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Item 1. Business

2021-04-13 compared with 2020-03-27 · 810 added, 813 removed, 115 unchanged (93% of the section changed)

We are a biotechnology company developing bioengineered organ

implants based on our novel technology.

Our technology is comprised of a proprietary biocompatible scaffold, which is the foundation

of our Cellframe TM technology, that is seeded with the patient’s own mesenchymal

stromal cells to form our Cellspan TM implant, combining the clinically proven principles

of tissue engineering, cell biology and materials science.

Our platform technology is being developed to treat life-threatening

conditions of the esophagus, bronchus and trachea.

By focusing on these underserved patients, we hope to dramatically improve the

treatment paradigm for these patients.

We believe our technology may provide surgeons a new paradigm

to address life-threatening conditions of the esophagus, bronchus, and trachea due to congenital abnormalities, diseases, infections

Our novel technology harnesses the body’s response and modulates it toward the healing process to regenerate

tissue and restore the continuity and integrity of the organ.

We are pursuing our Cellspan Esophageal Implant (CEI) technology

as our first product candidate to address both esophageal disease and pediatric esophageal atresia, and we are also developing

our technology’s applications to address conditions of the bronchus and trachea.

In collaboration with world-class institutions, such as Mayo

Clinic and Connecticut Children’s Medical Center, we are advancing our technology.

Our product development program is based

on the greatest medical unmet needs, analysis of existing surgical options and physician validation.

In October 2019, we filed an Investigational New Drug (IND)

application with the U.S.

Food and Drug Administration (FDA) to treat patients with esophageal disease, absent of cancer, in adults

that would require a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus

with our CEI product candidate.

In November 2019, we received notice from the FDA placing our IND on clinical hold and providing

a preliminary list of clinical hold and non-clinical hold questions.

In December 2019, we received the formal letter with clinical

hold and non-clinical hold questions and submitted our response to the clinical hold questions on February 18, 2020.

2020, the FDA notified us that the IND for our CEI product candidate had been removed from clinical hold and that we could proceed

with our study.

This FDA approval enables us to start our transition to a clinical-stage biotechnology company, and start clinical

planning, engaging with a clinical research organization and site readiness in advance of starting the clinical trial for our CEI

product candidate.

We believe that receiving regulatory approval to treat pediatric

esophageal atresia with our CEI may provide a shorter time to a commercial product and the greater overall potential value in the

In addition to providing a novel solution for a great medical need, approval of our pediatric esophageal atresia product

candidate may result in receipt of a priority review voucher, which if achieved, could potentially provide significant value and

non-dilutive funding to Biostage in the future.

We have continued to advance our CEI pediatric esophagus program and plan to file

a protocol amendment with the FDA to update our CEI esophageal disease clinical program after the initial adult patients are treated

in the esophageal disease trial, subject to FDA approval.

We are a biotechnology company developing bioengineered organ implants

based on our novel technology.

Our technology is comprised of a proprietary biocompatible scaffold, which is the foundation of our Cellframe TM

technology, that is seeded with the patient’s own mesenchymal stromal cells to form our Cellspan TM

implant, combining the clinically proven principles of tissue engineering, cell biology and materials science.

Our platform technology

is being developed to treat life-threatening conditions of the esophagus, bronchus and trachea.

By focusing on these underserved patients,

we hope to dramatically improve the treatment paradigm for these patients.

We believe our technology may provide surgeons a new paradigm to address

life-threatening conditions of the esophagus, bronchus, and trachea due to congenital abnormalities, diseases, infections and traumas.

Our novel technology harnesses the body’s response and modulates it toward the healing process to regenerate tissue and restore

the continuity and integrity of the organ.

We are pursuing our Cellspan Esophageal Implant (CEI) technology as our first product candidate

to address both esophageal disease and pediatric esophageal atresia, and we are also developing our technology’s applications to

address conditions of the bronchus and trachea.

In collaboration with world-class institutions, such as Mayo Clinic

and Connecticut Children’s Medical Center, we are advancing our technology.

Our product development program is based on the greatest

medical unmet needs, analysis of existing surgical options and physician validation.

In October 2019, we filed an Investigational New Drug (IND) application

with the U.S.

Food and Drug Administration (FDA) to treat patients with esophageal disease, absent of cancer, in adults that would require

a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus with our CEI product

In November 2019, we received notice from the FDA placing our IND on clinical hold and providing a preliminary list of clinical

hold and non-clinical hold questions.

In December 2019, we received the formal letter with clinical hold and non-clinical hold questions

and submitted our response to the clinical hold questions on February 18, 2020.

On March 19, 2020, the FDA notified us that the IND for

our CEI product candidate had been removed from clinical hold and that we could proceed with our study.

This FDA approval enables us to

start our transition to a clinical-stage biotechnology company, and start clinical planning, engaging with a clinical research organization

and site readiness in advance of starting the clinical trial for our CEI product candidate.

On May 7, 2020, we submitted responses to

certain non-clinical hold questions and finalized a majority of the remaining non-clinical hold responses in the third quarter of 2020,

and submitted the remaining responses in the fourth quarter of 2020, except as it relates to our clinical trial details that we will submit

once a clinical research organization is selected.

The ongoing COVID-19 pandemic could continue to adversely impact our business, including

planned clinical trials, as discussed elsewhere in this document.

We believe that receiving regulatory approval to treat pediatric esophageal

atresia with our CEI may provide a shorter time to a commercial product and the greater overall potential value in the U.S.

addition to providing a novel solution for a great medical need, approval of our pediatric esophageal atresia product candidate may result

in receipt of a priority review voucher, which if achieved, could potentially provide significant value and non-dilutive funding to Biostage

in the future.

We have continued to advance our CEI pediatric esophagus program and plan to file a protocol amendment with the FDA to

update our CEI esophageal disease clinical program after the initial adult patients are treated in the esophageal disease trial, subject

to FDA approval.

formed a subsidiary in Hong Kong, Harvard Apparatus Regenerative Technology Limited, as we continue to assess the market and regulatory

approval pathway in China as to our implant products.

We are not certain at this time as to which market, including U.S.

example, may provide the most viable initial pathway for regulatory approval to a commercial product.

This will depend on a number of

factors, including the approval and development processes, related costs, ability to raise capital and the terms and conditions thereof,

as well as the ongoing impact of the COVID-19 pandemic, among other factors.

Any development and capital raising efforts in China may

include a joint venture in relation to our Hong Kong subsidiary, and would also involve a number of commercial variables, including rights

and obligations pertaining to licensing, development and financing, among others.

Our failure to receive or obtain such clearances or

approvals on a timely basis or at all, whether that be in the U.S., China or otherwise, would have an adverse effect on our results of

Our Technology Platform:

Our Cellspan process begins with the collection of an adipose

(fat) tissue biopsy from the patient followed by the use of standard tissue culture techniques to isolate and expand the patient’s

own (autologous) mesenchymal (multipotent) stromal cells, or MSC.

The cells are seeded onto a proprietary biocompatible, synthetic

scaffold, produced to mimic the dimensions of the organ to be regenerated, and incubated in a proprietary bioreactor.

is electrospun from polyurethane to form a non-woven, hollow tube.

The specific microstructures of the Cellspan implants are designed

to allow the cultured cells to attach to and cover the scaffold fibers.

We have conducted large-animal studies to investigate the use

of the Cellspan implants for the reconstitution of the continuity and integrity of tubular shape organs, such as the esophagus

and the large airways, following a full circumferential resection of a clinically relevant segment, just as would occur in a clinical

We announced favorable preliminary preclinical results of large-animal studies for the esophagus, bronchus and trachea

in November 2015.

Based on the results of those studies, we chose the esophagus to be the initial focus for our organ regeneration

Our Cellspan process begins with the collection of an adipose (fat)

tissue biopsy from the patient followed by the use of standard tissue culture techniques to isolate and expand the patient’s own

(autologous) mesenchymal (multipotent) stromal cells, or MSC.

The cells are seeded onto a proprietary biocompatible, synthetic scaffold,

produced to mimic the dimensions of the organ to be regenerated, and incubated in a proprietary bioreactor.

The scaffold is electrospun

from polyurethane to form a non-woven, hollow tube.

The specific microstructures of the Cellspan implants are designed to allow the cultured

cells to attach to and cover the scaffold fibers.

We have conducted large-animal studies to investigate the use of the

Cellspan implants for the reconstitution of the continuity and integrity of tubular shape organs, such as the esophagus and the large

airways, following a full circumferential resection of a clinically relevant segment, just as would occur in a clinical setting.

favorable preliminary preclinical results of large-animal studies for the esophagus, bronchus and trachea in November 2015.

results of those studies, we chose the esophagus to be the initial focus for our organ regeneration technology.

of intersection of Cellspan esophageal implant and native

at time of implant and proposed mechanism of action

In May 2016, we reported an update of results from additional,

confirmatory pre-clinical large-animal studies.

We disclosed that the studies had demonstrated in a predictive large-animal model

the ability of our Cellspan implant to successfully stimulate the regeneration of a section of esophagus that had been surgically

CEIs, consisting of a proprietary biocompatible synthetic scaffold seeded with the recipient animal’s own mesenchymal

stromal cells, were surgically implanted in place of the esophagus section that had been removed.

After the surgical full circumferential

resection of a portion of the thoracic esophagus, the Cellspan implant stimulated the reconstitution of full esophageal structural

integrity and continuity.

In May 2016, we reported an update of results from additional, confirmatory

pre-clinical large-animal studies.

We disclosed that the studies had demonstrated in a predictive large-animal model the ability of our

Cellspan implant to successfully stimulate the regeneration of a section of esophagus that had been surgically removed.

CEIs, consisting

of a proprietary biocompatible synthetic scaffold seeded with the recipient animal’s own mesenchymal stromal cells, were surgically

implanted in place of the esophagus section that had been removed.

After the surgical full circumferential resection of a portion of the

thoracic esophagus, the Cellspan implant stimulated the reconstitution of full esophageal structural integrity and continuity.

of esophageal reconstitution over Cellspan esophageal

following time of implant and proposed mechanism of action

Study animals were returned to a solid diet three weeks after

the implantation surgery.

The scaffold portions of the Cellspan implants, which are intended to be in place only temporarily, were

retrieved approximately three weeks post-surgery via the animal’s mouth in a non-surgical endoscopic procedure.

to 3 months, a complete inner epithelium layer and other specialized esophagus tissue layers were regenerated.

Two animals in the

study were kept in life for almost two years to evaluate the long-term viability of the newly regenerated tubular conduit and were

then sacrificed for histological data.

Prior to their sacrifice, these animals demonstrated normal weight gain, appeared healthy

and free of any significant side effects and received no specialized care.

implant following

time of implant and proposed mechanism of action

Study animals were returned to a solid diet three weeks after the implantation

The scaffold portions of the Cellspan implants, which are intended to be in place only temporarily, were retrieved approximately

three weeks post-surgery via the animal’s mouth in a non-surgical endoscopic procedure.

Within 2.5 to 3 months, a complete inner

epithelium layer and other specialized esophagus tissue layers were regenerated.

Two animals in the study were kept in life for almost

two years to evaluate the long-term viability of the newly regenerated tubular conduit and were then sacrificed for histological data.

Prior to their sacrifice, these animals demonstrated normal weight gain, appeared healthy and free of any significant side effects and

received no specialized care.

Platform Technology in Life-threatening Orphan Indications

In November 2016, we were granted Orphan Drug Designation for

our CEI by the FDA to restore the structure and function of the esophagus subsequent to esophageal damage due to cancer, injury

or congenital abnormalities.

Orphan Drug Designation provides a seven-year marketing exclusivity period against competition in

from the date of a product’s approval for marketing.

This exclusivity would be in addition to any exclusivity we

may obtain from our patents.

Additionally, orphan designation provides certain incentives, including tax credits and a waiver of

the Biologics License Application (BLA) fee.

In November 2016, we were granted Orphan Drug Designation for our CEI

by the FDA to restore the structure and function of the esophagus subsequent to esophageal damage due to cancer, injury or congenital

abnormalities.

Orphan Drug Designation provides a seven-year marketing exclusivity period against competition in the U.S.

from the date

of a product’s approval for marketing.

This exclusivity would be in addition to any exclusivity we may obtain from our patents.

Additionally, orphan designation provides certain incentives, including tax credits and a waiver of the Biologics License Application

We also plan to apply for Orphan Drug Designation for our CEI in Europe.

Designation in Europe provides market exclusivity in Europe for ten years from the date of the product’s approval for marketing.

We have advanced the development of our technology, specifically

a CEI, in a series of preclinical studies, including large-animal studies with collaborators.

In order to seek approval for the

initiation of clinical trials for our CEIs in humans, Good Laboratory Practice (GLP) studies to support the safety of the CEI are

required to submit an IND application with the FDA.

We have now performed GLP studies to demonstrate that our technology, personnel,

systems, processes and practices are sufficient for advancing into human clinical trials.

We have conducted a number of IND-enabling

GLP studies demonstrating safety and feasibility of the Cellspan implant.

During 2018 we also performed additional non-GLP studies

for the pediatric esophageal atresia program to optimize that product candidate.

Some of the results from these studies were included

in the IND for our CEI that we filed with the FDA in October 2019.

First-In-Human Use of Esophageal Implant

Product Candidate

Orphan Drug Designation in Europe provides market

exclusivity in Europe for ten years from the date of the product’s approval for marketing.

We have advanced the development of our technology, specifically a

CEI, in a series of preclinical studies, including large-animal studies with collaborators.

In order to seek approval for the initiation

of clinical trials for our CEIs in humans, Good Laboratory Practice (GLP) studies to support the safety of the CEI are required to submit

an IND application with the FDA.

We have now performed GLP studies to demonstrate that our technology, personnel, systems, processes and

practices are sufficient for advancing into human clinical trials.

We have conducted a number of IND-enabling GLP studies demonstrating

safety and feasibility of the Cellspan implant.

During 2018 we also performed additional non-GLP studies for the pediatric esophageal

atresia program to optimize that product candidate.

Some of the results from these studies were included in the IND for our CEI that we

filed with the FDA in October 2019.

First-In-Human Use of Esophageal Implant Product

On August 7, 2017, we announced the use of our CEI product candidate

1 unchanged sentence

hospital via an FDA-approved single-use expanded access application.

The surgery took place at Mayo

Clinic, but we were not allowed to identify the institution publicly at that time.

The surgery took place at Mayo Clinic,

but we were not allowed to identify the institution publicly at that time.

The patient was a 75-year-old male with a life-threatening

cancerous mass in his chest that spanned his heart, a lung and his esophagus.

The surgery was performed in May 2017 to remove the

tumor, repair the heart, part of one lung, and a section of the esophagus.

The CEI was interpositioned into the gap in the esophagus

created by the removal of the tumor.

The patient’s surgeon informed us at that time that the surgery was a success and the

patient was later discharged from the hospital.

In February 2018 the surgeon informed us that the patient had died after living

approximately eight months after surgery.

The surgeon stated that the cause of death was a stroke, and that the stroke was unrelated

to the esophageal implant.

The surgeon also informed us that a preliminary autopsy had shown that the esophageal implant resulted

in a regenerated esophageal tube in the patient, except for a very small (approximately 5mm) hole outside the implant zone on the

lateral wall that was right up against a synthetic graft inserted as part of the patient’s heart repair on the vena cava

in that same surgery.

The synthetic graft on the pericardium was not related to our esophageal implant product and may have acted

as an irritant to esophageal tissue where it contacted the esophageal implant.

The surgeon also informed us that the esophageal

regeneration in this patient was consistent with the regeneration previously observed in our large-animal studies.

In January 2019,

the surgeon presented the case study publicly at a major U.S.

medical conference, including histological data supporting his earlier

statements regarding successful regeneration.

Mayo Clinic expects to publish an article in a peer-reviewed journal and we expect

to be in a position to release additional information on this landmark case at that time.

Some of the results of this expanded

access case was included in the IND for our CEI that we filed with the FDA in October 2019.

Our product candidates are currently in development and have

not yet received regulatory approval for sale anywhere in the world.

The surgery was performed in May 2017 to remove the tumor,

repair the heart, part of one lung, and a section of the esophagus.

The CEI was interpositioned into the gap in the esophagus created

by the removal of the tumor.

The patient’s surgeon informed us at that time that the surgery was a success and the patient was later

discharged from the hospital.

In February 2018 the surgeon informed us that the patient had died after living approximately eight months

after surgery.

The surgeon stated that the cause of death was a stroke, and that the stroke was unrelated to the esophageal implant.

surgeon also informed us that a preliminary autopsy had shown that the esophageal implant resulted in a regenerated esophageal tube in

the patient, except for a very small (approximately 5mm) hole outside the implant zone on the lateral wall that was right up against a

synthetic graft inserted as part of the patient’s heart repair on the vena cava in that same surgery.

The synthetic graft on the

pericardium was not related to our esophageal implant product and may have acted as an irritant to esophageal tissue where it contacted

the esophageal implant.

The surgeon also informed us that the esophageal regeneration in this patient was consistent with the regeneration

previously observed in our large-animal studies.

In January 2019, the surgeon presented the case study publicly at a major U.S.

conference, including histological data supporting his earlier statements regarding successful regeneration.

Mayo Clinic expects to publish

an article in a peer-reviewed journal and we expect to be in a position to release additional information on this landmark case at that

Some of the results of this expanded access case was included in the IND for our CEI that we filed with the FDA in October 2019.

Our product candidates are currently in development and have not yet

received regulatory approval for sale anywhere in the world.

Changing the Surgical Treatment of Esophageal

1 unchanged sentence

Illustration of potential human application of Cellspan esophageal implant at site of esophageal disease (depicting implant prior to esophageal tissue reconstitution over implant)

We believe our technology may provide surgeons a new paradigm

to address life-threatening conditions of the esophagus due to infection, trauma, cancer or congenital abnormalities.

our focus is to treat patients with esophageal disease, absent of cancer, in adults that would require a short segment esophageal

implant following clinically indicated short segment resection of the thoracic esophagus with our CEI product candidate.

According to the World Health Organization’s International

Agency for Research on Cancer, there are approximately 572,000 new cases of esophageal cancer worldwide each year.

all patients diagnosed with esophageal cancer are treated via a surgical procedure known as an esophagectomy.

The current standard

of care for an esophagectomy requires a complex surgical procedure that involves moving the patient’s stomach or a portion

of their colon into the chest to replace the portion of esophagus resected by the removal of the tumor.

These current procedures

have high rates of complications and can lead to a severely diminished quality of life and require costly ongoing care.

product candidate aims to provide a simpler surgical procedure, with reduced complications, that may result in a better quality

of life after the operation and reduce the overall cost of these patients to the healthcare system.

We believe our technology may provide surgeons a new paradigm to address

life-threatening conditions of the esophagus due to infection, trauma, cancer or congenital abnormalities.

Initially, our focus is to

treat patients with esophageal disease, absent of cancer, in adults that would require a short segment esophageal implant following clinically

indicated short segment resection of the thoracic esophagus with our CEI product candidate.

According to the World Health Organization’s International Agency

for Research on Cancer, there are approximately 572,000 new cases of esophageal cancer worldwide each year.

A portion of all patients

diagnosed with esophageal cancer are treated via a surgical procedure known as an esophagectomy.

The current standard of care for an esophagectomy

requires a complex surgical procedure that involves moving the patient’s stomach or a portion of their colon into the chest to replace

the portion of esophagus resected by the removal of the tumor.

These current procedures have high rates of complications and can lead

to a severely diminished quality of life and require costly ongoing care.

Our CEI product candidate aims to provide a simpler surgical

procedure, with reduced complications, that may result in a better quality of life after the operation and reduce the overall cost of

these patients to the healthcare system.

Focus on Pediatric Esophageal Atresia:

a Congenital Abnormality in Need of a Better Solution

Each year, several thousand children worldwide are born with

a congenital abnormality known as esophageal atresia, a condition where an infant is born with an esophagus that does not extend

completely from the mouth to the stomach.

When a long segment of the esophagus is lacking, the current standard of care is a series

of surgical procedures where surgical sutures are applied to both ends of the esophagus in an attempt to stretch them and pull

them together so they can be connected at a later date.

This process can take weeks and the procedure is plagued by serious complications

and may carry high rates of failure.

Abnormality in Need of a Better Solution

Each year, several thousand children worldwide are born with a congenital

abnormality known as esophageal atresia, a condition where an infant is born with an esophagus that does not extend completely from the

mouth to the stomach.

When a long segment of the esophagus is lacking, the current standard of care is a series of surgical procedures

where surgical sutures are applied to both ends of the esophagus in an attempt to stretch them and pull them together so they can be connected

at a later date.

This process can take weeks and the procedure is plagued by serious complications and may carry high rates of failure.

Such approach also requires, in time, at least two separate surgical interventions.

options include the use of the child’s stomach or intestine that would be pulled up into the chest to allow a connection

to the mouth.

We are working to develop a CEI solution to address the complications of esophageal atresia, that could potentially

be life-changing, organ-sparing, or both.

Other options include the use of the child’s

stomach or intestine that would be pulled up into the chest to allow a connection to the mouth.

We are working to develop a CEI solution

to address the complications of esophageal atresia, that could potentially be life-changing, organ-sparing, or both.

Our Mission and Our Strategy

Our mission is to revolutionize regenerative medicine by bioengineering

patient-specific Cellspan implants that use the patient’s own mesenchymal stromal cells to stimulate organ regeneration and

restore an organ’s structure and continuity.

patient-specific Cellspan implants that use the patient’s own mesenchymal stromal cells to stimulate organ regeneration and restore

an organ’s structure and continuity.

Our business strategy to accomplish this mission includes:

life-threatening medical conditions.

We are focused on creating products to help physicians treat life-threatening

conditions to the esophagus, central lung and trachea caused by infection, trauma, cancer, or infection.

We are also developing

products for the treatment of congenital abnormalities of the esophagus and airways.

We are not targeting less severe conditions

that have reasonable existing treatment options.

Solutions for life-threatening medical conditions present a favorable therapeutic

index, or risk/benefit relationship, by providing the opportunity of a significant medical benefit for patients who have poor or

no treatment alternatives.

We believe that product candidates targeting life-threatening medical conditions may be eligible for

review and approval by regulatory authorities under established expedited review programs, which may result in savings of time

in the regulatory approval process.

Also, we believe that products targeting life-threatening medical conditions may be more likely

to receive favorable reimbursement compared with treatments for less critical medical conditions.

Developing products that have a relatively short time to

Targeting life-threatening medical conditions.

focused on creating products to help physicians treat life-threatening conditions to the esophagus, central lung and trachea caused by

infection, trauma, cancer, or infection.

We are also developing products for the treatment of congenital abnormalities of the esophagus

We are not targeting less severe conditions that have reasonable existing treatment options.

Solutions for life-threatening

medical conditions present a favorable therapeutic index, or risk/benefit relationship, by providing the opportunity of a significant

medical benefit for patients who have poor or no treatment alternatives.

We believe that product candidates targeting life-threatening

medical conditions may be eligible for review and approval by regulatory authorities under established expedited review programs, which

may result in savings of time in the regulatory approval process.

Also, we believe that products targeting life-threatening medical conditions

may be more likely to receive favorable reimbursement compared with treatments for less critical medical conditions.

Developing products that have a relatively short time to market.

Since the number of patients diagnosed each year in the U.S.

with a life-threatening esophageal condition that

would require a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus

is relatively small, we expect the number of patients that we would likely need to enroll in a clinical trial will also be relatively

We expect up to 10 patients to be enrolled in our first clinical trial, which implies a relatively fast enrollment time,

subject to milestone achievement requirements on initial patient(s) imposed by the FDA prior to enrolling additional patients,

and a less expensive clinical development program.

Therefore, we expect to be able to conduct a clinical trial in a relatively

short period of time, subject to enrollment time constraints, compared to clinical trials in indications with larger patient populations.

We intend to work closely with regulatory agencies and clinical experts to design and size the clinical studies appropriately

based on the specific conditions our products are intended to treat.

We are evaluating the potential impact of the coronavirus

pandemic on our study timelines and costs.

our Cellframe and Cellspan technology as a platform to address multiple organs.

We believe that pre-clinical data

we have produced to date may suggest that our technology is a novel and innovative approach to restoring organ function that may

provide an ability to develop products that would address life-threatening conditions impacting organs like the esophagus, bronchus

and trachea, and perhaps lower portions of the gastrointestinal (GI) tract.

We believe that our technology may allow physicians

to treat certain life-threatening conditions in ways not currently possible, and in some combination, to save patients’

avoid or reduce complications experienced in the current standard of care, and improve the patients’

with a life-threatening esophageal condition that would require

a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus is relatively small,

we expect the number of patients that we would likely need to enroll in a clinical trial will also be relatively small.

to 10 patients to be enrolled in our first clinical trial, which implies a relatively fast enrollment time, subject to milestone achievement

requirements on initial patient(s) imposed by the FDA prior to enrolling additional patients, and a less expensive clinical development

Therefore, we expect to be able to conduct a clinical trial in a relatively short period of time, subject to enrollment time

constraints, compared to clinical trials in indications with larger patient populations.

We intend to work closely with regulatory agencies

and clinical experts to design and size the clinical studies appropriately based on the specific conditions our products are intended

We are evaluating the potential impact of the COVID-19 pandemic on our study timelines and costs.

Using our Cellframe and Cellspan technology as a platform to address

multiple organs.

We believe that pre-clinical data we have produced to date may suggest that our technology is a novel and innovative

approach to restoring organ function that may provide an ability to develop products that would address life-threatening conditions impacting

organs like the esophagus, bronchus and trachea, and perhaps lower portions of the gastrointestinal (GI) tract.

We believe that our technology

may allow physicians to treat certain life-threatening conditions in ways not currently possible, and in some combination, to save patients’

lives, avoid or reduce complications experienced in the current standard of care, and improve the patients’

quality of life, while

at the same time reducing the overall cost of patient care to the healthcare system.

Supplying the finished Cellspan esophageal implant to the

Our technology includes our proprietary bioreactor, as well as our proprietary biocompatible scaffold that

is seeded with the patient’s own mesenchymal stromal cells.

We believe there is considerable value in supplying the

final cell-seeded scaffold implant to the surgeon so that the hospital and surgeon may focus solely on performing the

implantation.

Collaborating

with leading medical and research institutions.

We have and will continue to collaborate with leading medical

and research institutions.

We have a co-development initiative with Mayo Clinic for regenerative medicine organ implant products

for the esophagus and airways based on our technology.

We are also collaborating with Connecticut Children’s Medical Center

on a co-development project to translate our technology for pediatric esophageal atresia from pre-clinical studies to clinical

We believe the use of our product candidates by leading surgeons and institutions will increase the likelihood that other

surgeons and institutions will use our products.

Supplying the finished Cellspan esophageal implant to the surgeon.

Our technology includes our proprietary bioreactor, as well as our proprietary biocompatible scaffold that is seeded with the patient’s

own mesenchymal stromal cells.

We believe there is considerable value in supplying the final cell-seeded scaffold implant to the surgeon

so that the hospital and surgeon may focus solely on performing the implantation.

Collaborating with leading medical and research institutions.

We have and will continue to collaborate with leading medical and research institutions.

We have a co-development initiative with

Mayo Clinic for regenerative medicine organ implant products for the esophagus and airways based on our technology.

We are also collaborating

with Connecticut Children’s Medical Center on a co-development project to translate our technology for pediatric esophageal atresia

from pre-clinical studies to clinical trials.

We believe the use of our product candidates by leading surgeons and institutions will increase

the likelihood that other surgeons and institutions will use our products.

Our Technology

Our technology is comprised of our proprietary bioengineered

scaffold, which is the foundation of our Cellframe technology, that is seeded with the patient’s own mesenchymal stromal

cells in our proprietary bioreactor to form our Cellspan implant prior to implantation.

We believe that our technology combines

a highly-engineered, biocompatible scaffold and a robust population of cells that, by tapping into the stem cell niche of the

surrounding native tissue after implantation, will stimulate a tubular organ to remodel or regenerate tissue to close the gap

created by a surgical resection of a portion of that organ.

This unique combination of technologies, developed through our extensive

testing performed during the last few years, may potentially provide solutions to life-threatening conditions for patients with

unmet medical needs.

We believe that our technology is unique, in that its mode of

action appears to be different from other tissue engineering scaffold products developed previously, of which we are aware.

to our development of the technology, our approach attempted to implant an biocompatible scaffold that would be incorporated into

the patient’s body by the surrounding native tissue growing into the scaffold.

To our knowledge, all previous research and

development efforts by other investigators were based on that same concept.

Our technology is comprised of our proprietary bioengineered scaffold,

which is the foundation of our Cellframe technology, that is seeded with the patient’s own mesenchymal stromal cells in our proprietary

bioreactor to form our Cellspan implant prior to implantation.

We believe that our technology combines a highly-engineered, biocompatible

scaffold and a robust population of cells that, by tapping into the stem cell niche of the surrounding native tissue after implantation,

will stimulate a tubular organ to remodel or regenerate tissue to close the gap created by a surgical resection of a portion of that organ.

This unique combination of technologies, developed through our extensive testing performed during the last few years, may potentially

provide solutions to life-threatening conditions for patients with unmet medical needs.

We believe that our technology is unique, in that its mode of action

appears to be different from other tissue engineering scaffold products developed previously, of which we are aware.

Prior to our development

of the technology, our approach attempted to implant a biocompatible scaffold that would be incorporated into the patient’s body

by the surrounding native tissue growing into the scaffold.

To our knowledge, all previous research and development efforts by other investigators

were based on that same concept.

Our technology appears to work very differently.

believe that the unique combination of our highly-engineered biocompatible scaffold with a population of the patient’s own

mesenchymal cells enables an organ to develop new native tissue around our scaffold, but not into it, so the scaffold acts as a

type of frame or staging for the new tissue.

As a result, our scaffold is not incorporated into the body.

Instead, it is retrieved

from the body via an endoscopic procedure, not surgically, after sufficient tissue remodeling and regeneration has occurred.

We believe that the unique combination of our highly-engineered

biocompatible scaffold with a population of the patient’s own mesenchymal cells enables an organ to develop new native tissue around

our scaffold, but not into it, so the scaffold acts as a type of frame or staging for the new tissue.

As a result, our scaffold is not

incorporated into the body.

Instead, it is retrieved from the body via an endoscopic procedure, not surgically, after sufficient tissue

remodeling and regeneration has occurred.

Biocompatible Scaffold Component

Our proprietary biocompatible scaffold component of the CEI

is constructed primarily of polyurethane.

Our proprietary biocompatible scaffold component of the CEI is constructed

primarily of polyurethane.

This material was chosen based on extensive testing of various materials.

is made using a manufacturing process known as electrospinning.

The combination of the electrospinning process, which provides

control over the desired microstructure of the scaffold fabric, with the polyurethane results in a scaffold that we believe has

favorable biocompatibility characteristics.

The scaffold is made using a manufacturing

process known as electrospinning.

The combination of the electrospinning process, which provides control over the desired microstructure

of the scaffold fabric, with the polyurethane results in a scaffold that we believe has favorable biocompatibility characteristics.

The Patient’s Cells

on current pre-clinical development efforts, the cells we seed onto the scaffold are obtained from the patient’s adipose

tissue (abdominal fat).

This fat tissue is obtained from a standard biopsy before the implant surgery.

Mesenchymal stromal

cells are extracted and isolated from the adipose tissue biopsy.

The isolated cells are then expanded, or grown, for a short period

prior to surgery in order to derive a sufficient cell population to be seeded on the scaffold.

The cells are then seeded on the

scaffold in our proprietary bioreactor and incubated there before the implant surgery.

We believe our CEI product candidate has the potential to provide

a major advance over the current therapeutic options for treating esophageal disease, damage from infection or trauma and congenital

abnormalities.

We believe our CEI has the potential to overcome the major challenges in restoring organ function for a damaged

With our CEI we are developing a surgical procedure that has the objective of reconstituting the continuity of the patient’s

esophagus without having to relocate another organ in its place.

In addition, by reducing or eliminating complications that occur

in the current standard of care, we expect to reduce the costs of addressing and treating those additional complications.

these substantial costs can be reduced or even eliminated with our technology, we believe our products, if successfully developed,

can help save lives, improve the quality of life for patients and reduce overall healthcare costs.

Based on current pre-clinical development efforts, the cells we seed

onto the scaffold are obtained from the patient’s adipose tissue (abdominal fat).

This fat tissue is obtained from a standard biopsy

before the implant surgery.

Mesenchymal stromal cells are extracted and isolated from the adipose tissue biopsy.

The isolated cells are

then expanded, or grown, for a short period prior to surgery in order to derive a sufficient cell population to be seeded on the scaffold.

The cells are then seeded on the scaffold in our proprietary bioreactor and incubated there before the implant surgery.

We believe our CEI product candidate has the potential to provide a

major advance over the current therapeutic options for treating esophageal disease, damage from infection or trauma and congenital abnormalities.

We believe our CEI has the potential to overcome the major challenges in restoring organ function for a damaged esophagus.

we are developing a surgical procedure that has the objective of reconstituting the continuity of the patient’s esophagus without

having to relocate another organ in its place.

In addition, by reducing or eliminating complications that occur in the current standard

of care, we expect to reduce the costs of addressing and treating those additional complications.

Because these substantial costs can

be reduced or even eliminated with our technology, we believe our products, if successfully developed, can help save lives, improve the

quality of life for patients and reduce overall healthcare costs.

Unmet Patient Needs and Cellspan Implant Solutions

Esophageal Disease

There are approximately 572,000 new diagnoses of esophageal

cancer globally each year, according to the World Health Organization’s International Agency for Research on Cancer.

to the American Cancer Society, there are approximately 20,000 new diagnoses of esophageal cancer in the U.S.

each year, and there

are more than 16,000 deaths from esophageal cancer each year.

Esophageal cancer is very deadly - the five-year survival rate for

people with esophageal cancer is 18% in the U.S.

There are approximately 572,000 new diagnoses of esophageal cancer

globally each year, according to the World Health Organization’s International Agency for Research on Cancer.

According to the American

Cancer Society, there are approximately 20,000 new diagnoses of esophageal cancer in the U.S.

each year, and there are more than 16,000

deaths from esophageal cancer each year.

Esophageal cancer is very deadly - the five-year survival rate for people with esophageal cancer

is 18% in the U.S.

Approximately 5,000 esophagectomy surgeries occur in the U.S.

annually to treat

esophageal cancer, and approximately 10,000 esophagectomies occur in Europe annually.

We believe that approximately one half of

the world’s esophageal cancer cases occur in China, which would represent the largest potential patient population for our

adult esophageal product candidate.

We believe that our CEI, if approved, has the potential to provide a major advance over the

current esophagectomy procedures for addressing esophageal disease, which have high complication and morbidity rates.

The current standard of care for the esophagectomy requires

either (A) a gastric pull-up, where the stomach is cut and sutured into a tubular shape, then pulled up through the diaphragm to

replace a portion of the esophagus resected by the removal of the cancerous tumor;

or (B) a colon interposition, where a portion

of the colon is resected and used to replace the portion of the esophagus resected by the removal of the cancerous tumor.

Esophagectomies

have 90-day mortality rates of up to 19%.

Serious complications, such as leakage at the anastomoses, which can lead to infections

and sepsis, and pulmonary complications, such as impaired pulmonary function or pneumonia, occur in up to 30% of esophagectomy

Other complications from esophagectomies, such as a narrowing of the esophagus post-surgery, gastroesophageal reflux and

dumping syndrome (repetitive nausea, dizziness and vomiting) can also pose significant quality of life issues for patients.

We believe that our CEI has the potential to provide physicians

a new, simpler procedure to restore organ function while significantly reducing complication and morbidity rates compared with

the current standard of care, and without creating significant quality of life issues for patients.

Our current CEI product candidate

that was removed from clinical hold by the FDA on March 19, 2020 will treat patients with esophageal disease, absent of cancer,

in adults that would require a short segment esophageal implant following clinically indicated short segment resection of the

thoracic esophagus with our CEI product candidate.

annually to treat esophageal cancer, and approximately

10,000 esophagectomies occur in Europe annually.

We believe that approximately one half of the world’s esophageal cancer cases occur

in China, which would represent the largest potential patient population for our adult esophageal product candidate.

We believe that our

CEI, if approved, has the potential to provide a major advance over the current esophagectomy procedures for addressing esophageal disease,

which have high complication and morbidity rates.

The current standard of care for the esophagectomy requires either

(A) a gastric pull-up, where the stomach is cut and sutured into a tubular shape, then pulled up through the diaphragm to replace a portion

of the esophagus resected by the removal of the cancerous tumor;

or (B) a colon interposition, where a portion of the colon is resected

and used to replace the portion of the esophagus resected by the removal of the cancerous tumor.

Esophagectomies have 90-day mortality

rates of up to 19%.

Serious complications, such as leakage at the anastomoses, which can lead to infections and sepsis, and pulmonary

complications, such as impaired pulmonary function or pneumonia, occur in up to 30% of esophagectomy cases.

Other complications from esophagectomies,

such as a narrowing of the esophagus post-surgery, gastroesophageal reflux and dumping syndrome (repetitive nausea, dizziness and vomiting)

can also pose significant quality of life issues for patients.

We believe that our CEI has the potential to provide physicians a new,

simpler procedure to restore organ function while significantly reducing complication and morbidity rates compared with the current standard

of care, and without creating significant quality of life issues for patients.

Our current CEI product candidate that was removed from

clinical hold by the FDA on March 19, 2020 will treat patients with esophageal disease, absent of cancer, in adults that would require

a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus with our CEI product

Pediatric Esophageal Atresia

Esophageal Atresia (EA) is a rare congenital abnormality in

which an infant is born without part of the esophagus.

Esophageal Atresia (EA) is a rare congenital abnormality in which an

infant is born without part of the esophagus.

About 1 in 4,000 infants in the U.S.

is born with EA.

In some cases, the

two sections can be connected surgically.

However, in cases where the gap is too great for a simple surgical reconnection, the

current standard of care is a gastric pull-up, a colon interposition, or a procedure known as the Foker process.

In the Foker process,

traction devices are surgically attached to the two ends of the esophagus.

Traction is then applied, usually for several weeks

during which time the infant remains in an Intensive Care Unit, to stimulate the ends of the esophagus to grow and narrow the gap.

If the Foker process is successful in narrowing the gap sufficiently, a second surgery is necessary to connect the two ends of

the esophagus.

In addition to the Foker process being complex, it is also a very expensive procedure because the infant will normally

be in the hospital for several months during the process.

We believe that a pediatric CEI may provide pediatric surgeons

with a better procedure to treat EA that would result in a connected esophagus with higher success rates, lower complications and

lower overall costs to the healthcare system.

In some cases, the two sections can

be connected surgically.

However, in cases where the gap is too great for a simple surgical reconnection, the current standard of care

is a gastric pull-up, a colon interposition, or a procedure known as the Foker process.

In the Foker process, traction devices are surgically

attached to the two ends of the esophagus.

Traction is then applied, usually for several weeks during which time the infant remains in

an Intensive Care Unit, to stimulate the ends of the esophagus to grow and narrow the gap.

If the Foker process is successful in narrowing

the gap sufficiently, a second surgery is necessary to connect the two ends of the esophagus.

In addition to the Foker process being complex,

it is also a very expensive procedure because the infant will normally be in the hospital for several months during the process.

We believe that a pediatric CEI may provide pediatric surgeons with

a better procedure to treat EA that would result in a connected esophagus with higher success rates, lower complications and lower overall

costs to the healthcare system.

Central Lung Cancer

Lung cancer is the most common form of cancer and the most common

cause of death from cancer worldwide.

Lung cancer is the most common form of cancer and the most common cause

of death from cancer worldwide.

There are more than 450,000 new lung cancer diagnoses annually in the U.S.

approximately 25% of all lung cancer cases, the cancerous tumor resides only in a bronchus and not in the lobes of the lungs, and

is known as central lung cancer.

In approximately

25% of all lung cancer cases, the cancerous tumor resides only in a bronchus and not in the lobes of the lungs, and is known as central

Approximately 33,000 central lung cancer cases diagnosed in the U.S.

and Europe are Stage I and

II and are considered eligible for surgical resection, often with adjuvant chemotherapy and radiation.

Approximately 5,000 of those

patients are treated via pneumonectomy, a surgical procedure involving the resection of the cancer tumor, the whole bronchus below

the tumor and the entire lung to which it is connected.

It is a complex surgery and, due to the removal of a lung, results in a

50% reduction in the patient’s respiratory capacity.

The procedure has reported rates of post-surgical (in hospital) mortality

of 8% to 15%.

Complication rates associated with pneumonectomy are reported as high as 50%, and include post-operative pneumonia,

supraventricular arrhythmias and anastomotic leakage, placing patients at significant mortality risk post-discharge.

We believe that a Cellspan bronchial implant, once developed

and approved for marketing, has the potential to provide physicians a treatment alternative superior to the sleeve pneumonectomy

to address central lung cancer, a simpler procedure to restore organ function of the bronchus without sacrificing one of the patient’s

lungs, resulting in fewer post-surgery complications, improved mortality rates and improved quality of life for the patient.

and Europe are Stage I and II and are considered eligible

for surgical resection, often with adjuvant chemotherapy and radiation.

Approximately 5,000 of those patients are treated via pneumonectomy,

a surgical procedure involving the resection of the cancer tumor, the whole bronchus below the tumor and the entire lung to which it is

It is a complex surgery and, due to the removal of a lung, results in a 50% reduction in the patient’s respiratory capacity.

The procedure has reported rates of post-surgical (in hospital) mortality of 8% to 15%.

Complication rates associated with pneumonectomy

are reported as high as 50%, and include post-operative pneumonia, supraventricular arrhythmias and anastomotic leakage, placing patients

at significant mortality risk post-discharge.

We believe that a Cellspan bronchial implant, once developed and approved

for marketing, has the potential to provide physicians a treatment alternative superior to the sleeve pneumonectomy to address central

lung cancer, a simpler procedure to restore organ function of the bronchus without sacrificing one of the patient’s lungs, resulting

in fewer post-surgery complications, improved mortality rates and improved quality of life for the patient.

Life-threatening conditions of the Trachea

There are approximately 8,000 patients per year in the U.S.

and Europe who suffer from a condition of the trachea that put the patient at high risk of death.

These conditions can be due to

tracheal trauma, tracheal stenosis or trachea cancer.

There are approximately 40,000 tracheal trauma patients diagnosed each year

Of those, approximately 1,000 are severe enough to need surgical resection procedures.

Tracheal stenosis is a rare

complication from tracheostomies, but may have a devastating impact on respiratory function for patients.

Approximately 2,000 patients

are diagnosed with stenosis from tracheostomy in the U.S.

who suffer from a condition of the trachea that put the patient at high risk of death.

These conditions can be due to tracheal trauma,

tracheal stenosis or trachea cancer.

There are approximately 40,000 tracheal trauma patients diagnosed each year in the U.S.

approximately 1,000 are severe enough to need surgical resection procedures.

Tracheal stenosis is a rare complication from tracheostomies

but may have a devastating impact on respiratory function for patients.

Approximately 2,000 patients are diagnosed with stenosis from

tracheostomy in the U.S.

Trachea cancer is a very rare but extremely deadly cancer.

Trachea cancer patients in the U.S.

have a median survival of 10 months from diagnosis and a 5-year survival of only 27%.

were approximately 200 cases of primary trachea cancer diagnosed in the U.S.

Based on these facts, we estimate that there

are approximately 8,000 patients in the U.S.

and Europe with conditions of the trachea that put them at high risk of death, but

for whom there is currently no clinically effective tracheal implant or replacement method currently available.

We believe that a Cellspan tracheal implant may potentially

provide physicians a treatment to re-establish the structural integrity and function of a damaged or diseased trachea to address

life-threatening conditions due to tracheal trauma, stenosis or cancer.

We were incorporated under the laws of the State of Delaware

on May 3, 2012 as a wholly-owned subsidiary of Harvard Bioscience, Inc.

(Harvard Bioscience) to provide a means for separating

its regenerative medicine business from its other businesses.

Harvard Bioscience decided to separate its regenerative medicine

business into our company, a separate corporate entity (the Separation), and it spun off its interest in our business to its stockholders

in November 2013.

Since the Separation we have been a separately-traded public company and Harvard Bioscience has not been a stockholder

of our common stock or controlled our operations.

Following the Separation, we continued to innovate our bioreactors based on our

physiology expertise, we developed our materials science capabilities and we investigated and developed a synthetic tracheal scaffold.

By that time, we had built and staffed cell biology laboratories at our Holliston facility, to give ourselves the ability to perform

and control our scientific investigation and developments internally.

At that point, we began the second phase of our company’s

In mid-2014, we increased the pace of our scientifically-based

internal analysis and development of our first-generation tracheal implant product, the HART-Trachea.

From large-animal studies

conducted thereafter we found that the product elicited an unfavorable inflammatory response after implantation, which required

additional development and testing.

These requirements extended our expectations regarding our regulatory milestones and we announced

the additional testing and extended milestone expectations in January 2015.

During 2015 we isolated and tested all major variables

of the organ scaffold and the cell source and protocols, examining the effects of alternatives against the then-existing product

Through extensive in vitro preclinical studies, and small-animal and large-animal studies, we made dramatic improvements,

and discovered that the mechanism of action of our approach was very different from our hypothesis regarding that of the first-generation

Our technology uses a different scaffold material and microstructure, a different source and concentration of the patient’s

cells and several other changes from our earlier trachea initiative.

We believe that our technology, although built on learnings

from our earlier-generation product initiative, represents a new technology platform resulting from our rigorous science and development.

We have focused our development efforts on our Cellframe technology and Cellspan product candidates, which we have and will continue

to develop internally, and with our collaborators, via a rigorous scientific development process.

a median survival of 10 months from diagnosis and a 5-year survival of only 27%.

There were approximately 200 cases of primary trachea

cancer diagnosed in the U.S.

Based on these facts, we estimate that there are approximately 8,000 patients in the U.S.

with conditions of the trachea that put them at high risk of death, but for whom there is currently no clinically effective tracheal implant

or replacement method currently available.

We believe that a Cellspan tracheal implant may potentially provide

physicians a treatment to re-establish the structural integrity and function of a damaged or diseased trachea to address life-threatening

conditions due to tracheal trauma, stenosis or cancer.

We were incorporated under the laws of the State of Delaware on May

3, 2012 as a wholly-owned subsidiary of Harvard Bioscience, Inc.

(Harvard Bioscience) to provide a means for separating its regenerative

medicine business from its other businesses.

Harvard Bioscience decided to separate its regenerative medicine business into our company,

a separate corporate entity (the Separation), and it spun off its interest in our business to its stockholders in November 2013.

the Separation we have been a separately-traded public company and Harvard Bioscience has not been a stockholder of our common stock or

controlled our operations.

Following the Separation, we continued to innovate our bioreactors based on our physiology expertise, we developed

our materials science capabilities and we investigated and developed a synthetic tracheal scaffold.

By that time, we had built and staffed

cell biology laboratories at our Holliston facility, to give ourselves the ability to perform and control our scientific investigation

and developments internally.

At that point, we began the second phase of our company’s development.

In mid-2014, we increased the pace of our scientifically-based internal

analysis and development of our first-generation tracheal implant product, the HART-Trachea.

From large-animal studies conducted thereafter

we found that the product elicited an unfavorable inflammatory response after implantation, which required additional development and

These requirements extended our expectations regarding our regulatory milestones and we announced the additional testing and

extended milestone expectations in January 2015.

During 2015 we isolated and tested all major variables of the organ scaffold and the

cell source and protocols, examining the effects of alternatives against the then-existing product approach.

Through extensive in vitro

preclinical studies, and small-animal and large-animal studies, we made dramatic improvements, and discovered that the mechanism of action

of our approach was very different from our hypothesis regarding that of the first-generation product.

Our technology uses a different

scaffold material and microstructure, a different source and concentration of the patient’s cells and several other changes from

our earlier trachea initiative.

We believe that our technology, although built on learnings from our

earlier-generation product initiative, represents a new technology platform resulting from our rigorous science and development.

focused our development efforts on our Cellframe technology and Cellspan product candidates, which we have and will continue to develop

internally, and with our collaborators, via a rigorous scientific development process.

Clinical Trials

Our CEI has been designated by the FDA as a combination product.

We believe that this is a favorable designation as it allows for orphan designation and a more participatory path to approval.

We have conducted numerous pre-clinical studies in our esophageal implant programs and continue to see consistent regeneration.

Additionally, our CEI product candidate was used in an FDA-approved first-in-human compassionate use successfully in 2017.

2019, we filed an Investigational New Drug (IND) application with the U.S.

Food and Drug Administration (FDA) to treat patients

with esophageal disease in adults that would require a short segment esophageal implant following clinically indicated short segment

resection of the thoracic esophagus with our CEI product candidate.

In November 2019, we received notice from the FDA placing our

IND on clinical hold and providing a preliminary list of clinical hold and non-clinical hold questions.

In December 2019, we received

the formal letter with clinical hold and non-clinical hold questions and submitted our response to the clinical hold questions

on February 18, 2020.

On March 19, 2020, the FDA notified us that the IND for our CEI product candidate has been removed from clinical

hold and that we can proceed with our study.

This FDA approval enables us to start their transition to a clinical-stage biotechnology

company, and start clinical planning, engaging with a clinical research organization and site readiness in advance of starting

the clinical trial for our CEI product candidate.

We are also pursuing a pediatric program and plan to file a

protocol amendment to our CEI clinical program after the initial adult patients are treated in the esophageal disease trial, subject

to FDA approval.

In order to market our product candidate for both esophageal disease and pediatric esophagus atresia, we will

need to successfully complete applicable clinical trial requirements.

We believe that we have excellent pre-clinical and clinical

support of the pediatric atresia program through our collaboration with Connecticut Children’s Medical Center and our primary

investigator Dr.

believe that this is a favorable designation as it allows for orphan designation and a more participatory path to approval.

We have conducted

numerous pre-clinical studies in our esophageal implant programs and continue to see consistent regeneration.

Additionally, our CEI product

candidate was used in an FDA-approved first-in-human compassionate use successfully in 2017.

In October 2019, we filed an Investigational

New Drug (IND) application with the U.S.

Food and Drug Administration (FDA) to treat patients with esophageal disease in adults that would

require a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus with our CEI

product candidate.

In November 2019, we received notice from the FDA placing our IND on clinical hold and providing a preliminary list

of clinical hold and non-clinical hold questions.

In December 2019, we received the formal letter with clinical hold and non-clinical

hold questions and submitted our response to the clinical hold questions on February 18, 2020.

On March 19, 2020, the FDA notified us

that the IND for our CEI product candidate has been removed from clinical hold and that we can proceed with our study.

This FDA approval

enables us to start the transition to a clinical-stage biotechnology company, and start clinical planning, engaging with a clinical research

organization and site readiness in advance of starting the clinical trial for our CEI product candidate.

We are also pursuing a pediatric program and plan to file a protocol

amendment to our CEI clinical program after the initial adult patients are treated in the esophageal disease trial, subject to FDA approval.

In order to market our product candidate for both esophageal disease and pediatric esophagus atresia, we will need to successfully complete

applicable clinical trial requirements.

We believe that we have excellent pre-clinical and clinical support

of the pediatric atresia program through our collaboration with Connecticut Children’s Medical Center and our primary investigator

Christine Finck, who is also a member of our Scientific Advisory Board.

Essentially, we liken the pediatric atresia

market to a rare disease market.

Accordingly, the clinical trial population should reflect the ultra-orphan nature of the disease

Because life-threatening conditions of the esophagus requiring

a short segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus affects a small

population in the U.S., and based on our IND submission, we anticipate that our clinical trial using our CEI product candidate

will involve up to 10 patients.

Therefore, once commenced, we expect to be able to conduct a clinical trial in a relatively short

period of time compared to clinical trials in indications with larger patient populations.

We intend to work closely with regulatory

agencies and clinical experts to design and size the clinical studies appropriately based on the specific conditions our products

are intended to treat.

We also intend to request expedited review from the FDA for our CEI product.

Receipt of expedited review

would reduce the overall time through the regulatory approval process.

Essentially, we liken the pediatric atresia market to a rare

disease market.

Accordingly, the clinical trial population should reflect the ultra-orphan nature of the disease state.

Because life-threatening conditions of the esophagus requiring a short

segment esophageal implant following clinically indicated short segment resection of the thoracic esophagus affects a small population

in the U.S., and based on our IND submission, we anticipate that our clinical trial using our CEI product candidate will involve up to

Therefore, once commenced, we expect to be able to conduct a clinical trial in a relatively short period of time compared

to clinical trials in indications with larger patient populations.

We intend to work closely with regulatory agencies and clinical experts

to design and size the clinical studies appropriately based on the specific conditions our products are intended to treat.

We also intend

to request expedited review from the FDA for our CEI product.

Receipt of expedited review would reduce the overall time through the regulatory

approval process.

These expedited requests are submitted during the IND process.

We believe that receiving regulatory approval to treat pediatric

esophageal atresia with our CEI product candidate may provide a shorter time to a commercial product and the greater overall potential

value in the U.S.

In addition to providing a novel solution for a great medical need, approval of our pediatric esophageal

atresia product candidate may result in receipt of a priority review voucher, which if achieved, could potentially provide significant

value to our company in the future.

We have continued to advance our CEI pediatric esophagus program and plan to file a protocol

amendment with the FDA to our CEI esophageal disease clinical program after the initial adult patients are treated in the esophageal

disease trial, subject to FDA approval.

We intend to initially pursue regulatory approval for our CEI

product candidate in the U.S.

Following clinical trials in other foreign markets, we expect to pursue regulatory approval for

our CEI in those foreign markets, as well.

We believe that approximately one half of the world’s esophageal disease cases

occur in China, which would represent the largest potential patient population for our adult esophageal implant product candidate,

and we are consequently preparing to address that market.

We believe that receiving regulatory approval to treat pediatric esophageal

atresia with our CEI product candidate may provide a shorter time to a commercial product and the greater overall potential value in the

In addition to providing a novel solution for a great medical need, approval of our pediatric esophageal atresia product

candidate may result in receipt of a priority review voucher, which if achieved, could potentially provide significant value to our company

in the future.

We have continued to advance our CEI pediatric esophagus program and plan to file a protocol amendment with the FDA to

our CEI esophageal disease clinical program after the initial adult patients are treated in the esophageal disease trial, subject to FDA

We intend to initially pursue regulatory approval for our CEI product

candidate in the U.S., however as described above we are assessing the regulatory approval pathway in China and it is possible that this

pathway may end up being the initial pathway.

We believe that approximately one half of the world’s esophageal disease cases occur

in China, which would represent the largest potential patient population for our adult esophageal implant product candidate, and we are

consequently preparing to address that market.

Following clinical trials in other foreign markets, we expect to pursue regulatory approval

for our CEI in those foreign markets.

Research and Development

Our primary research and development activities are focused

in three areas:

Our primary research and development activities are focused in three

materials science, cell biology and engineering.

In materials science, we focus on designing and testing biocompatible

organ scaffolds, testing the structural integrity and the cellularization capacities of the scaffolds.

In cell biology, we focus

on developing and testing isolation and expansion protocols, cell characterization and fate studies, investigating the effects

of various cell types and concentrations, evaluating the biocompatibility of scaffolds, experimenting with different cell seeding

methodologies, and developing protocols for implantation experiments.

Our engineering group supports the materials science and

cell biology groups across an array of their activities, i.e.

designing, engineering and making our proprietary bioreactors and

All three of our R&D groups combine to plan and execute our in vitro studies.

A fundamental part of our

R&D effort in developing our technology has been dedicated to the discovery and development of small and large-animal model

In materials science, we focus on designing and testing biocompatible organ scaffolds,

testing the structural integrity and the cellularization capacities of the scaffolds.

In cell biology, we focus on developing and testing

isolation and expansion protocols, cell characterization and fate studies, investigating the effects of various cell types and concentrations,

evaluating the biocompatibility of scaffolds, experimenting with different cell seeding methodologies, and developing protocols for implantation

Our engineering group supports the materials science and cell biology groups across an array of their activities, i.e.

engineering and making our proprietary bioreactors and autoseeders.

All three of our R&D groups combine to plan and execute our in

vitro studies.

A fundamental part of our R&D effort in developing our technology has been dedicated to the discovery and development

of small and large-animal model studies.

The large-animal model employs the use of Yucatan mini-pigs.

Our Cellspan scaffolds were implanted in the cervical portion

as well as the thoracic portion of the esophagus and the airways in studies to date.

Our Cellspan scaffolds were implanted

in the cervical portion as well as the thoracic portion of the esophagus and the airways in studies to date.

In addition to our in-house engineering and scientific development

team, we collaborate with leaders in the field of regenerative medicine who are performing the fundamental research and surgeries

in this field to develop and test new products that will advance and improve the procedures being performed.

We will work with

our collaborators to further enhance our products to make them more efficient and easier to use by surgeons.

In the U.S., our principal

collaborations have been with Mayo Clinic and Connecticut Children’s Medical Center.

Collaboration typically involves us

developing new technologies specifically to address issues these researchers and clinicians encounter, and then working together

to translate our technology from pre-clinical studies to clinical trials.

In certain instances, we have entered into agreements

that govern the ownership of the technologies developed in connection with these collaborations.

team, we collaborate with leaders in the field of regenerative medicine who are performing the fundamental research and surgeries in this

field to develop and test new products that will advance and improve the procedures being performed.

We will work with our collaborators

to further enhance our products to make them more efficient and easier to use by surgeons.

In the U.S., our principal collaborations have

been with Mayo Clinic and Connecticut Children’s Medical Center.

Collaboration typically involves us developing new technologies

specifically to address issues these researchers and clinicians encounter, and then working together to translate our technology from

pre-clinical studies to clinical trials.

In certain instances, we have entered into agreements that govern the ownership of the technologies

developed in connection with these collaborations.

We incurred approximately $2.1 million and $4.9 million of research

and development expenses in 2020 and 2019, respectively.

As we have not yet applied for or received regulatory approval to market

any clinical products, no significant amount of these research and development costs have been passed on to our customers.

On March 28, 2018, we were awarded a Fast-Track Small Business

Innovation Research (SBIR) grant by the Eunice Kennedy National Institute of Child Health and Human Development (NICHD) to support

testing of pediatric CEI.

The award for Phase I, which was earned over the nine months ended September 30, 2018, provided for the

reimbursement of approximately $0.2 million of qualified research and development costs.

On October 26, 2018, we were awarded Phase II of the SBIR grant

for $1.1 million to support development, testing, and translation to the clinic through September 2019.

The Phase II grant includes

an additional $0.5 million for future period support through September 2020, subject to availability of funding and satisfactory

progress on the project.

In December 2019, we submitted a modified Phase II grant development plan which has not yet been approved

by the NICHD.

Based on the above, we have the opportunity to receive up to

$1.8 million under the SBIR grant, of which $0.9 million has been expended as of December 31, 2019.

Manufacturing

Biostage has developed a comprehensive manufacturing process

for our product candidates, including cell biology, scaffold production, cell isolation and expansion, seeding of cells on the

scaffold, incubation and expansion processes in the bioreactor and product transportation.

We currently perform certain manufacturing

steps in-house and subcontract certain processes and activities, primarily those related to cell expansion, seeding and incubation,

to experienced partners.

As we have not yet applied for or received regulatory approval to market any

clinical products, no amount of these research and development costs have been passed on to our customers.

On March 28, 2018, we were awarded a Fast-Track Small Business Innovation

Research (SBIR) grant by the Eunice Kennedy National Institute of Child Health and Human Development (NICHD) to support testing of pediatric

Cellspan™

Esophageal Implants (CEIs).

The award for Phase I provided for the reimbursement of approximately $0.2 million of qualified

research and development costs which was received and recognized as grant income during 2018.

On October 26, 2018, we were awarded the Phase II Fast-Track SBIR grant

from the Eunice Kennedy NICHD grant aggregating $1.1 million to support development, testing, and translation to the clinic through September

2019 and represented years one and two of the Phase II portion of the award.

On August 3, 2020, we were awarded a third year of the Phase

II grant totaling $0.5 million for support of development, testing, and translation to the clinic covering qualified expenses incurred

from October 1, 2019 through September 30, 2020.

In September of 2020, we filed and were granted a one year, no-cost extension for the

Phase II grant period extending through September 30, 2021.

For the years ended December 31, 2020 and 2019, we recognized $0.4

million and $0.5 million of grant income, respectively, from Phase II of the SBIR grant.

The aggregate SBIR grant to date provides us

with a total award of $1.8 million, of which, approximately $1.3 million has been recognized through December 31, 2020.

In March 2021, we received additional cash proceeds of $0.2 million

from the Phase II grant.

Manufacturing and Resources

Biostage has developed a comprehensive manufacturing process for our

product candidates, including cell biology, scaffold production, cell isolation and expansion, seeding of cells on the scaffold, incubation

and expansion processes in the bioreactor and product transportation.

We currently perform certain manufacturing steps in-house and subcontract

certain processes and activities, primarily those related to cell expansion, seeding and incubation, to experienced partners.

For our scaffolds we use a process called electrospinning to

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Electrospinning is a well-known fabrication process.

It is useful for cell culture applications

as it can create extremely thin fibers (much thinner than a human hair) that can make a fabric with pores approximately the same

size as a cell.

The electrospinning process parameters can be tuned to create a structure that is very similar to the natural structure

of the collagen fibers in human extracellular matrix.

Our process and end product have been developed over many years and involve

many trade secrets and proprietary know-how.

Our Cellspan scaffolds are made from polyurethane, an inert polymer that is not bioresorbable.

It is useful for cell culture

applications as it can create extremely thin fibers (much thinner than a human hair) that can make a fabric with pores approximately

the same size as a cell.

The electrospinning process parameters can be tuned to create a structure that is very similar to the

natural structure of the collagen fibers in human extracellular matrix.

Our process and end product have been developed over many

years and involve many trade secrets and proprietary know-how.

Our Cellspan scaffolds are made from polyurethane, an inert polymer

that is not bioresorbable.

However, we also perform studies on the use of scaffolds made from bioresorbable materials.

While we do not manufacture the cells,

as they will come from the patient’s adipose tissue, for regulatory purposes we are responsible for the quality control of

the cells and the seeding of the cells onto the scaffold in the bioreactor.

For this we have, in collaboration with our partners,

developed standard operating procedures for the seeding of cells on the scaffold.

clinical trials we anticipate that the

seeding will be performed using our Cellspan automatic cell seeder with our bioreactor at a pre-qualified third-party contract

manufacturer using current Good Manufacturing Practices (cGMP) using our proprietary protocol and under the supervision of our

not manufacture the cells, as they will come from the patient’s adipose tissue, for regulatory purposes we are responsible for

the quality control of the cells and the seeding of the cells onto the scaffold in the bioreactor.

For this we have, in

collaboration with our partners, developed standard operating procedures for the seeding of cells on the scaffold.

trials we anticipate that the seeding will be performed using our Cellspan automatic cell seeder with our bioreactor at a pre-

qualified third-party contract manufacturer using current Good Manufacturing Practices (cGMP) using our proprietary protocol and

under the supervision of our staff.

For our scaffolds, our primary materials are medical-grade plastic

resins and solvents used to liquefy the resins in our manufacturing process.

These materials are readily available from a variety

of suppliers and do not currently represent a large proportion of our total costs.

For our autoseeders and bioreactors, we perform

final assembly and testing of components that we buy from third parties like machine shops, parts distributors, molding facilities

and printed circuit board manufacturers.

These materials are readily available from a variety of suppliers

and do not currently represent a large proportion of our total costs.

For our autoseeders and bioreactors, we perform final assembly and

testing of components that we buy from third parties like machine shops, parts distributors, molding facilities and printed circuit board

manufacturers.

These manufacturing operations are performed primarily at our Holliston, MA headquarters.

Sales and Marketing

We expect that most surgeries using our CEI product will be

performed at a relatively small number of major hospitals in the U.S., China and other countries that will establish themselves

as specialized centers of excellence based on countries that we receive regulatory approval in.

We believe that a relatively small

number of centers of excellence in each country would be able to treat a large percentage of that country’s patients annually,

given the expected number of patients to be treated each year.

So, we expect our markets to be served by a concentrated number

of treatment centers.

Further, our technology platform is for the esophagus, the bronchi and the trachea, three organs all treated

by thoracic surgeons.

Therefore, all of those product candidates, once approved, would be marketed primarily to physicians practicing

in a single surgical specialty, so we expect that the total number of physicians using our products will be a much smaller population

than if our products were to be used by physicians in multiple areas of surgical specialties.

Due to our expectation of a population

of physicians in one surgical specialty being the primary users of our products in a concentrated number of centers of excellence

in each national market, we expect to be able to support our markets with a fairly small field sales force.

We expect to price the product commensurate with the medical

value created for the patient and the costs avoided with the use of our product.

We further expect to be paid by the hospital that

buys the product from us.

Finally, we expect that the hospital would seek reimbursement from payers for the entire transplant procedure,

including the use of our products.

Harvard Bioscience will be the exclusive distributor for the

research versions of our bioreactors.

Harvard Bioscience can only sell those products to the research markets in accordance with

the terms of a distribution agreement we entered into with Harvard Bioscience.

We retain all rights to manufacture and sell all

our products for clinical use.

We expect that most surgeries using our CEI product will be performed

at a relatively small number of major hospitals in the U.S., China and other countries that will establish themselves as specialized centers

of excellence based on countries that we receive regulatory approval in.

We believe that a relatively small number of centers of excellence

in each country would be able to treat a large percentage of that country’s patients annually, given the expected number of patients

to be treated each year.

So, we expect our markets to be served by a concentrated number of treatment centers.

Further, our technology

platform is for the esophagus, the bronchi and the trachea, three organs all treated by thoracic surgeons.

Therefore, all of those product

candidates, once approved, would be marketed primarily to physicians practicing in a single surgical specialty, so we expect that the

total number of physicians using our products will be a much smaller population than if our products were to be used by physicians in

multiple areas of surgical specialties.

Due to our expectation of a population of physicians in one surgical specialty being the primary

users of our products in a concentrated number of centers of excellence in each national market, we expect to be able to support our markets

with a fairly small field sales force.

We expect to price the product commensurate with the medical value

created for the patient and the costs avoided with the use of our product.

We further expect to be paid by the hospital that buys the

product from us.

Finally, we expect that the hospital would seek reimbursement from payers for the entire transplant procedure, including

the use of our products.

Harvard Bioscience will be the exclusive distributor for the research

versions of our bioreactors.

Harvard Bioscience can only sell those products to the research markets in accordance with the terms of a

distribution agreement we entered into with Harvard Bioscience.

We retain all rights to manufacture and sell all our products for clinical

Intellectual Property and Related Agreements

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and foreign patents, trademarks and contractual arrangements.

Our success will depend in part on our ability to

obtain and enforce patents on our products, processes and technologies to preserve our trade secrets and other proprietary information

and to avoid infringing on the patents or proprietary rights of others.

We anticipate that we will sell products in various markets

and various jurisdictions under brand name, logo and product design trademarks and service marks and that these marks

will attain material importance in the future.

Our success will depend in part on our ability to obtain

and enforce patents on our products, processes and technologies to preserve our trade secrets and other proprietary information and to

avoid infringing on the patents or proprietary rights of others.

We anticipate that we will sell products in various markets in the

and various jurisdictions under brand name, logo and product design trademarks and service marks and that these marks will attain

material importance in the future.

We also own select U.S.

Patents as well as certain patents in

Patents as well as certain patents in Germany.

These patents cover aspects of device and processes currently under development by our company.

Patents for various processes

and devices extend for varying periods according to the date of patent filing or grant and the legal term of patents in the country

or countries in which the patent was obtained.

The actual protection afforded by a patent can vary from country to country and

depends on factors such as the type of patent, scope of protection and available legal remedies.

In addition to issued patents, we have several pending patent

applications in the U.S.

Patents for various processes and devices

extend for varying periods according to the date of patent filing or grant and the legal term of patents in the country or countries in

which the patent was obtained.

The actual protection afforded by a patent can vary from country to country and depends on factors such

as the type of patent, scope of protection and available legal remedies.

In addition to issued patents, we have several pending patent applications

and key target jurisdictions.

We believe that one or more of these pending patent applications may be

of importance to material position depending upon factors such as the relevant patent jurisdiction, type of patent granted, and

scope of patent claims ultimately allowed in a given jurisdiction.

Depending upon factors such as the type of grant and the date

on which the patent application was filed, we anticipate that the term of certain pending patents may extend to 2036.

We believe that one or more of these pending patent applications may be of importance to material

position depending upon factors such as the relevant patent jurisdiction, type of patent granted, and scope of patent claims ultimately

allowed in a given jurisdiction.

Depending upon factors such as the type of grant and the date on which the patent application was filed,

we anticipate that the term of certain pending patents may extend to 2036.

We also rely on unpatented proprietary technologies in the development

and commercialization of our products, and we depend upon the skills, knowledge and experience of our scientific and technical

personnel, and those of our advisors, consultants and other contractors.

To help protect our proprietary know-how that may not

be patentable, and our inventions for which patents may be difficult to enforce, we rely on trade secret protection and confidentiality

agreements to protect our interests.

To this end, we require employees, consultants and advisors to enter into agreements that

prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas,

developments, discoveries and inventions that arise from their activities for us.

Additionally, these confidentiality agreements

require that our employees, consultants and advisors do not bring to us, or use without proper authorization, any third party’s

proprietary technology.

and commercialization of our products, and we depend upon the skills, knowledge and experience of our scientific and technical personnel,

and those of our advisors, consultants and other contractors.

To help protect our proprietary know-how that may not be patentable, and

our inventions for which patents may be difficult to enforce, we rely on trade secret protection and confidentiality agreements to protect

our interests.

To this end, we require employees, consultants and advisors to enter into agreements that prohibit the disclosure of confidential

information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions that

arise from their activities for us.

Additionally, these confidentiality agreements require that our employees, consultants and advisors

do not bring to us, or use without proper authorization, any third party’s proprietary technology.

Sublicense Agreement with Harvard Bioscience

We have entered into a sublicense agreement with Harvard Bioscience

pursuant to which Harvard Bioscience has granted us a perpetual, worldwide, royalty-free, exclusive, except as to Harvard Bioscience

and its subsidiaries, license to use the mark “Harvard Apparatus”

pursuant to which Harvard Bioscience has granted us a perpetual, worldwide, royalty-free, exclusive, except as to Harvard Bioscience and

its subsidiaries, license to use the mark “Harvard Apparatus”

in the name Harvard Apparatus Regenerative Technology.

The mark “Harvard Apparatus”

is used under a license agreement between Harvard Bioscience and Harvard University, and

we have agreed to be bound by such license agreement in accordance with our sublicense agreement.

We currently have no affiliation

with Harvard University.

“Harvard Apparatus”

is used under a license agreement between Harvard Bioscience and Harvard University, and we have agreed

to be bound by such license agreement in accordance with our sublicense agreement.

We currently have no affiliation with Harvard University.

Separation Agreements with Harvard Bioscience

On November 1, 2013, to effect the Separation, Harvard Bioscience

distributed all of the shares of our common stock to the Harvard Bioscience stockholders (or the Distribution).

Prior to the Distribution,

Harvard Bioscience contributed the assets of its regenerative medicine business, and approximately $15 million in cash, to our

company to fund our operations following the Distribution.

In connection with the Separation and immediately prior to the

Distribution, we entered into a Separation and Distribution Agreement, Intellectual Property Matters Agreement, Product Distribution

Agreement, Tax Sharing Agreement, Transition Services Agreement, and Sublicense Agreement with Harvard Bioscience to effect the

Separation and Distribution and provide a framework for our relationship with Harvard Bioscience after the Separation.

These agreements

govern the current relationships among us and Harvard Bioscience and provided for the allocation among us and Harvard Bioscience

of Harvard Bioscience’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities)

attributable to periods prior to the Separation.

On November 1, 2013, to effect the Separation, Harvard Bioscience distributed

all of the shares of our common stock to the Harvard Bioscience stockholders (or the Distribution).

Prior to the Distribution, Harvard

Bioscience contributed the assets of its regenerative medicine business, and approximately $15 million in cash, to our company to fund

our operations following the Distribution.

In connection with the Separation and immediately prior to the Distribution,

we entered into a Separation and Distribution Agreement, Intellectual Property Matters Agreement, Product Distribution Agreement, Tax

Sharing Agreement, Transition Services Agreement, and Sublicense Agreement with Harvard Bioscience to effect the Separation and Distribution

and provide a framework for our relationship with Harvard Bioscience after the Separation.

These agreements govern the current relationships

among us and Harvard Bioscience and provided for the allocation among us and Harvard Bioscience of Harvard Bioscience’s assets,

liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to the

Government Regulation

Any product that we may develop based on our technology, and

any other clinical products that we may develop, will be subject to considerable regulation by governments.

We were informed by

the FDA that our previous-generation tracheal product candidate would be regulated under the BLA pathway in the U.S.

informed by the European Medicines Agency (EMA) that the previous generation tracheal product would be regulated under the Advanced

Therapy Medicinal Products (ATMP), pathway in the European Union (E.U.).

On October 18, 2016, we also received written confirmation

from FDA’s Center for Biologics Evaluation and Research (CBER), that the FDA intends to regulate our CEI as a combination

product under the primary jurisdiction of CBER.

We further understand that CBER may choose to consult or collaborate with the FDA’s

Center for Devices and Radiological Health (CDRH), with respect to the characteristics of the synthetic scaffold component of our

product based on CBER’s determination of need for such assistance.

Although our current technology differs in design and

performance from the first-generation product candidate, we expect that cellframe-based products will be regulated by the FDA and

EMA under the same pathways as the first-generation tracheal product candidate.

This expectation is based on the fact that the

cellframe-based technology is centered on the delivery of the patient’s own cells seeded on an implanted synthetic scaffold

in order to restore organ function and our belief that the cells provide the primary mode of action.

Of course, it is possible

that some of our current and future products may use alternative regulatory pathways.

Any product that we may develop based on our technology, and any other

clinical products that we may develop, will be subject to considerable regulation by governments.

We were informed by the FDA that our

previous-generation tracheal product candidate would be regulated under the BLA pathway in the U.S.

and we were informed by the European

Medicines Agency (EMA) that the previous generation tracheal product would be regulated under the Advanced Therapy Medicinal Products

(ATMP), pathway in the European Union (E.U.).

On October 18, 2016, we also received written confirmation from FDA’s Center for Biologics

Evaluation and Research (CBER), that the FDA intends to regulate our CEI as a combination product under the primary jurisdiction of CBER.

We further understand that CBER may choose to consult or collaborate with the FDA’s Center for Devices and Radiological Health (CDRH),

with respect to the characteristics of the synthetic scaffold component of our product based on CBER’s determination of need for

such assistance.

Although our current technology differs in design and performance from the first-generation product candidate, we expect

that cellframe-based products will be regulated by the FDA and EMA under the same pathways as the first-generation tracheal product candidate.

This expectation is based on the fact that the cellframe-based technology is centered on the delivery of the patient’s own cells

seeded on an implanted synthetic scaffold in order to restore organ function and our belief that the cells provide the primary mode of

Of course, it is possible that some of our current and future products may use alternative regulatory pathways.

Regulatory Strategy

Domestic Regulation of Our Products

The testing, manufacturing, and potential labeling, advertising,

promotion, distribution, importing and marketing of our products are subject to extensive regulation by governmental authorities

and in other countries.

In the U.S., the FDA, under the Public Health Service Act, the Federal Food, Drug and Cosmetic

Act, and its implementing regulations, regulates biologics and medical device products.

The labeling, advertising, promotion, marketing and distribution

of biopharmaceuticals, or biologics and medical devices also must be in compliance with the FDA and U.S.

Federal Trade Commission

(FTC), requirements which include, among others, standards and regulations for off-label promotion, industry sponsored scientific

and educational activities, promotional activities involving the internet, and direct-to-consumer advertising.

The FDA and FTC

have very broad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance

of a warning letter directing us to correct deviations from regulatory standards and enforcement actions that can include seizures,

injunctions and criminal prosecution.

Further, we are required to meet regulatory requirements in countries outside the U.S., which

can change rapidly with relatively short notice.

We have been informed by the FDA that our CEI product candidates

are combination biologic/device products.

Biological products must satisfy the requirements of the Public Health Services Act and

the Food, Drug and Cosmetics Act and their implementing regulations.

In order for a biologic product to be legally marketed in

the U.S., the product must have a BLA approved by the FDA.

Domestic Regulation of Our Products and Business

The testing, manufacturing, and potential labeling, advertising, promotion,

distribution, importing and marketing of our products are subject to extensive regulation by governmental authorities in the U.S.

in other countries.

In the U.S., the FDA, under the Public Health Service Act, the Federal Food, Drug and Cosmetic Act, and its implementing

regulations, regulates biologics and medical device products.

The labeling, advertising, promotion, marketing and distribution of

biopharmaceuticals, or biologics and medical devices also must be in compliance with the FDA and U.S.

Federal Trade Commission (FTC),

requirements which include, among others, standards and regulations for off-label promotion, industry sponsored scientific and educational

activities, promotional activities involving the internet, and direct-to-consumer advertising.

The FDA and FTC have very broad enforcement

authority, and failure to abide by these regulations can result in penalties, including the issuance of a warning letter directing us

to correct deviations from regulatory standards and enforcement actions that can include seizures, injunctions and criminal prosecution.

Further, we are required to meet regulatory requirements in countries outside the U.S., which can change rapidly with relatively short

We have been informed by the FDA that our CEI product candidates are

combination biologic/device products.

Biological products must satisfy the requirements of the Public Health Services Act and the Food,

Drug and Cosmetics Act and their implementing regulations.

In order for a biologic product to be legally marketed in the U.S., the product

must have a BLA approved by the FDA.

The BLA Approval Process

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FDA approval of the BLA.

Based on discussions with the FDA, we expect clinical trials

for our esophageal implant product candidates to be conducted in two sequential phases:

A Phase 1, or Pilot Trial, where our product would be tested

on a small number of patients, up to 10, to demonstrate the product’s safety.

In addition, a protocol amendment could be

submitted to the phase 1 trial after the treatment of a to be determined number of patients to add the treatment of patients with

pediatric esophageal atresia.

If successful, the Phase 1 (or Pilot) Trial would be followed

by a Phase II Registration, or Pivotal Trial, to test the product’s efficacy.

We believe that the nature of our esophageal

products and the sizes of their targeted patient populations would lead to a small number of patients in this trial, relative to

most biotechnology clinical trials.

Clinical testing may not be completed successfully within any

specified time period, if at all.

The FDA closely monitors the progress of each phase of clinical trials that are conducted under

an IND and may, at its discretion, reevaluate, alter, suspend, or terminate the testing based upon the data accumulated to that

point and the FDA’s assessment of the risk/benefit ratio to the patient.

The FDA or the sponsor may suspend or terminate

clinical trials at any time for various reasons, including a finding that the subjects or patients are being exposed to an unacceptable

The FDA can also request that additional pre-clinical studies or clinical trials be conducted as a condition to product

Based on discussions with the FDA, we expect clinical trials for our

esophageal implant product candidates to be conducted in two sequential phases:

A Phase 1, or Pilot Trial, where our product would be tested on a small

number of patients, up to 10, to demonstrate the product’s safety.

In addition, a protocol amendment could be submitted to the phase

1 trial after the treatment of a to be determined number of patients to add the treatment of patients with pediatric esophageal atresia.

If successful, the Phase 1 (or Pilot) Trial would be followed by a Phase II Registration, or Pivotal Trial, to test the product’s efficacy.

We believe that the nature of our esophageal products and the sizes of their targeted patient populations would lead to a small number of patients in this trial, relative to most biotechnology clinical trials.

Clinical testing may not be completed successfully within any specified

time period, if at all.

The FDA closely monitors the progress of each phase of clinical trials that are conducted under an IND and may,

at its discretion, reevaluate, alter, suspend, or terminate the testing based upon the data accumulated to that point and the FDA’s

assessment of the risk/benefit ratio to the patient.

The FDA or the sponsor may suspend or terminate clinical trials at any time for various

reasons, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

The FDA can also request

that additional pre-clinical studies or clinical trials be conducted as a condition to product approval.

Companies also may seek Fast Track or Breakthrough Therapy designation

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condition and that demonstrate the potential to address unmet medical needs for such a condition.

If awarded, the Fast Track or

Breakthrough Therapy designation applies to the product only for the indication for which the designation was received.

If the FDA determines after review of preliminary clinical data

submitted by the sponsor that a Fast Track or Breakthrough Therapy product may be effective, it may begin review of portions of

a BLA before the sponsor submits the complete BLA (rolling review), thereby accelerating the date on which review of a portion

of the BLA can begin.

There can be no assurance that any of our products will be granted Fast Track or Breakthrough Therapy designation.

And even if they are designated as Fast Track or Breakthrough Therapy products, we cannot ensure our products will be reviewed

or approved more expeditiously for their Fast Track or Breakthrough Therapy indications than would otherwise have been the case

or will be approved promptly, or at all.

Furthermore, the FDA can revoke Fast Track or Breakthrough Therapy designation at any

In addition, products studied for their safety and effectiveness

in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may

receive Accelerated Approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that

the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect

on a clinical endpoint other than survival or irreversible morbidity.

As a condition of approval, the FDA may require that a sponsor

of a product receiving Accelerated Approval perform adequate and well-controlled post-approval clinical trials to verify and further

define the product’s clinical benefit and safety profile.

There can be no assurance that any of our products will receive

Accelerated Approval.

Even if Accelerated Approval is granted, the FDA may withdraw such approval if the sponsor fails to conduct

the required post-approval clinical trials, or if the post-approval clinical trials fail to confirm the early benefits seen during

the Accelerated Approval Process.

If awarded, the Fast Track or Breakthrough

Therapy designation applies to the product only for the indication for which the designation was received.

If the FDA determines after review of preliminary clinical data submitted

by the sponsor that a Fast Track or Breakthrough Therapy product may be effective, it may begin review of portions of a BLA before the

sponsor submits the complete BLA (rolling review), thereby accelerating the date on which review of a portion of the BLA can begin.

can be no assurance that any of our products will be granted Fast Track or Breakthrough Therapy designation.

And even if they are designated

as Fast Track or Breakthrough Therapy products, we cannot ensure our products will be reviewed or approved more expeditiously for their

Fast Track or Breakthrough Therapy indications than would otherwise have been the case or will be approved promptly, or at all.

the FDA can revoke Fast Track or Breakthrough Therapy designation at any time.

In addition, products studied for their safety and effectiveness in

treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive Accelerated

Approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect

on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other

than survival or irreversible morbidity.

As a condition of approval, the FDA may require that a sponsor of a product receiving Accelerated

Approval perform adequate and well-controlled post-approval clinical trials to verify and further define the product’s clinical

benefit and safety profile.

There can be no assurance that any of our products will receive Accelerated Approval.

Even if Accelerated

Approval is granted, the FDA may withdraw such approval if the sponsor fails to conduct the required post-approval clinical trials, or

if the post-approval clinical trials fail to confirm the early benefits seen during the Accelerated Approval Process.

Priority Review Voucher

Fast Track or Breakthrough Therapy designation and Accelerated

Approval should be distinguished from Priority Review designation although products awarded Fast Track or Breakthrough Therapy

designation may also be eligible for Priority Review designation.

Fast Track or Breakthrough Therapy designation and Accelerated Approval

should be distinguished from Priority Review designation although products awarded Fast Track or Breakthrough Therapy designation may

also be eligible for Priority Review designation.

Products regulated by the CBER may receive Priority Review designation

if they provide significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious

or life-threatening disease.

The agency has agreed to the performance goal of reviewing products awarded Priority Review designation

within six months, whereas products under standard review receive a ten-month target.

The review process, however, can be significantly

extended by FDA requests for additional information or clarification regarding information already provided in the submission.

Priority Review designation is requested at the time the BLA is submitted, and the FDA makes a decision as part of the agency’s

review of the application for filing.

Separately, but somewhat related, is a product’s ability

to qualify its sponsor to receive a Priority Review Voucher (PRV).

For a product aimed at prevention or treatment of a “rare

pediatric disease”

as defined in the Food, Drug and Cosmetics Act, and that also meets certain other qualifying attributes,

the product’s sponsor may qualify, apply for and receive a PRV, from the FDA.

A PRV entitles its holder to Priority Review

for a drug application, and the PRV is transferable.

Some companies who have received PRV’s have sold their PRV’s to

other companies who have then used the PRV to receive Priority Review for a drug application with the FDA.

Recent transfers of

PRV’s from one company to another have occurred at prices in the $80 –

if they provide significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious or life-threatening

The agency has agreed to the performance goal of reviewing products awarded Priority Review designation within six months, whereas

products under standard review receive a ten-month target.

The review process, however, can be significantly extended by FDA requests

for additional information or clarification regarding information already provided in the submission.

Priority Review designation is requested

at the time the BLA is submitted, and the FDA makes a decision as part of the agency’s review of the application for filing.

Separately, but somewhat related, is a product’s ability to qualify

its sponsor to receive a Priority Review Voucher (PRV).

For a product aimed at prevention or treatment of a “rare pediatric disease”

as defined in the Food, Drug and Cosmetics Act, and that also meets certain other qualifying attributes, the product’s sponsor may

qualify, apply for and receive a PRV, from the FDA.

A PRV entitles its holder to Priority Review for a drug application, and the PRV is

transferable.

Some companies who have received PRV’s have sold their PRV’s to other companies who have then used the PRV to

receive Priority Review for a drug application with the FDA.

Recent transfers of PRV’s from one company to another have occurred

at prices in the $80 –

125 million range.

We intend to apply for rare

pediatric disease designation for our pediatric esophageal implant product candidate as a first step in pursuit of a PRV.

is earned only upon marketing approval of the product.

There is no certainty that our pediatric esophageal product will achieve

marketing approval from the FDA, or that if it does, that FDA would award us a PRV.

Further, if received, there is no certainty

that the value of a PRV at that future date will compare favorably with the values reflected in recent transfers of PRVs.

We intend to apply for rare pediatric disease designation for our pediatric esophageal

implant product candidate as a first step in pursuit of a PRV.

A PRV is earned only upon marketing approval of the product.

certainty that our pediatric esophageal product will achieve marketing approval from the FDA, or that if it does, that FDA would award

Further, if received, there is no certainty that the value of a PRV at that future date will compare favorably with the values

reflected in recent transfers of PRVs.

Orphan Drug Designations

The Orphan Drug Act provides incentives to manufacturers to

develop and market drugs and biologics for rare diseases and conditions affecting fewer than 200,000 persons in the U.S.

time of application for Orphan Drug Designation.

In September 2014 the FDA granted orphan designation to our HART-Trachea product

In November 2016, we were granted Orphan Drug Designation for our CEI by the FDA to restore the structure and function

of the esophagus subsequent to esophageal damage due to injury congenital abnormalities, or cancer.

The first developer to receive

FDA marketing approval for an orphan biologic is entitled to a seven-year exclusive marketing period in the U.S.

The Orphan Drug Act provides incentives to manufacturers to develop

and market drugs and biologics for rare diseases and conditions affecting fewer than 200,000 persons in the U.S.

at the time of application

for Orphan Drug Designation.

In September 2014 the FDA granted orphan designation to our HART-Trachea product in the U.S.

2016, we were granted Orphan Drug Designation for our CEI by the FDA to restore the structure and function of the esophagus subsequent

to esophageal damage due to injury congenital abnormalities, or cancer.

The first developer to receive FDA marketing approval for an orphan

biologic is entitled to a seven-year exclusive marketing period in the U.S.

for that product.

The marketing exclusivity prevents FDA approval of another application for the same product for the same indication for a period

of seven years.

Orphan status also entitles the product’s sponsor to certain other benefits, such as a waiver of the BLA

user fee, which is currently a $2 million value.

Orphan product designation does not convey any advantage in or shorten the duration

of the regulatory review and approval process.

The marketing exclusivity prevents FDA approval

of another application for the same product for the same indication for a period of seven years.

Orphan status also entitles the product’s

sponsor to certain other benefits, such as a waiver of the BLA user fee, which is currently a $2 million value.

Orphan product designation

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

International

We plan to seek required regulatory approvals and comply with

extensive regulations governing product safety, quality, manufacturing and reimbursement processes in order to market our products

in other major foreign markets.

The regulation of our products in the Asian and European markets, and in other foreign markets

varies significantly from one jurisdiction to another.

The classification of the particular products and related approval or CE

marking procedures can involve additional product testing and additional administrative review periods.

The time required to obtain

these foreign approvals or to CE mark our products may be longer or shorter than that required in the U.S., and requirements for

approval may differ from the FDA requirements.

Regulatory approval in one country does not ensure regulatory approval in another,

but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

Legislation similar to the Orphan Drug Act has been enacted

in other jurisdictions, including the E.U.

We plan to seek required regulatory approvals and comply with extensive

regulations governing product safety, quality, manufacturing and reimbursement processes in order to market our products in other major

foreign markets.

The regulation of our products in the Asian and European markets, and in other foreign markets varies significantly from

one jurisdiction to another.

The classification of the particular products and related approval or CE marking procedures can involve additional

product testing and additional administrative review periods.

The time required to obtain these foreign approvals or to CE mark our products

may be longer or shorter than that required in the U.S., and requirements for approval may differ from the FDA requirements.

approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one

country may negatively impact the regulatory process in others.

Legislation similar to the Orphan Drug Act has been enacted in other

jurisdictions, including the E.U.

The orphan legislation in the E.U.

is available for therapies addressing conditions

that affect five or fewer out of 10,000 persons.

The marketing exclusivity period is for ten years, although that period can be

reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable

not to justify maintenance of market exclusivity.

At December 31, 2019, we had 12 employees working in our business,

is available for therapies addressing conditions that affect five

or fewer out of 10,000 persons.

The marketing exclusivity period is for ten years, although that period can be reduced to six years if,

at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of

market exclusivity.

Employees and Human Capital Resources

As of December 31, 2020, we had 7 employees working in our business,

of whom 6 were full-time and one was part-time.

At that date, all of our employees were based in the U.S.

None of our employees

are unionized.

None of our employees are unionized.

In general, we consider our relations with our employees to be good.

We are not aware of any companies whose products are directly

competitive with our cell-seeded biocompatible synthetic scaffold system.

However, in our key markets we may in the future compete

with multiple pharmaceutical, biotechnology, and medical device companies, including, among others, Aldagen, Asterias Biotherapeutics,

Athersys, BioTime, Caladrius Biosciences, Cytori Therapeutics, E.

du Pont de Nemours and Company, InVivo Therapeutics, Mesoblast,

Miramatrix Medical, Nanofiber Solutions, Neuralstem, Orgagen, Organovo, Osiris Therapeutics, Pluristem, Smiths Medical, Tissue

Genesis, Inc., Tissue Growth Technologies, United Therapeutics, Vericel Corporation and W.L.

Our employees are highly skilled, and many hold advanced degrees.

Our future performance depends significantly upon the continued service of our key scientific, technical and senior management personnel

and our continued ability to attract and retain highly skilled employees.

We have taken proactive steps throughout the COVID-19 pandemic

to protect the health and safety of our employees.

We expect to continue to implement these measures until we determine that the COVID-19

pandemic is adequately contained for purposes of our business.

We may take further actions, in compliance with all appropriate government

regulations, that we determine to be in the best interest of our employees.

We are not aware of any companies whose products are directly competitive

with our cell-seeded biocompatible synthetic scaffold system.

However, in our key markets we may in the future compete with multiple pharmaceutical,

biotechnology, and medical device companies, including, among others, Aldagen, Asterias Biotherapeutics, Athersys, BioTime, Caladrius

Biosciences, Cytori Therapeutics, E.

du Pont de Nemours and Company, InVivo Therapeutics, Mesoblast, Miramatrix Medical, Nanofiber

Solutions, Neuralstem, Orgagen, Organovo, Osiris Therapeutics, Pluristem, Smiths Medical, Tissue Genesis, Inc., Tissue Growth Technologies,

United Therapeutics, Vericel Corporation and W.L.

Gore and Associates.

there are many academic and clinical centers that are developing regenerative technologies that may one day become competitors

Many of our potential competitors have substantially greater

financial, technological, research and development, marketing, and personnel resources than we do.

We cannot forecast if or when

these or other companies may develop competitive products.

We expect that other products will compete with our products

and potential products based on efficacy, safety, cost, and intellectual property positions.

While we believe that these will be

the primary competitive factors, other factors include, in certain instances, obtaining marketing exclusivity under the Orphan

Drug Act, availability of supply, manufacturing, marketing and sales expertise and capability, and reimbursement coverage.

In addition, there are many academic and clinical centers that

are developing regenerative technologies that may one day become competitors of ours.

Many of our potential competitors have substantially greater financial,

technological, research and development, marketing, and personnel resources than we do.

We cannot forecast if or when these or other companies

may develop competitive products.

We expect that other products will compete with our products and potential

products based on efficacy, safety, cost, and intellectual property positions.

While we believe that these will be the primary competitive

factors, other factors include, in certain instances, obtaining marketing exclusivity under the Orphan Drug Act, availability of supply,

manufacturing, marketing and sales expertise and capability, and reimbursement coverage.

Effective December 31, 2020, we are no longer considered an “emerging

growth company”

under the Jumpstart Our Business Startups Act of 2012.

Information about our Executive Officers

2 unchanged sentences

Chief Scientific Officer

Peter Chakoutis

Vice President of Finance

Peter Pellegrino

Interim Vice President of Finance

Hong Yu –

Yu has served as our President since May 31, 2018.

is a seasoned executive with extensive knowledge in strategic analytics, wealth management, and investment research.

Prior to Biostage,

Yu was most recently a Senior Vice President responsible for strategic analytics at Bank of America, where he was employed

for nearly 20 years.

seasoned executive with extensive knowledge in strategic analytics, wealth management, and investment research.

Prior to Biostage, Mr.

Yu was most recently a Senior Vice President responsible for strategic analytics at Bank of America, where he was employed for nearly

During his career, Mr.

Yu has built strong business connections in various industries, including biotech/healthcare,

financial services, and robotics/artificial intelligence.

He developed an expertise in matching emerging companies with cross-border

investors, often providing U.S.

Yu has built strong business connections in various industries, including biotech/healthcare, financial

services, and robotics/artificial intelligence.

He developed an expertise in matching emerging companies with cross-border investors,

often providing U.S.

companies with market access to the vast capital supply in China.

Yu graduated from Huanggang

High School (Hubei, China) in 1990 and obtained a B.S.

Yu graduated from Huanggang High School (Hubei,

China) in 1990 and obtained a B.S.

in biophysics from Peking University (Beijing, China), and M.S.

in biostatistics

from School of Public Health, University of Illinois (Chicago, IL).

in biostatistics from School of Public

Health, University of Illinois (Chicago, IL).

Yu is a charterholder of Chartered Financial Analyst (CFA).

William Fodor - Chief Scientific Officer

William Fodor has served as our Chief Scientific Officer

since July 2017.

William Fodor has served as our Chief Scientific Officer since

On July 2, 2018, Dr.

Fodor became an employee of Biostage after serving via a consulting arrangement.

was a founding scientist at Alexion Pharmaceuticals, where he served as an executive management team member and Senior Director

of the Cell/Tissue Engineering, Transgenic Animal and Transplant Programs.

He has also served as an Associate Professor at the

University of Connecticut Department of Molecular Cell Biology and the Center for Regenerative Biology, extending research areas

into cells and cell engineering.

Fodor was Senior Director of Product Development at ViaCell Inc., leading programs in hematopoietic

stem cell process development and manufacturing, mesenchymal stem cell basic research and manufacturing for cardiac repair and

pancreatic stem cell research.

He was a consultant for the biotechnology industry, serving clients in stem cell research, gene

therapy, stem cell manufacturing and stem cell genome engineering.

Fodor has expertise in programs targeting transplant immunology,

hematopoiesis, cardiac repair, stem cell potency, gene therapy for liver diseases, tissue engineering, design and oversight of

pre-clinical non-GLP and GLP animal models and IND Applications (Pre-clinical and CMC Modules).

Fodor was a founding

scientist at Alexion Pharmaceuticals, where he served as an executive management team member and Senior Director of the Cell/Tissue Engineering,

Transgenic Animal and Transplant Programs.

He has also served as an Associate Professor at the University of Connecticut Department of

Molecular Cell Biology and the Center for Regenerative Biology, extending research areas into cells and cell engineering.

Senior Director of Product Development at ViaCell Inc., leading programs in hematopoietic stem cell process development and manufacturing,

mesenchymal stem cell basic research and manufacturing for cardiac repair and pancreatic stem cell research.

He was a consultant for the

biotechnology industry, serving clients in stem cell research, gene therapy, stem cell manufacturing and stem cell genome engineering.

Fodor has expertise in programs targeting transplant immunology, hematopoiesis, cardiac repair, stem cell potency, gene therapy for

liver diseases, tissue engineering, design and oversight of pre-clinical non-GLP and GLP animal models and IND Applications (Pre-clinical

and CMC Modules).

Fodor earned a PhD.

from Ohio State University.

He completed post-doctoral work at Yale University School of Medicine in the department of immunobiology,

investigating the regulation of MHC class I and MHC class II genes in the histocompatibility complex.

Peter Chakoutis –

Vice President of Finance

Chakoutis has served as our Vice President of Finance since

March 24, 2020.

in genetics from Ohio State University.

He completed post-doctoral work at Yale University School

of Medicine in the department of immunobiology, investigating the regulation of MHC class I and MHC class II genes in the histocompatibility

Peter Pellegrino –

Interim Vice President of Finance

has been working as a consultant for the Company since March 1, 2020 pursuant to our engagement of Point Providence Consulting, a financial

consultancy firm that specializes in working with life sciences companies.

Pellegrino was appointed as our Interim Vice President

of Finance prior to the filing of this Form 10-K and is currently President of Point Providence Consulting.

In his tenure at Point

Providence, Mr.

Pellegrino serves in a variety of financial roles to a number of public and private companies in various stages of research,

clinical development and commercialization.

Immediately prior to forming Point Providence Consulting, Mr.

Pellegrino served as Vice President,

Corporate Controller and Treasurer of Verastem, Inc., a publicly traded biopharmaceutical company, from 2018 to 2019.

From 2017 to 2018,

Pellegrino was employed by Merus, Inc., a publicly traded oncology company, as Vice President, Corporate Controller.

Previously, Mr.

Chakoutis served in the same position from August 2019 through January 2020, and prior to that

he was our Director of Finance starting in February 2018.

From 2012 to 2017, Mr.

Chakoutis was employed at HeartWare, Inc., a medical

device leader in developing and manufacturing miniaturized implantable heart pumps;

ventricular assist devices for the treatment

of advanced heart failure, serving as HeartWare’s Director of Sales Operations from 2015 to 2017 and Director of Financial

Planning & Analysis from 2012 to 2015.

From 2006 to 2011, he served as the Assistant Controller for Caliper Life Sciences.

From 2000 to 2005, Mr.

Chakoutis was employed by DUSA Pharmaceuticals serving as DUSA’s Chief Financial Officer from 2003

to 2005 and Controller from 2000 to 2002.

Prior to 2000, he served in various managerial positions in the areas of financial reporting

and accounting.

Chakoutis has been a Certified Public Accountant in the State of Massachusetts since 1996, holds a B.S.

business administration - accounting from Norwich University, and a masters in finance from Bentley Graduate School.

Pellegrino was Corporate Controller of Aspen Aerogels, Inc., a publicly traded designer, developer, and manufacturer of insulation products

from 2009 to 2017.

Prior to 2009, he served in various managerial positions in the areas of accounting and financial reporting.

in business administration from Bryant University.

Available Information and Website

Our website address is www.biostage.com .

Our Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, and exhibits and amendments to those reports filed or furnished with the Securities

and Exchange Commission (SEC) pursuant to Section 13(a) of the Exchange Act are available for review on our website and the SEC

website at www.sec.gov.

Any such materials that we file with, or furnish to, the SEC in the future will be available on our website

as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

The information on our website

is not incorporated by reference into this Annual Report on Form 10-K.

Our Quarterly Reports

on Form 10-Q, Current Reports on Form 8-K, and exhibits and amendments to those reports filed or furnished with the Securities and Exchange

Commission (SEC) pursuant to Section 13(a) of the Exchange Act are available for review on our website and the SEC website at www.sec.gov.

Any such materials that we file with, or furnish to, the SEC in the future will be available on our website as soon as reasonably practicable

after they are electronically filed with, or furnished to, the SEC.

The information on our website is not incorporated by reference into

this Annual Report on Form 10-K.

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