What changed in this filing

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Item 1. Business

2023-03-20 compared with 2022-03-01 · 87 added, 148 removed, 403 unchanged (37% of the section changed)

We are a biopharmaceutical company creating next generation immunotherapies for cancer, inflammation, and autoimmunity using de novo protein design technology.

We use sophisticated computational methods to design proteins that demonstrate specific pharmaceutical properties that provide potentially superior therapeutic benefit over native proteins.

Existing protein engineering treatments generally involve the modification of native proteins.

With our proprietary platform, which we refer to as our Neoleukin platform, we design new protein scaffolds from the ground up, capable of demonstrating specific biological properties.

Through this method we are able to produce proteins that, while resembling native proteins, may have novel molecular interfaces, differential activation of specific cell types, increased stability, or improved biodistribution compared to native proteins in order to deliver greater therapeutic benefit.

We are a biopharmaceutical company that has focused on creating next generation immunotherapies for cancer, inflammation, and autoimmunity using de novo protein design technology.

We developed sophisticated computational methods to design proteins that demonstrate specific pharmaceutical properties that provide potentially superior therapeutic benefit over native proteins.

With our de novo protein design process, we have been able to design new protein scaffolds from the ground up that are capable of demonstrating specific biological properties.

With the introduction of machine learning to this process, we believe timelines for developing potential candidates can be accelerated.

De novo proteins have the capacity to be cytokine receptor agonists, antagonists, or result in conditional activation of specific cytokine receptors such that they may regulate inflammation or the immune response to cancer and inflammatory conditions.

We are initially focused on key cytokine mimetics, which we refer to as Neoleukin de novo cytokine mimetics.

Neoleukin de novo cytokine mimetics can be modified to adjust affinity, thermodynamic stability, resistance to biochemical modification, pharmacokinetic characteristics, and targeting to tumor or inflamed tissues.

Our lead product candidate, NL-201, is a de novo protein designed to mimic the therapeutic activity of the cytokines interleukin-2, or IL-2, and interleukin-15, or IL-15, for the potential treatment of various types of cancer, including renal cell carcinoma, or RCC, melanoma, and hematological malignancies, while limiting the toxicity caused by the preferential binding of native IL-2 and IL-15 to non-target cells.

In preclinical studies, a closely-related precursor to NL-201 demonstrated higher levels of activity and lower toxicity in multiple murine solid tumor syngeneic models as compared to recombinant, native IL-2.

Our work has been primarily focused on key cytokine mimetics, which we refer to as Neoleukin de novo cytokine mimetics, that can be modified to adjust affinity, thermodynamic stability, resistance to biochemical modification, pharmacokinetic characteristics, potency and targeting to tumor or inflamed tissues.

Our first product candidate was NL-201, a de novo protein designed to mimic the therapeutic activity of the cytokines interleukin-2, or IL-2, and interleukin-15, or IL-15, for the potential treatment of various types of cancer, including renal cell carcinoma, or RCC, melanoma, and hematological malignancies, while limiting the toxicity cause by the preferential binding of IL-2 and IL-15 to non-target cells.

We initiated a Phase 1 clinical trial for NL-201 in May 2021, however, based on a review of the preliminary data from this trial, the benefit to risk ratio for patients and recent developments in the field of IL-2 therapeutics, we made a strategic decision to close that trial in November 2022.

Following the decision to discontinue development of NL-201, we turned our focus to research into the next generation of de nov o cytokine mimetics that further widen the therapeutic window, such as the development of targeted and conditionally activated molecules to create potent immune agonists.

Corporate Restructurings

In November 2022, we announced a corporate restructuring as a result of the strategic decision to discontinue development of NL-201 and turn our focus to the next generation of de nov o cytokine mimetics that further widen the therapeutic window.

While we believe that there are promising developments in this field of research, we also continued to evaluate strategic alternatives in light of the challenging capital markets.

In March 2023, we announced a further corporate restructuring to significantly reduce our workforce and suspend o ur research and development activities in order to conserve capital and focus on other strategic alternatives for the Company.

Such alternatives may include a sale, merger, divestiture of assets, licensing or other strategic transaction.

There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or that, if completed, any agreements or transactions will be successful or on attractive terms.

As a result of the restructuring plan approved by our Board of Directors on November 12, 2022 in connection with our decision to discontinue development of NL-201, we reduced our workforce by approximately 40%.

In connection with the decision to focus on strategic alternatives, our Board adopted a second restructuring plan on March 6, 2023, further reducing our workforce by approximately 70% of our remaining employees.

We expect these restructurings to be completed by the end of the second quarter of 2023.

De Novo Protein Design Technology

Our Neoleukin platform uses a set of advanced computational algorithms and methods to design functional de novo proteins.

Our de novo protein design process uses a set of advanced computational algorithms and methods to design functional de novo proteins.

A protein is generally defined as one or more chains of covalently-linked amino acids – totaling at least 50 amino acids – that assemble into a 3-dimensional structure.

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however, this is still only a small subset of all possible amino acid sequences that can be assembled to form a protein.

While protein engineering to date has largely been conducted through the modification of native proteins, with our Neoleukin platform we are able to explore the full sequence space, guided by the physical principles that underlie protein folding, and design functional proteins from the ground up.

While protein engineering to date has been conducted primarily through the modification of native proteins, with our de novo protein design methods we are able to explore the full sequence space, guided by the physical principles that underlie protein folding, and design functional proteins from the ground up.

Our de novo proteins fit the above definition of a protein, but, unlike native proteins, are designed using our proprietary computational algorithms and methods.

Successful de novo protein design is a cutting-edge process that requires both the advanced computational tools and deep insight into how a sequence of amino acids will fold into a stable 3-dimensional protein.

To design a Neoleukin de novo cytokine mimetic using our Neoleukin platform, we begin with an accurate model of the biological target.

This is typically a high-resolution crystal structure but may instead be a computationally-modeled structure.

Then, critical points of contact between molecular interfaces are identified so that essential interactions can be maintained or strengthened, and undesirable interactions can be avoided.

Next, we use a computational algorithm to build idealized 3-dimensional topologies of the biological target and the Neoleukin de novo cytokine mimetic.

Finally, we use a separate computational algorithm to select amino acids for each position within the idealized 3-dimensional topologies that maximizes interactions at the desired interface and the thermodynamic stability of the resulting protein.

These amino acid sequences are then expressed in bacteria, tested in our laboratory, and further modified to optimize the final sequence.

The resulting protein is unlike anything that exists in nature and can be fine-tuned to improve on the desired biological activity.

While we are currently focused on the design of Neoleukin de novo cytokine mimetics, we believe this approach could be used broadly to widen the therapeutic window and improve drug-like characteristics of therapeutic proteins, including chemical stability, pharmacokinetic properties, or novel routes of administration.

Furthermore, we believe that the Neoleukin platform can also be used to generate de novo proteins that inhibit activation of specific receptors, a property that could be valuable for treatment of inflammatory or autoimmune conditions.

Computational design of therapeutic proteins is in a very early stage of development.

The potential is vast, and we are focused on continuing to improve the technology and realizing the tremendous potential of de novo protein design to improve human health.

Our business model is focused on three primary goals:

Successful de novo protein design is a cutting-edge process that requires both advanced computational tools and deep insight into how a sequence of amino acids will fold into a stable 3-dimensional protein.

By incorporating machine learning and neural networks into our existing de novo protein design methods, our scientists have been able to accelerate the discovery process and expand the scope and complexity of addressable protein structures.

To design a de novo cytokine mimetic prior to the era of machine learning and neural networks, we required an accurate model of the biological target, typically a high-resolution crystal structure.

With recent advances in machine learning being implemented in our design process, it is now possible to predict structures even when they have not been experimentally determined.

Our methods preserve or modify critical protein/protein interfaces and build unique scaffolds to stabilize the de novo proteins.

Amino acid sequences that will fold into the desired structures are encoded as DNA, which can then be expressed and experimentally tested for the desired biological activity and specificity.

The resulting proteins are unlike anything that exists in nature and can be fine-tuned to improve on the desired biological activity.

Following the decision by our Board of Directors in March 2023 to further restructure the Company and suspend our research and development activities to conserve capital, we are focused on strategic alternatives that may include a sale, merger, divestiture of assets, licensing or other strategic transaction.

Our historical business model has been focused on three primary goals:

• Develop proprietary de novo protein immunotherapies for the treatment of cancer and inflammatory conditions;

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• Collaborate with leading biotechnology, pharmaceutical, and academic partners to expand the scope and application of our platform .

The key elements of our strategy are:

• Rapidly advance NL-201 to clinical proof-of-concept .

NL-201 is our lead product candidate and we believe it is the first entirely de novo therapeutic protein to be evaluated in a clinical setting.

In 2021, we initiated a Phase 1 clinical trial in patients with advanced, relapsed, or refractory solid tumors.

The Phase 1 trial is currently ongoing with interim data expected in the second half of 2022.

We also plan to expand our ongoing trial of NL-201 by adding a combination arm with Merck's KEYTRUDA ® (pembrolizumab) in mid-2022.

In addition, we plan to initiate a Phase 1 clinical trial in hematological malignancies with NL-201 in 2022.

• Generate preclinical data for additional product candidates.

Our research activities are currently focused on the development of novel de novo cytokine receptor agonists and antagonists to expand our pipeline.

We are currently optimizing and evaluating several early research projects as potential clinical candidates.

We initially intend to develop de novo protein therapeutics to address significant unmet medical needs in oncology, inflammation, and autoimmune indications.

• Expand the capabilities of the Neoleukin platform.

De novo protein design is in the early stages of development and has the potential to generate therapeutics to treat a wide range of human diseases.

We believe that there will be a rapid evolution in the enabling technology, such that it will be feasible to design more complex and dynamic proteins in the future.

We intend to devote a significant amount of resources to building our talent, methods, and infrastructure in order to position Neoleukin as a leader in the design and development of de novo protein therapeutics.

• Build partnerships to leverage the Neoleukin platform.

There is substantial interest in the field of de novo protein design for therapeutic applications.

We intend to seek partners that can provide additional resources and expertise to further advance our pipeline and broaden our potential targets.

We may also strategically pursue one or more collaborations to design, out-license, or co-develop de novo proteins.

Our lead product candidate, NL-201, is an IL-2/IL-15 immunotherapy designed to eliminate binding to the alpha subunit of the IL-2 receptor (also known as CD25) while enhancing binding to the beta and gamma subunits.

In multiple preclinical animal models, a precursor to NL-201, demonstrated substantial antitumor activity without detectable binding to CD25, as compared to native IL-2.

Following these preclinical studies, we further refined our precursor to extend its half-life, resulting in the NL-201 product candidate.

We have since completed multi-dose, non-GLP and GLP toxicology studies of NL-201 in rats and non-human primates, as well as initiated a first in-human clinical trial.

This included completion of GLP in-life dosing with no unexpected toxicities observed.

NL-201 is intended to be used as either a single-agent or in combination with complementary therapeutic modalities, including checkpoint inhibitors.

In addition, we believe NL-201 holds promise in combination with cell therapy to expand and maintain populations of transplanted CAR-T and natural killer, or NK, cells.

IL-2 is one of the few immuno-oncology drugs with demonstrated activity as a single agent.

IL-2 has a confirmed mechanism of action for treating tumors;

however, it has encountered issues as a therapeutic due to the biased activation of cells that contain CD25.

CD25 induces conformational changes in IL-2 that enable high-affinity binding to the beta and gamma subunits of the IL-2 receptor.

Preferential binding to endothelial cells expressing CD25 is believed to exacerbate vascular leak syndrome, while preferential activation of CD25-expressing regulatory T cells can inhibit anti-cancer immune responses.

Due to IL-2’s potential for high toxicity, with vascular leak syndrome and cytokine storm being frequent side effects, and reduced efficacy over time, its use as a therapeutic has been limited.

Further, low-dose treatments have generally been insufficient to demonstrate therapeutic activity.

While the problem posed by IL-2 is well understood, it has been difficult to modify native IL-2 to retain potent activation of IL-2 receptor signaling while eliminating binding to CD25.

Instead of modifying native IL-2, computational methods were used to design a new sequence with the proper intermolecular interactions to efficiently bind the beta and gamma subunits while eliminating CD25 binding.

As opposed to traditional recombinant protein therapeutics, de novo proteins are entirely novel sequences with limited homology to native proteins.

While there is a potential that patients may mount an anti-drug immune response against NL-201, we believe that this risk may be mitigated by several factors, including the stability of the protein and its resistance to proteolytic degradation.

Immunotherapy Market Overview

Over the past several decades, the potential of the immune system to control and/or eliminate cancer has been better understood and appreciated.

Immunotherapies, including allogeneic stem cell transplantation, checkpoint inhibitors, and cellular therapies have led to impressive improvements in patient outcomes.

Immunotherapy is one of the fastest growing segments of the oncology market and immune checkpoint inhibitors are one of the most widely used classes of cancer immunotherapy.

Checkpoint inhibitors promote an anti-cancer immune response by blocking inhibitory signals between cancer cells and the immune microenvironment.

Patients with metastatic cancers, who previously had generally poor prognoses, now have the opportunity to achieve durable responses with checkpoint inhibitors.

Research and development into a range of immunotherapies, including allogeneic stem cell transplantation, checkpoint inhibitors, T-cell engagers, immune agonists and cellular therapies in some cases have led to impressive improvements in patient outcomes.

Immune checkpoint inhibitors are one of the most widely used classes of cancer immunotherapy and have allowed some patients with metastatic cancers who have had generally poor prognoses, the ability to achieve durable responses.

The initial drug in this class, ipilimumab, was approved by the United States Food and Drug Administration, or FDA, in 2011.

Since that time, many additional checkpoint inhibitors have been approved by the FDA.

In addition to checkpoint inhibitors, other notable cancer immunotherapies expected to improve cancer outcomes over the next decade include bi-specific T-cell engagers, immune agonists, and cellular therapies.

Limitations of Current Treatments

Despite achieving success in a subset of patients, checkpoint inhibitors often fail to control tumor growth.

In addition, some patients do not tolerate checkpoint inhibitor therapy regimens.

However, checkpoint inhibitors have their limitations:

despite achieving success in a subset of patients, checkpoint inhibitors often fail to control tumor growth, and some patients cannot tolerate the therapy regimen.

While checkpoint inhibitors work to block the mechanisms by which malignant cells evade immunological surveillance by anti-cancer T cells, they are less effective in patients who lack a favorable tumor microenvironment, expression of the inhibitory ligand, or sufficient tumor-specific antigens.

For these patients, novel approaches to immunotherapy are needed that complement and/or enhance checkpoint inhibition.

What is needed is a new class of agents that activate immune cells in the tumor microenvironment.

We believe that stimulation of the IL-2 and IL-15 pathways is an attractive approach to generate an anti-cancer immune response because it promotes the proliferation and activation of both CD8+ effector T cells and NK cells.

Recombinant human IL-2, or aldesleukin, is a proven therapy and is approved for the treatment of adults with metastatic RCC or metastatic melanoma.

However, significant toxicity has resulted in multiple boxed warnings in the labeling, including a requirement that administration occur in the hospital under supervision of an experienced physician.

As a result of these toxicities, aldesleukin is not frequently used clinically.

In addition, aldesleukin has a relatively modest rate of durable remissions, potentially because it preferentially stimulates the proliferation of regulatory T cells, which can inhibit the antitumor response.

We believe there is a clear clinical need for an agent that stimulates an immunological response to cancer with greater selectivity and less toxicity than aldesleukin.

Ongoing Clinical Development

NL-201 is currently being evaluated in a Phase 1 clinical trial in advanced solid tumors.

The Phase 1 clinical trial is planned to enroll up to 120 patients with advanced, relapsed, or refractory solid tumors.

Patients will receive monotherapy, intravenous NL-201 and may continue treatment until disease progression.

The trial is assessing safety, pharmacokinetics, pharmacodynamics, immunogenicity, and antitumor activity.

When the recommended dose and schedule are determined, we expect to enroll indication-specific expansion cohorts of patients with renal cell carcinoma and melanoma.

The trial is being conducted at multiple sites in North America and Australia.

In addition to our ongoing Phase 1 clinical trial of NL-201 for advanced solid tumors, we plan to initiate a Phase 1 clinical trial of NL-201 in hematological malignancies in 2022.

NL-201 has also shown potential for enhanced antitumor activity in preclinical studies when combined with other therapies such as checkpoint inhibitors, CAR-T cell therapy, and tumor-targeting antibodies.

On January 10, 2022, we announced a clinical collaboration with Merck to evaluate NL-201 in combination with KEYTRUDA ® (pembrolizumab).

We plan to amend the ongoing solid tumor trial in order to add a pembrolizumab combination arm with up to an additional 132 patients.

What is needed is a new class of agents that activate and recruit immune cells in the tumor microenvironment.

Clinical Trial of NL-201

Our first product candidate to be taken into clinical trial was NL-201, a computationally designed CD25-independent agonist of the IL-2 and IL-15 receptors.

NL-201 was designed to eliminate binding to the alpha subunit of the IL-2 receptor (also known as CD25) while enhancing binding to the beta and gamma subunits.

In multiple preclinical animal models, a precursor to NL-201 demonstrated substantial antitumor activity without detectable binding to CD25, as compared to native IL-2.

Following these preclinical studies, we further refined our precursor to extend its half-life, resulting in the NL-201 product candidate.

We then completed multi-dose, non-GLP and GLP toxicology studies of NL-201 in rats and non-human primates, and initiated our first in-human clinical trial.

This included completion of GLP in-life dosing with no unexpected toxicities observed.

NL-201 was intended to be used as either a single-agent or in combination with complementary therapeutic modalities, including checkpoint inhibitors.

In May 2021, we enrolled the first patient in a Phase 1 clinical trial of NL-201 for advanced solid tumors.

On May 16, 2022, we announced that we had begun dosing patients in a new arm of the clinical trial study with a combination of NL-201 and Merck's checkpoint inhibitor KEYTRUDA® (pembrolizumab).

On November 12, 2022, we made the decision to discontinue development of NL-201 for strategic reasons and to focus our resources on advancing the next generation of de novo protein therapeutics, using the lessons we have learned from our development of NL-201.

We have also discontinued plans for any future trials of NL-201, including a Phase 1 clinical trial in hematological malignancies.

Preclinical Research Programs

Following the decision to discontinue development of NL-201, we turned our focus to research into the next generation of de novo cytokine mimetics that further widen the therapeutic window, such as the development of targeted and conditionally activated molecules to create potent immune agonists.

We have been combining our expertise in de novo protein design, including data gathered from the development of NL-201 and research into other novel cytokine mimetics, with advances in machine learning and neural networks to expand the scope of our design process to include more complex protein structures and create more sophisticated and dynamic structural elements than were previously possible.

Our research team has also developed other molecules using our de novo protein design capabilities, including potential therapeutic candidates that may be developed in the future.

In 2020, we reported development of NL-CVX1, a fully de novo decoy protein that was designed to block infection of human cells by the SARS-CoV-2 virus.

In June 2021, we suspended plans to develop this molecule as effective vaccines became widely available;

however, we believe this is a powerful example of the capability of our technology to develop potential de novo therapies in a short time frame.

In 2021, we reported preclinical data for an inhibitor of IL-2 and IL-15 activity, Neo-5171, which demonstrated in vivo anti-inflammatory activity.

In December 2022, we presented data on NEO-TRA1, a precision-tuned agonist of the IL-2 receptor beta and gamma subunits that is targeted to and selectively expands T-regulatory cells, at the American Society of Hematology (ASH) meeting ASH.

Following the decision by our Board of Directors in March 2023 to further restructure the Company to conserve capital and focus on strategic alternatives, we have suspended our research and development activities.

UW License Agreement

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In addition, UW may terminate the Exclusive License Agreement for material breach that is not cured within a specified number of days, which cure period is to be at least doubled if we are proceeding diligently to cure the default.

Other Research Programs

Beyond our initial focus on NL-201, our research team is working on further applying de novo protein design principles to develop therapeutics to address significant unmet medical needs in immuno-oncology, inflammation, and autoimmunity.

Our research is powered by our Neoleukin platform, which is our computational framework for developing highly selective, hyper-stable de novo immunomodulatory proteins.

Beyond NL-201, we are developing targeted and conditionally active IL-2/IL-15 mimetics, as well as cytokine mimetic programs for other oncology targets.

Our research team is also actively applying our Neoleukin platform to generate de novo receptor agonist and antagonist candidates against multiple targets of interest for inflammatory and autoimmune indications.

As we validate additional candidates, they will enter our preclinical pipeline.

Due to the COVID-19 pandemic, we investigated the application of our de novo protein technology to prevent or treat SARS-CoV-2 virus infection, and, in November 2020, we announced the publication of our scientific work in the journal Science detailing the creation of NL-CVX1, a de novo protein decoy that is specifically designed to block infection of SARS-CoV-2, the virus which causes the COVID-19 disease.

Our findings demonstrated that NL-CVX1 blocks infection of human cells in vitro, even when a high viral burden is used.

Furthermore, intranasal administration of NL-CVX1 protected Syrian hamsters from a lethal dose of SARS-CoV-2.

In June 2021, in response to the evolving COVID-19 therapeutic landscape, including the widespread availability of effective vaccines, we suspended plans to advance this research program into clinical trials.

Intellectual Property

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We have also licensed rights to two provisional patent applications that we jointly own with UW.

These patents and patent applications, as applicable, include disclosure and claims encompassing our NL-201 product candidate, the composition of matter of key molecule families, as well as methods of using the computational algorithms that form the basis of our Neoleukin platform.

These patents and patent applications, as applicable, include disclosure and claims encompassing NL-201 the composition of matter of other IL-2/IL-15 cytokine mimetics, as well as methods of using the computational algorithms that form the basis of our de novo protein design process.

We have secured an exclusive license from UW to develop and commercialize products covered by these patents and patent applications.

For NL-201 and related technology, two U.S.

For NL-201 and related technology, three U.S.

patents have issued and will expire in 2039, absent any patent term adjustments or extensions.

A fourth U.S.

patent has issued directed to certain targeted Il-2/IL-15 mimetics which will expire in 2039, absent any patent term adjustments or extensions.

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Any patents that may issue from these patent applications in-licensed from UW are expected to expire in 2039, absent any patent term adjustments or extensions.

As our product candidate and other programs advance through research and development, we expect to seek to identify and protect new inventions, and we have filed applications on new inventions such as methods of administration and combination therapies.

Also, through our research efforts, we anticipate generating intellectual property covering novel compounds and improvements on existing molecules.

We expect that patents that result from this new research will remain Neoleukin’s exclusive property, except to the extent jointly developed with third parties.

In addition, our research team is extending and enhancing our computational technology and capabilities.

We intend to protect improvements to the Neoleukin platform through a combination of new patent filings and/or the maintenance of trade secrets, as appropriate.

As our programs advance through research and development, we expect to seek to identify and protect new inventions.

non-provisional applications and PCT applications that claim the benefit of the priority date of earlier filed provisional applications, when appropriate.

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The PCT system delays expenses, allows a limited evaluation of the chances of success for national/regional patent applications and enables substantial savings where applications are abandoned within the first 2 1/2 years of filing.

We intend to pursue patent issuance and protection in key commercial markets where we expect significant product sales may occur.

The biotechnology and pharmaceutical industries are characterized by rapid evolution of technologies, fierce competition, and strong defense of intellectual property.

While we believe that our Neoleukin platform and our knowledge, experience, and scientific resources provide us with competitive advantages going forward, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.

The development of next-generation IL-2 or IL-15 agonists for cancer immunotherapy is an area of intense interest within the biotechnology industry.

We are aware of several IL-2 or IL-15 agonists in various stages of clinical development, including engineered variants of IL-2 that attempt to improve on aldesleukin’s narrow therapeutic window by inhibiting IL-2’s natural high-affinity interaction with CD25 using traditional protein engineering approaches including steric inhibition and mutagenesis.

We have historically pursued patent issuance and protection in key commercial markets where we expect significant product sales may occur.

The biotechnology and pharmaceutical industries are characterized by rapid evolution of technologies, including the use of machine learning techniques to advance the development of molecular design, among other things, fierce competition, and in many cases strong defense of intellectual property.

At the same time, some of the processes we have used in our design include access to publicly available computational tools, which are also readily accessible to many of our competitors.

While we believe that our de novo protein design process combined with our knowledge, experience, and scientific resources provide us with competitive advantages for developing our product candidates, our product candidates face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.

The development of next-generation cancer immunotherapy is an area of intense interest within the biotechnology industry.

We are aware of several immune agonists in various stages of clinical development, including engineered variants of IL-2 that attempt to improve on rhIL-2's narrow therapeutic window by inhibiting IL-2’s natural high-affinity interaction with CD25 using traditional protein engineering approaches including steric inhibition and mutagenesis.

While we are no longer pursuing clinical trials of NL-201 and have suspended our research and development activities, our product candidates may still be competitive with these types of immune agonists.

Many of our competitors, either alone or with strategic partners, have substantially greater financial, technical, and human resources than we do.

Accordingly, our competitors may be more successful than us in obtaining approval for treatments and achieving widespread market acceptance, rendering our treatments obsolete or non-competitive.

Accordingly, our competitors may be more successful than us in developing their product candidates on a faster timeline, obtaining approval for treatments, and achieving widespread market acceptance, rendering our treatments obsolete or non-competitive.

Accelerated merger and acquisition activity in the biotechnology and biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors.

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

Our commercial opportunity could be substantially limited in the event that our competitors develop and commercialize products that are more effective, safer, less toxic, more convenient, or less expensive than our comparable products.

In geographies that are critical to our commercial success, competitors may also obtain regulatory approvals before us, resulting in our competitors building a strong market position in advance of the entry of our products.

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If we choose to build a commercial infrastructure to support marketing in the United States, such commercial infrastructure could be expected to include a targeted sales force supported by sales management, internal sales support, an internal marketing group and distribution support.

To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that NL-201, or any of our other product candidates, will be approved.

To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that any of our potential product candidates would be approved.

Government Regulation

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Healthcare Reform

In March 2010, President Obama signed the Affordable Care Act, which substantially changed healthcare financing and the delivery by both governmental and private insurers, and significantly impacted the pharmaceutical industry.

The Affordable Care Act impacts existing government healthcare programs and requires the development of new programs.

For example, the Affordable Care Act provides for Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

Among the Affordable Care Act’s provisions of importance to the pharmaceutical industry are the following:

• an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biological products apportioned among these entities according to their market share in some government healthcare programs, that began in 2011;

• an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, retroactive to January 1, 2010, to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively and capped the total rebate amount for innovator drugs at 100% of AMP;

• expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

• a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts, now 7% off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D;

• extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

• expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

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

• a requirement to report annually specified financial arrangements with physicians and teaching hospitals, as defined in the Affordable Care Act and its implementing regulations, including reporting information related to “payments or other transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members and payments or other “transfers of value” to such physician owners and their immediate family members;

• a requirement to annually report drug samples that manufacturers and distributors provide to licensed practitioners, pharmacies of hospitals and other healthcare entities;

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

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

On August 2, 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress.

The Joint Select Committee did not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reductions to several government programs.

These reductions include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments, will stay in effect through 2029 unless additional Congressional action is taken.

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Furthermore, there has been heightened governmental scrutiny recently over the manner in which manufacturers set prices for their marketed products.

For example, there have been several recent Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

These new laws and initiatives may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our future customers and accordingly, our financial operations.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of Affordable Care Act, as well as efforts by the Trump administration to repeal or replace certain aspects of the Affordable Care Act, or ACA.

Since January 2017, President Trump signed two executive orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the Affordable Care Act.

Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA.

While Congress has not passed repeal legislation, the Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.

In November 2020, the United States Supreme Court held oral arguments on the Fifth Circuit U.S.

Court of Appeals decision that held that the individual mandate is unconstitutional.

It is uncertain how the United States Supreme Court will rule on this case or how healthcare measures of the Biden administration will impact the ACA and our business.

Congress may consider other legislation to repeal or replace elements of the ACA.

Healthcare reforms that have been adopted, and that will be adopted in the future, could result in further reductions in coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S.

government rebate programs and additional downward pressure on pharmaceutical product prices.

On September 9, 2021, the Biden Administration published a wide-ranging list of policy proposals, most of which would need to be carried out by Congress, to reduce drug prices and drug payment.

The HHS plan includes, among other reform measures, proposals to lower prescription drug prices, including by allowing Medicare to negotiate prices, disincentivizing price increases, and to support market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase price transparency.

These initiatives recently culminated in the enactment of the Inflation Reduction Act of 2022, or IRA, which will, among other things, allow the HHS to negotiate the selling price of certain drugs and biologics that CMS reimburses under Medicare Part B and Part D.

However, only high-expenditure single-source drugs that have been approved for at least 7 years (11 years for biologics) can be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.

The negotiated prices, which will first become effective in 2026, will be capped at a statutory ceiling price.

Beginning in January 2023 for Medicare Part B and October 2022 for Medicare Part D, the IRA will also, penalize drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation.

The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties.

The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplace through plan year 2025.

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

We cannot predict what healthcare reform initiatives may be adopted in the future.

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Human Capital Resources

As of December 31, 2021, we had 91 employees, of whom 25 hold Ph.D.

As of December 31, 2022, following a reorganization that was in line with our plans to terminate our clinical trial of NL-201 and shift the focus of our research and development team, we had 56 employees, of whom 10 hold Ph.D.

degrees or M.D.

degrees and all of which are full time employees.

In March 2023, we announced a further restructuring including a workforce reduction of approximately 70% of our total number of employees at that time.

We have no collective bargaining agreements with our employees and have not experienced any work stoppages.

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The safety, health and wellness of our employees is a top priority.

In response to the COVID-19 pandemic, we have implemented safety protocols, which are reviewed regularly and revised from time to time based on local and federal guidelines.

Since March of 2020, we have made accommodations, including reducing the number and density of people in our facilities, requirements for the wearing of masks and for social distancing, increased cleaning procedures and readily available hand sanitizer.

These protocols are designed to comply with health and safety standards as required by federal, state, and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

In addition, we have provided work-at-home arrangements for employees who are able to do so and require that employees be fully vaccinated and asymptomatic if they are working on site.

In response to the COVID-19 pandemic, we implemented safety protocols based on local and federal guidelines, which we regularly review and revise from time to time based on changes in COVID-19 risks in our community and developing guidance from health officials.

During 2022, all of our employees who are not classified as remote workers returned to in-office work with hybrid schedules, and we resumed travel to in-person conferences and events.

Our business-critical research and development work was able to move forward throughout the COVID-19 pandemic within our employee safety guidelines.

Corporate Information

6 unchanged sentences

On December 31, 2020, Neoleukin Corporation was merged into Neoleukin Therapeutics, Inc.

As a result of these transactions, we have consisted of a single operating company since December 31, 2020.

We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission, or SEC.

5 unchanged sentences

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