells, and any further clinical development of FT819 in patients with relapsed / refractory B-cell malignancies will be determined upon completion of the dose escalation at this current dose level.

Autoimmune Diseases

Autoimmune diseases affect organs throughout the body and are often characterized by the presence of auto-antibodies, which are produced by aberrant B cells and can attack healthy cells and tissues.

In a ground-breaking academic clinical study published in Nature Medicine in September 2022, an investigational autologous CD19-targeted CAR T-cell therapy was administered to five patients with SLE.

Naïve B-cell reconstitution occurred after an average time of 110 days of CAR T-cell infusion.

Given that the targeting and rapid depletion of B cells is a common mechanism of action for the successful treatment of B-cell malignancies and certain autoimmune diseases, we are expanding our clinical investigation of FT819 to autoimmune diseases.

We are currently conducting study start-up of a multi-center, Phase 1 clinical trial of FT819 for the treatment of patients with moderate to severe SLE, including those with active lupus nephritis or with active extrarenal lupus.

We intend to treat patients with standard conditioning chemotherapy followed by a single dose of FT819, with dose escalation initiating at 360 million cells.

Primary endpoints include the incidence of adverse events and the frequency of dose-limiting toxicities, and secondary endpoints include characterizing pharmacokinetics and pharmacodynamics, assessing disease-related biomarkers, and evaluating efficacy.

We believe FT819 has potential applicability across multiple autoimmune diseases.

CAR T-cell Program

FT825 is our first iPSC-derived CAR T-cell product candidate for the treatment of solid tumors being developed in collaboration with Ono Pharmaceutical.

The use of autologous CAR T-cell therapies for the treatment of solid tumors has been hampered by tumor-associated antigen heterogeneity, inefficient CAR T-cell trafficking to the tumor, immunosuppression inherent to the tumor microenvironment, and differentiating tumor-associated antigen expression between tumor and normal tissue.

To date there are no FDA-approved CAR T-cell therapies for the treatment of solid tumors.

FT825 is specifically designed to overcome these challenges in treating solid tumors, and incorporates seven novel synthetic controls of cell function:

a 1XX CAR construct inserted directly into the TRAC locus that is armed with a novel human epidermal growth factor receptor 2 (HER2) binding domain designed to preferentially target tumor cells;

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

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;

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.

and the complete disruption of TCR expression for the prevention of GvHD.

In preclinical studies of FT825 presented at the 2023 Society for Immunotherapy of Cancer (SITC) Annual Meeting, the product candidate’s HER2 binding domain (H2CasMab-2) exhibited robust, dose-dependent cytolytic activity in vitro against both HER2-high and HER2-low cell lines from multiple tumor types, and showed a highly selective and differentiated targeting profile in vitro against HER2-expressing cancer cell lines from healthy tissue in comparison to other HER2-directed agents such as trastuzumab (see figure below).

FT825 also exhibited enhanced trafficking and resistance to TGFβ-induced suppression in vitro (see figure below).

In addition to its CAR-mediated anti-tumor activity against HER2, co-activation of the product candidate’s hnCD16 Fc receptor through combination with monoclonal antibody therapy showed enhanced anti-tumor activity.

In January 2024, and alongside our collaborator Ono Pharmaceutical (see “Our Partnership with Ono Pharmaceutical”), we announced the initiation of enrollment of a multi-center, Phase 1 clinical trial of FT825 for the treatment of advanced solid tumors.

The Phase 1 study is designed to evaluate the safety and activity of a single dose of FT825 as monotherapy or in combination with monoclonal antibody therapy.

The dose escalation and dose expansion portions of the Phase 1 study will evaluate safety, tolerability, and pharmacokinetics as well as anti-tumor activity by overall response rate, duration of response and disease control rate.

CAR NK Cell Program

FT522 is our first iPSC-derived CAR NK cell product candidate that incorporates our novel Alloimmune Defense Receptor (ADR) technology, which is designed to reduce or eliminate the need for administration of intense conditioning chemotherapy to

patients receiving cellular immunotherapy.

While approved autologous CAR T-cell therapies have demonstrated compelling efficacy in treating patients with relapsed / refractory hematologic malignancies, several key challenges limit its adoption and patient reach including the need to co-administer conditioning chemotherapy to patients.

Conditioning chemotherapy induces toxicities, necessitates administration in large hospitals and treatment centers with intensive care units, and prevents effective combination with standard-of-care treatment regimens widely used in the community setting.

Its use has also been associated with treatment-emergent secondary malignancies, such as myelodysplastic syndrome.

In addition, the FDA recently announced an investigation into reports of secondary T-cell malignancies among patients receiving autologous CAR T-cell therapies and, as part of such investigation, the FDA is requiring that all commercially-approved BCMA-directed or CD19-directed autologous CAR T-cell therapies include a black box warning describing the risk of T-cell malignancies on each product’s label.

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 in combination with a monoclonal antibody;

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 synthetic ADR targeting 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 monoclonal antibody therapy, these features of FT522 are designed to reduce or eliminate the need for administration of intense conditioning chemotherapy to patients, enable dual-antigen targeting of antigens expressed on B cells, and extend the functional persistence of FT522.

In preclinical studies, we showed that ADR-armed CAR NK cells selectively targeted and eliminated alloreactive immune cells in an in vitro co-culture assay with allogeneic peripheral blood mononuclear cells (see figure below);

targeted and eliminated activated T-regulatory cells, overcoming a major suppressive mechanism associated with poor anti-tumor activity;

and were potentiated through 4-1BB engagement, promoting NK cell expansion and persistence.

In addition, in a disseminated Nalm6 leukemia model comprised of alloreactive T-cells and CD19+ 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 kill tumor cells while resisting rejection by alloreactive T-cells.

These preclinical data suggest that FT522 has the potential to robustly deplete CD19+ B cells, evade host immune cell rejection, and drive clinical responses without administration of intense conditioning chemotherapy to patients.

B-cell Lymphoma

We are currently conducting a multi-center, Phase 1 clinical trial of FT522 to assess its safety, pharmacokinetics, and clinical activity in patients with relapsed / refractory BCL.

The Phase 1 study includes two regimens:

Regimen A, or the “conditioning” arm, which consists of 3 days of standard conditioning chemotherapy;

1 dose of rituximab;

and 3 doses of FT522;

and Regimen B, or the “no conditioning” arm, which consists of 1 dose of rituximab and 3 doses of FT522 without conditioning chemotherapy.

Enrollment into Regimen A is ongoing at the first dose level of 300 million cells per dose and, upon clearance of dose-limiting toxicities at this first dose level, we intend to initiate enrollment into Regimen B at the first dose level of 300 million cells per dose.

Each regimen may proceed with dose escalation independently.

We believe we have the opportunity to establish clinical proof-of-concept for our ADR technology, and for our FT522 program without conditioning chemotherapy, early in dose escalation.

Autoimmune Diseases

We are also assessing the potential to expand our FT522 program into autoimmune diseases.

While therapeutic strategies designed to deplete B cells, including treatment with CD20-targeted monoclonal antibody therapy, have been shown effective for

induction and maintenance of remission in certain patients with autoimmune diseases, aberrant production of auto-antibodies by 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 auto-antibodies despite B-cell targeted intervention strategies.

We believe our FT522 program in combination with CD38-targeted monoclonal antibody therapy may be uniquely suited to address a broad range of autoimmune diseases through the potential reset of both CD19+ B-cell and CD38+ plasma-cell autoantibody-producing lineages.

CAR NK Cell Program

FT576 is our iPSC-derived CAR NK cell product candidate that is designed to target B-cell maturation antigen (BCMA) expressed on 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.

Several drugs that target plasma cells, including CD38-targeted monoclonal antibody therapy, have been approved for the treatment of multiple myeloma, a deadly form of blood cancer that is characterized by uncontrolled growth of abnormal plasma cells in the bone marrow.

In addition, autologous CAR T-cell therapies have shown significant efficacy in multiple myeloma, and two autologous CAR T-cell therapies targeting BCMA have been approved by the FDA.

Despite these advancements, multiple myeloma is rarely cured, creating a high unmet need for patients with relapsed / refractory disease.

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.

In data published by MDC scientists, BCMA-targeted CAR T-cells armed with its unique humanized extracellular antigen-binding domains showed higher affinity and greater specificity than other BCMA-targeted antigen-binding domains.

These differentiated properties conveyed both greater selectivity in recognizing plasma cells and more robust killing of plasma cells in vitro , including malignant plasma cells with low expression levels of BCMA.

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

FT576 incorporates four novel synthetic controls of cell function:

a proprietary CAR that targets BCMA;

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 monoclonal antibody therapy, these features of FT576 are designed to avoid NK cell fratricide, enable dual-antigen targeting of BCMA and CD38 antigens expressed on plasma cells, and extend functional persistence.

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

Multiple Myeloma

We are currently evaluating FT576 in an ongoing, multi-center, Phase 1 clinical trial to assess its safety, pharmacokinetics, and clinical activity in 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 monoclonal antibody therapy (Regimen B).

At the 2022 ASH Annual Meeting, we presented interim clinical data for 9 patients with relapsed / refractory multiple myeloma treated with a single dose of FT576, including six patients in Regimen A and three patients in Regimen B treated in our ongoing Phase 1 study.

Patients were heavily pre-treated having received a median of 5 prior lines of therapy (range 3-10), including 6 of 9 patients (67%) that were refractory to last therapy.

Each of the 9 patients received standard conditioning chemotherapy consisting of cyclophosphamide (Cy) at 300 mg/m 2 and fludarabine (Flu) at 30 mg/m 2 for three days followed by a single dose of FT576 ranging from 100 million cells to 300 million cells.

As of an October 7, 2022 data cutoff date:

• Tolerability.

No dose-limiting toxicities (DLTs) were observed, and both regimens were well tolerated.

Two patients (22%) experienced Grade 3 or greater FT576-related treatment-emergent adverse events (TEAEs), all of which resolved.

There were no FT576-related serious TEAEs.

With respect to TEAEs of special interest, there were no events of any grade of cytokine release syndrome (CRS), immune effector cell-associated neurotoxicity syndrome (ICANS), or GvHD.

There were no study discontinuations or deaths due to 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 5 prior lines of therapy, was triple-refractory to an immunomodulatory drug, a proteasome inhibitor, and anti-CD38 monoclonal antibody therapy, and was refractory to last therapy (pomalidomide, daratumumab and dexamethasone), achieved a very good partial response (VGPR) with the other two patients showing stable disease.

• Regimen B Activity.

Three patients were treated with a single dose of FT576 in combination with a CD38-targeted monoclonal antibody 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 amended the FT576 study protocol to allow for the use of bendamustine at 90 mg/m 2 for two days as an alternative to Cy / Flu conditioning chemotherapy.

Dose escalation in the multi-center, Phase 1 clinical trial of FT576 is currently ongoing, with three-dose cohorts being assessed in both Regimens A and B at up to 2.5 billion cells per dose.

We currently do not plan to assess FT576 at a dose level above 2.5 billion cells per dose, and any further clinical development of FT576 in patients with relapsed / refractory multiple myeloma will be determined upon completion of the dose escalation at this current dose level.

Autoimmune Diseases

We are also assessing the potential to expand our FT576 program into autoimmunity.

Auto-antibody-secreting plasma cells are increasingly recognized as essential drivers of pathophysiology in certain autoimmune diseases, such as myasthenia gravis.

Existing myasthenia gravis therapies do not adequately or specifically target long-lived plasma cells that reside in dedicated survival niches in the bone marrow or inflamed tissue.

These long-lived plasma cells are unresponsive to immunosuppressive and B-cell therapies.

We believe our FT576 program, which has the potential to target BCMA expressed on the surface of long-lived plasma cells, may represent an innovative therapeutic strategy for the treatment of certain autoimmune diseases.

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.

During 2022, Janssen Biotech, Inc.

(Janssen) exercised a commercial option for two collaboration candidates:

an iPSC-derived CAR 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 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 T-cell programs for the treatment of solid tumors.

On January 3, 2023, we received notice of termination from 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 cell and CAR T-cell product candidates for the treatment of cancer.

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

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.

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

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

We incurred charges of $12.9 million for severance and other employee termination-related costs during the year ended December 31, 2023.

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).

(Ono) entered into in September 2018 and amended in June 2022 (the Ono Agreement), we are conducting research and preclinical development of iPSC-derived CAR NK cell and CAR T-cell product candidates for the treatment of solid tumors.

In November 2022, we announced that Ono had exercised its preclinical option to FT825 / ONO-8250, an off-the-shelf, 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 received an option exercise fee of $12.5 million from

In January 2024, we announced the initiation of enrollment of a Phase 1 clinical trial of FT825 / ONO-8250 for the treatment of advanced solid tumors.

The companies are also currently conducting preclinical development of a second 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 original 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:

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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.

Under the terms of the Ono Agreement (as amended by the 2022 Ono Amendment), 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.

On November 30, 2023, we entered into an amendment with Ono to the Ono Agreement (the 2023 Ono Amendment).

Under the 2023 Ono Amendment, aggregate estimated research and development fees have been increased by approximately $1.4 million, for a total estimated $30.7 million in aggregate research and development fees over the course of the joint development plan.

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.

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.

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We cannot be sure that patents will be granted with respect to any of our owned or licensed pending patent applications or with respect to any patent applications we may own or license in the future, nor can we be sure that any of our existing patents or any patents we may own or license in the future will be useful in protecting our technology.

Please see “Risk Factors—Risks Related to Our Intellectual Property”

for additional information on the risks associated with our intellectual property strategy and portfolio.

Please see “Risk Factors—Risks Related to Our Intellectual Property” for additional information on the risks associated with our intellectual property strategy and portfolio.

Intellectual Property Relating to iPSC Technology and Platform

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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.

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patents that may issue from patent applications pending in this portfolio are expected to have statutory expiration dates between 2035 and 2038.

We also have exclusively licensed from The Memorial Sloan-Kettering Cancer Center (MSK) intellectual property covering the production and composition of iPSC-derived T cells and their use in cellular immunotherapy, and have a license from MSK to two patent families covering novel CAR constructs as well as off-the-shelf CAR T cells, including the use of CRISPR and other innovative technologies for their production.

We also have exclusively licensed from MSKCC intellectual property covering the production and composition of iPSC-derived T-cells and their use in cellular immunotherapy, and have a license from MSKCC to two patent families covering novel CAR constructs as well as off-the-shelf CAR T-cells, including the use of CRISPR and other innovative technologies for their production.

Collectively, this portfolio covers compositions of CAR constructs, compositions of T-cells and NK cells derived from pluripotent cells which are engineered with CARs, methods of engineering pluripotent cell lines, methods of deriving CAR T-cells from CAR expressing pluripotent stem cells, and methods of using CRISPR for producing off-the-shelf T-cell immunotherapies.

patents that may issue from patent applications pending in this portfolio are expected to have statutory expiration dates between 2034 and 2038.

In addition, we have licensed exclusive rights from the Max Delbruck Center for Molecular Medicine (MDC) to intellectual property directed to novel humanized antibody fragments, antigen-binding domains and CAR constructs that uniquely target and specifically bind B-cell Maturation Antigen (BCMA).

In addition, we have licensed exclusive rights from the Max Delbruck Center for Molecular Medicine to intellectual property directed to novel humanized antibody fragments, antigen-binding domains and CAR constructs that uniquely target and specifically bind BCMA.

Under the license agreement, we are granted an exclusive license for use in allogeneic engineered pluripotent stem cells.

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and internationally in this portfolio are expected to have statutory expiration dates between 2033 and 2037.

We have also licensed exclusive rights from the Dana-Farber Cancer Institute to certain intellectual property covering novel antibody fragments that uniquely and specifically bind the alpha-3 domain of MICA/B.

We have also licensed exclusive rights from the Dana-Farber Cancer Institute (DFCI) to certain intellectual property covering novel antibody fragments that uniquely and specifically bind the alpha-3 domain of MICA/B.

We are granted exclusive worldwide rights for use in iPSC-derived cellular therapeutics for the treatment of human disease under the license agreement.

Any patents that may issue from patent applications pending in this portfolio are expected to have statutory expiration dates in 2038.

Additionally, we have licensed exclusive rights from BCM to intellectual property covering the composition and use of a novel ADR that selectively targets activated T-cells to protect engineered allogeneic cell products expressing the ADR from elimination in the host immune system.

Under the license agreement with BCM, we are granted exclusive worldwide rights to use ADR in the field of iPSC-derived cell products, including T-cells and NK cells derived from iPSCs engineered with ADRs.

As of February 15, 2024, the portfolio includes one issued patent and 14 pending applications broadly applicable to making and using ADR-expressing effector cells, including T-cells and NK cells differentiated from iPSCs engineered with ADRs.

We expect U.S.

patents related to this technology to have statutory expiration dates starting in 2039.

Intellectual Property Relating to CRISPR Engineering

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This portfolio includes over 150 issued patents or pending patent applications relating to methods of programming the biological properties and therapeutic function of cells ex vivo , and the resulting therapeutic compositions of hematopoietic and immune cells.

Patents and patent applications in this portfolio include claims covering (i) therapeutic compositions of hematopoietic and immune cells, including T cells, NK cells, and CD34 + cells, that have been programmed ex vivo with one or more agents to optimize their therapeutic function for application in oncology and immune disorders and (ii) methods of programming cells including by the activation or inhibition of therapeutically-relevant genes and cell-surface proteins, such as those involved in the homing, proliferation and survival of hematopoietic cells or those involved in the persistence, proliferation and reactivity of immune cells.

Patents and patent applications in this portfolio include claims covering (i) therapeutic compositions of hematopoietic and immune cells, including T-cells, NK cells, and CD34 + cells, that

have been programmed ex vivo with one or more agents to optimize their therapeutic function for application in oncology and immune diseases and (ii) methods of programming cells including by the activation or inhibition of therapeutically-relevant genes and cell-surface proteins, such as those involved in the homing, proliferation and survival of hematopoietic cells or those involved in the persistence, proliferation and reactivity of immune cells.

patents within this portfolio that have issued or may yet issue from pending patent applications will have statutory expiration dates between 2032 and 2044.

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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.

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.

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.

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In particular, we are required to conduct activities toward specific development milestones of licensed products on an annual basis.

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

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

The University of Minnesota 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.

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We may terminate the agreement for any reason upon prior written notice to the University of Minnesota and payment of all amounts due to the University of Minnesota through the date of termination.

Memorial Sloan Kettering Cancer Center

In May 2018, we entered into an amended and restated license agreement with Memorial Sloan Kettering Cancer Center.

The agreement amends and restates the exclusive license agreement we entered into with Memorial Sloan Kettering Cancer Center in August 2016, under which we obtained rights relating to compositions and methods covering iPSC-derived cellular immunotherapy, including T cells and NK cells derived from iPSCs engineered with CARs.

Memorial Sloan-Kettering Cancer Center (MSKCC)

In May 2018, we entered into an amended and restated license agreement with MSKCC.

The agreement amends and restates the exclusive license agreement we entered into with MSKCC in August 2016, under which we obtained rights relating to compositions and methods covering iPSC-derived cellular immunotherapy, including T-cells and NK cells derived from iPSCs engineered with CARs.

Pursuant to the amended and restated license agreement, we continue to hold exclusive rights to the foregoing patents and patent applications, and obtained additional licenses to certain patents and patent applications relating to compositions and methods covering novel CAR constructs as well as off-the-shelf CAR T-cells, including the use of CRISPR and other innovative technologies for their production.

Under our amended and restated agreement with Memorial Sloan Kettering Cancer Center, we have royalty-bearing worldwide licenses to make, use and sell licensed products in all fields for human therapeutic uses.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.”

For those patent families where our rights are exclusive, Memorial Sloan Kettering Cancer Center retains the right to practice the patent rights for research, teaching and non-clinical research purposes, and to license other academic and non-profit research institutes to practice the patent rights for research, teaching and non-clinical research purposes.

Under our amended and restated agreement with MSKCC, we have royalty-bearing worldwide licenses to make, use and sell licensed products in all fields for human therapeutic uses.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.” For those patent families where our rights are exclusive, MSKCC retains the right to practice the patent rights for research, teaching and non-clinical research purposes, and to license other academic and non-profit research institutes to practice the patent rights for research, teaching and non-clinical research purposes.

Our licenses are also subject to pre-existing rights of the U.S.

Under the terms of the amended and restated agreement, we are required to pay Memorial Sloan Kettering Cancer Center an annual license maintenance fee during the term of the agreement, and are also required to make payments of up to $12.5 million for development, regulatory and commercial milestones achieved with respect to each licensed products.

Under the terms of the amended and restated agreement, we are required to pay MSKCC an annual license maintenance fee during the term of the agreement, and are also required to make payments of up to $12.5 million for development, regulatory and commercial milestones achieved with respect to each licensed products.

If commercial sales of a licensed product commence, we will also be required to pay royalties at percentage rates up to the high-single digits on net sales of licensed products.

Our royalty payments are subject to reduction for any third-party payments required to be made until a minimum royalty percentage has been reached.

In the event that we sublicense the patent rights, Memorial Sloan Kettering Cancer Center is also entitled to receive a percentage of the sublicensing income received by us.

Additionally, in the event a licensed product achieves a specified clinical milestone, Memorial Sloan Kettering Cancer Center is then eligible to receive additional milestone payments, where the amount of such payments owed to Memorial Sloan Kettering Cancer Center are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

Under the amended and restated agreement with Memorial Sloan Kettering Cancer Center, we are obligated to use commercially reasonable efforts to develop and make commercially available licensed products.

event that we sublicense the patent rights, MSKCC is also entitled to receive a percentage of the sublicensing income received by us.

Additionally, in the event a licensed product achieves a specified clinical milestone, MSKCC is then eligible to receive additional milestone payments, where the amount of such payments owed to MSKCC are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

Under the amended and restated agreement with MSKCC, we are obligated to use commercially reasonable efforts to develop and make commercially available licensed products.

In particular, we are required to conduct activities and commit a minimum amount of funding toward specific development milestones of licensed products on an annual basis.

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.

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

MSKCC 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.

We may terminate the agreement for any reason upon prior written notice to MSKCC.

Max Delbruck Center

In December 2018, we entered into a license agreement with Max Delbruck Center for Molecular Medicine (MDC) for rights relating to novel humanized antibody fragments, antigen-binding domains and CAR constructs that uniquely target and specifically bind B-cell Maturation Antigen (BCMA).

In December 2018, we entered into a license agreement with Max Delbruck Center for Molecular Medicine for rights relating to novel humanized antibody fragments, antigen-binding domains and CAR constructs that uniquely target and specifically bind BCMA.

Under our license agreement with MDC, we acquired an exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell products covered by the licensed patent rights, and to perform licensed processes, in each case, using cells derived from allogeneic engineered stem cells.

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Under our agreement with the Whitehead Institute, we acquired an exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell licensed products in all fields for commercial purposes, excluding the sale or distribution of reagents for basic research use.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.”

The Whitehead Institute retains the right to practice the patent rights for research, teaching and educational purposes, including in corporate-sponsored research under limited circumstances and in some cases only after obtaining our consent.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.” The Whitehead Institute retains the right to practice the patent rights for research, teaching and educational purposes, including in corporate-sponsored research under limited circumstances and in some cases only after obtaining our consent.

The Whitehead Institute 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.

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Under our agreements with TSRI (the TSRI License Agreements), we acquired exclusive royalty-bearing, sublicensable, worldwide licenses to make, use and sell products covered by the licensed patent rights, and to perform licensed processes, in each case, in all fields.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.”

TSRI retains a non-exclusive right to practice and use the patent rights for non-commercial educational and research purposes, and to license other academic and non-profit research institutions to practice the patent rights for internal basic research and education purposes.

The licensed patent rights are described in more detail above under “Intellectual Property Relating to iPSC Technology.” TSRI retains a non-exclusive right to practice and use the patent rights for non-commercial educational and research purposes, and to license other academic and non-profit research institutions to practice the patent rights for internal basic research and education purposes.

Under certain of our TSRI License Agreements, other third parties maintain a right to practice the patent rights for their internal use only.

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TSRI has the right to terminate any TSRI License Agreement if we fail to perform our obligations under the applicable agreement, including failure to meet any development benchmark or to use commercially reasonable efforts and due diligence to develop a licensed product, or if we otherwise breach the agreement, challenge the licensed patent rights, are convicted of a felony involving the development or commercialization of a licensed product or process, or become insolvent.

We may terminate any of our TSRI License Agreements by providing ninety days’

written notice to TSRI.

We may terminate any of our TSRI License Agreements by providing ninety days’ written notice to TSRI.

Each TSRI License Agreement otherwise terminates upon the termination of royalty obligations under such agreement.

Dana-Farber Cancer Institute

In April 2020, we entered into a license agreement with the Dana-Farber Cancer Institute (DFCI) for rights relating to novel antibody fragments that uniquely and specifically bind the alpha-3 domain of MICA/B.

Dana-Farber Cancer Institute (DFCI)

In April 2020, we entered into a license agreement with the DFCI for rights relating to novel antibody fragments that uniquely and specifically bind the alpha-3 domain of MICA/B.

Under our license agreement with DFCI, we acquired an exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell products covered by the licensed patent rights in the field of iPSC-derived cellular therapeutics for the treatment of human disease, and a non-exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell products covered by the licensed patent rights in the field of cellular therapeutics for the treatment of human disease.

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We also are required to make development, commercialization and sales milestones payments to DFCI of up to $25 million per licensed product.

If commercial sales of a licensed product commence, we will pay DFCI royalties at percentage rates ranging in the low single digits on net sales of licensed products in countries where such product is protected by licensed patent rights.

If commercial sales of a licensed product commence, we will pay DFCI royalties at percentage rates

ranging in the low single digits on net sales of licensed products in countries where such product is protected by licensed patent rights.

Our obligation to pay royalties continues on a country-by-country basis until the expiration of all licensed patent rights covering licensed products in such country, and our royalty payments will be reduced by other payments we are required to make to third parties in certain circumstances until a minimum royalty percentage has been reached.

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We may terminate the agreement for any reason in its entirety or on a product-by-product or country-by-country basis upon prior written notice to DFCI and payment of all amounts due to DFCI through the date of termination.

Baylor College of Medicine (BCM)

In April 2020, we entered into a license agreement with BCM for rights pertaining to a novel ADR that selectively targets activated T-cells to protect engineered allogeneic effector cells expressing the ADR from elimination in the host immune system.

Under our agreement, we obtained an exclusive royalty-bearing, sublicensable, worldwide license to make, use and sell products covered by the licensed patent rights in the field of iPSC-derived cell products, including T-cells and NK cells derived from iPSCs engineered with ADRs.

BCM retains the right to practice and license to other academic, government and research institutes for non-commercial research purposes.

Our licenses are also subject to pre-existing rights of the U.S.

Under the terms of the license agreement, we are obligated to make a minimum annual royalty payment to BCM starting in 2024.

We are also required to make development and regulatory milestone payments to BCM for the first three (3) distinct licensed products, where the milestone payments total up to $7 million for the first licensed product, and are reduced by fifty percent (50%) for each of the second and third licensed products.

If commercial sales of a licensed product commence, we will pay BCM a low single-digit percentage royalty on net sales of licensed products in countries where the product is protected by licensed patent rights.

Our obligation to pay royalties continues on a country-by-country basis until the expiration of all licensed patent rights in that country, with possible reductions for payments that we are required to make to third parties.

In the event that we sublicense the patent rights, BCM is entitled to receive a percentage of our sublicensing income.

Under the license agreement, we are obligated to use reasonable efforts to develop and introduce licensed products to the commercial market including by meeting certain diligence timelines.

These timelines are extendable by us for one year upon a one-time payment, subject to BCM’s discretion for further extensions.

The license agreement remains in effect until the expiration of the last to expire licensed patent.

BCM has the right to terminate the agreement if we materially default in the performance of any terms and fail to correct the default within a specified grace period after BCM’s written notice.

Termination by BCM is also possible if we are subject to insolvency or similar proceedings, assignment of all or substantially all of our assets for the benefit of creditors, or the appointment of a trustee, in each case that are not dismissed, stayed or suspended within thirty (30) days following such events.

We retain the right to terminate the agreement for any cause, upon prior written notice to BCM and payment of all amounts due to BCM under the agreement.

Manufacturing

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 manufacture of our off-the-shelf, multiplexed-engineered, iPSC-derived CAR NK cell and CAR T-cell 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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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.

With the extension of manufacturing to our 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

Marketing, Market Access and Sales

We currently intend to commercialize any products that we may successfully develop.

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

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 for its intended use or uses;

• approval of the protocol and related documentation by an independent institutional review board (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 for its intended use or uses;

• 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;

• 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;

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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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This group provides authorization as to whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the trial and may recommend halting the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Clinical trials involve the administration of the product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including rules that assure a clinical trial will be stopped if certain adverse events occur.

Each protocol and any amendments to the protocol must be submitted to the FDA and to the IRB.

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

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 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.

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

In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

These trials may also provide early evidence on effectiveness.

Phase 2—These trials are conducted in a limited number of patients in the target population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

• Phase 2—These trials are conducted in a limited number of patients in the target population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.

Phase 3—Phase 3 trials are undertaken to provide statistically significant evidence of clinical efficacy and to further evaluate dosage, potency, and safety in an expanded patient population at multiple clinical trial sites.

• Phase 3—Phase 3 trials are undertaken to provide statistically significant evidence of clinical efficacy and to further evaluate dosage, potency, and safety in an expanded patient population at multiple clinical trial sites.

They are performed after preliminary evidence suggesting effectiveness of the product has been obtained, and are intended to establish the overall benefit-risk relationship of the investigational product, and to provide an adequate basis for product approval and physician labeling.

Phase 4 –

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.

• Phase 4—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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or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

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.

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 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.

Further, the Right to Try Act of 2017 among other things, provides a federal framework for certain patients to request access to certain IND 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

We review each individual request for access through the Cures Act, the Right to Try Act and similar state laws, and may or may not provide access depending upon the facts of each request.

Review and Approval Processes

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.

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.

According to the FDA’s fee schedule, effective through September 30, 2023, the user fee for an application requiring clinical data, such as a BLA and an NDA, is $3,242,026.

PDUFA also imposes an annual prescription drug product program fee for biologics and drugs.

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

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 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.

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The resubmitted application also is subject to review before the FDA accepts it for filing.

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.

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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.

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 approval, and in some cases may delay the approval date.

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Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.

The FDA does not regulate behavior of physicians in their choice of treatments and physicians may legally prescribe available products for uses that are not described in the product’s labeling and that differ from those approved by the FDA.

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.

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Fast Track Designation.

The FDA may grant “fast track”

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 BLA for FDA review before the entire submission is completed.

The FDA may grant “fast track” 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 designation applies to the combination of the product and the specific indication for which it is being studied.

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A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation if preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.

If so designated, the FDA will expedite the development and review of the product candidate’s marketing application, including by meeting with, and providing advice to, the sponsor throughout the product candidate’s development, and taking steps to facilitate an efficient review of the development program and to ensure that the design of the clinical trials is as efficient as practicable.

RMAT 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.

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;

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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.

The FDA may review applications for oncology products under Real-Time Oncology Review (RTOR) established by the FDA’s Oncology Center of Excellence.

RTOR, which allows an applicant to pre-submit components of the application to allow the FDA to review clinical data before the complete filing is submitted, aims to explore a more efficient review process to ensure that safe

and effective treatments are available to patients as early as possible, while maintaining and improving review quality.

Products considered for review under RTOR must, among other things, be likely to demonstrate substantial improvements on a clinically relevant endpoint(s) over available therapy, and must have easily interpreted endpoints.

In addition, no aspect of the application should be likely to require a longer review time, such as, for example, a requirement for a REMS.

To determine eligibility for RTOR, the FDA requires top-line efficacy and safety results from an applicant’s pivotal clinical trial(s), as well as completion of database lock for the clinical trial(s).

The FDA will generally make a decision regarding acceptance into RTOR within twenty (20) business days of receipt of the request from the applicant.

If an applicant is not accepted into RTOR, the applicant will follow routine application submission procedures.

Fast Track designation, priority review, accelerated approval, breakthrough therapy designation, RMAT designation, designated platform technology status, and RTOR 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.

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Patent term restoration can compensate for time lost during product development and the regulatory review process by returning up to five years of patent life for a patent that covers a new product or its use.

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, plus the time between the submission date of the BLA and the approval of that application, provided the sponsor acted with diligence.

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A reference biological product is granted twelve years of exclusivity from the time of first licensure of the reference product.

The first biological product submitted under the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologics submitting under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) 18 months after approval if there is no legal challenge, (iii) 18 months after the resolution in the applicant’s favor of a lawsuit challenging the biologic’s patents if an application has been submitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.

A biological product or drug can obtain pediatric market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request”

for such a study.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods for all formulations, dosage forms, and indications of the active moiety or the biological period and, for drugs, patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or, for drugs, patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study provided that at the time pediatric exclusivity is granted there is not less than nine months of term remaining.

Orphan Drug Designation and Exclusivity

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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.

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

The FDCA requires manufacturers of biological products and drugs that include a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to submit a pediatric study plan to the FDA as part of the IND application.

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The FDA may grant deferrals for submission of data or full or partial waivers.

Generally, PREA does not apply to any biological product or drug for an indication for which orphan designation has been granted.

Generally, the PREA does not apply to any biological product or drug for an indication for which orphan designation has been granted.

Coverage and Reimbursement

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Accordingly, decisions regarding the extent of coverage and amount of reimbursement to be provided for any of our products will be made on a payor-by-payor basis.

Additionally, coverage determinations often require generating additional evidence related, for example, to the relative costs and benefits of new therapies versus standard of care –

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

Additionally, coverage determinations often require generating additional evidence related, for example, to the relative costs and benefits of new therapies versus standard of care – 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.

Private third-party payors often follow CMS’s decisions regarding coverage and reimbursement to a substantial degree.

However, one third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product candidate.

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

Private third-party payors often follow CMS’s decisions regarding coverage and reimbursement to a substantial

However, one third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product candidate.

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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• subjects biological products to potential competition by biosimilars;

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

rebate liability;

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

• made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability;

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

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

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This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year.

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.

Subsequent legislation extended the 2% reduction which remains in effect through 2031.

Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to providers will be further reduced starting in 2025 absent further legislation.

• 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 and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

• 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 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.

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.

• 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 March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

• The Inflation Reduction Act of 2022 (IRA) includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap;

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 price caps for certain high-cost drugs and biologics without generic or biosimilar competition;

require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation;

and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that pharmacy benefit managers can charge.

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

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

The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program.

The effects of the 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.

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

In February 2023, HHS also issued a proposal in response to an October 2022 executive order from President Biden that includes a proposed prescription drug pricing model that will test whether targeted Medicare payment adjustments will sufficiently incentivize manufacturers to complete confirmatory trials for drugs approved through FDA’s accelerated approval pathway.

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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Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business that may constrain the financial arrangements and relationships through which we research, as well as sell, market and distribute any products for which we obtain marketing authorization.

Arrangements with third-party payors and customers can expose pharmaceutical manufactures to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, or the FCA, which may constrain the business or financial arrangements and relationships through which companies research, sell, market and distribute pharmaceutical products.

Arrangements with third-party payors and customers can expose pharmaceutical manufactures to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act (FCA) which may constrain the business or financial arrangements and relationships through which companies research, sell, market and distribute pharmaceutical products.

In addition, transparency laws and patient privacy laws can apply to the activities of pharmaceutical manufactures.

The applicable federal, state and foreign healthcare laws and regulations that can affect a pharmaceutical company’s operations include without limitation:

• The federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under the Medicare and Medicaid programs, or other federal healthcare programs.

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

A person or entity can be found guilty of

violating the statute without actual knowledge of the statute or specific intent to violate it.

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.

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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”

for money or property presented to the federal government.

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

the submission of false or fraudulent claims.

The FCA also permits a private individual acting as a “whistleblower”

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

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.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims.

The FCA also permits a private individual acting as a “whistleblower” 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.

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• 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, other licensed care professionals and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

• 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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state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.

federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

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state and local laws requiring the registration of pharmaceutical sales representatives;

and state laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

and state laws governing the privacy and security of

health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

The scope and enforcement of each 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 with respect to certain laws.

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If any such changes were to be imposed, they could adversely affect the operation of our business.

Ensuring our business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from the business.

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.

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.

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.

Regulations Governing Data Collection and the Use, Processing and Cross-Border Transfer of Personal Information

We also may be or may become subject to various state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

For example, California has enacted the California Consumer Privacy Act (CCPA), which created new individual privacy rights for California consumers (as defined in the law) and placed increased privacy and security obligations on entities handling personal data of consumers or households.

Effective as of January 2020, the CCPA requires covered companies to provide certain disclosures to consumers about its data collection, use and sharing practices, and to provide affected California residents with ways to opt out of certain sales or transfers of personal information, and also regulates employee information.

On November 3, 2020, California passed the California Privacy Rights Act (CPRA) which builds on the CCPA and expands consumer privacy rights.

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 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.

In addition, as of May 25, 2018, the General Data Protection Regulation (GDPR) regulates the collection and use of personal data in the European Union (EU).

The GDPR covers any business, regardless of its location, that provides goods or services to residents in the EU and, thus, could incorporate any activities we undertake in EU member states.

The GDPR imposes strict requirements on controllers and processors of personal data, including special protections for “sensitive information,”

which includes health and genetic information of individuals residing in the EU.

The GDPR grants individuals the opportunity to object to the processing of their personal information, allows them to request deletion of personal information in certain circumstances, and provides the individual with an express right to seek legal remedies in the event the individual believes his or her rights have been violated.

Further, the GDPR imposes strict rules on the transfer of personal data out of the EU to regions that have not been deemed to offer “adequate”

privacy protections, such as the U.S.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU member states, which may deviate slightly from the GDPR, may result in warning letters, mandatory audits and financial penalties, including fines of up to 4% of global revenues, or €20,000,000, whichever is greater.

Further to the United Kingdom's (UK) exit from the EU on January 31, 2020, the GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020.

However, as of January 1, 2021, the UK’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain UK specific amendments) into UK law (referred to as the 'UK GDPR').

The UK GDPR and the UK Data Protection Act 2018 set out the UK’s data protection regime, which is independent from but aligned to the EU’s data protection regime.

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.

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.

The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing.

For example, the California Consumer Privacy Act (CCPA), created individual privacy rights for California consumers (as defined in the law) and requires compliance with privacy and security obligations for entities handling personal data of consumers or households.

The CCPA requires covered companies to provide certain disclosures to consumers about its data collection, use and sharing practices, and to provide affected California residents with ways to opt out of certain sales or transfers of personal information.

The California Privacy Rights Act (CPRA) amended the CCPA and expands consumer privacy rights in California, including by expanding consumers’ rights with respect to certain sensitive personal information and by establishing a state agency vested with the authority to enforce the CCPA.

The CPRA also applies to personal information collected about employees, applicants and retirees, as well as that which is collected in a business-to-business capacity.

While there is currently an exception in the CCPA for protected health information that is subject to HIPAA, the CCPA may nevertheless impact our business activities.

Several other U.S.

states have passed or enacted legislation similar to the CCPA, but contain key differences in the scope, application, and enforcement which may complicate compliance efforts.

In addition the EU General Data Protection Regulation (EU GDPR), as well as other national data protection legislation in force in relevant European Economic Area (EEA) Member States, and the UK equivalent of the same (UK GDPR) (collectively referred to as the GDPR in this Annual Report), and UK Data Protection Act 2018 regulates the collection and processing of personal data in the EEA and the United Kingdom (UK).

The GDPR covers any business, regardless of its location, that provides goods or services to individuals in the EU/UK or monitors their behavior in the EEA/UK, and, thus, could incorporate any activities we undertake in EEA/UK.

The GDPR imposes strict requirements on controllers and processors of personal data, including special protections for “sensitive information,” which includes health and genetic information, obtaining consent of the individuals to whom the personal data relates, having legal bases for processing personal data, providing transparency information to individuals, implementing safeguards to protect the security and confidentiality of personal data, having data processing agreements with third parties who process personal data, responding to individuals’ requests to exercise their data protection rights, reporting personal data breaches to the competent national data protection authority and affected individuals, appointing data protection officers, ensuring certain accountability measures are in place and record keeping.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EEA Member States and the UK, which may deviate slightly from the GDPR, may result in warning letters, mandatory audits and financial penalties, including fines of up to 4% of global revenues, or €20,000,000, (£17.5 million for the UK GDPR), whichever is greater.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

The UK’s data protection regime is independent from but currently still aligned to the EU’s data protection regime.

However, the UK has announced plans to reform the country’s data protection legal framework in its Data Reform Bill, which will introduce significant changes from the EU GDPR.

This may lead to additional compliance costs and could increase our overall risk exposure as we may no longer be able to take a unified approach across the EEA and the UK, and we will need to amend our processes and procedures to align with the new framework.

The GDPR also impose restrictions in relation to the international transfer of personal data from the EEA and UK to other countries in respect of which the European Commission or the UK government has not issued a so-called “adequacy decision” or “ adequacy regulation”, including the US in certain circumstances, unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data, such as the European Commission’s Standard Contractual Clauses for transfers outside of the EEA (SCCs) and a similar transfer mechanism for transfers of personal data outside of the UK, the International Data Transfer Agreement or Addendum (IDTA).

Where relying on the SCCs or IDTA for data transfers, exporters are also required to carry out transfer impact assessments to assess the risk of the data transfer on a case-by-case basis, including an analysis of the laws in the destination country.

Although the UK is regarded as a third country under the EU’s GDPR, the European Commission (EC) has issued a decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EEA to the UK remain unrestricted.

In July 2023, the European Commission adopted its adequacy decision for the EU-U.S.

Data Privacy Framework (Framework), the successor of the EU-U.S.

Privacy Shield framework, which the Court of Justice of the European Union invalidated in 2020.

On the basis of the new adequacy decision, personal data can flow safely from the EU to U.S.

companies participating in the Framework, without having to put in place additional data protection safeguards.

However, the Framework’s validity has already been challenged in court.

Implementing mechanisms to endeavor to ensure compliance with the GDPR and relevant local legislation in EEA Member States and the UK may be onerous and may interrupt or delay our development activities, and adversely affect our business, financial condition, results of operations, and prospects.

In addition to the foregoing, a breach of the CCPA, GDPR or other applicable privacy and data protection laws and regulations could result in regulatory investigations, reputational damage, and orders to cease/change our use of data, enforcement notices, or potential civil claims including class action-type litigation.

Other Regulations

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The biotechnology and pharmaceutical industries are characterized by rapid innovation, intense and dynamic competition and a strong emphasis on proprietary products.

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.

While we believe that our proprietary iPSC product platform, 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 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.

Novartis AG (Novartis) and Kite Pharma, Inc.

(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, 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.

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.

While we believe our use of clonal master iPSC lines for the production of our off-the-shelf NK- and T-cell product candidates is highly differentiated, a number of clinical-stage companies are currently focused on the development of cellular immunotherapies for the treatment of cancer, including Adaptimmune Therapeutics plc, Allogene Therapeutics, Inc., Atara Biotherapeutics, Inc., Bristol-Myers Squibb Company, Caribou Biosciences, Inc., Cellectis SA, Celularity, Inc., CRISPR Therapeutics AG, Gilead Sciences, Inc., ImmunityBio, Inc., Intellia Therapeutics, Inc., Iovance Biotherapeutics, Inc., Johnson & Johnson, Legend Biotech Corporation, Nkarta, Inc., Novartis AG, Precision Biosciences, Inc., Sanofi SA, and Takeda Pharmaceutical Company Limited, and 2seventy bio, Inc.

Cellular immunotherapies for the treatment of cancer and autoimmune diseases have recently been an area of significant research and development by academic institutions and biopharmaceutical companies.

Six autologous CAR T-cell therapies have been approved by the FDA for the treatment of relapsed / refractory hematologic malignancies:

Kymriah (Novartis AG) for B-cell acute lymphoblastic leukemia (ALL) and for diffuse large B-cell lymphoma (DLBCL);

Yescarta (Kite Pharma) for aggressive large B-cell lymphoma (LBCL);

Tecartus (Kite Pharma) for mantle cell lymphoma or B-cell ALL;

Breyanzi (Bristol-Myers Squibb Company) for aggressive LBCL;

Abecma (Bristol-Myers Squibb Company) for multiple myeloma;

and Carvykti (Janssen Biotech) for multiple myeloma.

We are developing our iPSC-derived CAR NK cell and CAR T-cell product candidates for the treatment of cancer and autoimmune diseases.

While we believe our proprietary iPSC product platform and our off-the-shelf, multiplexed-engineered, iPSC-derived cell product candidates are highly differentiated, a number of clinical-stage companies are currently focused on the development of cellular immunotherapies for the treatment of cancer and autoimmune diseases.

These competitive companies include, among others, Allogene Therapeutics, Inc., Arcellx, Inc., AstraZeneca plc, Autolus Therapeutics plc, Bristol-Myers Squibb Company, Cabaletta Bio, Inc., CARGO Therapeutics, Inc., Caribou Biosciences, Inc., Cartesian Therapeutics, Inc., Cellectis SA, Century Therapeutics, Inc., CRISPR Therapeutics AG, Galapagos NV, ImmunityBio, Inc., Janssen Biotech (Johnson & Johnson), Legend

Biotech Corporation, Kite Pharma (Gilead Sciences, Inc.), Kyverna Therapeutics, Inc., Nkarta, Inc., Novartis AG, Poseida Therapeutics, Inc., Sana Biotechnology, Inc.

and Takeda Pharmaceutical Company Limited.

Preclinical-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

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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 January 6, 2023, women made up 53.4% of our workforce and represented 42.9% of leadership positions at the Director level and above.

As of December 31, 2023, women made up 55% of our workforce and represented 50% of leadership positions at the director-level and above.

In addition, as of December 31, 2023, ethnic or racial minorities made up 54% of all of our employees, with 32% Asian, 12% Hispanic, 4% Black, 2% Native Hawaiian or other Pacific Islander and 4% of two or more races.

Ethnic or racial minorities made up 43% of our director-level and above employees, with 35% Asian, 3% Hispanic, 3% Black, and 2% of two or more races.

The age breakdown of our employee workforce consisted of 49% of employees between the ages of 25 – 39 years old, 45% of employees between the ages of 40 – 50 years old, and 6% of employees 55 and older.

Health and Safety

The success of our business is fundamentally connected to the well-being, health and safety of our employees, and we are committed to providing a safe, healthy and secure workplace for our employees.

We have an environmental health and safety program and maintain various compliance programs to support this commitment.

We routinely train and educate our employees on workplace safety and security.

Early in the pandemic we formed a COVID-19 task force dedicated to monitoring ongoing developments and guidance issued by local, state and public health authorities.

Our COVID-19 task force provides regular updates and recommendations to our executive team, and provides timely communication and training to our employee base about the various safety measures we have put into place to protect their health and wellbeing.

We took proactive action early on, implementing site enhancements and risk protocols, instituting remote working arrangements and adjusting our sick leave policies, and in our effort to support the safe occupancy of our sites, reconfigured work and common spaces to allow for social distancing increased office cleaning protocols, instituted daily health screenings and COVID-19 testing.

As testing has become more readily available, we have offered both onsite testing and memberships to local medical clinics that offer testing.

We continue to monitor and adjust our safety training and protocols as the pandemic continues to evolve.

We have an environmental, health and safety program and several cross-functional committees to support our environmental, health and safety program.

We routinely train and

educate our employees on workplace safety and security and maintain various compliance programs to support this commitment.

We continue to monitor and adjust our safety training and protocols as needed to ensure the safety and wellbeing of our workforce.

Compensation and Benefits

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The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

We have a comprehensive benefits program offering flexibility for our employees’

individual needs and requirements.

We have a comprehensive benefits program offering flexibility for our employees’ individual needs and requirements.

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.

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We are focused on attracting and retaining a team of highly talented and motivated employees.

We invest in and develop all levels of employees by engaging in ongoing career pathing and professional development conversations throughout an employee’s tenure.

In addition, we provide targeted leadership development programs for frontline leaders through executive leadership programs and offer a number of professional, management and leadership development training programs to help our employees develop cross-functional skills and tools to grow their careers.

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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.

Environmental Sustainability

We recognize the importance of the environment to a healthy, sustainable future for our business, our patients, and communities.

Our headquarters located in San Diego, California was designed to be energy efficient through the use of LED lighting, energy efficient air handling units, a fully integrated building management system, and other tools.

Our facilities are also outfitted with smart building solutions, such as occupancy sensors and air conditioning units reducing airflow based on occupancy.

Water-saving bathroom faucets and toilets are installed throughout the building to help reduce water consumption.

The exterior of our building is made up of draught tolerant landscaping to reduce the volume of water needed to maintain plant life around the building.

Employees are also provided free access to electric vehicle charging stations.

Our commitment to environmental sustainability is ongoing and we continue to be mindful of how we can minimize our environmental footprint as a company.

Corporate Information

We were incorporated in Delaware in 2007, and are headquartered in San Diego, CA.

We were incorporated in Delaware in 2007, and are headquartered in San Diego, California.

Our principal executive office is located at 12278 Scripps Summit Drive, San Diego, California 92131, and our telephone number is (858) 875-1800.

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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.

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You should consider all of the risk factors described in our public filings when evaluating our business.

Risks Related to Our Financial Condition

Our ongoing and planned operations, including the development of our product candidates, will require substantial additional funding, without which we will be unable to complete preclinical or clinical development of, or obtain regulatory approval for, or commercialization of our product candidates.

We are currently advancing multiple product candidates through clinical development, and conducting preclinical research and development activities in other programs.

Drug development is expensive, and we expect our research and development expenses to remain significant in connection with our ongoing activities, particularly as we advance our current product candidates in clinical trials and seek to initiate clinical development for additional product candidates.

As of December 31, 2023, our cash and cash equivalents and investments were $316.2 million.

We intend to use our cash and cash equivalents and investments primarily to fund the advancement and clinical development of our current product candidates and our ongoing preclinical, discovery and research programs, and for working capital and general corporate purposes.

However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic and licensing arrangements or a combination of these approaches.

In any event, we will require additional capital to obtain regulatory approval for, and to commercialize our existing product candidates and any other product candidates we may identify and develop.

Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

Our future capital requirements will depend on many factors, including, but not limited to:

• the progress, results, size, timing and costs of our ongoing and planned clinical trials, and any additional clinical trials we may initiate, conduct or support for our product candidates;

• the progress, results, size, timing and costs of our preclinical, process development and manufacturing studies, and activities necessary to initiate and conduct clinical trials for our product candidates and to establish and maintain manufacturing capabilities necessary to support such trials;

• 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 MSKCC 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;

• our ability to manufacture, or enter into arrangements with third parties for the manufacture of our existing product candidates, as well as potential future clinical development candidates, both for clinical development and commercialization, and the timing and costs associated with such manufacture;

• our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, or other costs we may incur, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

• 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 Ono, the University of Minnesota, and MSKCC, 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.

In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.

Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline.

The sale of additional equity or convertible securities would dilute all of our stockholders.

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 impacts of the ongoing wars between Russia and Ukraine and between Israel and Hamas 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.

Our failure to raise additional capital, or obtain adequate funds, will have a material adverse effect on our business, prospects, financial condition, results of operations, and market price of shares of our common stock.

We have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future.

We are a clinical-stage biopharmaceutical company formed in 2007 with a limited operating history.

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, 2023, we had an accumulated deficit of $1.2 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.

We also expect to incur significant operating and capital expenditures as we continue our research and development of, and seek regulatory approval for, our product candidates, in-license or acquire new product candidates for development, implement additional infrastructure and internal systems, and hire additional scientific, clinical, and administrative personnel.

We anticipate that our net losses for the next several years could be significant as we conduct our planned operations.

Because of the numerous risks and uncertainties associated with pharmaceutical, biological, and cell therapy product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

In addition, our expenses could increase if we are required by the FDA, or comparable foreign regulatory authorities, to perform studies or trials in addition to those currently expected, or if there are any delays in completing our clinical trials, preclinical studies, process development, manufacturing activities, or the research and development of any of our product candidates.

The amount of our future net losses will depend, in part, on the rate of increase in our expenses, our ability to generate revenues and our ability to raise additional capital.

These net losses have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

We have broad discretion over the use of our cash, cash equivalents, and investments and may not use them effectively.

Our management has broad discretion to use our cash, cash equivalents, investments and any additional funds that we may raise to fund our operations and could spend these funds in ways that do not improve our results of operations or enhance the value of our common stock.

The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline or delay the development of our product candidates.

We may invest our cash and cash equivalents in a manner that does not produce income or that loses value.

Risks Related to the Discovery, Development and Regulation of Our Product Candidates

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Only a small percentage of research and development programs ultimately result in commercially successful products, and we cannot assure you that any of our product candidates will demonstrate the safety, purity and potency, or efficacy profiles necessary to support further preclinical study, clinical development or regulatory approval.

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:

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;

We may experience delays in, 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:

• difficulties in optimizing the right dose and dosing 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;

our prioritization of other of our product candidates for advancement or the emergence of competing product candidates developed by others, including a decision to cease research and development of any existing product candidate due to the potential obsolescence of our product candidate by a competing product or product candidate or our determination that another of our existing or future product candidates has greater potential for clinical development, regulatory approval, or commercialization, including potentially greater therapeutic benefit, a more favorable safety or efficacy profile, a more consistent or more cost effective manufacturing process, or more a favorable commercial profile, including greater market acceptance or commercial potential, or more advantageous intellectual property position;

• our prioritization of certain of our product candidates for advancement or the emergence of competing product candidates developed by others, including a decision to cease research and development of any existing product candidate due to the potential obsolescence of our product candidate by a competing product or product candidate or our determination that another of our existing or future product candidates has greater potential for clinical development, regulatory approval, or commercialization, including potentially greater therapeutic benefit, a more favorable safety or efficacy profile, a more consistent or more cost effective manufacturing process, or more a favorable commercial profile, including greater market acceptance or commercial potential, or more advantageous intellectual property position;

• challenges and delays in trial execution associated with our testing of multiple product candidates in the same indication in different clinical trials, as well as competition from biotechnology and pharmaceutical companies, universities, and other research institutions for patients and clinical trial sites;

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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.

We also announced the termination of our Collaboration and Option Agreement with Janssen, which took effect on April 3, 2023.

As a result of the termination, we performed wind-down activities for the collaboration in the first quarter of 2023, including winding down the development of two product candidates that had been 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 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.

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.

We may need to conduct preclinical studies and clinical trials that we currently do not anticipate, including as a result of changes in the standard of care.

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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 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 any measures taken by governmental authorities, hospitals, or clinical trial sites in response to any future public health crises or other serious disasters or similar events;

• difficulties determining suitable doses and schedules of our novel cell product candidates for evaluation in clinical trials;

• difficulties in obtaining agreement from regulatory authorities on study endpoints and/or study duration, achieving study endpoints, the amount and sufficiency of data demonstrating efficacy and safety, and completing data analysis in clinical trials for any of our product candidates;

difficulties in obtaining agreement from regulatory authorities on the preclinical safety and efficacy data, the manufacturing requirements, and the clinical trial design and parameters necessary for an IND application to go into effect to initiate and conduct clinical trials for any of our current product candidates and any other product candidates that we may identify;

• delays in filing an IND application or IND amendment with the FDA to initiate or amend clinical trials of our current product candidates and any other product candidates that we may identify;

• difficulties in obtaining agreement from regulatory authorities on the preclinical safety and efficacy data, the manufacturing requirements, and the clinical trial design and parameters necessary for an IND application to go into effect to initiate and conduct clinical trials for any of our current product candidates and any other product candidates that we may develop;

• the occurrence of unexpected safety issues or adverse events in any ongoing or future clinical trials of our product candidates, including in trials of our product candidates conducted by investigator-sponsors;

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• 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 to manufacture certain of our product candidates consistently, and at acceptable quality levels and costs, 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 any future public health crises or other serious disasters or the ongoing wars between Russia and Ukraine and between Israel and Hamas, or other factors;

• 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;

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• 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;

the serious, life-threatening diseases of the patients enrolled in our clinical trials, who may die or suffer adverse medical events during the course of the trials for reasons that may not be related to our product candidates;

failure of patients to complete clinical trials or adhere to study protocols due to safety issues, side effects, disruptions in study conduct, including study monitoring, data collection and analysis, restrictions on hospital visits or travel relating to the COVID-19 pandemic, or other reasons;

• the serious, life-threatening diseases of the patients in our oncology clinical trials, who may die or suffer adverse medical events during the course of the trials for reasons that may not be related to our product candidates;

• failure of patients to complete clinical trials or adhere to study protocols due to safety issues, side effects, disruptions in study conduct, or other reasons;

• 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.

• 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 any future public health crisis or other serious disaster or similar events, 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.

• limitations on clinical trial conduct at our clinical trial sites resulting from prioritization of hospital and other medical resources toward other efforts, such as any future public health crisis or other serious disaster or similar events, 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 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.

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 any future public health crisis or other public health concerns 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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These risks could substantially increase our costs and limit the clinical and commercial supply of our product candidates, and the development and commercialization of our product candidates could be substantially delayed or restricted if the FDA or other regulatory authorities impose additional requirements on our manufacturing operations or if we are required to change our manufacturing operations to comply with regulatory requirements.

The manufacture and supply of our cell product candidates involve novel processes that are more complex than those required for most small molecule drugs and other cellular immunotherapies, and accordingly present significant challenges and are subject to multiple risks.

The manufacture and supply of our cell product candidates involves novel processes that are more complex than those required for most small molecule drugs and other cellular immunotherapies, and accordingly present significant challenges and are subject to multiple risks.

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.

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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 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.

The manufacturing processes for any products that we may develop are subject to FDA and foreign regulatory authority approval requirements, and we and any contract manufacturing organizations (CMOs) or other third party manufacturers that we may engage for manufacturing our product candidates, 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 and our current manufacturing operations, including protocols, processes, materials, and facilities, may not support regulatory approval of our existing product candidates.

We may be required to identify alternative protocols, processes, materials or facilities for the manufacture of any of these product candidates in compliance with applicable regulatory requirements.

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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 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.

If we or any CMOs or other third-party manufacturers that we may engage for manufacturing our product candidates 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 any 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 any 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’

or manufacturers’

inability to manufacture sufficient quantities of our product candidates at acceptable quality levels or costs, or at all, would materially and adversely affect our business .

A disruption to our manufacturing operations, or the inability by us or our third-party suppliers or manufacturers to manufacture sufficient quantities of our product candidates at acceptable quality levels or costs, or at all, would materially and adversely affect our business .

Developing manufacturing processes to support clinical studies and commercialization requirements is a difficult and uncertain task, and there are risks associated with scaling to the level required for clinical trials or commercialization, including, among others, cost overruns, potential problems with process scale-out, process reproducibility, stability and purity issues, lot consistency, and timely availability of acceptable reagents and raw materials.

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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 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 may 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 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.

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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.

Any inability to manufacture comparable drug product by us or any CMOs or third parties that we engage to manufacture our product candidates could delay the continued development of our product candidates.

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 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.

In addition, we and our third-party manufacturers may have limited manufacturing capacity for certain product candidates or components, and we may fail to locate suitable additional or replacement manufacturing capacity, including for the manufacture of our product candidates in compliance with cGMP or cGTP, on a reasonable basis or at all.

Any such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted to us, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, detention of product, refusal to permit the import or export of products, injunction or imposing civil and criminal penalties.

Accordingly, we will be required to make significant investments to maintain and expand our existing Good Manufacturing Practice (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, shortages of materials and supplies, facility shutdowns, global pandemics or other public health concerns, war or armed conflicts such as the ongoing wars between Russia and Ukraine and between Israel and Hamas, natural disasters (including due to the effects of climate change) 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 any new facilities could delay our development plans, including the initiation and conduct of our ongoing and planned clinical trials.

In addition, we and our third-party manufacturers may have limited manufacturing capacity for certain product candidates or components used in manufacturing our product candidates, and we may fail to locate suitable additional or replacement manufacturing capacity, including for the manufacture of our product candidates in compliance with current GMP (cGMP) or current Good Tissue Practice (cGTP), on a reasonable basis or at all.

applications or supplemental applications, detention of product, refusal to permit the import or export of products, injunction or imposing civil and criminal penalties.

Furthermore, certain of the components currently used in manufacturing our product candidates are research-grade only, and we may encounter problems obtaining or achieving adequate quantities and quality of clinical grade materials that meet FDA, European Medicines Agency, or other applicable standards or specifications with consistent and acceptable production yields and costs.

In addition, if contaminants are discovered in our supply of product candidates or in our manufacturing facilities or those of our third-party suppliers and manufacturers, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

In addition, if contaminants are discovered in our supply of product candidates or in our manufacturing facilities or those of our third-party suppliers and manufacturers, such manufacturing facilities may be closed for an extended period of time to investigate and remedy the contamination.

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.

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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 .

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.

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 .

As with any new biologic or product developed using novel technologies, our product candidates have an unknown immunogenicity profile.

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As a result, we may never succeed in developing a marketable product and we may never become profitable, which would have an adverse effect on our business, prospects, financial condition, results of operations, and market price of shares of our common stock.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

We anticipate that our current product candidates and any future product candidates may be used in combination with third-party drugs or biologics, some of which may still be in development, and we have limited or no control over the supply, regulatory status, or regulatory approval of such drugs or biologics.

Certain of our product candidates are being developed for use in combination with one or more other cancer therapies, such as monoclonal antibodies, and other current or future product candidates may be used in combination with other biologics or drugs, both approved and unapproved, such as fludarabine.

Our ability to develop and ultimately commercialize our current product candidates and any future product candidates used in combination with another drug or biologic will depend on our ability, or the ability of third-party clinical trial sites on which we rely, to access such drugs or biologics on commercially reasonable terms for the clinical trials and their availability for use with the commercialized product, if approved.

We cannot be certain that we, or third-party clinical trial sites on which we rely, will be able to secure a steady supply of such drugs or biologics on commercially reasonable terms or at all.

Any failure by us, or by third-party clinical trial sites on which we rely, to secure a steady supply of such drugs or biologics may delay our development timelines, increase our costs and jeopardize our ability to develop our current product candidates and any future product candidates as commercially viable therapies.

If any of these occur, our business, financial condition, results of operations, stock price and prospects may be materially harmed.

Moreover, the development of product candidates for use in combination with another product or product candidate may present challenges that are not faced for single agent product candidates.

For example, the FDA or comparable foreign regulatory authorities may require us to use more complex clinical trial designs in order to evaluate the contribution of each product and product candidate to any observed effects.

It is possible that the results of such trials could show that any positive previous trial results are attributable to the combination therapy and not our current product candidates and any future product candidates.

Moreover, following product approval, the FDA or comparable foreign regulatory authorities may require that products used in conjunction with each other be cross labeled for combined use.

To the extent that we do not have rights to the other product, this may require us to work with a third party to satisfy such a requirement.

Moreover, developments related to the other product may impact our clinical trials for the combination as well as our commercial prospects should we receive marketing approval.

Such developments may include changes to the other product’s safety or efficacy profile, changes to the availability of the approved product, quality, manufacturing and supply issues, and changes to the standard of care.

In the event that any collaborator or supplier cannot continue to supply their products on commercially reasonable terms, we would need to identify alternatives for accessing such products.

Additionally, should the supply of products from any collaborator or supplier be interrupted, delayed or otherwise be unavailable, our clinical trials may be delayed.

In the event we are unable to source an alternative supply or are unable to do so on commercially reasonable terms, our business, financial condition, results of operations, stock price and prospects may be materially harmed.

In addition, to the extent a third-party clinical trial site on which we rely sources a combination therapy itself and does not submit the costs of such therapy to government programs or patients’ insurance, the costs of such therapy may be passed on to us, which could harm our business, financial condition, results of operations, stock price and prospects.

If we encounter difficulties enrolling patients in our clinical trials, including as a result of competition for patients, our clinical development activities could be delayed or otherwise adversely affected.

We are required to identify and enroll a sufficient number of patients with the disease under investigation for each of our ongoing and planned clinical trials of our product candidates, and we may not be able to identify and enroll a sufficient number of patients, or those with required or desired characteristics and who meet certain criteria, in a timely manner.

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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 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;

• clinicians’ and patients’ perceptions as to the potential 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, or with CAR T-cell therapies broadly following FDA’s investigation into reports of T-cell malignancies for BCMA- and CD19-directed CAR T-cell therapies;

• 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 or other infectious diseases;

• 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 any public health crisis;

• 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 availability of components and agents necessary to enroll and treat prospective patients in our clinical trials, including agents which are often required to condition patients 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 clinical trial sites as a result of any public health crisis;

• 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 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.

Moreover, development of certain of our product candidates as treatment for autoimmune diseases represents a novel approach where B cells may play a role in initiating or maintaining disease treatment, and potential patients and their doctors may choose to use conventional therapies, such as corticosteroids or systemic immunosuppressive medications, rather than enroll patients 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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If we elect to incorporate these new features into next-generation product candidates, this may render our existing product candidates obsolete, and we may devote our limited resources in pursuit of a particular program for which there is a greater potential for success and fail to capitalize on development opportunities or product candidates including those which may be more advanced in development.

We focus on the development of programmed cellular immunotherapies for patients with cancer, including off-the-shelf NK- and T-cell product candidates derived from clonal master engineered iPSC lines.

We focus on the development of programmed cellular immunotherapies for patients with cancer and autoimmune diseases, including off-the-shelf NK- and T-cell product candidates derived from clonal master engineered iPSC lines.

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.

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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.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval.

During the conduct of clinical trials, patients may report changes in their health, including illnesses, injuries and discomforts, to their doctor.

Often, it is not possible to determine whether or not the product candidate being studied caused these conditions.

Regulatory authorities may draw different conclusions and may require us to pause our clinical trials or require additional testing to confirm these determinations, if they occur.

In addition, it is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, may be reported by subjects or patients.

Many times, drug-related side effects are only detectable after investigational products are tested in large-scale pivotal trials or, in some cases, after they are made available to patients on a commercial scale after approval.

If additional clinical experience indicates that any of our product candidates have side effects or cause serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate receives regulatory approval, such approval may be revoked, which would harm our business, financial condition, results of operations and prospects.

Drug-related side effects could also affect subject recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims.

Any of these occurrences may harm our business prospects significantly.

We study our product candidates in patient populations with significant comorbidities that may result in deaths or serious adverse events or unacceptable side effects and require us to abandon or limit our clinical development activities.

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Any inability to advance our existing product candidates or any other product candidate through clinical development would have a material adverse effect on our business, and the value of our common stock would decline.

Because our product candidates are based on novel technologies, it is difficult to predict the regulatory approval process and the time, the cost and our ability to successfully initiate, conduct and complete clinical development, and obtain the necessary regulatory and reimbursement approvals, required for commercialization of our product candidates.

Our cell programming technology and platform for generating cell therapy products using iPSCs represent novel therapeutic approaches, and to our knowledge there are currently no iPSC-derived cell products approved anywhere in the world for commercial sale.

As such, it is difficult to accurately predict the type and scope of challenges we may incur during development of our product candidates, and we face uncertainties associated with the preclinical and clinical development, manufacture and regulatory requirements for the initiation and conduct of clinical trials, regulatory approval, and reimbursement required for successful commercialization of these product candidates.

As such, it is difficult to accurately predict the type and scope of challenges we may incur during development of our product

candidates, and we face uncertainties associated with the preclinical and clinical development, manufacture and regulatory requirements for the initiation and conduct of clinical trials, regulatory approval, and reimbursement required for successful commercialization of these product candidates.

In addition, because our iPSC-derived cell product candidates are all in the early clinical or preclinical stage, we are currently assessing safety in humans and have not yet been able to assess the long-term effects of treatment.

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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.

For example, in November 2023, the FDA announced that it would be conducting an investigation into reports of T-cell malignancies following BCMA-directed or CD19-directed autologous CAR T-cell immunotherapies following reports of T-cell lymphoma in patients receiving these therapies.

In January 2024, the FDA determined that new safety information related to T-cell malignancies should be included in the labeling with boxed warning language on these malignancies for all BCMA- and CD19-directed genetically modified autologous T-cell immunotherapies.

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 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.

Regulatory requirements in the United States and in other countries governing the development of cell therapy products and therapeutic products created with gene editing technology 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.

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 made with gene editing technology, such as ours.

The regulatory review divisions and committees, and any new guidelines they promulgate, may lengthen the regulatory review process, require us to perform additional studies or clinical trials, and delay or prevent development, approval, and commercialization of our product candidates.

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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We may from time to time disclose results from preclinical testing or preliminary data or interim results from clinical studies of our product candidates.

Such results from preclinical testing, process development and manufacturing activities, and clinical studies, including interim clinical trial results as of specified data cutoff dates and results of earlier clinical studies with similar product candidates, are not necessarily predictive of future results, including later clinical trial results.

Such results from preclinical testing, process development and manufacturing activities, and clinical studies,

including interim clinical trial results as of specified data cutoff dates and results of earlier clinical studies with similar product candidates, are not necessarily predictive of future results, including later clinical trial results.

The results of our current and future clinical trials may differ from results achieved in earlier preclinical and clinical studies for a variety of reasons, including:

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Additionally, some clinical trials of our product candidates performed to date were generated from open-label studies and are being conducted at a limited number of clinical sites on a limited number of patients.

An “open-label”

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.

An “open-label” 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.

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.

Open-label clinical trials may be subject to a “patient bias”

where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment.

In addition, open-label clinical trials may be subject to an “investigator bias”

where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which treatment regimen patients have received and may interpret the information of the treated group more favorably given this knowledge.

Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment.

In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which treatment regimen patients have received and may interpret the information of the treated group more favorably given this knowledge.

Accordingly, the preliminary data from our Phase 1 clinical trials of certain of our product candidates may not be predictive of future clinical trial results for these or other product candidates when studied in a controlled environment or larger patient populations.

From time to time, we also publish interim, “top-line,”

or preliminary data from our clinical studies based on a preliminary analysis of then-available data.

From time to time, we also publish interim, “top-line,” or preliminary data from our clinical studies based on a preliminary analysis of then-available data.

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.

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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.

Preliminary or “top-line”

data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.

Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.

As a result, interim and preliminary data should be viewed with caution until the final data are available.

Material adverse changes between preliminary, “top-line,”

or interim data and final data could significantly harm our business prospects, financial condition and results of operations.

Material adverse changes between preliminary, “top-line,” or interim data and final data could significantly harm our business prospects, financial condition and results of operations.

Results of clinical testing of any of our existing or future product candidates may fail to show the necessary safety and efficacy required for regulatory approval.

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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.

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 or other public health concerns 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 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.

Any product candidate for which we obtain marketing approval, along with the manufacturing protocols, processes, materials and facilities, qualification testing, post-approval clinical data, labeling and promotional activities for such product, will be subject to continual and additional requirements of the FDA and other regulatory authorities.

These requirements include submissions of safety and other post-marketing information, reports, registration and listing requirements, requirements relating to current cGMP, applicable product tracking and tracing requirements, quality control, quality assurance and corresponding maintenance of records and documents, and recordkeeping.

These requirements include submissions of safety and other post-marketing information, reports, registration and listing requirements, requirements relating to cGMP, applicable product tracking and tracing requirements, quality control, quality assurance and corresponding maintenance of records and documents, and recordkeeping.

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.

Additionally, under the Food and Drug Omnibus Reform Act of 2022 (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 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.

We may seek regenerative medicine advanced therapy (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 RMAT designation from the FDA for certain of our product candidates.

A product candidate is eligible for RMAT designation if:

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This program is intended to facilitate efficient development and expedite review of RMATs.

A BLA for a product candidate with 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.

A Biologics License Application (BLA) for a product candidate with 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 the FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval.

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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 FDCA, 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 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.

However, we may be unable to obtain orphan drug designations for any of our product candidates that we are currently developing or may pursue.

Even if we do obtain orphan drug designations and are the first to obtain marketing approval of our product candidates for the applicable indications, we will not be able to rely on these designations to exclude other companies from manufacturing or selling biological products using the same principal molecular structural features for the same indication beyond these timeframes.

Furthermore, any marketing exclusivity in Europe can be reduced from ten years to six years if the initial designation criteria have significantly changed since the market authorization of the orphan product.

Furthermore, any marketing

exclusivity in Europe can be reduced from ten years to six years if the initial designation criteria have significantly changed since the market authorization of the orphan product.

For any product candidate for which we may be granted orphan drug designation in a particular indication, it is possible that another company also holding orphan drug designation for the same product candidate will receive marketing approval for the same indication before we do.

If that were to happen, our applications for that indication may not be approved until the competing company’s period of exclusivity expires.

Even if we are the first to obtain marketing authorization for an orphan drug indication in the United States, there are circumstances under which a competing product may be approved for the same indication during the seven-year period of marketing exclusivity, such as if the later product is shown to be clinically superior to our orphan product, or if the later product is deemed a different product than ours.

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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 seek approval of our product candidate into RTOR.

This program may not lead to a faster regulatory review or approval process and does not increase the likelihood that our product candidate(s) will receive marketing approval.

Participation in RTOR is voluntary.

Our acceptance into RTOR does not guarantee or influence approval of our application, which is subject to the same statutory and regulatory requirements for approval as applications that are not included in RTOR.

Although early approvals have occurred with applications selected for RTOR, this may not be the case for our application even if it is selected for RTOR.

If at any time the FDA determines our participation in RTOR, if selected, is no longer appropriate, the FDA may rescind our acceptance and instruct us to follow routine submission procedures for marketing approval.

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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Efforts to ensure that our current and future business arrangements with third parties, and our business generally, will comply with applicable healthcare laws and regulations will involve substantial costs.

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.

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.

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 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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Payments made to physicians in certain European Union Member States must be publicly disclosed.

Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual European Union Member States.

These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the European Union Member States.

Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or individual imprisonment.

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 data privacy regulations in foreign countries;

• 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 U.S.

Foreign Corrupt Practices Act 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 wars between Russia and Ukraine and between Israel and Hamas.

We may decide 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 Good Clinical Practice (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.

population and U.S.

medical practice;

(ii) the trials were performed by clinical investigators of recognized competence;

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.

laws and regulations.

There can be no assurance that the FDA will accept data from trials conducted outside the United States.

Risks Related to Our Reliance on Third Parties

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Our business could be harmed if those third parties fail to perform satisfactorily.

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.

While we currently manufacture clinical supplies of 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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The FDA or similar foreign regulatory agencies may also implement new standards at any time, or change their interpretations and enforcement of existing standards for manufacture, packaging or testing of products.

We have little control over our manufacturers’

compliance with these regulations and standards.

We have little control over our manufacturers’ compliance with these regulations and standards.

In some cases, the technical skills required to manufacture our product candidates may be unique or proprietary to a particular CMO, and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier if needed, or we may be unable to transfer such skills at all.

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.

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.

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.

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 terminated or 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 a corporate collaboration agreement with Ono;

our collaboration with Janssen will terminate effective April 2023.

our collaboration with Janssen terminated 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.

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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

Furthermore, disagreements with these parties could require or result in litigation or arbitration, which would be time-consuming and expensive.

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.

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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.

For example, 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.

Any failure or delays by us or by our clinical sites to obtain sufficient quantities of materials and agents 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 any 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 any public health crises, natural disasters (including due to the effects of climate change), ongoing wars, including the wars between Russia and Ukraine and between Israel and Hamas, 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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If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to timely develop, manufacture, obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We rely upon third parties, including medical institutions, clinical investigators, and CROs for the conduct of certain research and preclinical development activities, process development and manufacturing activities, and for the conduct, management, and supervision of clinical trials of our product candidates.

We rely upon third parties, including medical institutions, clinical investigators, and clinical research organizations (CROs) for the conduct of certain research and preclinical development activities, process development and manufacturing activities, and for the conduct, management, and supervision of clinical trials of our product candidates.

We do not have direct control over the activities of these third parties, and may have limited influence over their actual performance.

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The scope of patent protection in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain.

One aspect of the determination of patentability of our inventions depends on the scope and content of the “prior art,”

information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention.

One aspect of the determination of patentability of our inventions depends on the scope and content of the “prior art,” information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention.

There may be prior art of which we are not aware that may affect the patentability of our patent claims or, if issued, affect the validity or enforceability of a patent claim.

Further, we may not be aware of all third-party intellectual property rights potentially relating to our product candidates or their intended uses, and as a result the impact of such third-party intellectual property rights upon the patentability of our own patents and patent applications, as well as the impact of such third-party intellectual property upon our freedom to operate, is highly uncertain.

property upon our freedom to operate, is highly uncertain.

Because patent applications in the United States and most other countries are confidential for typically a period of 18 months after filing, or may not be published at all, we cannot be certain that we were the first to file any patent application related to our product candidates.

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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.

Furthermore, our intellectual property rights may be subject to a reservation of rights by one or more third parties.

For example, the research resulting in certain of the patent rights and technology that we own or have licensed was funded in part by the U.S.

As a result, the government has certain rights, including march-in rights, to such patent rights and technology.

When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the government to use the invention or to have others use the invention on its behalf.

These rights may permit the government to disclose our information to third parties and to exercise march-in rights to use or allow third parties to use our technology.

The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S.

In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States.

Any exercise by the government of such rights or by any third party of its reserved rights could harm our competitive position, business, financial condition, results of operations, and prospects.

We depend on our licensors to prosecute and maintain patents and patent applications that are material to our business.

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These license agreements impose various diligence, milestone payment, royalty and other obligations on us.

In particular, under our Amended and Restated Exclusive License Agreement dated May 15, 2018 (the Amended MSK License) with Memorial Sloan Kettering Cancer Center (MSK), in the event a licensed product achieves a specified clinical milestone, MSK is eligible to receive from us certain milestone payments totaling up to $75.0 million based on the price of our common stock, where the amount of such payments owed to MSK is contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

If we fail to comply with our obligations under our license agreements, including any payment obligations, we could lose some or all of our rights to develop, market and sell products covered by these licenses, and our ability to form collaborations or partnerships may be impaired.

In particular, under our Amended and Restated Exclusive License Agreement dated May 15, 2018 (Amended MSKCC License) with MSKCC, in the event a licensed product achieves a specified clinical milestone, MSKCC is eligible to receive from us certain milestone payments totaling up to $75.0 million based on the price of our common stock, where the amount of such payments owed to MSKCC is contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone.

partnerships may be impaired.

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 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.

We are and may become 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.

(see “Item 3.

Legal Proceedings” 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.

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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.

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.

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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.

The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.

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 intellectual property rights, 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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There may be third-party patents or patent applications with claims to materials, cell compositions, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.

Our competitors may have filed, and may in the future file, patent applications covering products and technologies similar to ours.

Our competitors may have filed, and may in the future file, patent applications covering

products and technologies similar to ours.

Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe.

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Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, cause development delays, and may impact our reputation.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’

fees for willful infringement, obtain one or more licenses from third parties, pay royalties, or redesign our infringing products, which may be impossible on a cost-effective basis or require substantial time and monetary expenditure.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties, or redesign our infringing products, which may be impossible on a cost-effective basis or require substantial time and monetary expenditure.

In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly.

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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 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’

access to the same technologies licensed to us.

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’ access to the same technologies licensed to us.

Additionally, we sometimes collaborate with academic institutions to accelerate our preclinical research or development under written agreements with these institutions.

Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration.

Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us.

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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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Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has

created uncertainty with respect to the value of patents, once obtained.

Depending on decisions by the U.S.

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If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable.

FDA’s investigation into CAR T-cell therapies and other similar actions could result in increased government regulation, unfavorable public perception and publicity, stricter labeling requirements for those product candidates that are approved, and a decrease in demand for any such product candidates.

The degree of market acceptance of our products, if approved for marketing, will depend on a number of factors, including:

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• the labeling of any approved product;

the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;

• the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;

• the clinical indications for which any product candidate is approved;

• the emergence, and timing of market introduction, of competitive products;

• the effectiveness of our marketing strategy;

• the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

• 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.

The patient populations targeted by our autoimmune product candidates are also typically not at risk of near-term death, even if they may suffer life-threatening symptoms, so those patients will need to deem the benefits of cell therapy to be worth the risk of unknown potential adverse side effects.

Our success in this space will depend upon physicians who specialize in the treatment of

autoimmune diseases targeted by our product candidates prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available.

Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be known until after it is launched.

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and (v) neither experimental nor investigational.

For more information regarding the risks related to insurance coverage and reimbursement please see "Business - Government Regulation - Coverage and Reimbursement."

For more information regarding the risks related to insurance coverage and reimbursement, 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.

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 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.

Because the target patient populations of our product candidates may be small and variable, 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 and autoimmune diseases.

The FDA often approves new therapies initially for use in patients with relapsed or refractory disease.

We expect to initially seek approval of our product candidates in these settings.

Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval in earlier lines of treatment.

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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 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.

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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.

Additionally, because our target patient populations may be small and variable, we may never achieve profitability without capturing a significant market share or obtaining regulatory approval for additional indications for our products.

Healthcare legislative or regulatory reform measures may have a negative impact on our business and results of operations.

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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 more information regarding the risks related to such recently enacted and future legislation please see “Business –

Government Regulation –

Healthcare Reform and Other Regulatory Changes.”

Continued implementation of the Affordable Care Act (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 more information regarding the risks related to such recently enacted and future legislation please see “Business – Government Regulation – Healthcare Reform and Other Regulatory Changes.”

There has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices.

Specifically, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S.

Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between pricing and manufacturer patient programs.

The continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare services to contain or reduce costs of healthcare may adversely affect:

• the demand for any of our product candidates, if approved;

• the ability to set a price that we believe is fair for any of our product candidates, if approved;

• our ability to generate revenues and achieve or maintain profitability;

• the level of taxes that we are required to pay;

• the availability of capital.

We expect that additional U.S.

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Risks Related to Our Business and Industry

The success of our existing product candidates is substantially dependent on developments within the field of cellular immunotherapy, and specifically developments relating to the use of pluripotent or genome edited cells for the manufacture of cellular therapeutics, some of which are beyond our control.

Our product candidates are designed and are being developed as therapeutic entities for use as cellular immunotherapies, and all of our current product candidates are based on our novel iPSC platform.

Additionally, some of our product candidates utilize novel genome editing technologies.

To date, there is limited clinical trial experience testing iPSC-derived therapeutic product candidates and genome edited therapeutics.

To date, there is limited clinical trial experience testing iPSC-derived therapeutic product candidates using genome edited cells.

The fields of cellular and genome edited therapies are evolving, and as more therapeutic product candidates derived from pluripotent and genome edited cells are reviewed by regulatory authorities, regulatory authorities may impose additional requirements for approval that were not previously anticipated.

There have also been several significant adverse events from gene therapy treatments in the past, including reported cases of leukemia and death.

There can be no assurance that any product candidates developed from or related to our iPSC platform or any of our research programs will not cause severe or undesirable side effects or result in significant delays or unanticipated costs, or that such development problems can be solved.

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 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.

Additionally, in November 2023, the FDA announced that it would be conducting an investigation into reports of T-cell malignancies following BCMA-directed or CD19-directed autologous CAR T-cell immunotherapies following reports of T-cell lymphoma in patients receiving these therapies.

There can be no assurance that any product candidates developed from or related to our iPSC product platform or any of our research programs will not cause severe or undesirable side effects or result in significant delays or unanticipated costs, or that such development problems can be solved.

Any adverse developments in the fields of cellular immunotherapy or genome edited therapy, such as FDA’s investigation into CAR T-cell therapies and other similar actions could negatively affect our ability to develop and commercialize our product candidates.

We face intense competition in an environment of rapid technological and scientific progress 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, more cost 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.

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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.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive or more commercially viable than any products that we may develop.

Furthermore, currently approved products could be discovered to have application for treatment of our targeted disease indications or similar indications, which could give such products significant regulatory and market timing advantages over our product candidates.

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

Additionally, products or technologies developed by our competitors may render our product candidates uneconomical or obsolete and we may not be successful in marketing those product candidates, once approved, against competitors.

Our ability to compete effectively with other biotechnology and pharmaceutical companies depends on our ability to distinguish our company and our product candidates from our competitors and their product candidates.

Some of our competitors may have, or new competitors or alliances may emerge that have, greater name and brand recognition, greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, larger sales forces, or significantly greater resources than we do and may be able to offer solutions competitive with ours at a more attractive price than we can.

Further, our current or potential competitors may be acquired by third parties with greater available resources.

As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition.

In addition, our competitors may in the future establish cooperative relationships with vendors of complementary products, technologies or services to increase the availability of their solutions in the marketplace.

Our competitors could also be better positioned to serve certain segments of our market, which could create additional price pressure.

In light of these factors, even if any products that we may develop are more effective than those of our competitors, current or potential customers may accept competitive products in lieu of purchasing our products.

If we are unable to successfully compete, our business, financial condition, and results of operations could be materially and adversely affected.

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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We may also experience difficulties in attracting or retaining personnel with sufficient experience and skills in the complex and emerging field of cellular therapeutic development and manufacture to support our ongoing and planned clinical development activities.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants.

There can be no assurance that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.

We may also be subject to penalties or other liabilities if we misclassify employees as consultants.

In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business.

There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.

Many of the biotechnology and pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources and different risk profiles than we do.

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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.

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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If we pursue such a strategy, we could, among other things:

issue equity securities that would dilute our current stockholders’

percentage ownership;

• issue equity securities that would dilute our current stockholders’ percentage ownership;

• incur substantial debt that may place strains on our operations;

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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 do not carry insurance for all categories of risk to which our business is or may be exposed.

Some of the policies we maintain include general liability, product liability, property, employee benefits liability, employment practices, workers’

compensation, cyber, directors’

and officers’

insurance, and umbrella.

Some of the policies we maintain include general liability, product liability, property, employee benefits liability, employment practices, workers’ compensation, cybersecurity, directors’ and officers’ insurance, and umbrella.

We do not know, however, if we will be able to maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us against losses.

Even if we obtain insurance, a claim could exceed the amount of our insurance coverage or it may be excluded from coverage under the terms of the policy.

Further, insurance coverage may not be available or successfully secured for loss profits or business interruption relating to the COVID-19 pandemic and its impacts.

Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of employee fraud or other misconduct.

Misconduct by employees could include intentional failures to comply with the regulations of the FDA or foreign regulators, to provide accurate information to the FDA or foreign regulators, to comply with healthcare fraud and abuse laws and regulations in the United States and abroad, to report financial information or data accurately or to disclose unauthorized activities to us.

Our employees or third party service providers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of employee or third party service provider fraud or other misconduct.

Misconduct by employees or third party service providers could include intentional failures to comply with the regulations of the FDA or foreign regulators, to provide accurate information to the FDA or foreign regulators, to comply with healthcare fraud and abuse laws and regulations in the United States and abroad, to report financial information or data accurately or to disclose unauthorized activities to us.

In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.

Employee and independent contractor misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation.

Employee or third party service provider misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation.

If any actions alleging such conduct are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant effect on our business, including the imposition of significant fines or other sanctions.

Our business could be negatively affected by cyberattacks or a deficiency in our cybersecurity.

A cyberattack or similar incident could occur and result in information theft, data corruption, operational disruption, damage to our reputation, or financial loss.

We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business.

Our technologies, systems, networks, or other proprietary information, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary and other information, or could otherwise lead to the disruption of our business operations.

The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

Moreover, certain cyber incidents, such as surveillance, may remain undetected for an extended period and could lead to disruptions in critical systems or the unauthorized release of confidential or otherwise protected information.

These events could lead to financial loss due to remedial actions, loss of business, disruption of operations, damage to our reputation, or potential liability.

Our systems and insurance coverage for protecting against cybersecurity risks may not be sufficient.

Furthermore, as cyberattacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyberattacks.

We face risks of potential liability related to the privacy of personal information, including health information we utilize in the development of our products, as well as information we obtain from clinical trials sponsored by us from research institutions and directly from individuals.

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 HIPAA and privacy and security requirements under HIPAA, as amended by 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 the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and privacy and security requirements under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (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.

There is no certainty that all of our employees, agents, suppliers, manufacturers, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws.

Even when HIPAA does not apply, failing to take appropriate steps to keep consumers’

personal information secure may constitute a violation of the Federal Trade Commission Act.

Even when HIPAA does not apply, failing to take appropriate steps to keep consumers’ personal information secure may constitute a violation of the Federal Trade Commission Act.

In addition, certain of the materials we use as starting material in our iPSC-derived product candidates are derived from human sources, which potentially contain sensitive identifiable personal information regarding the donor.

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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 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.

These state laws include the California Consumer Privacy Act , as amended by the California Privacy Rights Act (the CCPA), which establish 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 or sharing 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 passed in several other states, which 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 CCPA, 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.

An increasing number of foreign data protection laws, regulations and industry standards may also apply to personal information we obtain from individuals outside of the United States.

For example, the GDPR, imposes strict requirements for processing the personal data of individuals within the EEA and UK, including health-related data, and on the transfer of personal data out of the EEA and UK to non-adequate territories such as the United States;

any inability to transfer personal data from the EEA and UK to the United States in compliance with data protection laws may impede our ability to conduct trials and may adversely affect our business and financial position.

Failure to comply with the requirements of the GDPR may result in potential fines for companies of up to the greater of €20 million (£17.5 million for the UK GDPR) or 4% of annual global revenue and other administrative penalties.

In addition, under the GDPR, companies may face private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to protect their interests.

Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is possible that over time the UK GDPR could become less aligned with the EU GDPR, particularly with the introduction of the new Data Reform Bill into the UK legislative process.

In addition, EEA Member States have adopted national laws to supplement the EU GDPR, which may partially deviate from the EU GDPR, and the competent authorities in the EEA Member States may interpret EU GDPR obligations slightly differently from country to country, such that we do not expect to operate in a uniform legal landscape in the EEA and UK with respect to data protection regulations.

The potential of the respective provisions and enforcement of the EU GDPR and UK GDPR further diverging in the future creates additional regulatory challenges and uncertainties for us.

The lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of European personal data and our privacy and data security compliance, and could require us to amend our processes and procedures to implement different compliance measures for the UK and the EEA.

We are likely to be required to expend significant capital and other resources to ensure ongoing compliance with applicable data privacy and security laws.

Claims that we have violated individuals’

privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity that could harm our business.

Claims that we have violated individuals’ privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity that could harm our business.

Moreover, even if we take all necessary action to comply with legal and regulatory requirements, we could be subject to a data breach or other unauthorized access of personal information, which could subject us to fines and penalties, as well as litigation and reputational damage.

If we fail to keep apprised of and comply with applicable international, federal, state, or local regulatory requirements, we could be subject to a range of regulatory actions that could affect our or any collaborators’

ability to seek to commercialize our clinical candidates.

Any threatened or actual government enforcement action or litigation where private rights of action are available could also generate adverse publicity, damage our reputation, result in liabilities, fines and loss of business, and require that we devote substantial resources that could otherwise be used in other aspects of our business.

Any threatened or actual government enforcement action or litigation could also generate adverse publicity, damage our reputation, result in liabilities, fines and loss of business, and require that we devote substantial resources that could otherwise be used in other aspects of our business.

We make public statements about our use and disclosure of personal information through our privacy policy information provided on our internet platform and press statements.

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For example, laws in all 50 U.S.

states and the District of Columbia require businesses to provide notice to consumers whose sensitive personal information has been disclosed as a result of a data breach.

states and the District of Columbia require businesses to provide notice to consumers whose personal information has been disclosed as a result of a data breach.

These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly.

Moreover, states have been frequently amending existing laws, requiring attention to changing regulatory requirements.

We also may be contractually required to notify customers or other counterparties of a security breach.

Although we may have contractual protections with our third-party service providers, contractors and consultants, any actual or perceived security breach could harm our reputation and brand, expose us to potential liability or require us to expend significant resources on data security and in responding to any such actual or perceived breach.

liability or require us to expend significant resources on data security and in responding to any such actual or perceived breach or security incident.

Any contractual protections we may have from our third-party service providers, contractors or consultants may not be sufficient to adequately protect us from any such liabilities and losses, and we may be unable to enforce any such contractual protections.

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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 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.

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 cybersecurity risks, including attempts to gain unauthorized access to and to harm sensitive or confidential information and networks, insider threats, and ransomware.

These vulnerabilities may be heightened as a result of flexible work arrangements, including hybrid or remote work policies implemented by us and our third-party contractors, that were first adopted in response to the COVID-19 pandemic and have continued by many businesses in an effort to attract and retain talent.

We have from time to time experienced, and may continue to experience in the future, cyber-attacks on our information technology systems despite our best efforts to prevent them.

Although such breaches have been immaterial to our business to date, investigations into and remedial efforts in connection with any breaches, even those with immaterial impact, can be costly and time-consuming, and any future breaches could be material, or cause significant disruption, to our business.

Although such incidents have been immaterial to our business to date, investigations into and remedial efforts in connection with any security incidents, even those with immaterial impact, can be costly and time-consuming, and any future incidents could be material, or cause significant disruption, to our business.

For example, the loss of clinical trial data from completed, ongoing or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Likewise, we rely on third parties for research and development, the manufacture and supply of drug product and drug substance and to conduct clinical trials.

We depend on these third parties to implement adequate controls and safeguards to protect against and report cyber incidents.

We depend on these third parties to implement adequate controls and safeguards to protect against and report cybersecurity incidents.

If they fail to do so, we may suffer financial and other harm, including to our information, operations, performance, and reputation.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.

Cyber threats, both on premises and in the cloud, are evolving and include, but are not limited to:

Cybersecurity threats, both on premises and in the cloud, are evolving and include, but are not limited to:

malicious software, destructive malware, ransomware, attempts to gain unauthorized access to systems or data, disruption to operations, critical systems or denial of service attacks;

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and loss of assets.

In addition, we could be impacted by cyber threats or other disruptions or vulnerabilities found in products or services we use that are provided to us by third-parties.

In addition, we could be impacted by cybersecurity threats or other disruptions or vulnerabilities found in products or services we use that are provided to us by third-parties.

The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world.

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In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.

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.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’

operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

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.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes.

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Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Risks Related to Our Financial Condition and the Ownership of Our Common Stock

We are currently advancing multiple product candidates through clinical development, and conducting preclinical research and development activities in our other programs.

Drug development is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we advance our current product candidates in clinical trials and seek to initiate clinical development for additional product candidates.

As of December 31, 2022, our cash and cash equivalents and investments were $441.2 million.

In any event, we will require additional capital to obtain regulatory approval for, and to commercialize our existing product candidates and any other product candidates we may identify and develop.

Our future capital requirements will depend on many factors, including, but not limited to:

the progress, results, size, timing and costs of our ongoing and planned clinical trials, and any additional clinical trials we may initiate, conduct or support for our product candidates;

the progress, results, size, timing and costs of our preclinical, process development and manufacturing studies, and activities necessary to initiate and conduct clinical trials for our product candidates and to establish and maintain manufacturing capabilities necessary to support such trials;

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 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;

our ability to manufacture, or enter into arrangements with third parties for the manufacture of our existing product candidates, as well as potential future clinical development candidates, both for clinical development and commercialization, and the timing and costs associated with such manufacture;

our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, or other costs we may incur, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

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 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.

In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.

The sale of additional equity or convertible securities would dilute all of our stockholders.

acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

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.

We have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future.

We are a clinical-stage biopharmaceutical company formed in 2007 with a limited operating history.

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, 2022, we had an accumulated deficit of $1.05 billion.

We anticipate that our net losses for the next several years could be significant as we conduct our planned operations.

The amount of our future net losses will depend, in part, on the rate of increase in our expenses, our ability to generate revenues and our ability to raise additional capital.

These net losses have had, and will continue to have, an adverse effect on our stockholders’

equity and working capital.

Risks Related to the Ownership of Our Common Stock

Our stock price is subject to fluctuation based on a variety of factors.

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• fluctuations in our operating results (including changes related to stock-based compensation from performance-based awards);

acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from the conflicts in Ukraine;

• acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from the ongoing wars between Russia and Ukraine and between Israel and Hamas;

• 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.

These and other market and industry factors, including the effects of any future public health crises or other public health concerns, wars or armed conflicts, including the ongoing wars between Russia and Ukraine and between Israel and Hamas, the upcoming presidential election in the U.S.

or similar events, 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.

For example, pursuant to the terms of our license agreement with MSK, MSK is eligible to receive from us certain milestone payments totaling up to $75.0 million based on the price of our common stock, where the amount of such payments owed to MSK is contingent upon certain increases in the price of our common stock following the date of achievement of a specified clinical milestone.

In July 2021, we achieved the specified clinical milestone for a licensed product under our license agreement with MSK and our ten-trading day trailing average common stock price exceeded the first, pre-specified threshold.

Accordingly, MSK received the first milestone payment of $20.0 million in November 2021;

For example, pursuant to the terms of the Amended MSKCC License, MSKCC is eligible to receive from us certain milestone payments totaling up to $75.0 million based on the price of our common stock, where the amount of such payments owed to MSKCC is contingent upon certain increases in the price of our common stock following the date of achievement of a specified clinical milestone.

In July 2021, we achieved the specified clinical milestone for a licensed product under the Amended MSKCC License and our ten-trading day trailing average common stock price exceeded the first, pre-specified threshold.

Accordingly, MSKCC received the first milestone payment of $20.0 million in November 2021;

however, uncertainty of the price of our common stock results in an inability to ascertain the precise timing of any remaining future milestone payments in advance.

Additionally, a decrease in our stock price may cause our common stock to no longer satisfy the continued listing standards of Nasdaq.

If we are not able to maintain the requirements for listing on Nasdaq, our common stock could be delisted, which could have a materially adverse effect on our ability to raise additional funds as well as the price and liquidity of our common stock.

Our principal stockholders and management own a significant percentage of our stock and may be able to exercise significant control over our company.

As of February 20, 2024, our executive officers, directors and entities affiliated with our five percent stockholders beneficially own, in the aggregate, shares representing approximately 54.8% of our outstanding voting stock.

If, in accordance with the CoD (as such term is defined in Note 9 of the notes to the consolidated financial statements herewith) relating to the Class A Convertible Preferred Stock, Redmile (as such term is defined in Note 9 of the notes to the consolidated financial statements herewith) elects to remove certain limitations on the percentage of the our outstanding common stock that it may own such that the 2,794,549 shares of Class A Convertible Preferred Stock currently held by Redmile become fully convertible at Redmile’s option into 13,972,745 shares of common stock, the beneficial ownership of our executive officers, directors and entities affiliated with our five percent stockholders would increase to 61.8%.

If, in accordance with the CoD (as such term is defined in Note 9 of the notes to the consolidated financial statements herewith) relating to the Class A Convertible Preferred Stock, Redmile (as such term is defined in Note 9 of the notes to the consolidated financial statements herewith) elects to remove certain limitations on the percentage of the our outstanding common stock that it may own such that the 2,761,108 shares of Class A Convertible Preferred Stock currently held by Redmile become fully convertible at Redmile’s option into 13,805,540 shares of common stock, the beneficial ownership of our executive officers, directors and entities affiliated with our five percent stockholders would increase to 59.4%.

Although we are not aware of any voting arrangements in place among these stockholders, if these stockholders were to choose to act together, as a result of their stock ownership, they would be able to influence our management and affairs and control all matters submitted to our stockholders for approval, including the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets.

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For example, if any of our directors, executive officers or other entities affiliated with our five percent stockholders elect to sell, transfer or otherwise dispose of a significant amount of shares of our common stock, this could result in a decrease in our stock price.

Furthermore, any transferees or successors of all or a significant portion of our existing stockholders’

ownership in us will be able to exert a similar amount of control over us through their ownership position.

Furthermore, any transferees or successors of all or a significant portion of our existing stockholders’ ownership in us will be able to exert a similar amount of control over us through their ownership position.

We may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders and impose restrictions or limitations on our business.

We expect that significant additional capital will be needed in the future to continue our planned operations, and we may seek additional funding through a combination of equity offerings, debt financings, state or government grants, strategic alliances, licensing and collaboration arrangements, or other third-party business arrangements.

These financing activities may have an adverse effect on our stockholders’

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 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.

These financing activities may have an adverse effect on our stockholders’ 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 2023, we filed a registration statement on Form S-3 pursuant to which we may issue and sell up to $300.0 million in common stock, preferred stock, debt securities, warrants and/or units, in one or more series or classes, including up to $100.0 million in shares of common stock that may be issued in sales deemed to be an “at the market offering” as defined by the Securities Act of 1933, as amended (the Securities Act).

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.

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We also registered all of the 6,766,915 shares of common stock issued by us and all 14,097,745 shares of common stock issuable upon the conversion of an aggregate of 2,819,549 shares of Class A Convertible Preferred Stock issued by us in our November 2016 private placement transaction for resale on a Form S-3, which was declared effective by the SEC in January 2017.

Additionally, we have registered the shares of common stock issued to Johnson & Johnson Innovation –

under a stock purchase agreement entered into in connection with the Janssen Agreement pursuant to a registration statement on Form S-3.

Additionally, we have registered the shares of common stock issued to Johnson & Johnson Innovation – JJDC, Inc.

under the stock purchase agreement entered into in June 2020 in connection with the Janssen Agreement pursuant to a registration statement on Form S-3.

Moreover, we registered all of the 5,380,117 shares of common stock issued by us and all of the 257,310 prefunded warrants to purchase common stock in our public offering in January 2021.

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As a result, these shares will be available for sale in the public market subject to vesting arrangements and exercise of options, and restrictions under applicable securities laws.

In addition, certain of our executive officers, employees and affiliates have established or may in the future establish programmed selling plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, for the purpose of effecting sales of our common stock.

In addition, certain of our executive officers, employees and affiliates have established and may in the future establish programmed selling plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, for the purpose of effecting sales of our common stock.

If any of these events cause a large number of our shares to be sold in the public market, the sales could reduce the trading price of our common stock and impede our ability to raise future capital.

We have broad discretion over the use of our cash, cash equivalents, and investments and may not use them effectively.

We may invest our cash and cash equivalents in a manner that does not produce income or that loses value.

Provisions of Delaware law or our charter documents could delay or prevent an acquisition of our company, and could make it more difficult for you to change management.

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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.

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.

Our amended and restated bylaws designate the Court of Chancery of the State of Delaware and the U.S.

federal district courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’

ability to litigate disputes with us in a different judicial forum.

federal district courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to litigate disputes with us in a different judicial forum.

Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

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(ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, or employees to us or our stockholders;

(iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our amended and restated bylaws;

(iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our

amended and restated certificate of incorporation or our amended and restated bylaws;

or (iv) any action asserting a claim governed by the internal affairs doctrine.

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federal district courts shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

The forum selection clause in our amended and restated bylaws may limit our stockholders’

ability to litigate disputes with us in a different judicial forum.

The forum selection clause in our amended and restated bylaws may limit our stockholders’ ability to litigate disputes with us in a different judicial forum.

Our ability to use our net operating loss carryforwards and certain other tax benefits may be limited and, as a result, our future tax liability may increase.

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These net operating loss and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.

In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change”

is subject to limitations on its ability to utilize its pre-change net operating losses (NOLs) or tax credits, or NOLs or credits, to offset future taxable income or taxes.

Generally, a change of more than 50 percentage points in the ownership of a corporation’s stock, by value, over a three-year period constitutes an ownership change for U.S.

In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses (NOLs) or tax credits, or NOLs or credits, to offset future taxable income or taxes.

Generally, a change of more than 50 percentage points in the ownership of a corporation’s stock, by value, over a three-year period constitutes an ownership change for U.S.

federal income tax purposes.

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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.

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’

and officers’

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.

District Court for the Southern District of California and in June 2023, a derivative action was filed in the same court (see "Item 3.

Legal Proceedings" for a more detailed description of this matter).

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.

Additionally, the dramatic increase in the cost of directors’ and officers’ 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.

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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.

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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, 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.

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.

In addition, our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets upon which pharmaceutical and biopharmaceutical companies such as us are dependent for sources of capital.

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, 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.

Earthquakes, fires, or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.

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 or other materials and components necessary to conduct 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 an

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