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Item 1. Business

2024-02-28 compared with 2023-02-28 · 280 added, 300 removed, 514 unchanged (53% of the section changed)

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Our technologies are designed to generate T cells with the ability to persist and self‑renew while driving durable tumor cytotoxicity, even in the setting of an immunosuppressive tumor microenvironment.

The goal is for our technologies to provide patients with T cells that are potent and long-lasting enough to achieve durable antitumor responses.

Furthermore, our technologies can be applied in a target agnostic manner to multiple T‑cell modalities, including chimeric antigen receptor (CAR), tumor-infiltrating lymphocytes (TIL) and T‑cell receptor (TCR) therapies.

We apply our technologies with the aim to develop T‑cell therapies with improved durable clinical outcomes.

Our growing pipeline of promising cell product candidates targets solid tumor indications with large unmet needs that are collectively responsible for approximately 180,000 deaths in the US annually.

We apply our technologies with the aim of developing T‑cell therapies with improved and durable antitumor responses for patients with solid tumors.

Our technologies can be applied in a target agnostic manner to multiple T‑cell modalities, including chimeric antigen receptor (CAR), tumor-infiltrating lymphocytes (TIL) and T‑cell receptor (TCR) therapies.

Our growing pipeline of promising cell product candidates targets solid tumor indications with large unmet needs that are collectively responsible for approximately 180,000 deaths in the United States annually.

Each of our programs provide opportunities to expand into additional indications beyond the patient populations we are initially targeting.

Our product candidates are summarized in the Table 1 below:

Our lead product candidates are summarized in Table 1 below:

Lyell’s Pipeline

Our goal is to develop innovative therapies for patients with solid tumors based on our proprietary T‑cell reprogramming technologies, which generate tumor-reactive, long-lasting functional T cells that resist exhaustion and maintain the ability to self-renew and persist to drive durable tumor cytotoxicity.

We were incorporated in June 2018.

Our primary activities to date have included clinical development of T-cell therapies, conducting research and development, acquiring technology, entering into strategic collaboration and license agreements, enabling and executing manufacturing activities in support of our product candidate development efforts, organizing and staffing our company, business planning, establishing our intellectual property portfolio, making regulatory submissions, executing clinical trials, raising capital and providing general and administrative support for these activities.

We are early in our research and development efforts and are in Phase 1 clinical development of LYL797, our ROR1‑targeted CAR T-cell product candidate, and LYL845, our TIL product candidate.

Two additional product candidates that each include novel genetic and epigenetic reprogramming technologies are in preclinical development:

LYL119, a ROR1‑targeted CAR T-cell product candidate and a second generation TIL product candidate.

We do not have any products approved for sale.

Our goal is to realize the potential of cell therapy for solid tumors by developing innovative therapies enhanced with our proprietary T‑cell reprogramming technologies, which in nonclinical studies have been shown to generate potent,

tumor-reactive, long-lasting and functional T cells to drive durable tumor cytotoxicity.

Lyell was founded by leaders in the fields of oncology and cell therapy who have interrogated and elucidated the mechanisms of T‑cell biology and its interactions with cancer for decades.

We believe T‑cell exhaustion and lack of durable stemness, defined as the ability of T cells to self-renew and persist to drive durable tumor cytotoxicity, are primary barriers to effective cell therapy for solid tumors.

Emerging clinical data from the literature has continued to strengthen the rationale for our scientific approach.

Key components of our business strategy to achieve this goal include:

• Efficiently advance our diverse pipeline of product candidates — We believe our autologous T‑cell therapies will deliver improved, durable clinical outcomes for patients with solid tumors.

• Efficiently advance our diverse pipeline of product candidates — We believe our autologous T‑cell therapies have the potential to deliver improved, durable clinical outcomes for patients with solid tumors.

We have two wholly‑owned product candidates in two distinct T‑cell modalities, CAR T cell and TIL, currently in Phase 1 development targeting indications with unmet medical needs in large commercial opportunities.

We anticipate having initial clinical data for both programs in 2024 and filing a new Investigational New Drug (IND) application for our third wholly-owned product candidate in the first half of 2024.

• Leverage our proprietary, cell reprogramming technology platforms to create highly tumor-reactive, longer‑lasting functional T cells with enhanced ability to defeat solid tumors — We seek to develop T‑cell therapies to defeat solid tumors by addressing the major barriers to successful cell therapy in solid tumors, including overcoming exhaustion of T cells and creating populations of T cells with properties of durable stemness.

Our pipeline of therapeutic candidates includes programs designed to outlast and eradicate solid tumors utilizing our proprietary, stackable genetic and epigenetic T‑cell reprogramming technologies:

We anticipate having initial clinical data for both programs in 2024 and filing an Investigational New Drug (IND) application for a third wholly-owned product candidate in the first half of 2024.

• Leverage our proprietary, cell reprogramming technology platforms to create highly tumor-reactive, longer‑lasting functional T cells with enhanced ability to defeat solid tumors — We seek to develop T‑cell therapies to defeat solid tumors by addressing the major barriers to effective cell therapy in solid tumors, including overcoming exhaustion of T cells and creating populations of T cells with properties of durable stemness.

Our pipeline of therapeutic candidates includes programs designed to outlast and eradicate solid tumors utilizing our proprietary, stackable and complementary genetic and epigenetic T‑cell reprogramming technologies:

c-Jun overexpression, NR4A3 knockout, Epi‑R TM and Stim‑R TM .

• Continually innovate to develop and advance novel, breakthrough technologies for cell therapy — We are committed to continuing to discover, develop and advance disruptive technologies that have the potential to revolutionize cell therapy and its promise to improve the lives of patients with solid tumors.

For example, our new NR4A3 gene knockout and Stim‑R reprogramming technologies are designed to further improve the potency and durability of T cells.

These novel technologies are being utilized in our new CAR T-cell product candidate, LYL119, in addition to c-Jun overexpression and Epi‑R, with the goal of creating even greater benefit to patients with cancer.

• Maintain proprietary state‑of‑the‑art infrastructure and capabilities to control all aspects of cell product manufacturing — We have and will continue to invest in manufacturing with the goal to reliably produce the highest quality cell therapy products for patients.

This is achieved through implementing consistent processes and mitigating risks, including risks arising from the challenges of managing production, supply chain, patient specimen chain of custody and quality.

We have built and operate a wholly-owned manufacturing facility, LyFE™, which is a multi-product manufacturing center that can produce plasmid, lentiviral vector and cell products.

LyFE has been commissioned and qualified in compliance with U.S.

Food and Drug Administration’s Current Good Manufacturing Practices (cGMP) and is manufacturing cell product for our clinical trials.

We expect maintaining our own manufacturing facility to not only enable us to implement consistent processes and manage risk, but also to protect proprietary aspects of our reprogramming technologies, support seamless collaboration across research, development and manufacturing, access more detailed and timely product characterization information and rapidly incorporate new innovations.

Our technology infrastructure enables real‑time monitoring of our manufacturing process and the ability to incorporate insights into our research, manufacturing and clinical development efforts.

• Continually innovate to develop and advance novel, breakthrough technologies for cell therapy — We are committed to continuing to discover, develop and advance disruptive technologies that may have the potential to revolutionize cell therapy and its promise to improve the lives of patients with solid tumors.

For example, we are advancing a second generation TIL product candidate enhanced with both genetic and epigenetic reprogramming technologies.

In addition, we are advancing our Rejuvenation technology, which is designed to “turn back the clock” to generate more stem-like T cells with reduced epigenetic age and enhanced proliferation ability.

These novel technologies are being advanced with the goal of creating products with even greater benefit to patients with cancer.

• Maintain state‑of‑the‑art infrastructure and expert capabilities to control and innovate cell product manufacturing — We have built and operate a wholly-owned manufacturing facility, LyFE Manufacturing Center™, a multi-product manufacturing center that is producing cell product for our clinical trials.

We have, and will continue to, invest in infrastructure that enables real‑time monitoring of our manufacturing process and the ability to incorporate insights into our research, manufacturing and clinical development efforts.

Our manufacturing strategy includes seeking new ways to efficiently, rapidly and cost-effectively scale manufacturing capacity for our cell product candidates for future clinical trials and potential commercialization.

Our proof‑of‑concept technology transfer collaboration for the manufacture of LYL797 using the Cellares Cell Shuttle™ is an example of this.

We are also advancing our Epi-R P2 manufacturing process, which is designed to shorten TIL manufacturing time without impacting cell number and phenotype.

• Generate, secure and defend intellectual property on our differentiated technology platforms and product candidates — We have developed and secured intellectual property, including know-how, through our internal research efforts, licensing agreements and collaborations.

We rigorously analyze, file and protect our intellectual property in an ongoing manner.

• Opportunistically pursue strategic partnerships and collaborations to maximize the potential of our technologies and products – We consider a variety of ways to collaborate with external partners.

Our technologies can be applied in a target and modality agnostic manner to CAR, TIL and TCR therapies to improve the functionality of T cells.

In addition to applying our technologies to advance product candidates in our proprietary pipeline, we also assess opportunities to combine our technologies with targets that other companies are pursuing.

Our product candidates are designed to address large patient populations, and we will evaluate options for partnering programs, indications or geographies with pharmaceutical or biotechnology companies for development and/or commercialization.

We also consider opportunities to acquire or license rights or invest in differentiated product candidates or technologies to complement our pipeline.

Our Reprogramming Technologies

Cell therapy has demonstrated profound results in some patients suffering from hematologic malignancies, but solid tumors are more complex and have evolved multiple mechanisms to evade and ultimately resist clearance by the immune system.

This has limited the use of cell therapy in solid tumors.

Based on clinical data and other scientific evidence, we believe T‑cell exhaustion and lack of durable stemness , which include the ability of T cells to persist and self-renew to drive durable tumor cytotoxicity, are two apical barriers limiting the efficacy of cell therapy in solid tumors.

We have developed proprietary, stackable genetic and epigenetic reprogramming technologies to address these two major barriers.

Our reprogramming technologies are designed to generate potent T cells with durable cytotoxic function, irrespective of target and irrespective of whether they are delivered as CAR, TIL or TCR therapies.

We have generated T cells that have demonstrated in nonclinical studies the ability to sustain cancer cell killing in murine models of solid tumors and an increased ability to maintain stemness to drive more durable tumor cytotoxicity.

T‑cell exhaustion describes a dysfunctional cellular state characterized by increased expression of cell surface markers such as PD-1, TIM-3, and LAG-3, and importantly the functional inability to respond to antigen and elimination of target cells.

A clinical study previously conducted by one of our founders, Stanley Riddell, M.D., Professor in Immunology, Burke O’Reilly Family Endowed Chair in Immunotherapy, Fred Hutchinson Cancer Center, illustrated the different fates of CAR T cells in solid tumors versus hematologic malignancies and identified T-cell exhaustion as a key barrier to successful cell therapy in the solid tumor microenvironment.

In this study, conceptually depicted in Figure 1, autologous ROR1-targeted CAR T cells infused into patients with chronic lymphocytic leukemia underwent rapid expansion and retained T‑cell effector functions, leading to tumor cell clearance and clinical responses.

However, when CAR T cells generated with the same method are infused into patients with solid tumor such as triple-negative breast cancer (TNBC) or non-small cell lung cancer (NSCLC), these T cells often failed to expand adequately, rapidly developed

cell surface markers of T‑cell exhaustion and adopted a dysfunctional state.

The outcome of these studies clearly demonstrated that T‑cell exhaustion is a major barrier to successful cell therapy in solid tumors.

Solid tumors drive T cells down a path to exhaustion.

immune system.

This has limited the use of cell therapy in solid tumors, which account for 90% of cancer deaths.

Based on clinical data and other scientific evidence, we believe T‑cell exhaustion and lack of durable stemness , which include the ability of T cells to persist and self-renew to drive durable tumor cytotoxicity, are two primary barriers limiting the efficacy of cell therapy in solid tumors.

As illustrated in Figure 1, the highly immunosuppressive solid tumor microenvironment drives T cells down a path of exhaustion as a result of chronic and repeated antigen stimulation in solid tumors, which renders the T cells dysfunctional.

In addition, standard manufacturing processes often generate T‑cell products that are composed of mostly differentiated effector cells – cells that lack the stem-like qualities necessary to enable them to self-renew and sustain therapeutic activity over time.

Cell therapies for solid tumors must overcome two primary barriers:

T-cell exhaustion and lack of durable stemness.

T‑cell exhaustion describes a dysfunctional cellular state characterized by increased expression of cell surface markers such as PD-1, TIM-3 and LAG-3, and, importantly, the functional inability to respond to antigens and eliminate target cells.

A clinical study, previously conducted at the Fred Hutchinson Cancer Center, illustrated the different fates of CAR T cells in solid tumors versus hematologic malignancies and identified T-cell exhaustion as a key barrier to effective cell therapy in the solid tumor microenvironment.

In this study (Riddell et al, Keystone, 2020), autologous ROR1-targeted CAR T cells infused into patients with chronic lymphocytic leukemia underwent rapid expansion and retained T‑cell effector function, leading to tumor cell clearance and clinical responses.

However, when CAR T cells generated with the same method are infused into patients with solid tumors, such as triple-negative breast cancer (TNBC) or non-small cell lung cancer (NSCLC), these T cells often failed to expand adequately, rapidly developed cell surface markers of T‑cell exhaustion and adopted a dysfunctional state.

The outcome of these studies clearly demonstrated that T‑cell exhaustion is a major barrier to effective cell therapy in solid tumors.

Durable stemness describes the quality of a population of T cells to persist through self-renewal, as well as generate differentiated effector cell progenies to provide durable tumor cytotoxicity.

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Krishna et al., Science , Dec.

We have developed proprietary, stackable and complementary genetic and epigenetic reprogramming technologies designed to address these two major barriers.

Genetic reprogramming technologies :

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c-Jun and NR4A3 are involved in the regulation of the activator protein 1 (AP-1) transcription factor pathway, which plays a key role in T‑cell effector function.

These complementary reprogramming technologies function within this critical biological pathway to endow resistance to T‑cell exhaustion.

These complementary

reprogramming technologies function within this critical biological pathway to endow T cells with the ability to resist exhaustion.

Overexpression of c-Jun is based on the work of Lyell co-founder, Crystal Mackall, M.D., the Ernest and Amelia Gallo Family Professor of Pediatrics and Medicine at Stanford University and Founding Director of the Stanford Center for Cancer Cell Therapy.

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We and others have previously observed that the NR4A family of transcription factors is upregulated in exhausted T cells and may contribute to T‑cell exhaustion in part by restricting the activity of AP-1.

We hypothesize that disruption of NR4A3 expression, along with c-Jun overexpression, can further unleash the potential for maximal c-Jun activity and endow greater functional resistance to exhaustion.

Our nonclinical data suggest the combination of these two technologies, NR4A3 gene knockout and c-Jun overexpression, can act in a complementary fashion and have the potential to further improve the potency and durability of our CAR therapy.

We hypothesize that disruption of NR4A3 expression, along with c-Jun overexpression, may further unleash the potential for maximal c-Jun activity and endow greater functional resistance to exhaustion.

Our nonclinical data suggest the combination of these two technologies, NR4A3 gene knockout and c-Jun overexpression, can act in a complementary fashion and may have the potential to further improve the potency and durability of our CAR therapy.

Epigenetic reprogramming technologies:

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These novel manufacturing technologies generate product candidates with more stem-like cells and with greater potency during ex vivo T‑cell expansion.

Epi‑R is our proprietary ex vivo epigenetic reprogramming technology that intentionally and reproducibly generates a population of T cells with durable stemness.

Epi‑R is our proprietary ex vivo manufacturing protocol that is designed to generate populations of stem-like T cells with reduced exhaustion and improved proliferation and antitumor activity.

T cells with properties of durable stemness have an increased ability to self-renew and persist to drive durable tumor cytotoxicity.

This technology is built upon the groundbreaking science conducted at the National Cancer Institute (NCI), where it was demonstrated that products with more stem-like and functional T cells can be achieved by altering the metabolic state of the cells during expansion

(Vodnala et al., Science , Mar.

Key NCI scientists conducting this research subsequently joined Lyell where they advanced this research substantially to create the Epi‑R manufacturing protocol, which intentionally produces T‑cell populations with desirable stem-like properties that can be measured both phenotypically and functionally.

This novel Epi‑R protocol includes proprietary media, well-defined cell activation and expansion processes, as well as customized cytokine combinations.

Lyell’s Epi‑R protocol enables manufacturing of T‑cell therapy product candidates that are highly potent against cancer cells but also retain characteristics of stemness, which have been clinically associated with effective antitumor immunotherapies (Figure 2).

Key NCI scientists conducting this research subsequently joined Lyell where they created the Epi‑R manufacturing protocol, which intentionally produces T‑cell populations with desirable stem-like properties that can be measured both phenotypically and functionally.

Our novel Epi‑R protocol includes proprietary media, well-defined cell activation and expansion processes, as well as customized cytokine combinations.

Epi‑R enables manufacturing of T‑cell therapy product candidates that are highly potent against cancer cells but also retain characteristics of stemness, which have been clinically associated with effective antitumor immunotherapies (Figure 2).

Furthermore, relating specifically to TIL, the application of Epi‑R has generated T‑cell populations that exhibit a high degree of polyclonality, i.e ., the retention of a broad repertoire of TCR clonotypes that may react to a broader set of tumor antigens, thus improving the potential of our TIL therapy to counteract the heterogeneous nature of solid tumors.

Additionally, we are able to reliably and reproducibly manufacture our TIL products from a variety of solid tumors, including those that have been traditionally hard to manufacture such as from checkpoint refractory malignant melanoma, NSCLC and colorectal cancer (CRC).

Lyell’s proprietary Epi-R protocol produces T-cell populations with long-lived stem-like characteristics.

This protocol is used in both our LYL797 CAR T cell product candidate and in our LYL845 TIL product candidate as shown below.

Our second epigenetic reprogramming technology, Stim‑R, is a proprietary synthetic cell mimetic that mediates more precise and natural T‑cell activation in the manufacturing process.

Current manufacturing platforms typically utilize antibody-conjugated beads that were developed decades ago for expanding T cells.

As shown below, Lyell’s proprietary Epi-R manufacturing protocol produces T-cell populations with long-lived stem-like characteristics.

This protocol is used in our LYL797 CAR T-cell product candidate and in our LYL845 TIL product candidate, which are both in Phase 1 clinical trials, as well as our LYL119 CAR T‑cell product candidate in preclinical development.

Our second epigenetic reprogramming technology, Stim‑R, is a proprietary synthetic-cell mimetic composed of lipid-coated silica micro-rods that mimic the physiological cell-like presentation of signals to control T-cell activation in the manufacturing process.

Current manufacturing platforms typically utilize antibody-conjugated beads that were

developed decades ago for expanding T cells.

This standard approach does not provide precise control over the strength or duration of the signaling that drives T‑cell expansion ex vivo.

Our Stim‑R platform optimizes signaling parameters during T‑cell activation using degradable lipid-coated silica rods that can be functionalized to regulate cell activation more closely mimicking natural T‑cell stimulation.

This technology allows for greater control over the duration, intensity and type of signals delivered during cell expansion and manufacturing, resulting in the generation of more potent T‑cell products.

T‑cell rejuvenation technologies:

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Thus, we are working to advance another novel reprogramming technology that focuses on rejuvenation of antitumor T cells.

We are developing a method to maintain T‑cell identity while reducing the epigenetic age of the cells.

We are developing a method designed to maintain T‑cell identity while reducing the epigenetic age of the cells.

This technology is currently in the research stage.

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Our Clinical Programs

We are advancing a diverse pipeline of CAR T cell and TIL product candidates that incorporate our stackable reprogramming technologies designed to generate potent T cells with durable cytotoxic function, irrespective of target and irrespective of whether they are delivered as CAR T, TIL or TCR T therapies.

Each of our programs currently target

cancers with large unmet need and provide opportunity to expand into additional indications.

We have deployed our technologies in our pipeline in the following manner to provide rapid clinical proof-of-concept (Table 1):

We are advancing a diverse pipeline of four wholly-owned product candidates, including two product candidates in Phase 1 clinical development, LYL797 and LYL845.

Two additional product candidates, LYL119 and a second generation TIL product candidate, are in preclinical development.

Each of our programs currently target cancers with large unmet need and provide opportunity to expand into additional indications.

We have deployed our technologies in our pipeline in the following manner to provide rapid clinical proof-of-concept (see Table 1):

• LYL797 incorporates our c-Jun and Epi‑R technologies and is undergoing evaluation in a Phase 1 clinical trial enrolling patients with relapsed/refractory TNBC or NSCLC.

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LYL797 is manufactured utilizing our proprietary Epi‑R technology.

LYL797 construct.

ROR1 CAR T cell + c-Jun + Epi-R.

Phase 1 Clinical Trial

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Exploratory biomarkers of T‑cell function – exhaustion and stemness – will also be assessed.

We plan to share initial data from the trial when we have a meaningful number of patients and an indication of clinical effect, which we expect to occur in the first half of 2024.

In the first half of 2024, we plan to share initial clinical and translational data from the trial from at least 20 patients, which we anticipate will provide an early indication of clinical effect.

Target Indications

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Significant subsets of patients with common cancers express ROR1, including TNBC and NSCLC, two of the highest ROR1‑expressing solid tumor indications.

If successful, we may expand into other ROR1-positive cancers with a lower incidence of ROR1 expression, including potentially hormone-receptor positive breast cancer, ovarian and other solid tumors.

Results from our own ROR1 screening program are consistent with what is reported in the literature.

Using our immunohistochemistry assay in the screening for our Phase 1 trial, as of September 2023, we have found that approximately 50% of patients with TNBC and approximately 33% of patients with NSCLC have tumors that express ROR1.

If successful, we may expand into other ROR1-positive cancers, including potentially ovarian and other solid tumors.

Breast cancer is the second most common cancer in American women.

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Once TNBC has spread to distant parts of the body, the 5-year survival rate is only 11.5% despite currently available treatment options.

Available treatments include surgery, neoadjuvant and adjuvant chemotherapy such as capecitabine or gemcitabine, taxanes, anthracyclines and eribulin, check-point inhibitors such as pembrolizumab, and poly ADP ribose polymerase or PARP inhibitors such as olaparib and talazoparib.

At recurrence, the antibody-drug conjugate sacituzumab govitecan-hziy may be prescribed.

Lung cancer is the second most common cancer and is the leading cause of cancer mortality worldwide.

NSCLC, defined as any type of epithelial lung cancer other than small-cell lung carcinoma, accounts for about 84% of all lung cancers.

In 2016, the incidence of NSCLC varied widely, ranging from 3 to 57 per 100,000 in Africa and North America respectively, with ~2 million cases diagnosed globally.

It is estimated that 110,000 deaths from this disease occurred in the United States in 2022.

For people with localized NSCLC, the overall 5-year survival rate is ~61%.

For regional NSCLC, the 5-year survival rate is ~35%.

Based on current data, when cancer metastasizes, the 5-year survival rate is 6% despite surgery, radiation and treatment with multiple currently-approved therapies, including chemotherapy, immunotherapy and targeted drug therapy.

For non-metastatic disease, available treatments include surgery, combined with neoadjuvant and adjuvant chemotherapy.

Chemotherapy is usually anthracycline, alkylator or taxane‑based.

PARP inhibitors, such as

olaparib, may be used in the adjuvant setting.

For metastatic disease, options include combination chemotherapy and pembrolizumab.

At recurrence, patients with tumors that are low HER2 expressing are candidates for Fam-trastuzumab deruxtecan.

Otherwise, the antibody-drug conjugate sacituzumab govitecan-hziy is a treatment option.

Lung cancer is the leading cause of cancer mortality worldwide, accounting for about 2.2 million new cases and 1.8 million deaths worldwide in 2020.

Globally, lung cancer is the leading cause of cancer death for men.

For women, it is the second leading cause of cancer death, following only breast cancer.

In the United States, it is expected to account for approximately 12% of all new cancer cases.

It is estimated that 125,000 deaths from this cancer will occur in the United States in 2024.

NSCLC is more prevalent than small cell lung cancer, constituting approximately 85% of all lung cancer diagnoses.

The 5-year survival rates depend upon the stage of the disease.

NSCLC that is diagnosed at an early stage, typically when the cancer is confined to the lung, has a 5-year survival rate of approximately 65%.

Regional NSCLC, or disease that has spread to nearby lymph nodes or tissues but has not yet metastasized to distant organs, has a 5‑year survival rate of approximately 40%.

Metastatic NSCLC is the most advanced stage of NSCLC where the cancer has spread to distant organs.

The 5-year survival rate for metastatic NSCLC is generally much lower, often less than 10%.

Although there are multiple treatments, including surgery, radiation and approved therapies including chemotherapy, immunotherapy and targeted drug therapy, we believe there remains a tremendous need for better therapies to improve survival.

Nonclinical Data

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Additionally, in a nonclinical xenograft tumor model, LYL797, combining c-Jun overexpression and Epi‑R, demonstrated prolonged survival in a xenograft NSCLC animal model (Figure 6).

During the past year, we have presented these and other nonclinical findings at scientific and medical conferences, including in April, at the American Association of Cancer Research Annual Meeting.

Our scientific co-founder, Stanley Riddell, M.D., first tested the hypothesis that overexpression of c-Jun could improve T‑cell function in a rigorous solid tumor model of NSCLC (Figure 4).

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Taken together, these nonclinical data characterize LYL797 and demonstrate that ROR1-targeted CAR T cells reprogrammed with c-Jun and Epi-R can overcome barriers of T-cell exhaustion and lack of durable stemness.

LYL797 prolongs survival in NSCLC (H1975) xenograft model.

LYL797 reduces tumor burden and prolongs survival in NSCLC (H1975) xenograft model.

A novel epigenetically reprogrammed TIL product candidate designed for differentiated potency and durability targeting multiple solid tumor indications.

We are applying our epigenetic reprogramming technology, Epi‑R, to develop LYL845, which is expected to be an intravenously‑administered autologous TIL therapy for multiple solid tumors.

Our Epi‑R protocol comprises proprietary media, optimized cytokine compositions and well-defined cell activation and expansion protocols used during our manufacturing process.

Our Epi‑R manufacturing protocol comprises proprietary media, optimized cytokine compositions and well-defined cell activation and expansion protocols used during our manufacturing process.

TIL have previously shown clinical benefit in patients with advanced melanoma and other solid tumors with high mutational burden.

Published data from third-party TIL trials show that treating metastatic melanoma patients with TIL can result in complete and durable responses.

Response rates to TIL therapy in patients with other advanced solid tumors such as lung, colorectal and breast are much lower than that observed in advanced melanoma.

Response rates to TIL therapy in patients with other advanced solid tumors such as lung, colorectal and breast have been much lower than those observed in advanced melanoma.

Broad TIL efficacy has been limited by poor enrichment of tumor-reactive T cells and the poor quality and limited growth potential of expanded T cells.

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LYL845 incorporates our Epi‑R technology that has shown promising improvements in enhancing T-cell potency, antitumor activity and increased polyclonality of TIL in nonclinical experiments.

We recently received ODD for LYL845 as a potential novel treatment for patients with advanced melanoma.

Phase 1 Clinical Trial

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Evaluation of T-cell expansion, phenotype, clonal diversity and persistence will also be assessed.

Patients will be monitored for CRS and auto-immunity.

We plan to share initial data from the trial when we have a meaningful number of patients and an indication of clinical effect, which we expect to occur in 2024.

Patients will be monitored for CRS.

We plan to share initial clinical and translation data from the trial in the second half of 2024, when we expect to have a meaningful number of patients that can provide an early indication of clinical effect.

Target Indications

We are initially developing LYL845 for advanced melanoma, NSCLC and CRC.

Based on our success with those, we plan to include patients with other solid tumors, potentially including head and neck, cervical, breast and pancreatic cancer.

Although patients with these cancers may benefit initially from radiation therapy, chemotherapy, surgery, and more advanced alternatives such as checkpoint therapies, immunotherapies or targeted therapies, most patients with these types of cancers eventually relapse.

Based on our success with those indications, we plan to include patients with other solid tumors, potentially including head and neck, cervical, breast and pancreatic cancer.

Although patients with these cancers may benefit initially from radiation therapy, chemotherapy,

surgery, and more advanced alternatives such as checkpoint therapies, immunotherapies or targeted therapies, most patients with these types of cancers eventually relapse.

After becoming resistant to initial lines of therapy, patients are limited to palliative care, experimental therapies in clinical trials or chemotherapy regimens that are often highly toxic and largely ineffective.

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It is estimated there are over 100,000 new cases of melanoma diagnosed in the United States per year.

Melanoma arises due to genetic mutations in melanocytes, the pigment producing cells, which can be found in the skin, eye, inner ear and leptomeninges, and represents

the most aggressive and the deadliest form of skin cancer.

Melanoma arises due to genetic mutations in melanocytes, the pigment producing cells, which can be found in the skin, eye, inner ear and leptomeninges, and represents the most aggressive and the deadliest form of skin cancer.

Although melanoma accounts for only ~1% of all dermatologic cancers, it is responsible for ~80% of deaths from skin cancer.

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A description of NSCLC can be found above in the section describing the Phase 1 clinical trial for LYL797.

Colorectal cancer is the third leading cause of cancer-related deaths in both men and women in the United States.

CRC is the second leading cause of cancer-related deaths in the United States.

Most colorectal cancers are a type of tumor called adenocarcinoma, which is cancer of the cells that line the inside tissue of the colon and rectum.

In 2022, it was estimated that there were approximately 150,000 new cases of CRC in the United States with an estimated cause of approximately 53,000 deaths each year.

For patients diagnosed with metastatic disease, the 5-year survival rate is 14%.

In 2023, an estimated 150,000 people were diagnosed with CRC and approximately 53,000 will die from the disease.

For patients diagnosed with metastatic disease, the 5-year survival rate is approximately 14%.

Approximately 25% of patients have metastatic disease at diagnosis, and about 50% of patients with colorectal cancer will eventually develop metastases.

Over 35% of the patients with a new diagnosis of CRC will die within five years.

Currently available treatments include surgery, radiation therapy, chemotherapy, immunotherapy and targeted therapy (vascular endothelial growth factor, epidermal growth factor receptor, BRAF, NTRK, HER2 and kinase inhibitors).

Nonclinical Data

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These studies have demonstrated that TIL generated with our Epi‑R technology have phenotypes (stemness markers and cytotoxic T cells) associated with clinical responses in published literature and preserved polyclonal tumor reactive cells.

In addition, using Epi‑R allows us to expand TIL in not only immunologically hot tumors such as melanoma, but also immunologically colder tumors such as NSCLC and CRC.

During the past year, we have presented these findings at scientific and medical conferences.

These presentations are summarized below:

In November, at the 2022 Annual Meeting of the Society for Immunotherapy of Cancer (SITC), we presented data that demonstrated the ability of our Epi‑R technology to successfully and reliably expand TIL across three tumor types as compared to the standard (control) process.

In this study, expanding TIL with Epi‑R technology resulted in a 100% success rate (at least 10B cells) vs.

58% with control, including across twelve more difficult-to-expand tumor samples collected from checkpoint inhibitor refractory melanoma, NSCLC and CRC patients (Figure 7).

Further, in this study Epi‑R technology yielded a product (LYL845) with qualities that have been linked with antitumor functionality and improved outcomes in previous TIL clinical trials, including a greater proportion of CD8+ cytotoxic T cells and enrichment of T cells with stem-like profiles (Figure 8), and better metabolic fitness compared to control TIL.

Our Epi‑R protocol more consistently successfully expands TIL from immunologically cold solid tumors vs.

standard expansion processes.

In addition, manufacturing with Epi‑R allows us to expand TIL from not only immunologically hot tumors such as melanoma, but also immunologically colder tumors such as NSCLC and CRC.

In November 2022, at the Annual Meeting of the Society for Immunotherapy of Cancer (SITC), we presented data that demonstrated the ability of our Epi‑R technology to yield a product (LYL845) with qualities that have been linked with antitumor functionality and improved outcomes in previous TIL clinical trials, including a greater proportion of CD8+ cytotoxic T cells and enrichment of T cells with stem-like profiles (Figure 7), and better metabolic fitness compared to control TIL.

LYL845 is enriched for cells with characteristics associated with improved clinical outcomes (Krishna et al., Science, Dec.

We also presented at the 2022 meeting of SITC comprehensive analyses of transcriptomic profiles, polyclonality and prediction of tumor reactive T cell clones in our LYL845 product candidate.

In particular, our bioinformatic analyses demonstrated that LYL845 products expanded using Epi‑R technology at clinical scale were highly polyclonal and preserved approximately 94% of the predicted tumor reactive clones (Figure 9).

In particular, our bioinformatic analyses demonstrated that LYL845 products expanded using Epi‑R manufacturing protocol at clinical scale were highly polyclonal and preserved approximately 94% of the predicted tumor reactive clones (Figure 8).

Further, preserved putative tumor reactive clones in LYL845 products have increased stemness and reduced exhaustion-associated genes compared to TIL products derived from the standard process.

Moreover, the tumor-specific reactivity of LYL845 was confirmed by demonstrating dose-dependent antitumor cytolytic activity and cytokine secretion in tumor cell specific co-culture assays.

The tumor-specific reactivity of LYL845 was confirmed by demonstrating dose-dependent antitumor cytolytic activity and cytokine secretion in tumor cell specific co-culture assays.

LYL845 TIL preserve ~94% of predicted tumor reactive clones to enable targeting of heterogeneous solid tumors.

We have also shown in nonclinical studies with TIL products generated from tissue from five donors using either the LYL845 process or standard process that TIL products generated with our LYL845 Epi-R manufacturing protocol express more genes associated with stem-like phenotypes such as TCF-7 and SELL versus TIL products generated with the standard process which express more genes associated with exhaustion such as TIGIT and PD-1 (Figure 9).

Transcriptomic data of TIL products generated from five donor tissues using either standard or LYL845 Epi-R manufacturing protocol (four melanoma and one NSCLC) demonstrate that LYL845 generated with Epi-R are enriched for T cells with stem-like quality.

An innovative ROR1 CAR T-cell product candidate designed for enhanced cytotoxicity.

A key pillar of our strategy is to continually innovate to develop and advance novel, breakthrough technologies that address key barriers to successful cell therapy for solid tumors.

We have advanced a new genetic reprogramming

technology, NR4A3 knockout, and a new epigenetic reprogramming technology, Stim‑R, that are being applied in our new CAR T-cell product candidate, LYL119.

A key pillar of our strategy is to continually innovate to develop and advance novel, breakthrough technologies that address key barriers to effective cell therapy for solid tumors.

We have advanced a new genetic reprogramming technology, NR4A3 knockout, and a new epigenetic reprogramming technology, Stim‑R, that are being applied in our new CAR T-cell product candidate, LYL119 (Figure 10).

These technologies are stackable and complementary to c-Jun and Epi‑R and are designed to further improve the antitumor potency and durability of T cells.

ROR1 CAR T cell + c-Jun + NR4A3 KO + Epi-R + Stim-R.

LYL119 is being advanced with the goal of potentially creating even greater benefit for patients with ROR1-positive solid tumors.

An IND application is expected to be submitted for LYL119 in the first half of 2024.

c-Jun is a transcription factor in the activator protein 1 (AP-1) pathway, which plays a key role in driving T‑cell function.

NR4A family transcription factors contribute to T-cell exhaustion by restraining AP‑1 activity.

Reducing NR4A

expression enhances T-cell function associated with increased expression of AP‑1‑regulated genes.

Our NR4A3 knockout reprogramming technology furthers the hypothesis that reprogramming of the AP-1 transcription factor pathway in T cells may delay exhaustion and improve anti-tumor function.

Our Stim-R technology is a customizable, degradable, synthetic cell biomimetic composed of lipid-coated silica micro-rods that mimic the physiological cell-like presentation of signals to control T-cell properties.

Stim-R allows for rapid tuning of T-cell signal presentation to generate T-cell products with desirable phenotypic and functional properties.

We have optimized a Stim-R formulation to control T-cell stimulation and expansion to generate T-cell products with an enhanced activation state, resulting in improved potency compared with conventional T-cell activating reagents.

In nonclinical models, we have shown that Stim-R CAR T cells demonstrate prolonged persistence and enhanced cytotoxicity in response to serial antigen stimulation.

Nonclinical Data

In November at the 2022 meeting of SITC, we presented nonclinical data demonstrating that our NR4A3 knockout and Stim‑R technologies further enhance survival in vivo in a murine H1975 xenograft tumor model at a reduced CAR T‑cell dose.

We presented data demonstrating that the combination of our two genetic reprogramming technologies, NR4A3 gene knockout and c-Jun overexpression, enhances the functional activity of ROR1 CAR T cells as shown by higher levels of cytokine production, increased CAR T‑cell persistence and reduced surface expression of inhibitory receptors after repetitive antigen stimulation, as well as significant improvement in tumor control in vivo (Figure 10).

In a separate abstract, we also presented nonclinical data demonstrating that Stim‑R generates potent CAR T‑cell products with increased cell proliferation and persistence in vivo , as well as improved tumor control (Figure 11).

Combining c-Jun overexpression with NR4A3 knockout enables T cells to further resist exhaustion and prolongs survival.

Stim‑R ROR1 CAR T cells demonstrate improved potency and prolongs survival.

In November at the 2023 meeting of SITC, we presented nonclinical data demonstrating that LYL119 enhances survival in vivo in a murine H1975 xenograft tumor model, even at a very low CAR T‑cell dose of 100,000 CAR T cells (Figure 11).

Additionally, both in vitro and in vivo nonclinical data demonstrated that the combination of all four of our genetic and epigenetic reprogramming technologies resulted in superior cytotoxicity, improved proliferation and sustained cytokine production upon repeated antigen stimulation compared to various controls lacking one or more of the reprogramming technologies.

LYL119 eliminated H1975 (NSCLC) xenograft tumors and improved survival, even at low doses.

Our Manufacturing Capabilities

We believe it is critically important to own, control and continuously monitor all aspects of the cell therapy manufacturing process to mitigate risks, including challenges in managing production, supply chain, patient specimen chain of custody and quality control.

We made a strategic decision to invest in building our own manufacturing facility to control our supply chain, maximize efficiencies in cell product production time, optimize cost and quality, and have the ability to rapidly incorporate disruptive advancements and new innovations.

Controlling manufacturing also enables us to protect proprietary aspects of our reprogramming technologies.

We believe it is critically important to control and continuously monitor all aspects of the cell therapy manufacturing process to mitigate risks, including challenges in managing production, supply chain, patient specimen chain of custody and quality control.

As we developed our technologies, we made a strategic decision to invest in building our own manufacturing facility to control our supply chain, maximize efficiencies in cell product production time, optimize cost and quality, protect proprietary aspects of our reprogramming technologies and have the ability to rapidly incorporate advancements and new innovations.

We view our manufacturing team and capabilities as a significant competitive advantage.

Our LyFE Manufacturing Center™ located in Bothell, Washington is approximately 73,000 square feet and is comprised of manufacturing suites, laboratories and offices.

LyFE is commissioned and designed to be in compliance with U.S.

and European Union cGMP standards and has a flexible and modular design enabling CAR T cell, TIL, TCR T cell and GMP viral vector production to control and de-risk the manufacturing sequence and timing of the major components of our supply chain.

Owning our own facility encourages seamless collaboration across research, process development and manufacturing for high-quality reproducibility at manufacturing scale.

We are currently producing clinical supply for our Phase 1 trials at LyFE.

Our LyFE Manufacturing Center was commissioned and designed to be in compliance with U.S.

and European Union current Good Manufacturing Practices (cGMP) standards and has a flexible and modular design enabling CAR T-cell, TIL, TCR T-cell and cGMP viral vector production to control and de-risk the manufacturing sequence and timing of the major components of our supply chain.

Owning our own facility has enabled seamless collaboration across research, process development and manufacturing for high-quality reproducibility at manufacturing scale.

We are currently producing clinical supply for our Phase 1 trials at our LyFE Manufacturing Center.

At full staffing and capacity, we expect to be able to manufacture approximately 500 infusions per year depending on product candidate mix.

At this time, we believe this capacity is sufficient to support our pipeline programs into pivotal trials and, if approved, early commercialization.

While we believe this capacity is sufficient to support our pipeline programs into pivotal trials and, if approved, early commercialization, we are also advancing multiple strategic alternatives to innovate and scale manufacturing in the future.

We are evaluating third-party manufacturing options, such as the recently initiated CAR T-cell proof-of-concept collaboration with Cellares, as part of an overall CAR T‑cell manufacturing strategy to build scale and reduce cost.

For TIL, we are advancing our Epi-R P2 manufacturing protocol to shorten delivery time of TIL product to patients.

In November 2023 at SITC, we presented nonclinical data demonstrating that our Epi-R P2 TIL manufacturing process reduces the TIL culture duration to less than three weeks (from the standard time of four to six weeks) while maintaining the desired yield, stemness phenotype and retention of tumor reactive clones.

The pharmaceutical industry is highly competitive and dynamic, owing to rapidly advancing technologies.

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Some of these companies may have substantially greater financial and other resources than we have, such as larger research and development staff and well-established marketing and sales forces, or may operate in jurisdictions where lower standards of evidence are required to bring products to market.

T‑cell therapies for the treatment of solid tumors are being developed by a number of companies, including but not limited to Adaptimmune Therapeutics plc, ArsenalBio, AstraZeneca plc, Bristol Myers Squibb Co.,

Gilead Sciences Inc., Immunocore Holdings plc, Iovance Biotherapeutics Inc., the Janssen Pharmaceutical Companies of Johnson & Johnson, Nanjing Legend Biotech, Novartis AG, Nurix Therapeutics Inc., Precigen Inc.

and Turnstone Biologics.

We are also aware that other companies are developing therapies in modalities such as monoclonal antibodies and antibody drug conjugates for cancers that express ROR1, such as Merck & Co., Inc.

T‑cell therapies for the treatment of solid tumors are being developed by a number of companies, including but not limited to Arcellx, Inc., AstraZeneca plc, Autolus Therapeutics plc, Bristol Myers Squibb Co., Gilead Sciences Inc., Immunocore Holdings plc, Iovance Biotherapeutics Inc., the Janssen Pharmaceutical Companies of Johnson & Johnson, Nanjing Legend Biotech and Novartis AG.

On February 16, 2024, the FDA approved the first TIL therapy, Iovance’s lifileucel, for the treatment of unresectable or metastatic melanoma.

We are also aware that other companies are developing therapies in modalities such as monoclonal antibodies and antibody drug conjugates for cancers that express ROR1, such as Boehringer Ingelheim International GmbH, CStone Pharmaceuticals and Merck & Co., Inc.

Among companies developing cell therapies for solid tumors, we believe we are substantially differentiated by our reprogramming technologies, knowledge, experience, scientific personnel and robust intellectual property portfolio.

We believe the key competitive factors affecting the success of any of our product candidates will include efficacy, safety, accessibility, price and cost of manufacturing.

We believe there are many factors affecting the success of any of our product candidates, including efficacy, safety, accessibility, price and cost of manufacturing.

License, Collaboration and Success Payment Agreements

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We also entered into a letter agreement with Fred Hutch in December 2018 under which we agreed to make success payments to Fred Hutch, payable in cash or publicly tradable equity at our discretion.

These success payments are based on increases in the per share fair market value of our common stock (as all our Series A convertible preferred stock were converted into an equivalent number of shares of our common stock upon the closing of our initial public offering) during the success payment period, which is a period of time that begins on the date of our letter agreement with Fred Hutch and ends on the earlier of:

(a) the ninth anniversary of that date and (b) the earlier of (i) the date on which we sell, lease, transfer or exclusively license all or substantially all of our assets to another company and (ii) the date on which we merge or consolidate with or into another entity (other than a merger in which our pre-merger stockholders own a majority of the shares of the surviving entity).

These success payments are based on increases in the per share fair market value of our common stock (as all our Series A convertible preferred stock were converted into an equivalent number of shares of our common stock upon the closing of our initial public offering in 2021) during the success payment period, which is a period of time that begins on the date of our letter agreement with Fred Hutch and ends on the earlier of:

(a) the ninth anniversary of that date and (b) the earlier of (i) the date on which we

sell, lease, transfer or exclusively license all or substantially all of our assets to another company and (ii) the date on which we merge or consolidate with or into another entity (other than a merger in which our pre-merger stockholders own a majority of the shares of the surviving entity).

Success payments will be owed (if applicable) after measurement of the value of our common stock in connection with the following valuation dates during the success payment period:

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We also entered into a letter agreement with Stanford in October 2020, under which we agreed to make success payments to Stanford, payable in cash or publicly tradable equity at our discretion.

during the success payment period, which is a period of time that begins on the date of our letter agreement with Stanford and ends on the earlier of:

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GSK Collaboration and License Agreement

In 2019, we entered into a collaboration and license agreement with GlaxoSmithKline (GSK) that became effective on July 7, 2019 and was amended in June 2020 and December 2021 (GSK Agreement) for potential T‑cell therapies that apply our platform technologies and cell therapy innovations with T‑cell receptors (TCRs) or chimeric antigen receptors (CARs) under distinct collaboration programs.

The GSK Agreement defined two initial collaboration targets, CD19 and NY-ESO-1, and allowed GSK to nominate seven additional targets through July 2024.

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For the LYL331 program (NY-ESO-1 TCR with c-Jun), GSK exercised the License Option in April 2021 and assumed sole responsibility for future development and commercialization of the program at its own cost and expense.

No IND for LYL331 was submitted to the U.S.

Food and Drug Administration (FDA).

No IND for LYL331 was submitted to the FDA.

For the LYL132 program (NY-ESO-1 TCR with Epi‑R), we filed an IND application, which cleared in January 2022, though no patients were treated.

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Our policy is to seek to protect our proprietary position by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States related to our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation of our business.

We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of cell and gene therapy.

We additionally plan to rely on data exclusivity, market exclusivity and patent term extensions when available, and if appropriate, may seek and rely on regulatory protection afforded through orphan drug designations.

We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation and in-licensing opportunities to develop, strengthen and maintain our

proprietary position in the field of cell and gene therapy.

We additionally plan to rely on data exclusivity, market exclusivity and patent term extensions, when available, and, as appropriate, have sought and in the future may seek again and rely on regulatory protection afforded through ODDs.

Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions and improvements;

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Notwithstanding these efforts, we cannot be sure that any patents will be granted with respect to any patent application we have licensed or filed or may license or file in the future, and we cannot be sure that any patents we have licensed or patents that may be licensed or granted to us in the future will not be challenged, invalidated or circumvented or that such patents will be commercially useful in protecting our technologies.

As of February 1, 2023, our in-licensed and owned patent portfolio consists of over 40 issued patents and over 135 pending patent applications that we have licensed and over 100 pending patent applications that we own.

Our portfolio

covers various aspects of our T‑cell reprogramming technologies, c-Jun, NR4A3, Epi‑R and Stim‑R, as well as our product candidates.

As of December 31, 2023, our patent portfolio consists of over 40 issued patents and over 150 pending patent applications that we either own or have licensed.

Our portfolio covers various aspects of our T‑cell reprogramming technologies, c-Jun, NR4A3, Epi‑R and Stim‑R, as well as our product candidates.

The patents and patent applications in our portfolio are held primarily in the United States, Europe, Canada, Japan and Australia.

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The actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

As of February 1, 2023, our registered trademark portfolio currently contains over 165 registered trademarks and pending trademark applications, consisting of approximately 9 pending trademark applications in the United States, over 80 foreign pending trademark applications in Argentina, Brazil, Canada, China, Hong Kong, India, Israel, Mexico, Oman, South Korea, Russia, Singapore, South Africa, the United Arab Emirates and Venezuela;

and over 75 trademark registrations in the following countries through national filings:

Australia, Brazil, China, Colombia, Costa Rica, European Union, Hong Kong, India, Israel, Japan, Mexico, New Zealand, Oman, Russia, South Korea, Switzerland, the United Arab Emirates, the United Kingdom and Venezuela.

As of December 31, 2023, our registered trademark portfolio contains over 135 registered trademarks and pending trademark applications, consisting of approximately one trademark registration and five pending trademark applications in the United States, and approximately 120 foreign trademark registrations and approximately 11 foreign pending trademark applications.

We may also rely, in some circumstances, on trade secrets to protect our technology.

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We seek to protect our technology and product candidates, in part, by entering into confidentiality agreements with those who have access to our confidential information, including our employees, contractors, consultants, collaborators and advisors.

We also seek to preserve the integrity and confidentiality of our proprietary technology and processes by maintaining physical security of our premises and physical and electronic security of our information technology systems.

We also seek to preserve the integrity and confidentiality of our proprietary technology and

processes by maintaining physical security of our premises and physical and electronic security of our information technology systems.

Although we have confidence in these individuals, organizations and systems, agreements or security measures may be breached and we may not have adequate remedies for any breach.

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Given our stage of development, we have not yet established a commercial organization or distribution capabilities.

We intend to either build a commercial infrastructure to support sales of any approved products or outsource this function to third parties.

We intend to either build a commercial infrastructure to support sales of any approved products or outsource some or all of this function to third parties.

We intend to evaluate opportunities to work with partners that enhance our capabilities with respect to the development and commercialization of LYL797, LYL845, LYL119 and any other product candidates we may develop.

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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.

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

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

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

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• preparation of and submission to the FDA of a Biologics License Application (BLA), after completion of all pivotal clinical trials;

• satisfactory completion of an FDA Advisory Committee review, if applicable;

• a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency and, if applicable, to assess compliance with the FDA’s current Good Tissue Practices (cGTPs) requirements for the use of human cellular and tissue products, and of selected clinical investigation sites to assess compliance with GCPs;

• satisfactory completion of an FDA Advisory Committee review, if applicable;

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

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In addition to the submission of an IND to the FDA before initiation of a clinical trial in the United States, certain human clinical trials involving recombinant or synthetic nucleic acid molecules are subject to oversight of an Institutional Biosafety Committee (IBC) as set forth in the National Institutes of Health (NIH) Guidelines for Research Involving Recombinant DNA Molecules (the NIH Guidelines).

Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an IBC, a local institutional committee that reviews and oversees

research utilizing recombinant or synthetic nucleic acid molecules at that institution.

Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution.

The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may result in some delay before initiation of a clinical trial.

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

Some studies also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a Data Safety Monitoring Committee, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

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

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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.

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.

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The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.

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

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

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

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

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

In issuing the CRL, the FDA may recommend actions that the applicant might take to place the BLA in condition for

approval, including requests for additional information or clarification.

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

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

The sponsor of a new biologic may request that the FDA designate the biologic as a

fast track product at any time during the clinical development of the product.

The sponsor of a new biologic may request that the FDA designate the biologic as a fast track product at any time during the clinical development of the product.

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

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

Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

Products receiving accelerated approval may be subject to expedited

withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

In addition, 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.

In 2017, the FDA established a new regenerative medicine advanced therapy (RMAT) designation, which is intended to facilitate an efficient development program for, and expedite review of, any drug or biologic that meets the following criteria:

Regenerative medicine advanced therapy (RMAT) designation is intended to facilitate an efficient development program for, and expedite review of, any drug or biologic that meets the following criteria:

(i) the drug or biologic qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions;

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

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

Fast Track Designation, Breakthrough Therapy Designations, Priority Review, Accelerated Approval and RMAT designation do not change the standards for approval but may expedite the development or approval process.

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

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Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic.

Orphan drug designation must be requested before submitting a BLA.

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

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

In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

In addition, if a product that has orphan drug designation subsequently receives the first FDA approval for a particular drug or biologic for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan Drug designation (ODD) must be requested before submitting a BLA.

After the FDA grants ODD, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

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

In the United States, ODD entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers.

In addition, if a product that has ODD subsequently receives the first FDA approval for a particular drug or biologic for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

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

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Biologics are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution and advertising and promotion of the product.

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

After approval, most changes to the approved product, such as

adding new indications or other labeling claims, are subject to prior FDA review and approval.

There also are continuing, annual program fees for any marketed products.

Biologic manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and other laws.

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

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

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

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

The BPCIA is complex and continues to be interpreted

and implemented by the FDA.

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

In addition, government proposals have sought to reduce the 12-year reference product exclusivity period.

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Government Regulation Outside of the United States

In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products.

In addition to regulations in the United States, we may be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products.

Because biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.

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Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

In the European Union, for example, a clinical trial application (CTA) must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively.

Once the CTA is approved in accordance with the applicable requirements, clinical trial development may proceed.

The requirements and process governing the conduct of clinical trials are to a significant extent harmonized at the European Union-level but could vary from country to country.

In all cases, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

The way clinical trials are conducted in the European Union underwent a major change when the Clinical Trial Regulation (Regulation (EU) 536/2014) came into application in January 2022.

The Regulation harmonizes the assessment and supervision processes for clinical trials throughout the European Union via a Clinical Trials Information System, which will contain a centralized European Union portal and database.

To obtain regulatory approval of an investigational biological product under European Union regulatory systems, we must submit a marketing authorization application.

The application used to file the BLA in the United States is similar to that required in the European Union, with the exception of, among other things, country-specific document requirements.

Innovative products that target an unmet medical need may be eligible for a number of expedited development and review programs in the European Union, such as the PRIME scheme, which provides incentives similar to the breakthrough therapy designation in the United States.

Such products are generally eligible for accelerated assessment and may also benefit from different types of fast track approvals, such as a conditional marketing authorization or a marketing authorization under exceptional circumstances granted on the basis of less comprehensive clinical data than normally required (respectively in the likelihood that the sponsor will provide such data within an agreed timeframe or when comprehensive data cannot be obtained even after authorization).

The European Union also provides opportunities for market exclusivity.

For example, in the European Union, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity.

If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic or biosimilar application.

During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity.

However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity.

Products receiving orphan designation in the European Union can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market.

An orphan product can also obtain an additional two years of market exclusivity in the European Union for pediatric trials.

No extension to any supplementary protection certificate can be granted on the basis of pediatric trials for orphan indications.

The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States.

Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

(2) either (a) such condition affects no more than five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.

Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing

authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.

The application for orphan drug designation must be submitted before the application for marketing authorization.

The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

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

The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity.

Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

• The second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

• The applicant consents to a second orphan medicinal product application;

• The applicant cannot supply enough orphan medicinal product.

The medicinal products we are developing, which are based on genes, cells or tissues, may be considered advanced therapy medicinal products (ATMPs) in the European Union if they meet the scientific criteria for defining an ATMP.

The principles of the aforementioned medicines legislation apply to ATMPs.

All ATMPs must obtain a marketing authorization from the EMA and are regulated through the centralized authorization procedure.

Regulation (EC) No 1394/2007 (the ATMP Regulation) provides specific incentives to accelerate the development of such products, including fee reductions for scientific advice, an ATMP classification procedure (for all developers) and a certification procedure for quality and nonclinical data (for SMEs only).

If tissues and cells are being used as starting materials in a medicinal product we may also need to comply with the requirements of Directive 2004/23/EC (the European Tissues and Cells Directive) covering standards for donation, procurement and testing, processing, preservation, storage and distribution of human tissues and cells, as well as its technical implementing directives;

and Directive 2015/566, as regards the procedures for verifying the equivalent standards of quality and safety of imported tissues and cells.

In the European Union, early access mechanisms for innovative medicines (such as compassionate use programs and named patient supplies), pricing and reimbursement and promotion and advertising are subject to national regulations and oversight by national competent authorities and therefore significantly vary from country to country.

Sanctions for non-compliance with the aforementioned requirements, which may include administrative and criminal penalties, are generally determined and enforced at national level.

However, under the European Union financial penalties regime, the EMA can investigate and report on alleged breaches of the European Union pharmaceutical rules by holders of a marketing authorization for centrally authorized medicinal products and the European Commission could adopt decisions imposing significant financial penalties on infringing marketing authorization holders.

The United Kingdom left the European Union on January 31, 2020 (Brexit).

Following the Transition Period which ended on December 31, 2020, Brexit could materially impact the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the United Kingdom in the coming years.

For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, clinical trials must be conducted in accordance with GCP, applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Applications for marketing approval in the EU and other third countries must also follow detailed laws and procedures that vary from those in the US.

Moreover, in countries outside of the US, including the EU and countries in Eastern Europe, Latin America or Asia, the requirements governing product licensing, pricing and reimbursement vary from country to country.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Other Healthcare Laws

constrain the financial arrangements and relationships through which we research, sell, market and distribute any products for which we obtain marketing approval.

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

Such laws include, without limitation, federal and state anti-kickback, fraud and abuse, false claims, data privacy and security, price reporting and physician and other health care provider transparency laws and regulations.

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and imprisonment.

If our operations are found to be in violation of any of such laws or any other governmental

regulations that apply, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and imprisonment.

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 under Medicare, Medicaid or other federal healthcare programs.

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

maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and its implementing regulations, impose requirements on covered entities, including certain healthcare providers, health plans, healthcare clearinghouses and their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information.

Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.

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 the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

attorneys’ fees and costs associated with pursuing federal civil actions.

In addition, state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

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Even if a third-party payor covers a particular product or procedure, the resulting reimbursement payment rates may not be adequate.

Additionally, any companion diagnostic tests developed for use with a product are required to obtain coverage and reimbursement for those tests separate and apart from the coverage and reimbursement sought for such product.

These third-party payors are increasingly reducing coverage and reimbursement for medical products, drugs and services.

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For example, the ACA:

• increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price;

increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1%;

required collection of rebates for drugs paid by Medicaid-managed care organizations;

• required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

• imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs;

• expanded the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

• created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.

imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs;

implemented 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;

expanded eligibility criteria for Medicaid programs;

created a Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research;

and established a Center for Medicare and Medicaid Innovation at CMS (CMMI) to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

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On August 2, 2011, the Budget Control Act of 2011, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began in 2013 and will remain in effect through 2032.

However, COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2022.

Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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In addition, the IRA, among other things, (1) directs HHS to negotiate the price of certain single-source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.

These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.

These provisions take effect progressively starting in fiscal year 2023.

On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.

It is currently unclear how the IRA will be implemented, but it is likely to have a significant impact on the pharmaceutical industry.

Further, the Biden administration released an additional executive order on October 14, 2022, directing HHS to submit a report within ninety (90) days on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.

It is unclear whether this executive order or similar policy initiatives will be implemented in the future.

Further in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMMI, which will be evaluated on their ability to lower the cost of drugs, promote accessibility and improve quality of care.

It is unclear whether the models will be utilized in any health reform measures in the future.

Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act of 1980 (Bayh-Dole Act).

On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights that for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights.

While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological 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.

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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 (if approved).

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 (if approved).

In addition, it is possible that there will be further legislation or regulation that could harm our business, financial condition and results of operations.

For example, it is possible that additional governmental action is taken in response to address the COVID-19 pandemic.

Other Privacy and Security Laws

We may become subject to privacy laws in the jurisdictions in which we are established or in which we sell or market our products or run clinical trials.

For example, in Europe we may be subject to Regulation (EU) 2016/679, the General Data Protection Regulation (GDPR) in relation to our collection, control, processing and other use of personal data (i.e., data relating to an identifiable living individual).

The GDPR is directly applicable in each European Union Member State, however, it provides that European Union Member States may introduce further conditions, including limitations that could limit our ability to collect, use and share personal data (including health and medical information), or could cause our compliance costs to increase, ultimately having an adverse impact on our business.

The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.

It also requires data controllers to be transparent and disclose to data subjects (in a concise, intelligible and easily accessible form) how their personal information is to be used, imposes limitations on retention of personal data;

defines pseudonymized (i.e., key-coded) data;

introduces mandatory data breach notification requirements;

and sets higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities.

We are subject to the supervision of local data protection authorities in those European Union jurisdictions where we are established or otherwise subject to the GDPR.

Fines for certain breaches of the GDPR are significant:

up to the greater of €20 million or 4% of total global annual turnover.

Further, following the withdrawal of the United Kingdom from the European Union on January 31, 2020, pursuant to the transitional arrangements agreed between the United Kingdom and the European Union, we will have to comply with the GDPR and separately the GDPR as implemented in the United Kingdom, each regime having the ability to fine up to the greater of €20 million/ £17 million or 4% of global turnover.

The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, including how data transfers between European Union member states and the United Kingdom will be treated.

These changes may lead to additional compliance costs and could increase our overall risk.

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

In addition, the GDPR includes restrictions on cross-border data transfers.

Certain aspects of cross-border data transfers under the GDPR are uncertain as the result of legal proceedings in the European Union, including a recent decision by the Court of Justice for the European Union that invalidated the EU-U.S.

Privacy Shield and, to some extent, called into question the efficacy and legality of using standard contract clauses.

This may increase the complexity of transferring personal data across borders.

The GDPR will increase our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries.

We are also subject to European Union rules with respect to cross-border transfers of personal data out of the European Union and European Economic Area (EEA).

Recent legal developments in the European Union have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States.

On July 16, 2020, the Court of Justice of the European Union (CJEU) invalidated the EU-US Privacy Shield Framework (Privacy Shield) under which personal data could be transferred from the EEA to US entities who had self-certified under the Privacy Shield scheme.

While the CJEU upheld the adequacy, subject to certain conditions, of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism), future regulatory guidance could result in changes to the use of standard contractual clauses.

As supervisory authorities issue further guidance on personal

data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.

Further, the vote in the United Kingdom in favor of exiting the European Union, referred to as Brexit, has created uncertainty with regard to data protection regulation in the United Kingdom.

Specifically, while the Data Protection Act of 2018, which “implements” and complements the GDPR achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, aspects of data protection in the United Kingdom, such as the transfer of data from the EEA to the United Kingdom, remain uncertain.

During the period of “transition” (i.e., until December 31, 2020), European Union law will continue to apply in the United Kingdom, including the GDPR, after which the GDPR will be converted into United Kingdom law.

Beginning in 2021, the United Kingdom will be a “third country” under the GDPR.

In addition, California enacted the California Consumer Privacy Act (CCPA), which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling certain personal data of consumers or households.

The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provide such consumers new ways to opt-out of certain sales or transfers of personal information, and provide consumers with additional causes of action.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.

This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

The CCPA became effective on January 1, 2020, and (i) allows enforcement by the California Attorney General, with fines set at $2,500 per violation (i.e., per person) or $7,500 per intentional violation and (ii) authorizes private lawsuits to recover statutory damages for certain data breaches.

In addition, laws in all 50 U.S.

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

State laws are changing rapidly and there is discussion in the U.S.

Congress of a new comprehensive federal data privacy law to which we would become subject if it is enacted.

The CCPA may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.

Further, the California Privacy Rights Act (the CPRA) recently passed in California.

The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.

The majority of the provisions went into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.

For example, it is possible that additional governmental action may be taken to address another health epidemic, as it did in response to the COVID-19 pandemic.

Other Data Privacy and Security Laws

In the ordinary course of our business, we may process or receive personal or sensitive data.

We are, or may become, subject to numerous data privacy and security obligations, including federal, state, local and foreign laws, regulations, guidance and industry standards related to data privacy and security in the jurisdictions in which we are established or in which we sell or market any approved products or run clinical trials.

Such obligations may include those from, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (CCPA), the California Privacy Rights Act (CPRA), the European Union’s General Data Protection Regulation 2016/679 (EU GDPR), the EU GDPR as it forms part of United Kingdom (UK) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (UK GDPR) and the ePrivacy Directive.

Several states within the United States have also enacted or proposed data privacy and security laws.

For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act.

Additionally, we are, or may become, subject to various U.S.

federal and state consumer protection laws, which require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data.

The CCPA, CPRA and EU GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance obligations and exposure for any noncompliance.

For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’ collecting, using and disclosing personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’ personal data processing activities, to delete the individual’s personal data and to opt out of certain personal data disclosures).

Also, the CCPA provides for civil penalties and a private right of action for data breaches that may include an award of statutory damages.

In addition, the CPRA expanded the CCPA by giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are subject to the CCPA’s private right of action and establishing a new California Privacy Protection Agency to implement and enforce the new law.

Foreign data privacy and security laws (including but not limited to the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.

As one example, the EU GDPR applies to any company established in the European Economic Area, which is comprised of the 27 Member States of the EU plus Norway, Iceland and Liechtenstein (collectively, the EEA) and to companies established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.

These obligations may include limiting personal data processing to only what is necessary for specified, explicit and legitimate purposes;

requiring a legal basis for personal data processing;

requiring the appointment of a data protection officer in certain circumstances;

increasing transparency obligations to data subjects;

requiring data protection impact assessments in certain circumstances;

limiting the collection and retention of personal data;

increasing rights for data subjects;

formalizing a heightened and codified standard of data subject consents;

requiring the implementation and maintenance of technical and organizational safeguards for personal data;

mandating notice of certain personal data breaches to the relevant supervisory authorities and affected individuals;

and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

See the section titled “Risks Related to Regulation and Legal Compliance” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations.

Foreign Corrupt Practices Act

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Employees and Human Capital Management

We are a clinical stage T‑cell reprogramming company dedicated to developing novel cell therapies to improve the lives of people with solid tumor cancers.

We strive to create an environment where everyone can do the best work of their lives, be themselves and thrive personally and professionally.

Our culture is grounded by innovative science and demands excellence.

Patients are waiting for better therapies, and it is this need that drives our sense of urgency to achieve our important mission.

We believe success comes when we and our employees align our core values with our mission to translate our ground-breaking science into medicines with the potential to transform patients’ lives.

We are a clinical stage T‑cell reprogramming company dedicated to developing novel cell therapies to improve the lives of people with malignant solid tumors.

We strive to create an environment where everyone can do their best work, be themselves and thrive personally and professionally.

Our culture is grounded by innovative science and a focus on patients with cancer who need better therapies.

Their need drives our sense of urgency to achieve our important mission.

We believe success comes when we align our core values with our mission to translate our ground-breaking science into therapies with the potential to transform patients’ lives.

Our core values are:

We focus and execute on the critical efforts that matter most.

We are bold and willing to think and act differently.

We seek to understand and communicate directly, transparently and honestly.

We value evidence over opinion and focus and execute on the critical efforts that matter most.

We challenge the status quo – we are bold and willing to think and act differently.

We always assume positive intent and seek to understand and communicate directly, transparently and honestly.

• Collaboration :

We work across teams to solve our most challenging problems to continually improve and learn.

We work together to create value, working across teams to solve our most challenging problems to continually improve and learn.

Our Employees

We view our employees as valuable assets in serving our mission.

Our employees are one of our most valuable strengths;

our people drive our ability to achieve our mission.

We compete in the highly competitive biotechnology industry, and attracting, retaining and developing a diverse group of talented employees is crucial to our strategy and our ability to compete effectively.

We need to grow the size of our organization in order to support our current research, product development and manufacturing efforts and our future plans for commercializing our product candidates, if approved.

This growth is critical to our success.

There currently is a shortage of skilled individuals with substantial experience discovering, developing and manufacturing cell therapy medicines, which is likely to continue.

We also operate in areas such as data capture and analytics, machine learning and artificial intelligence.

Our organization is designed to support our current research, product development and manufacturing efforts and is ready to scale to meet future plans for commercializing our product candidates, if approved.

A strategic priority is attracting and retaining talent with the skills we need today and in the future.

The labor market continues to reflect a limited pool of skilled individuals with substantial experience discovering, developing and manufacturing cell therapy medicines, and we expect this is likely to continue.

We also operate in areas such as data capture and analytics.

As a result, competition for talent is intense and the turnover rate can be high.

We face substantial competition among numerous biopharmaceutical companies and academic institutions as well as technology companies for individuals with these skills.

For these reasons, we continue to develop our culture through people systems that establish clear expectations, ensure employees have ongoing feedback and provide opportunities for skill and career development as well as competitive pay and benefits.

As of December 31, 2023, we had 224 employees, over 79% of whom were engaged in research and development activities, technical operations and process sciences.

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Many of our employees have experience with the development of cell therapies.

Substantially all of our employees are located in California and Washington.

All of our employees are located in California and Washington.

None of our employees are subject to a collective bargaining agreement nor represented by labor unions.

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Developing our employees is important, and we focus on providing training and opportunities for development and advancement.

Learning and development, training and career advancement are an integral part of retaining our employees.

We hold talent discussions regularly, which include promotion cycles across functions and role levels.

In 2022, we created a comprehensive talent management framework, which includes role leveling, competencies, training by role level and competencies and development planning.

Training, coaching, routine feedback and a systematic approach to employee advancement are key components of our talent strategy.

We hold talent discussions regularly, which include promotion cycles across all functions and levels.

In 2023, we have further enhanced our talent management practices, including establishing career frameworks for development positions, implementing individual goal setting for all staff and introducing a compensation approach that recognizes differentiated performance.

Since inception, our employee turnover has remained consistently below average for the U.S.

life sciences industry generally, as well as for life sciences companies located in Northern California and the Pacific Northwest.

Given our expanding operations and need to further grow our headcount to support our business, we continually assess employee turnover, recruitment initiatives, compensation and benefits programs, safety in performing critical laboratory work, diversity and other matters relevant to human capital management, and we review results with our board of directors on a periodic basis.

Given our need to retain and attract talent, we continually assess employee turnover, effectiveness of recruitment initiatives, compensation and benefits programs, health and safety practices, diversity and inclusion and other matters relevant to human capital management.

These outcomes and updates are routinely reviewed with our board of directors.

Our Compensation and Benefits

Given the highly competitive nature of our industry and the importance of recruitment and retention to our success, we strive to provide our employees with what we believe is a competitive and comprehensive total rewards package of compensation, benefits and services.

This package includes competitive market pay, healthcare benefits for employees and family members, a flexible spending account, paid time off benefits, family leave, flexible work schedules, flexible work locations, 401(k) matching, an employee assistance program and a new wellness program.

In addition, we offer employees the benefit of equity ownership in the company through stock option grants and restricted stock units.

In addition, we offer

employees the benefit of equity ownership in the company through stock option grants and/or restricted stock units.

Our employees are also eligible to participate in an employee stock purchase plan, which offers the opportunity to purchase our common stock at a discount of 15%.

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We aim to treat all individuals with respect and dignity and to provide all employees with equal opportunity and fair treatment.

By embracing diversity and inclusion, we seek to create an organization committed to working together to develop innovative solutions consistent with our values and in support of accomplishing our mission.

By embracing diversity and inclusion, we seek to create an organization committed to collaboration and innovation consistent with our values and in support of accomplishing our mission.

Not only is a diverse, equitable and inclusive mindset and culture critical to an engaged and committed workplace, but it is also imperative to understanding and meeting the needs of the patients we seek to help with our medicines.

With the support of our executive leadership team, we convened a Diversity, Belonging, Inclusion and Equity (DBIE) working group in 2020 comprised of a diverse group of employees tasked with designing and implementing specific initiatives to promote greater diversity, belonging, inclusion and equity at Lyell.

We also engaged an experienced DBIE consultant to advise us on the design and planning of new DBIE initiatives based on expertise and external benchmarking.

The DBIE working group formalized a DBIE statement, a framework, a tactical plan and advanced a commitment to the importance of DBIE.

In 2022, we offered several DBIE speaker events, rolled out Inclusivity@Lyell

training sessions, utilized Textio to reduce gender bias in role descriptions and postings, and tried several new recruiting sources to further diversify candidate pools.

Although we are proud of our progress to date, we have and will continue to conduct relevant training and provide guidance with respect to best practices of similarly situated companies.

As of December 31, 2022, our employees were self-reportedly approximately 49.3% percent women and 47.4% of our employees were self-reportedly ethnically or racially diverse with 33.6% Asian, 4.0% Black or African American, 6.2% Hispanic or Latino and 3.6% of other minority groups or two or more races.

We believe in equitable pay practices and our compensation practices and philosophies are reviewed regularly.

In 2020, with the support and sponsorship of our executive leadership team, we established a Diversity, Belonging, Inclusion and Equity (DBIE) working group comprised of a diverse group of employees tasked with designing and implementing specific initiatives to promote greater diversity, belonging, inclusion and equity at Lyell.

We continue to externally benchmark our efforts with respect to best practices across industries.

The DBIE working group is guided by a collaboratively developed DBIE mission statement.

The working group is comprised of volunteers from our three work locations representing various levels in the organization.

This team, sponsored by our Chief Executive Officer and Senior Vice President of Human Resources, creates an annual strategic and tactical plan to advance our focus on the importance of DBIE to our culture.

Our DBIE team has continued to develop and implement an annual plan that includes many opportunities for learning and engagement open to all employees.

In addition to the DBIE employee working group, our Human Resources practices emphasize diversity and inclusion as key indicators of success.

Recruitment, progression and development processes emphasize the importance of fostering a workforce that is representative of our diverse patient population.

While we are proud of our progress to date, we have and will continue to conduct relevant training and provide guidance with respect to best practices of similarly situated companies.

We believe in equitable pay and our compensation practices are reviewed regularly.

We establish components and ranges of compensation based on market and benchmark data.

Within this context, we strive to pay all employees equitably within a reasonable range, taking into consideration factors such as role, market data, internal equity, job location, relevant experience, and individual and company performance.

We review and analyze our compensation decisions for individual employees and our workforce as a whole on at least an annual basis.

In 2022, we engaged an independent external firm to conduct a pay equity analysis, the results of which we believe demonstrated that our compensation practices and structure are equitable.

Within this context, we strive to pay all employees equitably within a market-competitive range, taking into consideration factors such as role, market data for similar roles in related industry, internal equity, job location, relevant experience and individual performance.

Ongoing pay progression is guided by our compensation philosophy;

in 2023, this was enhanced to recognize differentiation in rewards, where our highest performing employees received the highest rewards.

At the same time, we are committed to pay equity;

we have a review process that is conducted on at least an annual basis.

If we identify employees with unjustified pay gaps that do not align with our pay philosophy, we review and take appropriate action to ensure fidelity between our stated philosophy and actions.

Employee Safety and COVID-19

Employee safety and well-being is of paramount importance to us in any year and has been of particular focus since 2020 in light of the evolving and continuing effects of the COVID-19 pandemic.

In response to the pandemic, we have supported our employees and government efforts to curb the COVID-19 pandemic through safety and communication efforts and investments.

One of our top priorities is the protection of the health and well-being of our employees, partners and communities.

While our employees have returned to work in our offices on a flexible-basis, all employees and substantially all other third parties that come onsite are required to be fully vaccinated.

We continue to maintain rigorous procedures to address actual and suspected COVID-19 cases and potential exposure, including increased cleaning of high touch areas, provision of hand sanitizing stations and limited on-site contract tracing as needed, and we expect to continue such measures for the near foreseeable future.

We continue to closely monitor the COVID-19 pandemic and have strived to follow recommended containment and mitigation measures, including the guidance from the Centers for Disease Control and Prevention ( CDC), Occupational Safety and Health Administration (OSHA), the states of California and Washington (including their state OSHA programs) and applicable counties.

Available Information

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We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information that we file with the SEC electronically.

The Securities and Exchange Commission (SEC) maintains a website at www.sec.gov that contains reports, proxy and information statements and other information that we file with the SEC electronically.

Copies of our reports on Form 10-K, Forms 10-Q, Forms 8-K and amendments to those reports may also be obtained, free of charge, electronically on the investor relations page on our website located at ir.lyell.com as soon as reasonably practical after we file such material with, or furnish it to, the SEC.

We also use the investor relations page on our website as a channel of distribution for important company information.

Important information, including press releases, analyst presentations and financial information regarding us, as well as corporate governance information, is routinely posted and accessible on the investor relations page on our website.

We also use the Investors page on our website as a channel of distribution for important company information.

Important information, including press releases, corporate and scientific presentations and financial information regarding our company, as well as corporate governance information, is routinely posted and accessible on the Investors page on our website.

Information on or that can be accessed through our website is not part of this Annual Report on Form 10-K, and the inclusion of our website address is an inactive textual reference only.

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