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Item 1. Business

2023-03-16 compared with 2022-03-28 · 409 added, 390 removed, 267 unchanged (75% of the section changed)

We are a biopharmaceutical company utilizing a proprietary human memory B cell platform to discover and develop first-in-class antibody therapeutics designed to change the way diseases are currently being treated.

Our proprietary discovery engine identifies novel therapeutic antibodies and their targets by leveraging highly educated components of the immune system, memory B cells, from patients who have learned to fight off their disease.

Memory B cells are the key elements in the human immune system response because they produce specific, high-affinity antibodies that bind to pathogens or cancer cells, and thus target them for destruction by other immune effector cells.

Our platform is different from those of other biotechnology companies because of our unbiased, broad, deep and efficient approach to identifying novel antibody-target pairs that may be useful in treating cancer and infectious diseases.

Unlike other approaches that use deep sequencing of B cells to identify dominant clones that are common within and across patients, and which assume those clones are therapeutically relevant, we do not assume that any such genomic dominance is necessarily the hallmark of therapeutic utility.

Our primary focus areas are oncology and infectious disease.

Despite many elements that distinguish oncology from infectious diseases, the breadth of our platform enabled the discovery of novel antibodies in both of these therapeutic areas.

We are currently advancing two programs:

a three-antibody cocktail (IMM-BCP-01) for potential treatment and prophylaxis of SARS-CoV-2, and an antibody (IMM-ONC-01) against IL-38, a novel immune checkpoint, for the potential treatment of various solid tumors.

To date, we have processed memory B-cells isolated from hundreds of cancer patients and have generated several hundred thousand hybridomas, or stable, immortalized forms of B cell clones that produce a single antibody for extended periods of time.

We are a biopharmaceutical company utilizing a proprietary human memory B cell platform to discover and develop antibody therapeutics to improve patient care.

Our discovery engine identifies novel therapeutic antibodies and their targets by leveraging the highly educated component of the immune system, memory B cells.

Memory B cells are the key elements of a durable human immune response because they produce specific, high-affinity antibodies that bind to antigens produced in diseased cells and target them for destruction by other immune effector cells.

We believe that our platform is different from those of other biotechnology companies because of our unbiased, broad, deep and efficient approach to identifying novel antibody-target pairs that may be useful in developing treatments for cancer and other diseases.

Unlike some approaches that use deep sequencing of B cells to identify dominant clones that are common within and across patients, and which assume those clones are therapeutically relevant, we do not assume that any such genomic dominance is necessarily the hallmark of therapeutic utility.

Our primary focus area is oncology.

Despite many elements that distinguish oncology from other diseases, the breadth of our platform has enabled the discovery of novel antibodies in non-oncology areas as well.

We are currently advancing our lead oncology program:

an antibody (IMM-ONC-01) against IL-38 , a novel immune modulator for the treatment of various solid tumors and identifying novel target-antibody pairs under the Collaboration Agreement with AbbVie.

To date, we have processed memory B-cells isolated from hundreds of cancer patients and have generated several hundred thousand hybridomas, or stable, immortalized forms of B cell clones that each produce a single antibody for extended periods of time.

We have successfully identified more than a thousand individual antibodies, which we refer to as “hits,” that appear to bind to either a cancer cell or a tumor extract with high-affinity and specificity.

To date, after assessing only a fraction of these hits (antibodies), we have identified over 70 potentially novel cancer targets.

We believe that several of these antibody-target pairs could potentially form the basis of a therapeutic hypothesis, resulting in an intervention or a diagnostic to detect such targets in a broader patient population.

One of these unique targets is interleukin 38, or IL-38, a novel immune checkpoint inhibitor.

An antibody directed at IL-38 is the current focus of our lead oncology program, IMM-ONC-01, which is in preclinical development stage.

We are also studying the expression of this novel checkpoint in various tumor types in order to select the most appropriate patient population to study in the clinic.

We plan to submit our IND application for the IMM-ONC-01 program with the FDA in the second half of 2022.

To date, after assessing only a fraction of these hits, we have identified over 70 potentially novel cancer targets.

We believe that several of these antibody-target pairs could potentially form the basis of new therapies or diagnostics for a large number of oncology patients.

One of these unique targets is interleukin 38, or IL-38, a novel immune modulator.

An antibody directed at IL-38 is the current focus of our program IMM-ONC-01, which is in preclinical development stage.

We are also studying the expression of IL-38 in various tumor types in order to select the most appropriate patient population for potential evaluation of IMM-ONC-01 clinical utility.

We plan to submit our IND application for the IMM-ONC-01 program with the FDA by mid-2023.

We believe that our platform is useful in uncovering new insights into cancer biology itself.

In analyzing over 70 cancer targets that we have identified to date, we observed a “functional clustering” of targets, indicating that different tumor patients appear to mount an immune response directed towards specific processes in cancer biology, such as membrane dynamics and exosomes.

In analyzing over 70 cancer targets that we have identified to date, we observed a “functional clustering” of targets, indicating that different cancer patients appear to mount immune responses directed towards common processes in cancer biology, such as membrane dynamics and formation and function of exosomes.

We are leveraging these insights to guide the discovery of future oncology pipeline assets and perhaps to enable future strategic collaborations and additional value creation.

In addition, the platform is able to identify antibodies that can serve as suitable candidates for other cancer treatment modalities, such as Antibody-Drug Conjugates (ADC) or T cell engagers.

We have advanced a product candidate that binds and inactivates SARS-CoV2, which causes COVID-19.

This program is aimed at advancing an innovative therapeutic approach against the SARS-CoV2 virus into the clinic.

In addition, the platform can identify antibodies that can serve as potential candidates for other cancer treatment modalities, such as Antibody-Drug Conjugates or Bi-Specific Antibodies useful as T Cell Engagers by engaging unique targets expressed on cancer cell surface.

In the area of infectious diseases, we have advanced a product consisting of a cocktail of three antibodies (IMM-BCP-01) that bind and inactivate SARS-CoV2, which causes COVID-19.

This program is aimed at advancing an

innovative therapeutic approach against the SARS-CoV2 virus into the clinic.

We are conducting this program in collaboration with the DoD (U.S.

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We generated a library of nearly 400 antibodies from the memory B-cells of patient “super-responders” who successfully cleared their SARS-CoV-2 infection having high circulating levels of high-affinity anti-viral antibodies.

We have completed in-vitro pre-clinical evaluation of the activity of IMM-BCP-01 against multiple SARS-CoV-2 variants (including Alpha, Beta, Gamma, Delta, and Omicron) and submitted an IND application to the FDA in November 2021.

In March 2022, the FDA communicated that the clinical study can be initiated for our antibody cocktail for the treatment of SARS-CoV-2 following a brief clinical hold.

Key Attributes of Our Discovery Engine

Our discovery engine discovers innovative antibody-target pairs using an unbiased, broad, deep and efficient approach, as we are able to:

● Capture a large number (typically thousands) of patient-derived memory B cells and enrich and expand them using proprietary methods.

We then convert memory B cells into stable human hybridomas, which typically express an antibody in quantities necessary for broad pre-clinical screening.

● Interrogate each antibody produced by the human memory B cell hybridomas against disease-related antigens, using function-based high-throughput screening approaches that include proprietary protein micro-array technologies that allow rapid screening of up to 20,000 antibodies in a single experiment.

In the case of infectious diseases, screening is performed against defined pathogen specific antigens and in the case of oncology, screening is performed against mixtures of cancer related antigens.

● Simultaneously identify relevant, potentially novel, target antigens that are prevalent in a broader patient population, which we refer to as “public antigens,” and antibodies that bind to them with high affinity.

Therefore, we believe our platform can yield antibodies that may have the potential for use as therapeutics and/or diagnostics across a broad therapeutic landscape, which could translate into advancing one to two antibodies into IND-enabling development studies per year.

● Utilize an unbiased approach that spotlights biological processes of disease relevance, guided by the memory B-cell response.

Further, identify antibodies that can be used in combination with other modalities resulting in novel therapeutics, such as Antibody-Drug Conjugates, Bi-specifics and T cell engagers.

Our Lead Discovery Programs

Oncology (IMM-ONC-01)

Our lead oncology program is focused on IL-38, which we believe is a novel, tumor-derived immune checkpoint capable of promoting evasion of the immune system.

IL-38 was identified as the target of an antibody isolated from a hybridoma library generated from the memory B cells of a patient with squamous head and neck cancer.

Query of public and proprietary databases of cancer patient data suggest overexpression of IL-38, based on mRNA expression in multiple solid tumors.

Further, a correlation with low levels of tumor-infiltrating T cells, a hallmark of immune suppression in some of these patients’ tumors, was also observed suggesting a role for IL-38 as an immune checkpoint.

Data obtained from preclinical testing indicate that blocking IL-38 function using inhibitory antibodies increase the immune response to the tumor and result in anti-tumor activity in select animal models, suggesting that anti-IL-38 antibodies could have therapeutic utility as single agents or in combination with other therapeutic modalities.

Our recent analysis further confirms elevated IL-38 expression in samples of specific patient tumor subtypes, such as head and neck and gastroesophogeal, show high frequency of occurrence based on mRNA expression.

We believe that this information will help guide the selection of patient cohorts for clinical testing, thereby improving the probability of clinical success.

We plan to submit our IND application for the IMM-ONC-01 program with the FDA in the second half of 2022.

SARS-CoV-2 (IMM-BCP-01)

We are actively developing an antibody cocktail, comprising a combination of three effective anti-viral antibodies derived from the B cells of COVID-19 “super-responders.” The immune system employs multiple viral clearance mechanisms to fight SARS-CoV-2 infection.

IMM-BCP-01 targets non-overlapping regions of the Spike protein of SARS-CoV-2 which include highly conserved, subdominant epitopes.

The cocktail promotes both ACE2 and non-ACE2 dependent neutralization and induces natural viral clearance mechanisms such as antibody dependent cellular cytotoxicity, complement activation and phagocytosis.

If successful, we expect that our antibody cocktail product candidate could be used both as a treatment for individuals who have contracted SARS-CoV-2 and as a prophylactic to offer protection against the virus for individuals who are at risk of contracting SARS-CoV-2.

We are conducting this program in collaboration with the DoD, which has asserted that this platform may be of strategic importance, due to its potential use in the current COVID-19 pandemic as well as in future viral outbreaks.

The IMM-BCP-01 program is broadly focused on the emerging variants of SARS-CoV-2 .

We submitted an IND for the IMM-BCP-01 program to the FDA in November 2021.

In March 2022, the FDA communicated that the clinical study can be initiated for our antibody cocktail for the treatment of SARS-CoV-2 following a brief clinical hold.

Other Programs and Platforms

In addition to the already described lead discovery programs, we will continue to invest in our discovery engine to expand our pipeline.

The high output of antibody-target pairs resulting from our discovery engine may provide us with additional insights into the immune response against cancer and infectious diseases.

We intend to continue to invest in this platform, to evaluate novel antibody-target pairs and to develop a pipeline of antibody therapeutics as single agents or in combination with other therapeutics or technologies.

We anticipate the engine will enable us to advance one to two programs into IND-enabling studies per year.

We also intend to continue to enter into additional strategic partnerships and collaborations to expand our opportunities and capabilities.

We intend to continue to form strategic partnerships with government agencies and with other third parties to accelerate our research and development efforts, as exemplified by our other transaction authority for prototype agreement with the DoD related to COVID-19.

The unique insights we obtain may also enable strategic partnerships with other entities, including pharmaceutical and biotechnology companies.

We also intend to continue collaborating with various vendors, manufacturers, and other service providers to complement the capabilities needed to continue to develop and commercialize our products.

Additionally, we plan to expand our intellectual property estate and infrastructure needed to discover and advance our products.

We intend to expand our intellectual property estate related to our platform as well as to our product candidates.

We may in-license or acquire complementary intellectual property as needed or required, and we may continue to build our know-how and trade secrets.

We may pursue both therapeutic and diagnostic applications of our antibodies through composition of matter and/or method of use patents.

While our initial focus areas are in oncology and infectious disease, we may invest in intellectual property in other therapeutic areas as well.

Our experienced management and leadership team has broad expertise in the field of discovering and developing therapeutics and includes highly capable, world-class immunologists and biologists.

We submitted an IND application for the IMM-BCP-01 program to the U.S.

FDA in November 2021 and initiated the Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 in June 2022.

On January 6, 2023, the Company announced that it successfully completed dosing of the first cohort of patients in a Phase 1b study with no significant treatment-related adverse events.

The Company has decided to seek a partner in order to continue the trial and for any further development activities.

The Challenges Faced by Existing Antibody Therapies for Cancer

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In oncology, patients sampled include those who are treatment naïve, treated with standard regimens, or have been treated with immunity enhancing therapies.

In infectious diseases, such as COVID-19, we include samples from patients who have successfully cleared the infection.

Patient Response :

We fuse and immortalize thousands of these patient-derived memory B cells using proprietary methods, capturing them as hybridomas that typically express an individual antibody in quantities sufficient for extensive screening.

We fuse and immortalize thousands of these patient-derived memory B cells using proprietary methods, capturing them as hybridomas, each of which typically express an individual antibody in quantities sufficient for extensive functional screening.

Antibody Screening :

For oncology, we screen individual antibodies by assessing their binding to intact cancer cells or normal cells, or by assessing their binding to a large number (typically 100) of different extracts of authentic tumor samples and cancer cell lines (Figure [ Screening ]).

Using our proprietary approach, we can screen up to 20,000 antibodies on a single array.

For infectious diseases, such as COVID-19, we screen against defined sets of antigens expressed by the infectious agent.

Hybridomas producing antibodies that show both high-affinity binding, by typically binding at single digit nanomolar concentrations, and specific binding, by showing much higher binding to a subset of tumor cells compared to normal cells or to irrelevant viral proteins, are designated as screening “hits.” Hybridomas producing those hits can be sequenced, their immunoglobulin genes can be cloned into expression vectors, and the individual antibodies can be produced recombinantly.

Figure [ screening ].

Representation of screening paradigm Antibody Validation:

Hybridomas producing antibodies that show both high-affinity binding, by typically binding at single digit nanomolar concentrations, and specific binding, by showing much higher binding to a subset of tumor cells compared to normal cells, are designated as screening “hits.” Hybridomas producing those hits can be sequenced, their immunoglobulin genes can be cloned into expression vectors, and the individual antibodies can then be produced recombinantly.

Antibody Validation:

The next step in our process is to identify the specific antigen to which the antibody appears to bind with high affinity and specificity.

We use one of two complementary approaches for this activity:

the first method involves an assessment of antibody binding to known human proteins spotted on a protein microarray with high selectivity (for example, as shown in Figure [target selectivity ] , where a single antigen is identified).

the first method involves an assessment of antibody binding to known human proteins spotted on a protein microarray with high selectivity.

If the target is not represented on the array or no specific binding is seen, we attempt to use the antibody to “pull out” the antigen from its source using immunoprecipitation, and then identify the antigen sequence using mass spectrometry.

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Additional tests, such as measurements of changes in cell growth, cell survival, cell migration, or internalization of the antigen after it has been bound by the antibody, are used to further assess the potential that the antibody could be of therapeutic interest.

Figure [ target selectivity ] .

Examples of binding specificity of patient-derived antibodies determined using human protein microarray-based target identification

Engine Output :

So far, we have screened several hundred thousand hybridomas and identified 2,400 “hit” antibodies that bind to a cancer cell or a tumor extract with high affinity and specificity.

To date, while only approximately one-third of these hits has been assessed further, we have already identified more than 70 cancer targets.

We concomitantly identify both the antibody, or the potential therapeutic, as well as its antigen target.

Furthermore, the antibody may also be used in a diagnostic test to determine if a patient’s disease is over-expressing the antigen it is directed at.

Our antibody hits can be developed, unmodified, as potential therapeutics, or can be combined with other modalities such as antibody-drug conjugates, bi-specifics, T cell engagers.

We may form strategic partnerships with others who may seek to use our antibodies as the basis for such modalities.

For IMM-BCP-01, we collected B cells from 30 super responders and identified over 400 antibodies specific for both spike and non-spike viral proteins.

We anticipate the output from our discovery engine may potentially translate into one to two programs entering IND-enabling studies per year.

A Key Output from Our Discovery Platform:

Functional Clustering

Our unbiased platform approach enables a broad interrogation of the patient memory B cell response to disease and may allow us to both gain additional insights into the underlying biology and identify sets of new targets.

Data available on each antigen we have identified to date have revealed a “functional clustering” of targets, or clusters of targets with functional similarities among patients who mount a specific immune response.

We believe these functional clusters, as shown in the illustration in Figure [ cluster diagram ], may provide critical clues to the important tumor-driven processes that the immune system appears to attack to effectively eliminate the disease.

Figure [ cluster diagram].

To date, the Immunome discovery engine has identified more than 70 innovative cancer targets based upon patient-derived antibody responses.

These targets appear to cluster around distinct biological functions that might be of therapeutic importance in cancer.

As an example, when looking at clusters of targets with functional similarity, as shown in the above illustration, one cluster contains several proteins associated with membrane dynamics.

Membrane dynamics are a critical part of how cells, including tumor cells, control vital processes such as cell movement and signaling.

Deregulation of those processes in cancer cells may be linked to hallmarks of cancer such as uncontrolled cell division and metastasis.

Prominent among the targets we identified are several structural and catalytic proteins that regulate the formation and the function of exosomes, small vesicles packed with material used by cancer cells to create a pro-growth, pro-survival and anti-immune tumor niche.

The tumor uses exosomes to change the functions of stromal cells, endothelial cells and immune effector cells, by taking control of those normal cells and using them to generate an environment in which cancer can thrive.

We are actively exploring the concept that antibodies directed at some of these exosomal components may have therapeutic utility.

In addition, some of these proteins function in normal cells to regulate the trafficking of proteins to and from the cell surface, suggesting that they may be rapidly internalized upon binding of an antibody.

We are actively exploring the concept that antibodies selective for these targets may have therapeutic utility as antibody-drug conjugates.

Our Multiple Product Development Opportunities in Cancer

We believe our approach to the discovery of novel antibodies enables the following therapeutic modalities:

Therapeutic Output:

We believe our approach to the discovery of novel antibodies enables the following therapeutic modalities for cancer:

Unmodified Immunoglobulins:

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If the antigen is rapidly internalized upon antibody binding the targeting selectivity of antibodies can be leveraged to deliver sufficient quantities of the “tumor killing” payload to kill the cancer cells.

This approach uses known “tumor killing” agents and does not rely upon unproven mechanisms for efficacy.

This approach uses known “tumor killing” agents and relies on their killing mechanisms for efficacy.

Bispecific Antibodies:

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These bispecific antibodies can bind to two different tumor cell antigens and may induce therapeutic effects through simultaneous modulation of two cellular processes.

Alternatively, bispecific antibodies can be engineered to bind to a tumor cell antigen and an antigen on the surface of an immune effector cell (e.g., T cell).

This class of bispecific antibody directs the immune effector cell to attack and destroy the tumor.

Our Lead Oncology Discovery Program

IMM-ONC-01 Overview:

Our lead oncology development program is focused on antibodies targeting IL-38, a lesser-known member of the IL-1 family of cytokines.

IL-38 binds to receptors found on immune cell subsets, such as macrophages, dendritic cells, gamma delta T cells (γδT cells), and regulatory T cells, each of which is critical for establishing an immuno-responsive tumor microenvironment.

Our analysis of data from The Cancer Genome Atlas, or TCGA, has demonstrated that IL-38 is over expressed at the RNA level in a subset of tumors of high unmet medical need as compared to normal tissue from the same organ site (Figure [ ONC-01 indications ]).

Furthermore, consistent with our hypothesis that IL-38 acts to suppress anti-tumor immunity, high IL-38 expression in tumors was inversely correlated with the presence of tumor-infiltrating immune effector cell populations (Figure [ TILS ].

We have expanded this analysis through use of a proprietary database to include assessment of mRNA expression in over 60 cancers and identified that IL-38 is not only over expressed, but also occurs at a significantly higher frequency in select tumor sub-types, such as gastroesophageal squamous carcinoma, squamous carcinoma of the head and neck, lung squamous cancer and squamous and basal carcinoma of the skin .

We are in the process of directly confirming this IL-38 overexpression in patient samples of these select sub-types to guide and streamline overall clinical development.

Figure [ ONC-01 indications ]:

IL-38 is overexpressed in cancers of high unmet medical need.

Figure [ TILs ]:

Inverse relationship between high IL-38 expression and immune cell populations in tumors

In the literature, a clinical study of 400 lung cancer patients’ analysis of biopsy materials revealed an association between high IL-38 expression levels and poor patient outcomes.

The same study found that the expression of IL-38 is often correlated with PD-L1 suggesting that these two checkpoints may well work as together to inhibit the immune response.

As depicted in the illustration below in Figure [ therapeutic hypothesis ], tumor-derived IL-38 is hypothesized to suppresses the innate immune response and the recruitment of immune effector cells into the tumor microenvironment in the early part of the cancer immunity cycle.

We hypothesize that an antagonistic anti-IL-38 antibody will block the immune suppressive function of IL-38, leading to an enhanced immune cell infiltration into the tumor.

This in turn may lead to a more robust anti-tumor immune response.

Figure [ therapeutic hypothesis ].

Targeting IL-38 with IMM-ONC-01 is anticipated to block IL-38 function and induce recruitment of immune effector cells

Just as antibodies that antagonize the function of PD-L1 induce a therapeutic effect in patients who express PD-L1.

We believe targeting IL-38 with an antibody that blocks IL-38 function, in a similar fashion, may also induce a therapeutic response.

Immunome’s lead anti IL-38 antibody directly competes for binding of IL-38 to its putative receptors, IL-1RAPL1 and IL-36R, in vitro in a concentration dependent manner (Figure [ receptor competition ]).

Figure [ receptor competition ].

IMM-ONC-01 blocks ability of IL-38 to bind to its putative receptors IL1RAPL1 and IL-36R

The ability to competitively inhibit IL-38 binding to its receptors correlates with blocking IL-38 function in vitro .

Using an in vitro macrophage model system, IL- 38 was shown to abrogate macrophage activation, as measured by IL-6 production, upon lipopolysaccharide (LPS, a bacterial cell wall component)-stimulation.

Treatment with an antagonistic anti-IL-38 antibody blocked the effect of IL-38, resulting in significant re-activation of IL-6 production and further demonstrating the role of IL-38 in the inflammatory response.

Re-awakening of the immune system in this manner appears to generate corresponding in vivo efficacy in a mouse model bearing B16F10, a tumor that is known to produce IL-38.

The data in Figure [ B16 efficacy ] demonstrates the anti-tumor effect of a murine version of our anti-huIL38 antibody in a mouse model.

Figure [ B16 efficacy ] Treating with anti-IL-38 antibody appears to induce an anti-tumor response in IL-38 expressing mouse B16F10 tumor model.

Additional studies have confirmed the in vivo efficacy of a murine version of our anti-huIL38 antibody in a second tumor model (EMT6 breast cancer).

In the EMT6 model, approximately 40% of anti-IL-38 treated mice cleared their EMT6 xenografts.

When rechallenged the mice that had successfully cleared the initial tumor xenograft were resistant to

subsequent engraftment (Figure [ EMT6 efficacy ], left panel) which led to an increase in overall survival (Figure [ EMT6 efficacy ], right panel).

These data reveal the possible establishment of durable immune memory in those animals.

Figure [ EMT6 efficacy ].

Treating with anti-IL-38 antibody appears to induce long-term anti-tumor memory response in the EMT6 mouse model of breast cancer.

IMM-ONC-01, our lead antibody, has progressed into development with an IND submission expected in the second half of 2022.

Our Lead Infectious Disease Discovery Program (IMM-BCP-01)

IMM-BCP-01 Overview:

The human immune system elicits multiple mechanisms of action, capable of working in concert with one another, to clear viral infections, such as those caused by SARS-CoV-2, the virus that has led to the COVID-19 pandemic.

In our work funded, in part, through another transaction authority (OTA;

contract number W911QY-20-9-0019) with the DoD’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND) in collaboration with the Defense Health Agency, we used Immunome’s discovery engine (Figure [ platform ]), to identify a three-antibody cocktail (IMM-BCP-01) for the treatment of SARS-CoV-2 infection.

The three antibodies comprising IMM-BCP-01 (IMM20184, IMM20190 and IMM20253) were down selected from amongst more than 400 antibodies isolated from the memory B cells of super responders (patients who exhibited rapid seroconversion to IgG and very high anti-SARS-CoV-2 antibody titers).

Selection criteria included, amongst other characteristics, intrinsic and combinatorial anti-viral mechanisms of action.

Antibodies were selected based upon both viral neutralization and viral clearance (e.g., phagocytosis, antibody dependent cellular cytotoxicity, and mobilization of the complement cascade) properties.

Figure platform .

Our proposed approach to developing antibody cocktail (IMM-BCP-01)

The individual antibodies comprising IMM-BCP-01 each bind to unique, non-overlapping epitopes on the receptor binding domain (RBD) of the SARS-CoV-2 spike (S) protein.

Each antibody elicits intrinsic anti-viral properties that when combined exhibit combinatorial viral neutralization and clearance properties against a breadth of SARS-CoV-2 variants in vitro and in vivo , including an array of US Center for Disease Control Variants of Concern (VoC) and Variants of Interest (VoI).

SARS-CoV-2 spike protein mediates binding to a cellular receptor, human angiotensin-converting enzyme 2 (ACE2), and fusion of viral and host plasma membranes.

Consistent with the epitopes to which they bind on the spike protein, IMM20184 and IMM20190 neutralize, or prevent viral fusion with host cells, in an ACE2-dependent manner.

Binding of these antibodies to their epitopes on S directly compete for binding of ACE2 to the RBD (Figure [ ACE2 competition ]) .

In contrast, IMM20253 does not compete for ACE2 binding.

The combination of these three antibodies (IMM-BCP-01) is more effective than any individual component antibody at competing for ACE2 binding.

Figure [ ACE2 competition ]:

IMM-BCP-01 includes ACE2 competitive (IMM20183 and IMM20253) and non-competitive (IMM20253) antibodies.

IMM20184 and IMM20253 bind to epitopes that are conserved across a wide range of variants of SARS-CoV-2 observed to date.

IMM20184 binds to an epitope on the inner face of the RBD that not only allows for direct competition of ACE2 binding but also promotes avid binding between two S proteins within the same spike trimer.

IMM20253 binds to an epitope on the outer face of the RBD that is conserved across other betacoronaviruses including SARS-CoV-1.

Binding of IMM20253 to the RBD does not compete for ACE2 binding, it rather appears to induce a non-ACE2 dependent conformational change in S that makes it more susceptible to protease inactivation.

IMM20253, to our knowledge, is the only antibody under development for treating COVID-19 that utilizes this mechanism of action to neutralize SARS-CoV-2.

Initial in vitro characterization of IMM-BCP-01 involved pseudo virus neutralization experiments.

Commercially available pseudo virus that express the spike protein from the original SARS-CoV-2 (WA1/2020) virus or various CDC VoI and VoC were used to infect cells expressing the human ACE2 receptor (hACE2-293T) in the presence or absence of IMM-BCP-01 or subsets of its constituent antibodies.

IMM-BCP-01 (1:1:1 mixture of IMM20184 / IMM20190 / IMM20253) potently neutralized all variants tested in a concentration-dependent manner (Figure [ neutralization ].

Consistent with the epitope conservation, neutralization by a combination of IMM20184 and IMM20253 was unaffected across all variants tested to date.

Figure [ neutralization ]:

IMM-BCP-01 broadly neutralizes SARS-CoV-2 variants

Neutralization activities observed in pseudo virus assays were confirmed in a series of live virus experiments, using both spot reduction and plaque forming assay protocols with multiple SARS-CoV-2 variants.

IMM-BCP-01 and the two-antibody cocktail of IMM20184/IMM20253 neutralized live virus in vitro with IC50 values that were either equivalent or more potent in both assays as compared to the IC50 values obtained against pseudo virus.

Comparative assessment of the pseudo virus, and two forms of live virus (spot reduction and plaque assays) suggest IMM-BCP-01 neutralizes all variants tested and that the potency against Beta and Gamma variants was more sensitive to the testing methodology.

Each of the antibodies that comprise IMM-BCP-01 was isolated from patients as IgG1 molecules.

These data, along with the growing body of evidence suggesting that effector function is required for optimal in vivo activity of anti-SARS-CoV-2 antibodies (Chen RE, 2021) (Ravetch J, 2021), led us to construct IMM20184, IMM20190, and IMM20253 with canonical IgG1 Fc domains.

No mutations were introduced into the Fc domain that would be predicted to disrupt complement fixation, decrease binding affinity for Fc gamma receptors, or increase half-life of the molecules.

IMM-BCP-01, and its constituent antibodies, were evaluated for elicitation of non-neutralizing, Fc-mediated responses.

The activation of the classical complement pathway (CP) by IMM20184, IMM20190, and IMM20253 antibodies, and combinations thereof, was evaluated using an adapted CP activation assay ( Nikitin, 2019).

Under the conditions, we detected increasing levels of C4 deposition which correlated with increasing concentrations of IMM20190 and, to a lesser extent, IMM20253 (Figure [ complement fixation ].

IMM20184 did not differ from isotype control at all concentrations tested.

Although the IMM20184 and IMM20253 antibodies appear less potent than IMM20190 in this assay, the importance of those two antibodies to the IMM-BCP-01 mixture is observed when tested as a two-antibody cocktail.

In a surprising finding, the IMM20184/IMM20253 two antibody cocktail elicited a combinatorial effect, resulting in saturating levels of complement fixation that were not achieved by either individual component antibody when tested at up to 2-logs higher concentrations.

A similar, but even more pronounced, effect was observed with IMM-BCP-01.

The combinatorial effects on concentration-dependent deposition of C4 by the IMM20184/IMM20253 and IMM-BCP-01 cocktails suggest that opsonization of the SARS-CoV-2 Trimer with antibodies targeting multiple epitopes across different faces of the RBD is far superior for C4 deposition than targeting a single epitope and reaches saturation at concentrations nearly a thousand-fold lower than the most potent single antibody.

Figure [ complement fixation ]:

Comparative Complement Fixation of Individual and Combinations of the IMM-BCP-01 Antibody Components

Similarly, all three human IgG1 antibodies induced phagocytosis of Trimer-coated beads in a concentration-dependent manner relative to an isotype control (Figure [ phagocytosis ], with IMM20253 and IMM20190 exhibiting higher rates of phagocytosis than IMM20184.

Even a low concentration of IMM20253 (approximately 15 pM) was sufficient to potently induce phagocytosis.

This potent induction of phagocytosis by IMM20253 antibody may be attributed to its epitope location on the outer surface of the “Up” conformation of the Trimer.

Figure [ phagocytosis ]:

Comparative Phagocytosis of Individual Components and the IMM-BCP-01 Antibodies

IMM-BCP-01 was evaluated for efficacy by measuring the impact of dosing on viral titers in the lungs of Syrian hamsters infected with three different SARS-CoV-2 variants.

Dosing of IMM-BCP-01 resulted in statistically significant decreases in viral titers relative to the vehicle-treated controls for all three variants (Figure [ in vivo efficacy ].

A dose response was observed against the WA1/2020 variant with viral clearance ranging from over 2-log with the 0.1 mg group to at least 4-log with the 0.3 mg dose group.

A dose response was observed against the Alpha variant of approximately 1.5-log with the 0.1 mg dose group and approximately a 3.5-log clearance with the 0.5 mg dose group.

Finally, a dose response was also observed against the Beta variant with viral clearance ranging from approximately 1.5-log with the 0.1 mg group to approximately 2.5-log with the 0.5 mg dose group.

Figure [ in vivo efficacy ]:

In Vivo Efficacy of IMM-BCP-01 Against the WA1/2020, Alpha, and Beta Variants

Based on preclinical efficacy observed in the hamsters and corroborative safety data generated in animal testing and tissue cross-reactivity, a cocktail composition and dose were arrived at for the Phase 1b safety testing in patients.

Strategic Collaborations and License Agreements

We believe that our technology has broad utility and could enable the formation of attractive strategic partnerships to capture product opportunities on which we may not otherwise wish to capitalize.

To maximize the value of our platform we may, from time to time, contemplate and enter into various forms of collaborative agreements with third parties, including other companies, government agencies, academic institutions and non-profit groups.

The material collaborations and licensing agreements entered into by us to date are described in greater detail below.

IMM-BCP-01 Collaboration with the DoD

Alternatively, bispecific antibodies can be engineered to bind to a tumor cell antigen as well as an antigen on the surface of an immune effector cell (e.g., T cell).

This class of bispecific antibody, T cell engagers or TCEs, directs the immune effector cell to attack and destroy the tumor.

Key Attributes of Our Discovery Engine

Our discovery engine discovers innovative antibody-target pairs using an unbiased, broad, deep and efficient approach, as we are able to:

● Capture a large number (typically thousands) of patient-derived memory B cells and enrich and expand them using proprietary methods.

We then convert memory B cells into stable human hybridomas, which typically express an antibody in quantities necessary for broad pre-clinical screening.

Therefore, we believe our platform can yield antibodies that may have the potential for use as therapeutics and/or diagnostics across a broad therapeutic landscape.

● Utilize an unbiased approach that spotlights biological processes of disease relevance, guided by the memory B-cell response.

Further, identify antibodies that can be used in combination with other modalities resulting in novel therapeutics, such as Antibody-Drug Conjugates, Bi-specifics such as T cell engagers.

Our Current Programs

Oncology (IMM-ONC-01)

Our lead oncology program targets IL-38, which we believe is a novel, negative regulator of inflammation capable of promoting tumor evasion of the immune system.

IL-38 was identified as the target of an antibody isolated from a hybridoma library generated from the memory B cells of a patient with squamous head and neck cancer.

Query of public and proprietary (Tempus) databases of cancer gene expression revealed over-expression of IL-38 in multiple solid tumors.

Further, a correlation with low levels of tumor-infiltrating immune effector cells, a hallmark of immune suppression in some of these patients’ tumors, and high IL-38 expression was also observed, suggesting a role for IL-38 as an immune modulator.

Data obtained from preclinical testing indicated that blocking IL-38 function using inhibitory antibodies increased the immune response to the tumor and resulted in anti-tumor activity in select animal models, suggesting that anti-IL-38 antibodies could have therapeutic utility as single agents or in combination with other therapeutic modalities.

Our recent analysis further confirms IL-38 expression is frequently elevated in samples of select patient tumor subtypes, in cancers such as head and neck, lung and gastroesophageal.

We believe that this information could potentially guide patient selection for early clinical testing and may improve the overall probability of demonstrating clinical utility, thereby improving the probability of clinical success.

We plan to submit our IND application for the IMM-ONC-01 program by mid-2023.

SARS-CoV-2 (IMM-BCP-01)

We are developing an antibody cocktail derived from the B cells of COVID-19 patients who exhibited high neutralizing titers.

IMM-BCP-01 targets non-overlapping regions of the Spike protein of SARS-CoV-2 which include highly conserved, subdominant epitopes.

We are conducting this program in collaboration with the DoD.

The IMM-BCP-01 program is broadly focused on the emerging variants of SARS-CoV-2.

We submitted an IND application for the IMM-BCP-01 program to the U.S.

FDA in November 2021 and initiated the Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 in June 2022 .

On January 6, 2023, the Company announced that it successfully completed dosing of the first cohort of patients in a Phase 1b study with no significant treatment-related adverse events.

The Company has decided to seek a partner in order to continue the trial and for any further development activities.

Other Programs and Platform

In addition to the already described current programs, we will continue to invest in our proprietary discovery engine to expand our pipeline.

The high output of antibody-target pairs resulting from our discovery engine may provide us with additional insights into the immune response against cancer and other diseases.

Additionally, we plan to expand our intellectual property estate and infrastructure needed to discover and advance our programs and development candidates.

We may in-license or acquire complementary intellectual property as needed or required, and we may continue to build our know-how and trade secrets.

We may pursue both therapeutic and diagnostic applications of our antibodies through composition of matter and/or method of use patents.

While our initial focus areas are in oncology and other diseases, we may invest in intellectual property in other therapeutic areas as well.

Our experienced management and leadership team has broad expertise in the field of discovering and developing therapeutics and includes highly capable, world-class immunologists and biologists.

Strategic Collaborations, License Agreements and Other Material Agreements

We believe that our technology has broad utility and could enable the formation of attractive strategic partnerships.

Therefore, to maximize the value of our platform we may, from time to time, contemplate and enter into various forms of collaborative agreements related to our platform, our programs and/or development candidates with third parties, including other companies, government agencies, academic institutions and non-profit groups.

Additionally, we may, from time to time, contemplate and enter into various forms of license agreements with third parties.

The material collaborations, licensing and other related agreements entered into by us to date are described in greater detail below.

Collaboration with AbbVie

On January 4, 2023, the Company entered into a collaboration and option agreement, or the Collaboration Agreement, with AbbVie Global Enterprises Ltd., or AbbVie, pursuant to which the Company will use its proprietary discovery engine to discover and validate targets derived from patients with three specified tumor types, and antibodies that bind to such targets, which may be the subject of further development and commercialization by AbbVie.

The research term is at least 66 months, subject to extension in certain circumstances by specified extension periods.

Pursuant to the terms of the Collaboration Agreement, with respect to each novel target-antibody pair that the Company generates that meets certain mutually agreed criteria (each, a Validated Target Pair or VTP), the Company granted to AbbVie an exclusive option (up to a maximum of 10 in total) to purchase all rights in and to such Validated Target Pair, for all human and non-human diagnostic, prophylactic and therapeutic uses throughout the world, including without limitation the development and commercialization of certain products derived from the assigned Validated Target Pair and directed to the target comprising such VTP (Products).

No rights are granted by the Company to AbbVie under any of Company’s platform technology covering the Company’s discovery engine.

Until the expiration of the research term, the Company is not permitted to conduct any activities in connection with targets or antibodies derived from patients with the specified tumor types, whether independently or with other third parties, except in limited circumstances with respect to certain target-antibody pairs that are no longer subject to the collaboration with AbbVie.

In addition, during the term of the Collaboration Agreement, the Company is not permitted to develop products directed to targets that are included in VTPs purchased by AbbVie, or to which AbbVie still has rights under the Collaboration Agreement, whether independently or with other third parties.

Under the Collaboration Agreement, AbbVie will pay the Company an upfront payment of $30.0 million, plus certain additional platform access payments in the aggregate amount of up to $70.0 million based on the Company’s use of our discovery engine in connection with activities under each stage of the research plan, and delivery of VTPs to AbbVie.

AbbVie will also pay an option exercise fee in the low single digit millions for each of the up to 10 VTPs for which it exercises an option.

If AbbVie progresses development and commercialization of a Product, AbbVie will pay the Company development and first commercial sale milestones of up to $120.0 million per target, and sales milestones based on achievement of specified levels of net sales of Products of up to $150.0 million in the aggregate per target, in each case, subject to specified deductions in certain circumstances.

On a Product-by-Product basis, AbbVie will pay the Company tiered royalties on net sales of Products at a percentage in the low single digits, subject to specified reductions and offsets in certain circumstances.

AbbVie’s royalty payment obligation will commence, on a Product-by-Product and country-by-country basis, on the first commercial sale of such Product in such country and will expire on the earlier of (a) (i) the ten (10)-year anniversary of such first commercial sale for such Product in such country, or (ii) solely with respect to a Product that incorporates an antibody comprising a VTP (or certain other antibodies derived from such

delivered antibody), the expiration of all valid claims of patent rights covering the composition of matter of any such antibody (whichever out of (i) or (ii) is later), and (b) the expiration of regulatory exclusivity for such Product in such country.

The Company is potentially eligible to receive up to $2.8 billion from AbbVie under the Collaboration Agreement from the sources described above.

The Collaboration Agreement will expire upon the expiration of the last to expire royalty payment obligation with respect to all Products in all countries, subject to earlier expiration if all option exercise periods for all Validated Target Pairs expire without AbbVie exercising any option.

In addition, the research term will terminate if AbbVie does not elect to make certain platform access payments at specified points during the research term, in order for the Company to continue the target discovery activities under the collaboration.

The Collaboration Agreement may be terminated by (a) either party upon the other party’s uncured material breach, or upon any insolvency event of the other party, (b) AbbVie for convenience upon a specified period prior written notice, or (c) AbbVie for the Company’s breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws.

If AbbVie has the right to terminate the Collaboration Agreement for the Company’s uncured material breach or a breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws, AbbVie may elect to continue the Collaboration Agreement, subject to certain specified reductions applicable to certain of AbbVie’s payment obligations (with a specified floor on such reductions).

Collaboration with the DoD

In July 2020, the Company entered into an Other Transaction Authority for Prototype Agreement, or the OTA Agreement, with the DoD to fund the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19.

The amount of funding available to the Company under this expense reimbursement contract was $13.3 million.

The amount of funding available to the Company under this expense reimbursement contract was originally $13.3 million.

In May 2021, the Company and the DoD amended the OTA Agreement, pursuant to which the DoD award was increased from $13.3 million to $17.6 million.

In January 2023, we modified the OTA Agreement to extend the completion date from December 30, 2022 to July 31, 2023, at no additional cost to the government.

All other terms and conditions remain the same and are in full force and effect.

The DoD may terminate the agreement in its entirety for convenience or in whole or in part for our material breach of the agreement.

As of December 31, 2022, the Company has received the maximum reimbursement amount of $17.6 million from the DoD to complete specific research activities for the project based on the estimated cost for such prototype.

The $17.6 million was not sufficient to fund our full planned research and development phase 1B.

Therefore, we have used our own funds to support completion of certain activities under the contract.

Pursuant to the OTA Agreement, ownership of any invention developed under the agreement follows inventorship under U.S.

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In addition, we own all study data generated under the OTA Agreement, whether generated by us or the DoD.

We also obtained the right to negotiate a commercial license covering DoD’s interest in any invention solely owned by DoD and developed under the agreement.

We also obtained the right to negotiate a commercial license covering the DoD’s interest in any invention solely owned by the DoD and developed under the agreement.

Our rights to inventions and data are subject to standard government-retained rights.

We are required to use commercially reasonable efforts to complete specified research activities for the prototype project based on the estimated cost for such prototype.

We are eligible to receive up to $17.6 million in the aggregate from DoD, subject to continued compliance with the terms of the OTA Agreement and future pricing requirements.

We are not obligated to pay any royalties or other future consideration under this agreement.

The OTA Agreement extends through final payment, subject to completion of the prototype project as determined by a DoD official in accordance with key technical goals established for the project or results that justify completion.

The DoD may terminate the agreement in its entirety for convenience or in whole or in part for our material breach of the agreement.

Even if fully funded, the $17.6 million would not be sufficient to fund our full planned research and development phase 1B.

Therefore, we have used and will continue to use our own funds to support completion activities as part of the contract.

Arrayjet License Agreement

In June 2019, we entered into an exclusive license agreement, or the Arrayjet Agreement, with Arrayjet Limited, or Arrayjet, pursuant to which we obtained a royalty-bearing, exclusive license under certain licensed patents and know-how for all purposes, including to research, develop, make, have made, use, sell, offer for sale, market, and otherwise commercialize products in the United States, the United Kingdom, China, Germany, and Japan, for the screening of human derived hybridomas and antibodies or derivatives thereof against cell lysate libraries where the antigen(s) of interest are unknown in the antibody therapy field.

Arrayjet License Agreements

In June 2019, we entered into an exclusive license agreement, or the Arrayjet Agreement, with Arrayjet Limited, or Arrayjet, amended on July 10, 2020 and on December 30, 2022.

Pursuant to the Arrayjet Agreement, we obtained a royalty-bearing, exclusive license under certain licensed patents and know-how for all purposes, including to research, develop, make, have made, use, sell, offer for sale, market, and otherwise commercialize products in the United States, the United Kingdom, China, Germany, and Japan, for the screening of human derived hybridoma libraries against cancer cell lysate libraries where the antigen(s) of interest are unknown.

We also obtained a right to license certain new intellectual property rights owned or acquired by Arrayjet during the term, subject to the negotiation of mutually agreeable license terms.

The foregoing license grant includes a limited right to grant nonexclusive sublicenses.

In connection with the Arrayjet Agreement, we are required to make annual license payments in the low six figures to maintain such exclusivity.

In the event we independently undertake certain development activities, we are also obligated to pay annual license fees in the mid six figures and annual sublicensing fees in the low six figures, and we are obligated to pay a low single digit percentage of other sublicensing revenue received.

In connection with the Arrayjet Agreement, we are required to make annual license payments in the low-to-mid six figures to maintain such exclusivity.

obligated to pay a low single digit percentage of other sublicensing revenue received.

During the term, we are obligated to pay Arrayjet a low single digit royalty on net sales of products by us and a low single digit to low teens royalty on net sales of products by sublicensees.

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Either party may terminate the Arrayjet Agreement for the other’s material breach or insolvency.

Arrayjet Master Services Agreement and Quotation

On November 18, 2016, the Company entered into a Master Services Agreement with Arrayjet, which was subsequently amended on February 15, 2021, January 1, 2022 and December 30, 2022, referred to as the MSA.

On December 30, 2022, the Company also entered into a Quotation & Contract of Sale, or the Quotation, with Arrayjet under the MSA, referred to as the Quotation.

Under the MSA, Immunome may engage Arrayjet to perform the services agreed upon between the parties pursuant to one or more quotations & contracts of sale.

Per the MSA, unless otherwise provided in any quotation & contract of sale, Immunome may terminate any quotation & contract of sale without cause and Immunome may terminate the MSA at-will upon requisite advance notice.

Pursuant to the Quotation, the Company engaged Arrayjet to perform certain hybridoma screening services using a microarray assay for the period of time specified in the Quotation.

These services may be performed pursuant to one or more Task Orders describing the specific services to be performed.

The quotation may be terminated by either party for material breach of the other party, by Immunome at-will upon the requisite advance notice, by the parties’ mutual agreement or automatically if the MSA is terminated.

Under the Quotation, the Company has agreed to pay Arrayjet an annual instrument access fee in the low six-figures and a screening fee based on the number of screening cycles ordered by the Company.

The Company agreed to a minimum screening fee for the first year of the Quotation in the low six-figures and made a prepayment to Arrayjet for the first year of screening services.

Whitehead Patent License Agreement

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We are obligated to pay Whitehead a high first decile percentage of certain payments received from sublicensees, subject to certain reductions to single-digit percentages, and we are obligated to pay Whitehead a mid-teen percentage royalty on certain payments received from non-sublicensee corporate partners.

On November 17, 2022, the Company entered into a Letter Agreement, or Letter Agreement, with Whitehead, which became effective on January 4, 2023, upon the satisfaction of the conditions described therein.

The Letter Agreement supplements the Whitehead Agreement.

Pursuant to the Letter Agreement, Whitehead and the Company agreed that certain payments received by the Company from the Collaborator (as defined in the Letter Agreement) (i.e., a corporate partner, as defined in the License Agreement) would be excluded from the Company’s payment obligations to Whitehead.

The Company and Whitehead further agreed, among other things, that the Company will make certain payments to Whitehead (i) as Net Sales (as defined in the License Agreement) as long as the Company receives those payments from the Collaborator on a specified number of products purchased by the Collaborator and (ii) upon the achievement of certain milestones whether by the Company or the Collaborator.

We have the right to terminate the Whitehead Agreement upon specified prior written notice to Whitehead.

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TJU License Agreement

certain patent rights, know-how, and materials of TJU that relate to our antibody screening platform, in each case to research, develop, manufacture, use, commercialize, and improve licensed products and to practice licensed processes for all purposes.

In June 2012, we entered into an exclusive license agreement, or the TJU Agreement, with Thomas Jefferson University, or TJU, pursuant to which we obtained from TJU a worldwide, royalty-bearing exclusive license under certain patent rights, know-how, and materials of TJU that relate to our antibody screening platform, in each case to research, develop, manufacture, use, commercialize, and improve licensed products and to practice licensed processes for all purposes.

We are currently required to make an annual license maintenance payment in the low five figures, which amount may be credited against royalties payable in the same calendar year.

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We produce our lead antibodies at the laboratory scale necessary for early research and development activities and some preclinical assessments.

For later stage preclinical assessment, such as IND-enabling studies and safety assessment, of product candidates, and early-stage clinical assessment, we use third-party manufacturers to produce our antibodies and any other necessary intermediates or reagents.

For later stage preclinical assessment, such as IND-enabling studies and safety assessment and early-stage clinical assessment, we use third-party manufacturers to produce our antibodies and any other necessary intermediates or reagents.

We do not have, and we do not currently plan to acquire or develop the infrastructure, facilities or capabilities to conduct these manufacturing activities ourselves.

We intend to continue to utilize third-party manufacturers to produce, package, label, test and release product for clinical testing and for future commercial use, as needed.

We intend to continue to utilize third-party manufacturers to produce, package, label, test and release product for clinical and non-clinical testing and for future commercial use, as needed.

We expect to continue to rely on such third parties to manufacture our products for the foreseeable future.

Our expected future contractual manufacturing organizations will each have successful track records of producing clinical and commercial products for other companies under applicable compliance regulations, such as cGMP compliance in case of the FDA, and will have previously been inspected by regulatory authorities for compliance with cGMP standards.

We are aware of several companies that are developing antibody treatments for the therapeutic areas of cancer and infectious diseases, specifically COVID-19.

We are aware of several companies that are developing antibody treatments for the therapeutic areas of cancer and other diseases.

Many of these companies are well-capitalized and, in contrast to us, have significant clinical experience, and may include our potential future strategic partners.

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Atreca, Inc.;

IGM Biociences, Inc.;

IGM Biosciences, Inc.;

OncoReponse, Inc;

In addition, we expect to compete with large, multinational pharmaceutical companies that discover, develop and commercialize antibodies and other therapeutics for use in treating cancer such as AstraZeneca;

and Alchemab.

In addition, we expect to compete with large, multinational pharmaceutical companies that discover, develop and commercialize antibodies and other therapeutics and modalities including Antibody-Drug Conjugates and T-Cell Engagers for use in treating cancer such as AstraZeneca;

Bristol-Myers Squibb Company;

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(a member of Roche group);

GlaxoSmithKline;

and Johnson & Johnson.

If any future product candidates identified through our current lead programs are eventually approved for sale, they will likely compete with a range of treatments that are either in development or currently marketed for use in those same disease indications.

In the area of infectious diseases, specifically our COVID19 efforts, our key competitors include other companies developing antibody-based therapeutics such as Regeneron, Glaxo SmithKline plc.

and Vir Biotechnology (in collaboration), Sorrento Therapeutics, Inc., Adagio;

Eli Lilly and AbCellera (in collaboration), and AstraZeneca.

If any programs or development candidates identified through our current lead programs are eventually approved for sale, they will likely compete with a range of treatments that are either in development or currently marketed for use in those same disease indications.

In the area of infectious diseases, specifically our COVID-19 efforts, we made the decision to partner our IMM-BCP-01 program for further development and if a partner is successful in the future, they may encounter key competitors including other companies developing antibody-based therapeutics such as Regeneron;

Glaxo SmithKline plc.

and Vir Biotechnology (in collaboration);

Eli Lilly and AbCellera (in collaboration);

and AstraZeneca.

Further, we expect the future market potential and need for our antibody cocktail product will be negatively influenced should any of the numerous vaccine products, by companies including Moderna, Inc.;

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We believe our current layered patent estate, together with our efforts to develop and patent next generation technologies, provides us with substantial intellectual property protection.

As of March 1, 2022, we owned 65 pending national phase patent applications in the U.S and abroad, two pending PCT applications, and 7 pending U.S.

provisional patent applications.

As of March 1, 2023, we owned 68 pending national phase patent applications in the U.S and abroad, three pending PCT applications, and seven pending U.S.

provisional patent applications, in total covering 12 patent families.

Our portfolio includes claims directed to the composition of matter and methods of use for antibodies, including IMM-ONC-01 and IMM-BCP-01.

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However, we recognize that the area of patent and other intellectual property rights in biotechnology is an evolving one with many risks and uncertainties, which may affect those rights.

Our commercial success will depend in significant part upon obtaining and maintaining patent protection and trade secret protection of our current and future product candidates and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party challenges and operating without infringing on the proprietary rights of others.

Our commercial success will depend in significant part upon obtaining and maintaining patent protection and trade secret protection of our programs and development candidates and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party challenges and operating without infringing on the proprietary rights of others.

Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents, or any patents granted to us in the future will be commercially useful in protecting our product candidates, discovery programs and processes.

For this and more comprehensive risks related to our intellectual property, please see the section titled “Risk Factors — Risks Related to Our Intellectual Property.”

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In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted or further altered even after patent issuance.

Consequently, we may not obtain or maintain adequate patent protection for any of our future product candidates or for our technology platform.

Consequently, we may not obtain or maintain adequate patent protection for any of our programs and development candidates or for our technology platform.

We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors.

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Thus, we may not be able to meaningfully protect our trade secrets.

It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and

other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us.

It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us.

These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.

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If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference or derivation proceedings in the USPTO to determine priority of invention.

When available to expand market exclusivity, our strategy is to obtain, or license additional intellectual property related to current or contemplated development platforms, core elements of technology and/or product candidates.

For more information regarding the risks related to our intellectual property, see the section titled “Risk Factors — Risks Related to Our Intellectual Property.”

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The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing.

We, along with third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.

We, along with our third-party contractors, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our programs and development candidates.

Government Regulation of Biological Products

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations and biologics under the FDCA, the Public Health Service Act, or PHSA, and their implementing regulations.

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The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and financial resources.

Preclinical and Clinical Development

The data required to support a Biologics License Application (BLA) is generated in two distinct development stages:

preclinical and clinical.

Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.

The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

Failure to comply with the applicable U.S.

requirements may subject an applicant to administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications, or NDAs, or biologics license applications, or BLAs, or the agency's issuance of warning letters, or the imposition of fines, civil penalties, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or criminal prosecution brought by the FDA and the U.S.

Department of Justice or other governmental entities.

Nonclinical and Clinical Development

The data required to support a BLA is generated in two distinct development stages:

nonclinical and clinical.

Nonclinical studies include laboratory evaluation of product chemistry and formulation and may involve in vitro testing or in vivo animal studies to assess the potential for toxicity, adverse events, and other safety characteristics of the program or development candidate, and in some cases to establish a rationale for therapeutic use.

The conduct of nonclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

The Consolidated Appropriations Act for 2023, signed into law on December 29, 2022, (P.L.

117-328) amended the FDCA and the Public Health Service Act to specify that nonclinical testing for drugs and biologics may, but is not required to, include in vivo animal studies.

According to the amended language, a sponsor may fulfill nonclinical testing requirements by completing various in vitro assays (e.g., cell-based assays, organ chips, or microphysiological systems), in silico studies (i.e., computer modeling), other human or nonhuman biology-based tests (e.g., bioprinting), or in vivo animal studies.

The sponsor must submit the results of the preclinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, as well as other information, to the FDA as part of the IND.

Prior to beginning the first clinical trial with a product candidate, we must submit an IND to the FDA.

An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.

The central focus

of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

The FDA has 30 days after submission to raise safety concerns or questions about the proposed clinical trial.

In such a case, the IND may be placed on clinical hold and the IND sponsor, and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.

Some long-term nonclinical testing to further establish the safety profile of the program or development candidate, as well as manufacturing process development and product quality evaluation, continues after the IND is submitted.

Human clinical trials in support of an NDA or BLA

Prior to beginning the first clinical trial with a program or development candidate, the sponsor must submit an IND to the FDA.

An IND is a request that FDA grant an exemption to federal law prohibiting interstate shipment of an investigational authorization to administer the program or development candidate to humans in accordance with a specific clinical trial protocol.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical trials.

An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions related to the proposed clinical trial and places the IND on a clinical hold .

In such a case, the IND sponsor must resolve all outstanding concerns or questions posed by the FDA before the clinical trial can begin.

Submission of an IND therefore may not result in FDA authorization to begin a clinical trial.

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Furthermore, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site and must monitor the study until completed.

Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Regulatory authorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that

the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives.

Some studies also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, or DSMB, which provides authorization for whether a study may move forward at designated check points based on review of certain data from the study, to which only the DSMB has access, and may recommend halting the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the biologic, findings from animal or in vitro testing that suggest a significant risk for human subjects, and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

Sponsors of clinical trials of certain FDA-regulated products generally must register and disclose certain clinical trial information to a public registry maintained by the National Institutes of Health, or NIH.

In particular, information related to the investigational product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial.

Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.

Although sponsors are also obligated to disclose the results of their clinical trials after completion, disclosure of the results can be delayed in some cases for up to two years after the date of completion of the trial.

Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government.

The NIH’s Final Rule on ClinicalTrials.gov registration and reporting requirements became effective in 2017, and the government has brought enforcement actions against non-compliant clinical trial sponsors.

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

In addition, these studies may be designed to test dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

● Phase 2 — The investigational product is administered to a patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to assess adverse events and potential side effects.

● Phase 1/Phase 1b — The investigational product is initially introduced into healthy human subjects (Phase 1) or directly into patients with the target disease or condition (Phase 1b) for certain therapies targeting severe or life-threatening diseases where the investigational product may be too inherently toxic to administer ethically to healthy volunteers.

In either case, these studies are designed to test safety, dosage tolerance, absorption, metabolism, distribution and excretion of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

● Phase 2 — The investigational product is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to assess adverse events and potential side effects.

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

● Phase 3 — The investigational product is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and, if appropriate, to provide an adequate basis for product approval.

These trials may include comparisons with placebo and/or other comparator treatments.

The duration of treatment is often extended to mimic the actual use of a product during marketing.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.

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Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for products.

Concurrent with clinical trials, companies may complete additional animal studies and develop additional information about the biological characteristics of the product candidate and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality and purity of the final product, or for biologics, the safety, purity and potency.

Additionally, appropriate packaging must be selected and tested, and stability

studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Concurrent with clinical trials, companies may complete additional nonclinical studies and develop additional information about the biological characteristics of the program or development candidate and must finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the program or development candidate and, among other things, must develop methods for testing the identity, strength, quality and

purity of the final product, or for biologics, the safety, purity and potency.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the program or development candidate does not undergo unacceptable deterioration over its shelf life.

In the Consolidated Appropriations Act for 2023, Congress amended the FDCA to require sponsors of a Phase 3 clinical trial, or other “pivotal study” of a new drug to support marketing authorization, to submit a diversity action plan for such clinical trial.

The action plan must include the sponsor’s diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them.

A sponsor must submit a diversity action plan to FDA by the time the sponsor submits the trial protocol to the agency for review.

The FDA may grant a waiver for some or all of the requirements for a diversity action plan.

It is unknown at this time how the diversity action plan may affect Phase 3 trial planning and timing or what specific information FDA will expect in such plans, but if FDA objects to a sponsor’s diversity action plan and requires the sponsor to amend the plan or take other actions, it may delay trial initiation.

BLA Submission and Review

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

The BLA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.

The submission of a BLA requires payment of a substantial application user fee to FDA, unless a waiver or exemption applies, and the sponsor of an approved BLA is also subject to an annual program fee.

Once a BLA has been submitted, the FDA’s goal is to review standard applications within ten months after accepting the application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing.

In both standard and priority reviews, the FDA extends the review process based on requests for additional information or clarification.

The FDA reviews a BLA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency.

The FDA may convene an advisory committee to provide clinical insight on application review questions.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials, along with information relating to the product’s chemistry, manufacturing, and controls and proposed labeling, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.

A BLA must contain sufficient evidence of the biological program or development candidate’s safety, purity, potency and efficacy for its proposed indication or indications.

Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA.

The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Under the Prescription Drug User Fee Act, as amended, or PDUFA, each BLA must be accompanied by a significant user fee, and the sponsor of an approved BLA is also subject to an annual program fee.

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

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

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

According to the goals and policies for original BLAs agreed to by the FDA under PDUFA, the FDA has ten months from the filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review.

For all original BLAs, the ten and six-month time periods run from the filing date;

for all other submissions, including resubmissions, efficacy supplements and other supplements, the FDA’s stated review time periods, ranging from two to ten month, run from the submission date.

Despite these review goals, it is not uncommon for FDA review of a BLA to extend beyond the goal date.

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing.

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

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

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

Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA.

The FDA reviews a BLA to determine, among other things, whether the proposed product is safe, pure, potent and effective for its intended use, and whether the facility (or facilities) in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency.

Most such applications are meant to be reviewed within ten months from the date it is accepted for filing, and most applications for “priority review” products are meant to be reviewed within six months from the date the application is accepted for filing.

The review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.

The FDA likely will re-analyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making final decisions on approval.

Before approving a BLA, the FDA will typically inspect the facility or facilities where the product is manufactured.

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

Additionally, before approving a BLA, the FDA will typically inspect one or more treatment sites to assure compliance with GCP.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response letter.

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

Additionally, before approving a BLA, the FDA will typically inspect one or more treatment sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP.

To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A Complete Response letter will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response letter without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.

In issuing the Complete Response letter, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If the FDA grants regulatory approval of a product, such approval will be for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks.

A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form.

A CRL generally outlines the deficiencies that the FDA identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.

In issuing the CRL, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing .

If a CRL is issued, the applicant may choose to either resubmit the NDA or BLA addressing all of the deficiencies identified in the letter or withdraw the application.

If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA or BLA, the FDA will issue an approval letter.

The FDA has committed to reviewing such resubmissions in response to an issued CRL in either two or six months depending on the type of information included.

Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If the FDA grants regulatory approval of a product, such approval is limited to the conditions of use (e.g., patient population, indication) described in the application and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the BLA with a risk evaluation and mitigation strategy, or REMS, to ensure the benefits of the product outweigh its risks and to assure the safe use of the drug or biological product.

A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis.

If the FDA concludes a REMS is needed, the sponsor of the NDA or BLA must submit a proposed REMS.

The FDA will not approve a BLA without a REMS, if required.

The FDA also may condition approval on, among other things, changes to proposed labeling (e.g., the addition of specific contraindications, warnings or precautions) or the development of adequate controls and specifications.

Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace.

The FDA may require one or more Phase 4 post a-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

Expedited Development and Review Programs

The FDA offers a number of expedited development and review programs for qualifying product candidates.

The fast-track program is intended to expedite or facilitate the process for reviewing new products that meet certain criteria.

Specifically, new products are eligible for fast-track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.

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

The sponsor of a fast-track product has opportunities for frequent interactions with the review team during product development and, once a BLA is submitted, the product may be eligible for priority review.

A fast track product may also be eligible for rolling review, where the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

A product intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review.

A product can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The designation includes all of the fast-track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product, including involvement of senior managers.

Any marketing application for a biologic submitted to the FDA for approval, including a product with a fast-track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval.

A product is eligible for priority review if it has the potential to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition compared to marketed products.

For products containing new molecular entities, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date (compared with ten months under standard review).

Additionally, products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

It is possible that at the time of a BLA submission, our product candidates may not be eligible for accelerated approval, or the FDA could determine that accelerated approval is not warranted.

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

The FDA may require one or more Phase 4 post-market trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Fast Track, Breakthrough Therapy and Priority Review Designations

The FDA is authorized to designate certain products for expedited development or review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition.

These programs include fast track designation, breakthrough therapy designation and priority review designation.

To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors.

Fast track designation provides opportunities for more frequent interactions with the FDA review team to expedite development and review of the product.

The FDA may also review sections of the BLA for a fast track product on a rolling basis before the complete application is submitted, if the sponsor and the FDA agree on a schedule for the submission of the application sections and the sponsor pays any required user fees upon submission of the first section of the NDA.

In addition, fast track designation may be withdrawn by the sponsor or rescinded by the FDA if the designation is no longer supported by data emerging from the clinical trial process.

In addition, the FDA may designate a drug or biologic as a “breakthrough therapy” upon a request made by the IND sponsor.

A breakthrough therapy is a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Drugs or biologics designated as breakthrough therapies are also eligible for accelerated approval of their respective marketing applications.

The FDA must take certain actions with respect to breakthrough therapies, such as holding timely meetings with and providing advice to the product sponsor, which are intended to expedite the development and review of an application for approval of a breakthrough therapy.

Finally, the FDA may designate a product for priority review if it is a drug or biologic that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness over existing therapy.

The FDA determines at the time that the marketing application is submitted, on a case- by-case basis, whether the proposed drug represents a significant improvement in treatment, prevention or diagnosis of disease when compared with other available therapies.

Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation.

A priority review designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months for an original BLA from the date of filing.

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

Furthermore, fast track designation, breakthrough therapy designation and priority review do not change the standards for approval and may not ultimately expedite the development or approval process.

Accelerated Approval Pathway

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 from the FDA and may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

The FDA may also grant accelerated approval for such a drug or biologic when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of approval, the FDA will require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials to verify and describe the predicted effect on IMM or other clinical endpoint, and the product may be subject to expedited withdrawal procedures.

Drugs and biologics

granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit.

Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.

An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug or biologic, such as an effect on IMM.

The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints but has indicated that such endpoints generally may support accelerated approval when the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate long-term clinical benefit of a drug or biologic.

The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit.

As a result, a program or development candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to establish the effect on the clinical endpoint.

Failure to conduct required post-approval studies, or to confirm the predicted clinical benefit of the product during post-marketing studies, would allow the FDA to withdraw approval of the drug.

As part of the Consolidated Appropriations Act for 2023, Congress provided FDA additional statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.

Under the act’s amendments to the FDCA, the FDA may require the sponsor of a product granted accelerated approval to have a confirmatory trial underway prior to approval.

The sponsor must also submit progress reports on a confirmatory trial every six months until the trial is complete, and such reports are published on FDA’s website.

The amendments also give FDA the option of using expedited procedures to withdraw product approval if the sponsor’s confirmatory trial fails to verify the claimed clinical benefits of the product.

All promotional materials for programs or development candidates being considered and approved under the accelerated approval program are subject to prior review by the FDA.

Pediatric Trials

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

The FDCA requires that a sponsor who is planning to submit a marketing application for a drug or biologic product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan, or PSP, within sixty days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA.

The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to

conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

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

The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

The FDA and the sponsor must reach agreement on the PSP.

A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers.

Unless otherwise required by regulation, the PREA does not apply to any product for an indication for which orphan designation has been granted.

However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biologic product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in

the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic.

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

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use will be disclosed publicly by the FDA;

the posting will also indicate whether the drug or biologic is no longer designated as an orphan drug.

More than one program or development candidate may receive an orphan drug designation for the same indication.

Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to seven years of orphan product exclusivity.

During the seven-year exclusivity period, the FDA may not approve any other applications to market a product containing the same active moiety for the same disease, except in very limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

A product is clinically superior if it is safer, more effective or makes a major contribution to patient care.

Thus, orphan drug exclusivity could block the approval of one of our potential products for seven years if a competitor obtains approval of the same product as defined by the FDA and we are not able to show the clinical superiority of our program or development candidate or if our program or development candidate’s indication is determined to be contained within the competitor’s product orphan indication.

In addition, the FDA will not recognize orphan drug exclusivity if a sponsor fails to demonstrate upon approval that the product is clinically superior to a previously approved product containing the same active moiety for the same orphan condition, regardless of whether or not the previously approved product was designated an orphan drug or had orphan drug exclusivity.

A product that has received orphan drug designation may not receive orphan exclusivity if it is approved for a use that is broader than the indication for which it received the designation.

Orphan exclusivity does not prevent the FDA from approving a different drug or biological product for the same disease or condition, or the same product for a different disease or condition.

Recent court cases have challenged FDA’s approach to determining the scope of orphan drug exclusivity;

however, at this time the agency continues to apply its long-standing interpretation of the governing regulations and has stated that it does not plan to change any orphan drug implementing regulations.

Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to monitoring and record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval.

There also are continuing user fee requirements, under which FDA assesses an annual program fee for each product identified in an approved BLA.

Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers.

Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented.

FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use.

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

Any products that we may manufacture or distribute pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, monitoring and record-keeping requirements, reporting of adverse experiences with the product, periodic reporting requirements, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, as well as advertising and promotion requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as off-label use), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the Internet.

After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval of a new BLA or a supplement, which may require the applicant to develop additional data or conduct additional pre-clinical studies and clinical trials.

The FDA may also place other conditions on approvals, including the requirement for a REMS, to assure the safe use of the product.

A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products.

In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval to ensure the quality and long-term stability of the product.

The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products.

The manufacturing facilities for our programs and development candidates must meet cGMP requirements and satisfy the FDA or comparable foreign regulatory authorities before any product is approved and our commercial products can be manufactured.

We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in

accordance with cGMP regulations.

These third-party manufacturers must comply with cGMP regulations that require, among other things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.

Manufacturers, including third-party manufacturers, and other entities involved in the manufacture and distribution of approved biologics are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws.

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

Future inspections by the FDA and other regulatory agencies may identify compliance issues at the facilities of our CMOs that may disrupt production or distribution or require substantial resources to correct.

In addition, the discovery of conditions that violate these rules, including failure to conform to cGMP regulations, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including, among other things, voluntary recall and regulatory sanctions as described below.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information;

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, could result in adverse consequences to the Company.

Examples of these consequences include, without limitation, the following:

may result in revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical studies to assess new safety risks;

or imposition of distribution restrictions or other restrictions under a REMS program;

complete withdrawal of the product from the market or other limits on marketing or manufacture of the product;

imposition of civil or criminal penalties.

The FDA closely regulates the marketing, labeling, advertising and promotion of biologics.

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The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Pediatric exclusivity

Pediatric exclusivity is a type of non-patent marketing exclusivity available in the United States and, if granted, it provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents.

This six-month exclusivity may be granted if a sponsor submits pediatric data that fairly responds to a Written Request from the FDA for such data.

The data do not need to show the product to be effective in the pediatric population studied;

rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

The issuance of a Written Request does not require the sponsor to undertake the described studies.

Biosimilars and Reference Product Exclusivity

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product.

To date, a number of biosimilars have been licensed under the BPCIA, and numerous biosimilars have been approved in Europe.

The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies,

and a clinical study or studies.

Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Upon licensure by the FDA, an interchangeable biosimilar may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product, although to date no such products have been approved for marketing in the United States.

Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.

In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

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

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

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

The biosimilar applicant must demonstrate that the product is biosimilar based on data from (1) analytical studies showing that the biosimilar product is highly similar to the reference product;

(2) animal studies (including toxicity);

and (3) one or more clinical studies to demonstrate safety, purity and potency in one or more appropriate conditions of use for which the reference product is approved.

In addition, the applicant must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency.

A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, and the first approved interchangeable biologic product will be granted an exclusivity period of up to one year after it is first commercially marketed.

As part of the Consolidated Appropriations Act for 2023, Congress amended the PHSA in order to permit multiple interchangeable products approved on the same day to receive and benefit from this one-year exclusivity period.

If pediatric studies are performed and accepted by the FDA as responsive to a Written Request, the 12-year exclusivity period will be extended for an additional six months.

In addition, the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

“First licensure” typically means the initial date the particular product at issue was licensed in the United States.

Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a supplement for the reference product for a subsequent application filed by the same sponsor or manufacturer of the reference product (or licensor, predecessor in interest or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength or for a modification to the structure of the biological product that does not result in a change in safety, purity or potency.

Therefore, one must determine whether a new product includes a modification to the structure of a previously licensed product that results in a change in safety, purity or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity.

Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

The BPCIA is complex and continues to be interpreted and implemented by the FDA.

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As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty.

Healthcare Laws and Compliance Requirements

In the United States, our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers may be subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S.

Health Care Laws and Compliance Requirements

Although we currently do not have any products on the market, our business operations and current and future arrangements with investigators, health care professionals, consultants, third-party payors and customers may be subject to regulation and enforcement by various federal, state and local authorities in addition to the FDA, including but not limited to, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S.

Department of Health and Human Services, or HHS, (such as the Office of Inspector General and the Health Resources and Service Administration), the Department of Justice, or the DOJ, and individual U.S.

Attorney offices within the DOJ, and state and local governments.

Attorney offices within the DOJ, and state

and local governments.

For example, sales, marketing and scientific/educational grant programs may have to comply with the anti-fraud and abuse provisions of the Social Security Act, the false claims laws, the privacy and security provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and similar state laws, each as amended, as applicable.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

The term remuneration has been interpreted broadly to include anything of value.

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Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based

on a cumulative review of all of its facts and circumstances.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.

Our practices, including our arrangements with physicians, may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.

The federal false claims and civil monetary penalty laws, including the FCA, which can be enforced by private citizens through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal healthcare programs, including Medicare and Medicaid, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

The federal false claims and civil monetary penalty laws, including the False Claims Act, or FCA, which can be enforced by private citizens through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal health care programs, including Medicare and Medicaid, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

A claim includes “any request or demand” for money or property presented to the U.S.

For instance, historically, pharmaceutical and other healthcare companies have been, and continue to be, prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

For instance, historically, pharmaceutical and other health care companies have been, and continue to be, prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.

A violation of the Anti-Kickback Statute makes any claim submitted as a result of the violation of the Anti-Kickback Statute a false claim under the FCA.

Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, off-label, and thus generally non-reimbursable, uses.

HIPAA created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Like the federal Anti-Kickback Statute, under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

HIPAA created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any health care benefit program, including private third-party payors, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.

Like the federal Anti-Kickback Statute, under HIPAA a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Also, many states have similar, and typically more prohibitive, fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

Additionally, to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.

Additionally, to the extent that our products are approved by and sold in a foreign country, we may be subject to similar foreign laws.

We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements relating to the privacy, security and transmission of individually identifiable health information on certain healthcare providers, healthcare clearinghouses, and health plans, known as covered entities, as well as independent contractors, or agents of covered entities that create, receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, known as a business associates.

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, impose requirements relating to the privacy, security and transmission of individually identifiable health information on certain health care providers, health care clearinghouses, and health plans, known as covered entities, as well as independent contractors, or agents of covered entities that create, receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, known as a business associates.

Among other things, the passage of HITECH made HIPAA’s privacy

and security standards directly applicable to business associates.

HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions.

In addition, many state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways, are often not pre-empted by HIPAA, and may have a more prohibitive effect than HIPAA, thus complicating compliance efforts.

Additionally, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians, as broadly defined by such law, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals, and to report annually certain ownership and investment interests held by physicians and their immediate family members.

Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to certain other healthcare professionals, including physician assistants and nurse practitioners.

In addition, many states also govern the reporting of payments or

other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.

Additionally, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians, as broadly defined by such law, certain advanced non-physician health care practitioners, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, such individuals or entities, and to report annually certain ownership and investment interests held by physicians and their immediate family members.

In addition, many states also govern the reporting of payments or other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state.

Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain.

Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices.

Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other health care entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices.

All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor.

If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other current or future governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, additional reporting obligations and integrity oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Ensuring business arrangements with third parties comply with applicable health care laws and regulations is a costly endeavor.

If our operations are found to be in violation of any of the federal and state health care laws described above or any other current or future governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, additional reporting obligations and integrity oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

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Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we may obtain regulatory approval.

Significant uncertainty exists as to the coverage and reimbursement status of any programs or development candidates for which we may obtain regulatory approval.

In the United States and in foreign markets, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the extent to which third-party payors provide coverage and establish adequate reimbursement levels for such products.

In the United States, third-party payors include federal and state healthcare programs, private managed care providers, health insurers and other organizations.

Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid in the United States, and commercial payors are critical to new product acceptance.

In the United States,

third-party payors include federal and state health care programs, private managed care providers, health insurers and other organizations.

Coverage and adequate reimbursement from governmental health care programs, such as Medicare and Medicaid in the United States, and commercial payors are critical to new product acceptance.

Third-party payors decide which therapeutics they will pay for and establish reimbursement levels.

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CMS decides whether and to what extent our products will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.

Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is:

● a covered benefit under its health plan;

● safe, effective and medically necessary;

● appropriate for the specific patient;

● cost-effective;

● neither experimental nor investigational.

Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is a covered benefit under its health plan, safe, effective and medically necessary, appropriate for the specific patient, cost-effective and neither experimental nor investigational.

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

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Third-party payors are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness of medical products, therapies, and services, in addition to questioning their safety and efficacy.

Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with branded drugs and drugs administered under the supervision of a physician.

Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with branded drugs and biologics, as well as drugs and biologics administered under the supervision of a physician.

We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain FDA approvals.

Our product candidates may not be considered medically necessary or cost-effective.

Our programs and development candidates may not be considered medically necessary or cost-effective.

Obtaining coverage and reimbursement approval of a product from a third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our product on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.

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Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies, but also have their own methods and approval processes.

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

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

Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop.

If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any program or development candidate that we successfully develop.

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

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

Further, certain of our products, once approved, may be administered by a physician.

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

Further, certain of our products, if approved, may be administered by a physician.

Under currently applicable U.S.

law, certain products not usually self-administered (including injectable drugs) may be eligible for coverage under Medicare through Medicare Part B.

Medicare Part B is part of original Medicare, the federal health care program that provides health care benefits to the aged and disabled, and covers outpatient services and supplies, including certain pharmaceutical products, that are medically necessary to treat a beneficiary’s health condition.

As a condition of receiving Medicare Part B reimbursement for a manufacturer’s eligible drugs or biologicals, the manufacturer is required to participate in other government healthcare programs, including the Medicaid Drug Rebate Program and the 340B Drug Pricing Program.

The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a condition for states to receive federal matching funds for the manufacturer’s outpatient drugs furnished to Medicaid patients.

law, certain products that are not self-administered by the patient (including injectable drugs) may be eligible for coverage under Medicare through Medicare Part B.

Medicare Part B is part of original Medicare, the federal health care program that provides health care benefits to the aged and disabled, and covers outpatient services and supplies, including certain drug and biological products, that are medically necessary to treat a beneficiary’s health condition.

As a condition of receiving Medicare Part B reimbursement for a manufacturer’s eligible drugs or biologicals, the manufacturer is required to participate in other government health care programs, including the Medicaid Drug Rebate Program and the 340B Drug Pricing Program.

The Medicaid Drug Rebate Program requires biopharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of HHS as a condition for states to receive federal matching funds for the manufacturer’s outpatient therapeutic products furnished to Medicaid patients.

Under the 340B Drug Pricing Program, the manufacturer must extend discounts to entities that participate in the program.

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Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed.

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

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

Other member states allow companies to fix their own prices for medicines but monitor and control company profits.

The downward pressure on health care costs has become intense.

As a result, increasingly high barriers are being erected to the entry of new

As a result, increasingly high barriers are being erected to the entry of new products.

In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.

The marketability of any product candidates for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide coverage and adequate reimbursement.

In addition, emphasis on managed care, the increasing influence of health maintenance organizations, and additional legislative changes in the United States has increased, and we expect will continue to increase, the pressure on healthcare pricing.

The downward pressure on the rise in healthcare costs has become very intense.

The marketability of any programs or development candidates for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide coverage and adequate reimbursement.

The downward pressure on the rise in health care costs has become very intense.

Coverage policies and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Potential Healthcare Reform

In the United States and some jurisdictions outside the United States, there have been, and continue to be, proposed legislative and regulatory changes to the current healthcare systems that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell product candidates for which marketing approval is obtained.

Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives that impact both the regulatory approval process for new products as well as the terms under which government and third-party payors will contract with and reimburse manufacturers.

For example, several government payor programs, such as Medicare and Medicaid, require manufacturers to enter into rebate agreements as a condition to approving manufacturer’s products for reimbursement by Federal Healthcare Programs.

In March 2010, the ACA was signed into law and substantially changed the way healthcare is financed by both governmental and private insurers in the United States.

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

Additionally, the ACA, among other things, included incentives to programs that increase the federal government’s comparative effectiveness research.

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

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year and reduced payments to several types of Medicare providers.

The Coronavirus Aid, Relief and Economic Stability Act (the “CARES Act”), which was signed into law on March 27, 2020, suspended the reductions from May 1, 2020, through March 31, 2022, and extended the sequester through 2031.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years regarding these matters.

This has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

Individual states in the United States have also become increasingly active in implementing regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries.

Furthermore, there has been increased interest by third party payors and governmental authorities in reference pricing systems and publication of discounts and list prices.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product.

It is possible that additional governmental action is taken to address the COVID-19 pandemic.

Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.

Health Care Reform

In the United States and some jurisdictions outside the United States, there have been, and continue to be, proposed legislative and regulatory changes to the current health care systems that could prevent or delay marketing approval of programs and development candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell programs and development candidates for which marketing approval is obtained.

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product and therapeutic candidates.

If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

Moreover, among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in health care systems with the stated goals of containing health care costs, improving quality and/or expanding access.

For example, the ACA was enacted in March 2010 and has had a significant impact on the health care industry in the United States.

The ACA expanded coverage for the uninsured while at the same time containing overall health care costs.

With regard to biopharmaceutical products, the ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program.

Additionally, the Creating and Restoring Equal Access to Equivalent Samples Act was enacted on December 20, 2019 to address the concern articulated by both the FDA and others in the industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a REMS for certain products, to deny generic product developers access to samples of brand products.

Because generic product developers need samples to conduct certain comparative testing required by the FDA, some have attributed the inability to timely obtain samples as a cause of delay in the entry of generic products.

To remedy this concern, the CREATES Act establishes a private cause of action that permits a generic product developer to sue the brand manufacturer to compel it to furnish the necessary samples on “commercially reasonable, market-based terms.” Whether and how generic product developments will use this new pathway, as well as the likely outcome of any legal challenges to provisions of the CREATES Act, remain highly uncertain and its potential effects on any of our future commercial products are unknown.

Following several years of litigation in the federal courts, in June 2021, the U.S.

Supreme Court upheld the ACA when it dismissed a legal challenge to the ACA’s constitutionality.

Further legislative and regulatory changes under the ACA remain possible, but it is unknown what form any such changes or any law would take, and how or whether it may affect the biopharmaceutical industry as a whole or our business in the future.

We expect that changes or additions to the ACA, the Medicare and Medicaid programs, and changes stemming from other health care reform measures, especially with regard to health care access, financing or other legislation in individual states, could have a material adverse effect on the health care industry in the United States.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA that affect health care expenditures.

These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013 and was extended by the Consolidated Appropriations Act for 2023 and will remain in effect through 2032 unless additional Congressional action is taken.

Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

In May 2019, DHHS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified a DHHS policy change that was effective January 1, 2019.

More recently, in August 2022, President Biden signed into the law the Inflation Reduction Act of 2022, or the IRA.

Among other things, the IRA has multiple provisions that may impact the prices of drug products that are both sold into the Medicare program and throughout the United States.

Starting in 2023, a manufacturer of a drug or biological product covered by Medicare Parts B or D must pay a rebate to the federal government if the drug product’s price increases faster than the rate of inflation.

This calculation is made on a drug product by drug product basis and the amount of the rebate owed to the federal government is directly dependent on the volume of a drug product that is paid for by Medicare Parts B or D.

Additionally, starting in payment year 2026, CMS will negotiate drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition.

CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028.

If a drug product is selected by CMS for negotiation, it is expected that the revenue generated from such drug will decrease.

Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In December 2020, the U.S.

Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers, or PBMs, and other members of the health care and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, including any future drug products for which we secure marketing approval.

Additional Regulation

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If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines.

We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business.

We believe that we are in material compliance with applicable environmental laws and that

continued compliance therewith will not have a material adverse effect on our business.

We cannot predict, however, how changes in these laws may affect our future operations.

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We offer a competitive total rewards package, updated in 2022 based on market research.

During 2020 and 2021, we also adjusted our practices and processes to support employees in a pandemic environment.

During 2020 through 2022, we also adjusted our practices and processes to support employees in a pandemic environment.

We incentivize high performers through an annual bonus program based on our performance for which all employees are eligible.

We also offer equity incentive plans, the purpose of which are to attract, retain and reward personnel through the granting of stock-based compensation awards in order to increase stockholder value and the success of our company by motivating team members to perform to the best of their abilities and achieve our objectives.

We also offer equity incentive plans, the purpose of which are to attract, retain and reward personnel through the granting of share-based compensation awards in order to increase stockholder value and the success of our company by motivating team members to perform to the best of their abilities and achieve our objectives.

We currently lease 11,000 square feet of office and laboratory space in Exton, Pennsylvania under a lease that expires on March 31, 2024.

1 unchanged sentence

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