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Item 1. Business

2023-03-09 compared with 2022-03-01 · 212 added, 672 removed, 371 unchanged (70% of the section changed)

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We have applied our deep understanding of fibrosis biology, along with our medicinal chemistry and translational medicine expertise to develop a set of proprietary tools designed to discover and de-risk product candidates quickly and efficiently.

Our wholly-owned lead product candidate, PLN-74809, is an oral small molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC.

We have completed a Phase 1a SAD/MAD trial and a Phase 1b proof-of-mechanism trial of PLN-74809 in IPF and are currently conducting three Phase 2a trials in our lead indications:

Our wholly-owned lead product candidate, bexotegrast (PLN-74809), is an oral, small molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC.

We are currently conducting three Phase 2a trials in our lead indications:

two in IPF and one in PSC.

We announced interim data from our first Phase 2a IPF trial in September 2021.

Our Phase 2a INTEGRIS-IPF trial has completed enrollment and we expect to release data mid-2022.

Our Phase 2a INTEGRIS-PSC trial is currently enrolling with full enrollment expected in mid-2022, with data readout expected by late 2022 or early 2023.

We have also developed a second product candidate, PLN-1474, a Phase 2-ready small molecule selective inhibitor of αvß1 for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis, or NASH, for which we have partnered with Novartis.

In addition to our clinical programs, we currently have preclinical integrin-based programs targeting oncology and muscular dystrophies.

In September 2021, we announced positive interim results from a Phase 2a positron emission tomography, or PET, imaging trial evaluating target engagement of PLN-74809 in the lungs of IPF patients.

Each patient across the four dose cohorts tested achieved target engagement levels greater than 50% in the most fibrotic portions of their lungs after only one dose of PLN-74809.

Target engagement of 50% was previously established in a Phase 1b trial as the threshold for predicted clinical anti-fibrotic effect.

In addition, there was a dose- and plasma concentration-dependent response with the two highest doses approaching target saturation.

PLN-74809 was well tolerated in the trial with no serious adverse events, or SAEs, reported.

The interim data confirm that PLN-74809 penetrates the highly fibrotic lung tissue of IPF patients, and potently binds to its target.

These interim data allow us to construct a full exposure-target engagement curve model, decoding our ongoing Phase 2a trials and guiding future clinical development of PLN-74809.

In February 2022, we announced positive results from an expanded PLN-74809 Phase 1b proof-of-mechanism trial.

This study evaluated PLN-74809's ability to suppress TGF-β activation in the lungs of healthy volunteers as measured through relative pSmad2 levels in alveolar macrophages collected through bronchioalveolar lavage (BAL) at 6 hours and 24 hours after the last dose.

The trial was conducted in two parts.

Part 1 evaluated PLN-74809 at doses of 80 mg and 160 mg versus placebo and Part 2 evaluated PLN-74809 at 320 mg versus placebo.

PLN-74809 demonstrated clear evidence of on-target biological activity in the lungs of healthy participants.

Results showed that PLN-74809 inhibited TGF-β activation by up to 92% and 76% at 6- and 24-hours, respectively, following dosing.

PLN-74809 was well tolerated with mostly mild adverse events, and no severe adverse events.

There was no dose relationship associated with adverse events, no serious adverse events (SAEs) and no treatment discontinuations due to adverse events.

This trial further defines the relationship between plasma exposure of PLN-74809 and TGF-β inhibition in the lung and will guide dose selection in future trials.

Fibrosis refers to the abnormal thickening and scarring of connective tissue due to the production and deposition of excess collagen in the extra-cellular matrix.

Fibrosis can occur in many different tissues including lung, liver, kidney, muscle, skin and the gastrointestinal tract, and often causes severe and debilitating disease potentially leading to organ failure and death.

Fibrosis has historically proven difficult to treat, which we believe is due to the complexity of the disease biology and the challenge of targeting fibrotic tissues selectively without affecting healthy tissues.

We believe that tissue-specific inhibition of TGF-β may hold the key to successfully treating fibrosis.

In normal tissues, TGF-β is activated in response to tissue injury which initiates a cascade that results in collagen production and, ultimately, scar formation to heal the tissue.

In fibrosis, however, TGF-β signaling becomes dysregulated, with TGF-β being continuously activated, leading to excess collagen deposition, even in the absence of acute tissue injury.

TGF-β, while implicated in fibrosis pathophysiology, is expressed, and intermittently activated across all tissue types and plays important, context-specific roles in tissue homeostasis.

Therefore, TGF-β cannot be blocked systemically without disrupting these homeostatic functions and causing significant toxicities.

To treat fibrosis more precisely in specific tissues, we believe it is crucial to discover and treat the underlying mechanism causing excess TGF-β activation.

Our scientific founders are pioneers in elucidating the role of specific extracellular receptors known as integrins as a key element in the activation of TGF-β.

While the role of integrins in TGF-β activation has been well-characterized over the past 10 years, integrins have historically been difficult to target therapeutically using small

molecules due to the difficulty of engineering molecules with high receptor selectivity and bioavailability.

We believe that we have addressed these challenges with our platform.

We have built a library of compounds that includes bioavailable, selective and potent inhibitors of multiple integrins that may be used to target a range of fibrotic diseases across different tissues.

Our lead wholly-owned product candidate, PLN-74809, is an oral small molecule, dual-selective inhibitor of αvß6 and αvß1 that we are advancing in IPF and PSC.

We announced positive interim data from our Phase 2a INTEGRIS-IPF trial in July 2022 and January 2023.

We expect to release final data from the INTEGRIS-IPF trial in the second quarter of 2023.

We expect to release interim data from our Phase 2a trial in PSC in the third quarter of 2023.

We have also developed a second clinical stage product candidate, PLN-1474, an oral, small molecule selective inhibitor of αvß1 for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis, or NASH.

PLN-1474 is Phase 2-ready, having shown an excellent safety and pharmacokinetic profile in Phase 1 trials.

PLN-1474 was licensed to Novartis in 2019.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis returned global rights to PLN-1474 to Pliant.

In January 2023, we received FDA clearance of investigational new drug application, or IND, for our third clinical program, PLN-101095, a dual inhibitor of integrins αvß8 and αvß1 for the treatment of solid tumors that are resistant to immune checkpoint inhibitors.

We expect to initiate a Phase 1 trial of PLN-101095 in the second quarter of 2023.

In addition to our clinical programs, we are currently advancing a preclinical integrin-based program targeting muscular dystrophies.

Our Lead Candidate - Bexotegrast

Our lead wholly-owned product candidate, bexotegrast, is an oral, small molecule, dual-selective inhibitor of αvß6 and αvß1 that we are advancing in IPF and PSC.

While expressed at very low levels in normal tissues, αvß6 and αvß1 are upregulated in the pulmonary tissues of IPF patients, and in the liver tissues of PSC patients.

They both serve as activators of TGF-β, leading to increased collagen production and fibrosis in these tissues.

By blocking TGF-β activation by both αvß6 and αvß1, we believe PLN-74809 may slow and potentially halt the progression of fibrosis in these patient populations.

PLN-74809 has been granted orphan drug designation by the FDA for both IPF and PSC.

IPF is the most common and severe form of progressive pulmonary fibrosis, affecting approximately 140,000 patients in the United States.

By blocking TGF-β activation by both αvß6 and αvß1, we believe bexotegrast may slow and potentially halt the progression of fibrosis in these patient populations.

Bexotegrast has been granted orphan drug designation by the United States Food and Drug Administration, or

FDA and the European Medicines Agency, or EMA, for both IPF and PSC.

In addition, bexotegrast has been granted Fast Track designation by the FDA for IPF and PSC.

Bexotegrast for Treatment of IPF

IPF is the most common and severe form of progressive pulmonary fibrosis, affecting approximately 140,000 patients in the United States and over 3 million patients around the world.

While the underlying cause of IPF is unknown, the course of the disease is well documented, with progressive scarring that destroys the structure and function of the lungs over time.

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However, both therapies have raised significant safety and tolerability concerns.

Bexotegrast is an oral small-molecule that selectively inhibits both αvß6 and αvß1 integrins that we are developing as a potential therapy for IPF and PSC.

We have determined that TGF-β activation in fibrosis associated with IPF and PSC involves both αvß6 and αvß1 integrins.

It has been shown that expression of both αvß6 on epithelial cells and αvß1 on fibroblasts can lead to excessive activation of TGF-β in fibrosis.

Epithelial tissue includes any tissue that lines the surfaces of the body such as alveoli, bile ducts, urinary tract, skin, and gastrointestinal tract.

Each of these tissues contains multiple cell types including epithelial cells and fibroblasts.

An important secondary effect of the TGF-β cascade is that it promotes upregulation of αvß1 on epithelial cells.

The increased expression of these integrins on the cell surface contributes in turn to further TGF-β activation in a TGF-β-driven positive feed-forward loop.

In July 2022, we announced positive interim data from the 40 mg, 80 mg and 160 mg dose groups of INTEGRIS-IPF, a multinational, randomized, double-blind, placebo-controlled Phase 2a clinical trial of bexotegrast in patients with IPF.

The trial met its primary and secondary endpoints demonstrating that bexotegrast was well tolerated over a 12-week treatment period and displayed a favorable pharmacokinetic profile.

The trial’s exploratory efficacy endpoints assessing changes in forced vital capacity, or FVC, and Quantitative Lung Fibrosis, or QLF, imaging, demonstrated a dose-dependent treatment effect on FVC and QLF versus placebo over 12 weeks in bexotegrast treated patients.

Bexotegrast was well tolerated over 12 weeks of treatment with no drug related serious adverse events, or SAEs, and no treatment discontinuations due to adverse events

In January 2023, we announced additional positive 12-week interim data from the 320 mg dose group of INTEGRIS-IPF.

The 320 mg group met its primary and secondary endpoints demonstrating that bexotegrast was well tolerated over a 12-week treatment period and displayed a favorable pharmacokinetic profile.

Bexotegrast at 320 mg demonstrated a statistically significant mean increase in FVC from baseline at all timepoints, surpassing all lower dose groups, and showed a strong treatment effect on FVC percent predicted, or FVCpp, QLF and profibrotic biomarkers versus placebo at 12 weeks.

Bexotegrast was well tolerated over 12 weeks of treatment at 320 mg with no drug-related severe or serious adverse events.

Change in FVC from Baseline of Bexotegrast 320 mg Over 12 Weeks in INTEGRIS-IPF;

Mixed Model Repeat Measures Analysis – Modified Intent to Treat Population

Proportion of Participants with FVCpp Decline ≥10% - Intent to Treat Population

Circulating PRO-C3 and Integrin beta-6 Biomarker Levels–

Change from Baseline at 4- and 12-Weeks vs Placebo

Bexotegrast for Treatment of Primary Sclerosing Cholangitis

PSC is a progressive liver disorder affecting approximately 30,000 to 45,000 patients in the United States.

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There are currently no FDA-approved therapies for PSC.

In our live human tissue assay, PLN-74809 showed a greater than 50 percent decrease in the expression of pro-fibrotic genes, such as collagen type I alpha1 chain, or COL1A1, and collagen type 3 alpha1 chain, or COL3A1, that are responsible for collagen production in human IPF and PSC tissues.

Additionally, we have completed a study in non-human primates in which we showed that inhibition of αvß6 and αvß1 reduced TGF-β activation by greater than 75% in cells isolated from the lungs after seven days of treatment.

We have completed Phase 1a single ascending dose, or SAD, multiple ascending dose, or MAD, and food effect clinical trials in which PLN-74809 was shown to be orally bioavailable and generally well tolerated with a half-life that may support once-daily dosing.

We have also completed a Phase 1b proof-of-mechanism trial in healthy volunteers evaluating PLN-74809’s ability to inhibit TGF-β activation as measured through pSMAD2/3 levels.

pSMADs act as signaling molecules directly downstream from the TGF-β receptor, and therefore pSMAD2/3 levels can be used as a reliable biomarker for TGF-β activation.

In the Phase 1b trial, and subsequent Phase 1b extension trial, PLN-74809 was shown to inhibit TGF-β activation in alveolar macrophages collected from healthy volunteers, by up to 92% and 76% at 6- and 24-hours, respectively.

Additionally, PLN-74809 was well tolerated with only mild adverse events and no drug-related adverse events.

We are currently conducting two Phase 2a trials of PLN-74809 in IPF.

In the first of these trials, we are enrolling up to 12 IPF patients and utilizing a positron emission tomography, or PET, ligand to measure αvß6 target engagement by PLN-74809 in the lungs post-treatment with ascending single doses of PLN-74809.

We announced positive interim data from this trial in September of 2021.

Enrollment of this trial continues.

The second trial is a 12-week randomized, double-blind, placebo-controlled trial enrolling approximately 84 IPF patients across four cohorts consisting of three dose cohorts of PLN-74809 and one placebo cohort that will evaluate safety, tolerability and pharmacokinetics, or PK.

We also plan to employ exploratory efficacy endpoints including Quantitative Lung Fibrosis, or QLF, imaging analysis, biomarkers and pulmonary function tests including Forced Vital Capacity, or FVC.

This trial completed enrollment in December 2021, and we expect to release data mid-2022.

We are also recruiting a Phase 2a trial of PLN-74809 in PSC.

The trial is a 12-week randomized, double-blind, placebo-controlled trial enrolling approximately 84 PSC patients across four cohorts consisting of three dose cohorts of PLN-74809 and one placebo cohort that will evaluate safety, tolerability and PK.

We also plan to employ exploratory efficacy endpoints including fibrosis biomarkers such as Pro-C3 and ELF, as well as ALP and liver imaging.

This trial is currently on track to complete enrollment by mid-2022, with data readout expected by late 2022 or early 2023.

We have also developed a second clinical stage product candidate, PLN-1474, which is a small molecule, selective inhibitor of TGF-β activation by the integrin αvß1 in development for treatment of liver fibrosis associated with NASH.

We are currently conducting a Phase 2a trial of bexotegrast in PSC.

The trial is a 12-week randomized, double-blind, placebo-controlled trial enrolling approximately 84 PSC patients across four treatment groups consisting of three bexotegrast doses (40 mg, 80 mg and 160 mg) and one placebo group that will evaluate safety, tolerability and PK.

We also plan to evaluate exploratory efficacy endpoints including fibrosis biomarkers such as Pro-C3 and ELF, as well as ALP and liver imaging.

We expect to announce data from this trial in the third quarter of 2023.

PLN-1474 for Treatment of Liver Fibrosis Associated with NASH

NASH is highly prevalent, affecting approximately 16.5 million adults in the United States, including approximately 3.3 million with stage F3/F4 fibrosis.

The stage of fibrosis is the strongest predictor of liver-related morbidity and all-cause mortality in NASH.

Patients with F3 and F4 fibrosis carry liver-related mortality risk that is 17 times and 42 times greater, respectively, than NASH patients without fibrosis.

Therefore, we believe that treating F3/F4

liver fibrosis will have an impact on liver-related morbidity and all-cause mortality in NASH.

There are currently no approved therapies for NASH and the candidates in development to date have shown only modest antifibrotic effects in published clinical trials.

We have developed a second clinical stage product candidate, PLN-1474, which is an oral, small molecule, selective inhibitor of TGF-β activation by the integrin αvß1 in development for treatment of advanced liver fibrosis associated with NASH.

αvß1 serves as an activator of TGF-β and its expression has been shown to be upregulated in hepatic stellate cells in late-stage NASH-associated liver fibrosis.

In October 2019, we entered into a collaboration and license agreement with Novartis in which Novartis licensed global rights to PLN-1474.

Under the terms of the agreement, we received a $50.0 million license fee, as well as $30.0 million of equity investment.

Additionally, we are eligible to receive up to $416.0 million in total milestone payments, as well as tiered royalties on products commercialized from the collaboration.

To date, we have received $25.0 million in contingent payments and $391.0 million remain eligible for achievement.

We have completed a first-in-human, randomized, double-blind, placebo-controlled Phase 1 dose escalation trial that enrolled 84 healthy volunteers across single ascending dose and multiple ascending dose cohorts.

PLN-1474 has completed a first-in-human, randomized, double-blind, placebo-controlled Phase 1 dose escalation trial that enrolled 84 healthy volunteers across single ascending dose and multiple ascending dose groups.

Results showed that PLN-1474 was rapidly absorbed and well tolerated with no dose- or treatment-limiting toxicities observed with adverse events that were mostly mild with no severe or serious adverse events observed.

The PLN-1474 Investigational New Drug, or IND, application was transferred to Novartis in the first quarter of 2021.

Novartis is responsible for all future development, manufacturing and commercialization activities for PLN-1474.

In addition to our clinical programs, we are developing two additional preclinical integrin-based programs.

The first of these is our oncology program.

In October 2019, we entered into a collaboration and license agreement with Novartis in which Novartis licensed global rights to PLN-1474.

Pursuant to the terms of the agreement, we received an upfront $50.0 million license fee and a $25.0 million contingent payment upon first-patient first-dose in the Phase 1 clinical trial of PLN-1474.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis returned global rights to PLN-1474 to Pliant.

Please refer to Note 8 to our financial statements appearing elsewhere in this Annual Report for further information about the license and collaboration.

PLN-101095 for Treatment of Solid Tumors That are Resistant to Immune Checkpoint Inhibitors

In December 2022, we filed an IND for our third clinical program, PLN-101095 an oral, dual inhibitor of αvß8 and αvß1 integrins for the treatment of solid tumors with a suboptimal response to immune checkpoint inhibitors, or ICIs.

In January 2023 we received clearance from the FDA to begin clinical trials.

As TGF-β biology has been elucidated, it has become increasingly understood in the scientific literature that TGF-β plays an important anti-inflammatory role in the tumor micro-environment, preventing T-cell infiltration and inhibiting release of various cytokines.

This mechanism is becoming increasingly recognized as a potential cause of the resistance to checkpoint inhibitors such as anti-PD-1 therapies seen in many tumors.

We are targeting the TGF-β activating integrin αvβ8, which is upregulated in certain tumors with the goal of sensitizing tumors to checkpoint inhibitors.

This program has generated positive data in preclinical tumor models and our candidate is currently undergoing IND-enabling studies.

We expect to submit an IND application for our oncology program by the end of 2022.

Our second preclinical program is an allosteric agonistic monoclonal antibody against an undisclosed integrin receptor being developed for treatment of muscular dystrophies, including Duchenne Muscular Dystrophy, or DMD.

The target integrin is upregulated on muscle cells across multiple muscular dystrophy indications, acting as a substitute for dystrophin and helping to anchor muscle cells to the extracellular matrix.

We are targeting the TGF-β activating integrins αvβ8 and αvβ1, which are upregulated in certain tumors, with the goal of sensitizing tumors to checkpoint inhibitors.

We plan to initiate Phase 1 first-in-human study evaluating PLN-101095 in patients with solid tumors with a suboptimal response to immune checkpoint inhibitors, or ICIs, in the second quarter of 2023.

PLN-101325 for Treatment of Muscular Dystrophies

In addition to our clinical programs, we are developing a preclinical allosteric agonistic monoclonal antibody against α7β1 for treatment of muscular dystrophies, including Duchenne Muscular Dystrophy, or DMD.

The α7β1 integrin is upregulated on muscle cells in several muscular dystrophy indications, partially compensating for the lack of dystrophin and helping to anchor muscle cells to the extracellular matrix.

The program utilizes an allosteric agonistic antibody to activate the target in order to augment the naturally occurring compensatory mechanism.

Because the antibody is not mutation specific, it could potentially be effective as a single therapy or in combination with other treatment modalities across multiple muscular dystrophy indications.

Our muscular dystrophy candidate is currently undergoing IND enabling studies with submission of an IND application by the end of 2022.

Our muscular dystrophy candidate is currently undergoing IND enabling studies with submission of an IND expected in 2023.

We have assembled an executive team with highly relevant experience in fibrosis, small molecule drug discovery and clinical development.

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To achieve this, we are focused on the following key strategies:

• Rapidly advance PLN-74809 through clinical development and commercialization in IPF and PSC.

• Rapidly advance bexotegrast through clinical development and commercialization in IPF and PSC.

We are developing our lead oral, small molecule inhibitor of αvß6 and αvß1 as a novel therapy for IPF and PSC, each an area of high unmet medical need.

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Our focus is to commercialize our assets in orphan fibrosis indications and to selectively work with partners in larger indications and in geographies outside of North America.

Given the size and competitive dynamics of the NASH indication, we believe that our collaboration with Novartis provides PLN-1474 a strong platform for advancement.

Furthermore, we will evaluate and potentially choose to partner our unpartnered product candidates in indications outside of fibrosis.

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We intend to leverage these tools and capabilities in a target- and modality-agnostic manner to expand our pipeline with a mission to become a world-leading fibrosis company.

A Condition of Uncontrolled Scarring

Fibrosis refers to excessive scarring often resulting from aberrant tissue repair processes.

In normal tissues, fibrotic pathways represent a repair mechanism by which the tissues heal themselves in response to injury or disease.

These pathways are normally deactivated upon completion of tissue repair.

However, when they become dysregulated and remain activated, excess collagen deposition can cause tissues to thicken and become stiff, ultimately impairing their physiological function.

Fibrosis is a disease of connective tissue.

Normal connective tissue forms a supportive network between cells, lending structure and integrity to tissues built up of many cell types.

Connective tissue is composed of collagenous and elastic fibers, as well as a number of supporting cells such as fibroblasts and white blood cells.

These supporting cells are embedded in a gel-like matrix made up of proteins known as the extra-cellular matrix.

The most important protein in this matrix is collagen, which takes the form of elongated, fine fibers, providing flexible support to the surrounding cells.

In fibrotic tissues, initial insults such as tissue damage or inflammation spur the deposition of excess collagen.

Normally such responses are balanced in finely controlled feedback loops, but in fibrotic disease these feedback loops are dysregulated, resulting in progressive scarring, thickening, and loss of function.

Fibrosis occurs in many organ systems throughout the body including the lungs, liver, kidneys, gastrointestinal tract, skin, and muscles.

While the exact pathologies of diseases in these organs vary, the development of fibrosis involves many common cell types and biochemical pathways, including the TGF-β signaling pathway.

The ultimate result is similar across many tissues:

secretion and extracellular activation of growth factors that stimulate fibroblasts to secrete excess collagen, leading to runaway growth of scar tissue.

We believe that selectively inhibiting TGF-β activation holds the key to successfully treating fibrosis across multiple tissues and organs.

TGF-β is secreted by nearly all cells and organs in mammals and stored in large amounts outside of cells, in the extra-cellular matrix, as part of an inactive complex.

In healthy tissues, TGF-β is transiently activated in response to tissue injury which initiates a cascade that results in collagen production and, ultimately, healing of the tissue.

In fibrosis, however TGF-β signaling becomes dysregulated and perpetuated, with TGF-β being continuously activated, leading to excess collagen deposition in the absence of acute tissue injury.

Moreover, induced activation of TGF-β alone in animal models has been shown to be sufficient to induce fibrosis, and inhibition of TGF-β activation has been shown to prevent or reduce fibrosis.

TGF-β can be activated in multiple ways in response to specific tissue injury.

One important class of cell-surface proteins that activate TGF-β in fibrosis are integrins.

Integrins have a variety of functions, including signaling inside the cells, providing tissue structure and stability through adhesion between cells.

Integrins are heterodimeric proteins, meaning they are composed of two different protein subunits paired together.

These are known as α and β subunits.

In humans, there are eighteen distinct α subunits and eight distinct β subunits, which combine to form 24 known and functional integrin pairs.

Certain integrins bind the inactive TGF-β complex.

In response to tissue injury, the cells expressing these integrins are induced to contract, exerting physical force on the bound TGF-β complex.

This mechanical force changes the shape of the complex, releasing active TGF-β.

This activation triggers a biological cascade which results in collagen production, and when dysregulated leads to fibrosis.

As depicted in the figure below, this cascade involves (i) binding of active TGF-β to its receptor, the TGF-β type I receptor kinase also known as ALK5;

(ii) phosphorylation of immediate downstream signaling proteins known as SMAD2 and SMAD3;

(iii) formation of a transcription initiation complex by pSMAD2, pSMAD3 and SMAD4;

and (iv) subsequent transcription of target genes that encode fibrotic proteins such as collagen.

Importantly, whereas certain TGF-β-activating integrins are expressed at very low levels in healthy tissues, the TGF-β cascade can lead to the upregulation of these integrins resulting in a TGF-β-driven positive feed-forward loop which further increases TGF-β activation.

Furthermore, as fibrosis progresses and the fibrotic organ gets stiffer, it becomes progressively easier for contracting cells to activate integrin-bound TGF-β.

It is because of this continued, tissue-specific upregulation of integrins and their key roles in continued TGF-β-activation that we believe that integrins provide an avenue to selectively inhibit TGF-β activation in fibrotic tissue without affecting TGF-β’s important physiological roles in healthy tissues.

αv Integrins promote fibrosis through activation of TGF-β

Model of integrin regulation of TGF- β signaling

Historical Challenges to Drug Development in Fibrosis

Fibrosis has historically been a difficult therapeutic area to target pharmaceutically.

The biology and underlying causes of fibrosis are complex and, in many diseases, poorly understood.

In the past, many patients with fibrotic disease were treated with anti-inflammatory agents such as steroids.

While steroids may have a mild anti-fibrotic effect in some forms of fibrosis, they can exacerbate others, such as IPF.

Additionally, the negative effects of chronic steroid exposure make it difficult to treat patients with these agents for long-term periods.

More recently, it has become well understood that regardless of the underlying cause, TGF-β activation is at the heart of several key processes that drive fibrosis, including collagen formation, deposition of extracellular matrix proteins and activation and proliferation of fibroblast cells.

As such, much of the historic drug development efforts to treat fibrosis have been aimed at systemically inhibiting or disrupting the TGF-β signaling pathway by either (i) blocking TGF-β binding to the TGF-β receptors with an antibody or (ii) preventing the type I TGF-β receptor, also known as ALK5, from activating the SMADs using a small molecule kinase inhibitor.

However, because of TGF-β’s role in normal physiology, these approaches cause substantial toxicity and dysregulation of normal functions.

For example, documented toxicities that arise from systemic inhibition of TGF-β signaling include cardiac toxicity, inflammation and focal epithelial hyperplasia.

A potentially safer approach to fibrosis therapy is to inhibit specific pro-fibrotic signaling molecules, such as connective tissue growth factor and autotaxin, which operate downstream of TGF-β activation, thereby mitigating the tolerability issues associated with systemic TGF-β inhibition.

While tolerability has been shown to improve with this approach, the efficacy shown to date has been modest, likely because TGF-β activates multiple pro-fibrotic signaling pathways in addition to those targeted by these approaches.

Another recent approach is to prevent TGF-β activation by stabilizing TGF-β in its inactive form.

However, it is not known whethe r latent TGF-β stabilization can be accomplished in a tissue specific manner.

In addition to the historical difficulty in targeting TGF-β, clinical development for the treatment of fibrosis has also been limited by the lack of tools to understand this complex multicellular process.

Only certain parts of this process can be modeled using cellular assays.

More complete representations of fibrosis can be generated in animal models, but these models tend to be acute in nature and do not accurately represent disease pathology in humans which, in most cases, develops over decades.

Integrin Inhibitors as a Potential Treatment for Fibrosis

A targeted approach to fibrosis treatment would be one that inhibits TGF-β activation in only those tissues where fibrosis is occurring.

One potential way to accomplish this is to inhibit the integrin proteins that are known to be overexpressed in specific fibrotic tissue and cause the abnormal activation of TGF-β.

In several forms of fibrosis, namely IPF and PSC, TGF-β activating integrins such as αvß6 and αvß1 are over-expressed.

These integrins are normally

expressed at low levels in healthy tissue.

Therefore, it may be possible to avoid off-target toxicity effects by selectively inhibiting αvß6 and αvß1.

By inhibiting fibrosis-specific TGF-β activators such as these specific integrins, it is possible to block abnormal TGF-β activation in the specific tissues where fibrosis occurs, without affecting TGF-β signaling in healthy tissues.

However, integrin drug development has historically been challenging due to the difficulty of developing small molecule integrin inhibitors that are both selective for specific integrins and bioavailable.

Utilizing our proprietary discovery and development capabilities, we believe that we have overcome key historical challenges to the development of integrin inhibitors, including potency, selectivity and bioavailability.

We have identified two bioavailable and highly potent and selective integrin inhibitors.

Our lead product candidate, PLN-74809, has demonstrated good oral bioavailability with a once daily oral dosing profile in Phase 1a trials, and demonstrated target engagement in an interim analysis from our Phase 2a PET ligand trial.

We also believe our integrin library, integrin screening assay platform, live fibrotic human tissue program, PET-ligand imaging program and use of novel disease biomarkers provide a robust platform to drive future drug discovery and development.

Our Capability and Approach to Fibrosis Drug Discovery and Development

Our approach to drug development in fibrosis combines our deep knowledge of the biology of fibrosis with various cellular, tissue, and in vivo assays developed in house to interrogate the biology of fibrosis and uncover pathways and potential targets.

We developed an extensive panel of cell assays, precision cut tissue assays and animal models covering various types of fibrotic diseases.

These assays allow us to evaluate target expression in fibrotic tissues as well as the anti-fibrotic activity of our candidates after treatment and begin to establish proof-of-biological-mechanism in both animal models and human tissue prior to initiating clinical trials.

We believe these collective capabilities uniquely allow us to (i) efficiently identify targets, (ii) optimize the potency and selectivity of candidates and (iii) de-risk product candidates in advance of human proof-of-concept.

The first tool we use in our discovery process is our target expression atlas.

Utilizing samples from normal and fibrotic human tissue, we developed a quantitative atlas of gene and protein expression across multiple fibrotic diseases.

This database represents a wealth of data that we use to quantify expression of tissue specific targets for potential therapeutics.

The atlas is continuously expanding through acquisition of additional samples as well as additional analyses.

The second important tool in our discovery process is our compound library that we screen for activity against targets identified through our target atlas.

While we are agnostic to treatment modality, our initial targeted chemistry effort has been focused on integrin inhibitors, and our medicinal chemistry team has developed a proprietary library of over 10,000 integrin binding molecules.

The goal of the library is to maximize structural diversity while targeting optimal absorption, distribution, metabolism and excretion, or ADME, properties.

We expect that the library will continue to grow as we investigate new structures.

We have designed the library based on in silico known X-ray structures/homology models, structure-activity relationships of structural motifs of known integrin inhibitors, and de novo molecular design.

In addition to our proprietary integrin inhibitor library, we have a non-integrin compound library of over 70,000 compounds that we screen against non-integrin targets.

Once we have identified a potential target through our target expression atlas, we screen our library of compounds against the target.

We have developed screening assays for all 24 known integrins and use these assays to evaluate the potency and selectivity of binding for our potential drug candidates prior to preclinical studies.

Given the selectivity and potency challenges that have hampered integrin drug development, we believe our integrin assay panel represents a major step forward in integrin-based drug development.

We believe a key advantage of our development strategy is our ability to test our product candidates in live human fibrotic tissue, which helps us to bridge the gap between animal models and clinical proof-of-concept.

We have developed proprietary protocols that extend the viability of live human explant tissue samples which allow us to reproducibly perform multiday experiments.

Our access to these live tissue samples allows us to evaluate the effects of our product candidates on multiple markers of anti-fibrotic activity.

The data from these experiments increase our confidence that the tested product candidates will show anti-fibrotic effects in patients.

In this way, our human tissue program serves to further de-risk product candidates and increase their likelihood of success in the clinic.

Once in clinical development, we seek to further de-risk our programs by designing clinical trials that allow us to show proof-of-mechanism in advance of clinical efficacy data.

Because fibrosis is a chronic disease, proof-of-efficacy in human trials is expensive and takes relatively large patient numbers and years to demonstrate statistically relevant safety and efficacy data.

We utilize pharmacodynamic biomarkers and advanced imaging techniques, including PET, to evaluate target engagement by our product candidates over relatively short time periods and observe whether the product candidate is having the anticipated effect.

We believe obtaining these clinical data points in an efficient manner allows us to optimize our clinical development strategy and resource allocation.

We and our partners also proactively conduct observational, natural history trials in target diseases to better understand disease pathophysiology and progression and develop new molecular biomarkers.

Through these trials, we have gone on to develop patient registries and establish relationships with clinicians at leading medical research institutions dedicated to bringing novel fibrosis therapies to their patients.

We are developing an extensive biomarker discovery and validation program.

We are seeking to develop biomarkers to (i) identify patients at high risk of rapid disease progression, (ii) identify patients more likely to respond to treatment and (iii) monitor early treatment responses.

We are conducting clinical studies and other research with leading academic centers to track disease progression and collect biological samples such as blood, urine, and tissue biopsies which we can use to discover and validate novel biomarkers.

Our Systematic Approach to Identifying and Targeting Integrins in Fibrosis

Selective inhibition of TGF-β activation in fibrotic tissues could potentially be the safest and most effective approach to treating fibrosis.

One way to accomplish this is to inhibit the integrin receptors that drive excessive activation of TGF-β.

Given the importance of integrins in regulating the initial steps in fibrosis, we have focused our initial drug discovery efforts on a dual approach.

This approach includes both biological profiling to identify which integrins are important in various diseased tissues and chemical profiling of libraries containing proprietary integrin inhibitors to help determine their selectivity and potency for individual integrins.

Utilizing our extensive in-house medicinal chemistry expertise, we have created a library of over 10,000 integrin binding molecules.

We screen this library against the integrin targets that we identify through our expression atlas and or biological profiling process.

To our knowledge, this type of industrial-scale, systematic biological and chemical profiling, seeking selective inhibitors of one or more integrins, has not previously been carried out.

Central to our integrin inhibitor discovery process are our integrin assay panels.

A key challenge in integrin inhibition, historically, has been selectivity for specific integrins.

To address this challenge, we have developed assays against all known integrins.

We use these screening assays to measure potency and selectivity of potential candidates against these integrins.

This allows us to quickly optimize the integrin binding profiles of potential development candidates in an iterative process.

In addition to our deep understanding of integrin biology, we have gained significant insight in structure-activity relationships that determine integrin selectivity and optimal pharmacokinetic, or PK, profiles.

Utilizing this knowledge, we are now able to precisely engineer bioavailable integrin inhibitors with high potency and desired selectivity.

Our integrin inhibitor profiling capability has enabled us to quickly identify inhibitors that target individual integrins such as PLN-1474, which selectively inhibits αvß1, as well as dual inhibitors such PLN-74809 which selectively targets both αvß6 and αvß1.

Combining the data from our biological profiling and chemical profiling sets has enabled us to identify compounds that we believe have the highest potential for therapeutic activity in specific fibrotic diseases.

Our iterative drug discovery effort focuses on drug-like properties of compounds early in the testing process.

Compounds are screened for in vitro potency/selectivity and ADME/PK properties.

This enables us to move from compound optimization to in vivo testing in a matter of months.

We continue to evaluate our broad proprietary library of integrin binding compounds to identify additional product candidates to treat fibrotic diseases.

Furthermore, our approach allows us to use our discovery and development capabilities to develop non-integrin therapeutic modalities to treat fibrotic diseases.

Our rich library also provides a deep

series of potential backup molecules with structurally unique chemotypes that we believe can enhance the probability of clinical success.

As with all development efforts, a key approach to preclinically de-risking our integrin inhibitor candidates is evaluation of candidates in live human fibrotic tissue obtained following transplant procedures.

The ability to observe effects of our product candidates on gene expression in human tissues prior to entering the clinic provides a bridge from animal models to clinical proof-of-concept and helps give us additional confidence as we move toward human trials.

As fibrosis is a chronic disease, proof-of-efficacy in human trials is expensive and takes years to complete.

We utilize pharmacodynamic biomarkers and advanced imaging techniques, including PET, to evaluate target engagement by our product candidates over relatively short time periods and de-risk our programs by designing clinical trials that allow us to show proof-of-mechanism in advance of clinical efficacy data.

We are using αvß6 PET ligand imaging technology in our ongoing Phase 2a PLN-74809 trial to evaluate the level of αvß6 expression in the lungs of IPF patients, as well as to measure our product candidate’s ability to bind αvß6.

In September 2021, we released positive interim data from this ongoing trial demonstrating PLN-74809’s ability to penetrate highly fibrotic lung tissue and bind to αvß6.

In addition to the αvß6 PET ligand, we have developed an αvß1PET tracer to evaluate the level of αvß1 expression in fibrotic tissues, as well as to measure the ability of our product candidates to penetrate fibrotic tissues and bind to αvß1.

We filed an IND for this program in December 2020 and the U.S.

Food and Drug Administration, or FDA, has since issued a “safe to proceed” letter.

We have initiated a Phase 1 clinical trial of our αvß1 PET ligand.

Our Product Candidates

Idiopathic Pulmonary Fibrosis Background

IPF is a debilitating, age-related lung disease of unknown causes that has few treatment options.

It is a form of progressive pulmonary fibrosis that leads to thickening and stiffening of the lung tissue resulting in the loss of lung function.

As tissue scarring progresses, the lungs’ ability to transfer oxygen into the bloodstream becomes increasingly impaired.

Average life expectancy at the time of confirmatory diagnosis of IPF is estimated to be between three and four years.

Approximately 60 to 80 percent of patients die within five years of diagnosis.

These survival rates are worse than those of many late-stage cancers, such as stage 3 breast cancer.

Patients with IPF experience debilitating symptoms, including shortness of breath and difficulty performing routine functions, such as walking and talking.

Other symptoms include a chronic, dry, hacking cough;

discomfort in the chest;

loss of appetite;

and weight loss.

IPF is a rare disease that affects approximately 140,000 people in the United States.

There are an estimated 30,000 to 40,000 new cases diagnosed each year.

Currently, there is no pharmacological cure for IPF and only a small proportion of late-stage IPF patients may be eligible for a lung transplant.

The current non-transplant standard of care aims to slow the disease progression and improve the quality of life.

Two therapies to treat IPF have recently been approved by the FDA:

Esbriet® (pirfenidone), marketed by Roche Holding AG, and OFEV® (nintedanib), marketed by Boehringer Ingelheim.

After decades during which the FDA approved no new treatments for IPF, the approvals of pirfenidone and nintedanib represented a major breakthrough for IPF patients.

However, while these therapies may help slow the decline of lung function, neither drug has been shown to stop the progression of IPF.

We believe that, despite the approval of pirfenidone and nintedanib by FDA, there remains an unmet need for IPF patients that we plan to address through our product candidate.

Despite its mechanism of action being unknown, pirfenidone has been shown in registrational trials to have a modest effect on slowing the progression of IPF as measured by FVC, in approximately fifteen percent of patients.

Recent studies suggest that pirfenidone may have an impact on survival compared to placebo, but these results have not been confirmed.

In March 2020, the FDA granted breakthrough therapy designation for pirfenidone for treatment of unclassifiable lung fibrosis.

Nintedanib is an inhibitor of multiple tyrosine kinases that are receptors for growth factors such as platelet- derived growth factor, or PDGF, fibroblast growth factor, or FGF, and vascular endothelial growth factor, or VEGF.

Nintedanib reduced the rate of decline of pulmonary function in multiple trials by approximately half and led to significant delays in the time to acute disease exacerbation.

While treatment was associated with a trend towards increased survival in registration trials, it has not been shown conclusively to have a survival benefit.

Recent exploratory analyses from pooled data from six clinical trials of nintedanib suggest that nintedanib may extend life expectancy in patients with IPF.

The FDA approved nintedanib for the treatment of lung fibrosis associated with systemic sclerosis in September 2019, and for the treatment of chronic fibrosing interstitial lung disease, or ILD with a progressive phenotype in March 2020.

Elevated liver enzymes have been observed with both of these drugs, requiring monitoring of liver tests and potentially temporary dose reduction and discontinuation.

Cases of drug-induced liver injury, including one fatal outcome, have been reported in patients treated with nintedanib.

Pirfenidone’s prescribing information also carries a similar warning about elevated liver enzymes.

Despite the remaining unmet need, combined sales of pirfenidone and nintedanib in 2020 were over $3.6 billion.

IPF remains a major cause of morbidity and mortality and an area of high unmet medical need for which a commercial opportunity remains.

Primary Sclerosing Cholangitis Background

PSC is a progressive liver disorder characterized by inflammation and fibrosis of the bile ducts which transport bile from the liver to the intestines.

This type of fibrosis often results in obstruction or interruption of bile flow from the liver, a condition known as cholestasis, leading to liver fibrosis.

Cirrhosis eventually develops and many individuals ultimately require a liver transplant.

PSC patients are also at a higher risk of developing hepatobiliary cancers, including a 5 to 20 percent lifetime chance of developing cholangiocarcinoma, a typically rare form of cancer with an especially poor prognosis.

The exact cause of PSC is unknown.

PSC is normally diagnosed at middle age, with a median age at diagnosis of approximately 40 years old.

The prevalence of PSC in the United States is estimated to be between 30,000 and 45,000 patients.

In the absence of liver transplant, median survival of PSC patients is 10 to 12 years following diagnosis without intervention.

There are currently no approved pharmacological treatments for PSC.

A number of immunosuppressive and anti-inflammatory agents have been studied in patients with PSC, but none has been conclusively proven to slow progression.

Liver transplantation is the only available treatment for PSC patients;

however, disease has been shown to recur in up to 20 percent of patients following transplantation.

Our Solution, PLN-74809

PLN-74809 is an oral small-molecule that selectively inhibits both αvß6 and αvß1 integrins that we are developing as a potential therapy for IPF and PSC.

We have determined that TGF-β activation in fibrosis associated with IPF and PSC involves both αvß6 and αvß1 integrins.

It has been shown that expression of both αvß6 on epithelial cells and αvß1 on fibroblasts can lead to excessive activation of TGF-β in fibrosis.

Epithelial tissue includes any tissue that lines the surfaces of the body such as alveoli, bile ducts, urinary tract, skin, and gastrointestinal tract.

Each of these tissues contains multiple cell types including epithelial cells and fibroblasts.

An important secondary effect of the TGF-β cascade is that it promotes upregulation of αvß1 on epithelial cells.

The increased expression of these integrins on the cell surface contributes in turn to further TGF-β activation in a TGF-β-driven positive feed-forward loop.

Epithelial tissue fibrosis is driven by two types of integrins

Data from our lab, as well as scientific literature, have shown that αvß6 and αvß1 proteins are overexpressed in at least two different fibrosis indications:

In lung tissue from IPF patients we and others have shown that alveolar epithelial cells have elevated αvß6 expression, and that the level of over-expression correlates with disease severity.

We have also shown that in these patients, αvß1 expression is upregulated.

In liver tissue from PSC patients, we have shown that αvß6 is upregulated in cholangiocytes, the epithelial cells that line the bile ducts, and that αvß1 is upregulated in whole fibrotic liver tissue.

αvß6 and αvß1 are normally expressed at very low levels in healthy tissue making them ideal targets for selectively inhibiting TGF-β activation in IPF and PSC.

αvß6 is upregulated in the lung tissue of IPF

patients and the liver tissue of PSC patients

* = p < 0.05 (1)

(1) A p-value is the probability that the reported result was achieved purely by chance, such that a p-value of less than or equal to 0.05 or 0.01 means that there is a 5.0% or 1.0% or less probability, respectively, that the difference between the control group and the treatment group is purely due to chance.

A p-value of 0.05 or less typically represents a statistically significant result.

αvß1 expression is upregulated in lung and liver fibrosis

We have conducted a non-interventional clinical trial in IPF patients to assess the expression of integrin αvß6 using a PET ligand.

This trial confirmed that patients with IPF have high levels of integrin αvß6 expression, which tend to be co-localized with fibrotic regions of the lungs.

This trial was published in Nature Communications in 2019.

The specificity of this PET ligand can be seen in images from an IPF patient who received a unilateral lung transplant.

The PET ligand is only taken up in the diseased lung but not in the transplanted healthy lung.

Pulmonary αvß6 PET ligand uptake in an IPF patient with a unilateral lung transplantation is confined to the IPF lung

We have shown that inhibition of both αvß6 and αvß1 integrins is required to maximally inhibit the expression of COL1A1 , a key gene that encodes type I collagen, in models of lung and biliary fibrosis as well as in human IPF tissue.

COL1A1 is a TGF-β regulated gene that is expressed in fibrotic tissue.

The expression level of COL1A1 correlates with the amount of collagen deposited as measured by the standard biochemical method of quantification of hydroxyproline, an amino acid that is a major component of collagen.

Clinical Development of PLN-74809

Current and Planned Clinical Trials for IPF and PSC

We are currently conducting three Phase 2a trials of PLN-74809, two in patients with IPF and one in patients with PSC, subject to the impact of the COVID-19 pandemic.

The first of these is an ongoing Phase 2a randomized, double-blind, placebo-controlled IPF trial evaluating up to three doses of PLN-74809 in IPF patients.

We are exploring doses up to 160 mg per day at the highest dose.

This is a 12-week trial evaluating safety and tolerability, as well as PK in IPF patients.

We plan to evaluate exploratory endpoints including pulmonary function tests, biomarkers and imaging, including Quantitative Lung Fibrosis HRCT imaging, or QLF.

This is a multinational trial with approximately 60 sites in the United States, Canada, Australia, New Zealand and multiple countries in Europe.

This trial has completed enrollment and data release is expected in mid-2022.

In December 2021, the FDA authorized evaluation of long-term dosing of PLN-74809 up to 320 mg in patients with IPF.

This appr oval enables the evaluation of PLN-74809 in larger, long-term pivotal trials in IPF.

We initiated a 6-month Phase 2a trial of PLN-74809 at 320 mg in IPF patients in the first quarter of 2022.

12-Week Safety, PK, Biomarker Trial in IPF Patients

Design of 12-week Phase 2a IPF Trial

In our 12-week Phase 2a IPF trial, we will utilize QLF as a biomarker for early detection of changes in lung fibrosis.

QLF is a fibrosis biomarker assessed using high resolution computerized tomography, or CT, imaging and utilizes quantitative image analysis to measure the density of lung tissue and quantify the volume of fibrosis present in the lung.

QLF technology was developed by MedQIA, and has been evaluated in over 5,000 ILD patients, showing an ability to predict FVC decline in patients with IPF.

While we will measure both endpoints, we believe QLF may allow us to detect changes in lung fibrosis in a more specific way than FVC.

QLF has been utilized in recent clinical trials to evaluate early treatment effects in the amount of lung fibrosis present.

In Biogen’s Phase 2a trial of BG00011, a mAb targeting αvß6, dose-dependent trends in QLF were seen at 8 weeks, with the 1 mg/kg cohort showing a decrease in the amount of fibrosis present with a r=-0.49 correlation to FVC.

Additionally, FibroGen utilized QLF in their Phase 2 trial of pamrevlumab, their anti-CTGF mAb, in IPF.

FibroGen showed 71% and 50% reductions in progression of fibrosis versus placebo at 24 and 48 weeks, respectively, as measured by QLF.

We are conducting a 12-week Phase 2a randomized, double-blind, placebo-controlled trial of PLN-74809 in PSC patients.

We are evaluating up to three cohort doses of PLN-74809 (40 mg, 80 mg or 160 mg) or placebo.

This is a multinational trial with approximately 60 sites in the United States, Canada, Australia, New Zealand and multiple countries in Europe.

This trial is currently on track to complete enrollment by mid-2022, with data readout expected by late 2022 or early 2023.

12-Week Safety, PK, Biomarker Trial in PSC Patients

Design of 12-week Phase 2a PSC trial

The primary endpoints for our Phase 2a PSC trial will be safety and tolerability, as well as PK.

We will also employ exploratory endpoints including fibrosis biomarkers including PRO-C3 and ELF, which are predictive of transplant-free survival in PSC patients, change in alkaline phosphatase and liver imaging.

Regulators have suggested that composite endpoints including biomarkers such as alkaline phosphatase, PRO-C3 and ELF coupled with liver histology may support approval in PSC.

Both Gilead and Dr.

Falk Pharma are including liver histology as a primary endpoint in their respective Phase 3 PSC trials.

NGM Biopharmaceuticals, Inc., or NGM, showed dose-dependent changes in PRO-C3 and ELF at 12 weeks in its Phase 2a PSC trial, with levels returning to baseline after the removal of treatment.

We are also conducting an open-label trial utilizing a PET ligand to αvß6 that allows imaging of target engagement by PLN-74809 in the lungs of IPF patients during treatment.

Patients will receive a single dose of PLN-74809 across a dose range starting at 60 mg.

We will obtain a PET scan at baseline to evaluate αvß6 expression levels in the patients’ lungs and then initiate treatment with PLN-74809.

A post-treatment PET scan will be performed at approximately three hours after administration of the dose, which will enable us to evaluate PLN-74809’s target engagement in patients’ lungs at maximum drug concentration.

Images are analyzed for regions of high fibrotic activity, which are then evaluated for target engagement.

Following completion of a standard washout period, patients may consent to receive a second dose of PLN-74809 at a different dose level followed by a second post-dose PET scan.

When PLN-74809 binds to the αvß6 receptor, we would expect to see decreased PET ligand uptake in the lungs post-treatment when compared to pre-treatment levels.

The relationship between dose and target engagement is important to confirm penetration of PLN-74809 into fibrotic tissue, establish a PK/pharmacodynamic, or PD, relationship between PLN-74809 plasma exposure and αvß6 target engagement, link biological activity shown in Phase 1b healthy volunteer BAL study to αvß6 target engagement in IPF lungs and guide dose selection in future studies.

We announced positive interim results from the Phase 2a PET imaging trial of PLN-74809 in September 2021.

Each patient across the four dose cohorts tested achieved target engagement levels of greater than 50% in the most fibrotic portions of their lungs after only one dose of PLN-74809.

Target engagement of 50% was previously established in a Phase 1b trial as the threshold for predicted clinical anti-fibrotic effect.

In addition, there was a dose- and plasma concentration-dependent response with the two highest doses approaching target saturation.

PLN-74809 was well tolerated in the trial with no serious adverse events reported.

The interim data confirm that PLN-74809 penetrates the highly fibrotic lung tissue of IPF patients, and potently binds to its target.

The data allow us to construct a full exposure curve model, decoding our ongoing Phase 2a trials and guiding future clinical development of PLN-74809.

Four IPF patients were administered six single doses of PLN-74809 across cohorts of 60 mg, 120 mg, 240 mg and 320 mg, generating a total of six patient scans.

Single doses of 60 mg, 120 mg and 240 mg were predicted to achieve serum concentrations similar to those seen at Cmax at steady state for doses of 40 mg, 80 mg and 160 mg, respectively, which the Company is studying as part of its ongoing Phase 2a INTEGRIS-IPF trial in IPF patients.

Preliminary results are as follows:

PLN-74809 Demonstrated Lung Penetration, with Greater than 50% Target Engagement Achieved in the Lungs of All IPF Patients Across All Dose Cohorts

• Up to 98% target engagement of PLN-74809 achieved

• Greater than 50% target engagement of PLN-74809 achieved across all doses

Dose and Plasma Concentration Response Established

• PLN-74809 achieved a dose response across all single-doses from 60 mg to 320 mg

• Suggests target engagement levels along the entire exposure curve of PLN-74809

• Supports potential anti-fibrotic activity of PLN-74809 at the doses being evaluated in the ongoing Phase 2a INTEGRIS-IPF trial

PLN-74809 Well-Tolerated Across All Doses

• No serious adverse events reported

PLN-74809 Percent Target Engagement Across Multiple Single-Dose Cohorts

Other Potential Development Plans for PLN-74809 in Pulmonary and Hepatic Indications

We are currently exploring the potential effects of PLN-74809 in fibrotic diseases outside of IPF and PSC and may choose to explore the development of PLN-74809 in additional indications in the future.

For example, we believe PLN-74809 could provide anti-fibrotic benefits in several pulmonary and hepatic fibrosis diseases where there is over-expression of αvß6, including pulmonary fibrosis associated with systemic sclerosis, pulmonary fibrosis associated with

rheumatoid arthritis, pulmonary fibrosis associated with other forms of interstitial lung disease, primary biliary cholangitis, or PBC, biliary atresia and progressive familial intrahepatic cholestasis, or PFIC.

Additionally, we believe that PLN-74809 could provide anti-fibrotic benefits in the setting of end-stage renal disease.

Phase 1 Trials

We completed an extended Phase 1a first-in-human, or FIH, SAD/MAD and food effect clinical trial of PLN-74809 in healthy volunteers.

In the SAD portion of the trial, single doses of PLN-74809 were administered to 32 volunteers across four cohorts at doses of 15 mg, 30 mg, 50 mg and 75 mg.

Eight additional volunteers in the SAD portion of the trial received placebo.

In the MAD portion of the trial, PLN-74809 was administered orally to 27 volunteers, once-daily over 14 days at 10 mg, 20 mg, 40 mg.

Six additional volunteers in the MAD portion of the trial received placebo.

In the food effect part of the trial, PLN-74809 was administered to 12 volunteers, administered as a single dose with and without food.

PLN-74809 was shown to be well tolerated with no dose-related adverse events.

All but two adverse events reported in the entire trial were mild except for a moderate adverse event of dental abscess (SAD, 30 mg dose cohort) and a moderate adverse event of viral syndrome (MAD, 40 mg dose cohort).

All adverse events resolved or recovered and no dose relationship for adverse events was observed.

No notable findings were observed for laboratory abnormalities, vital signs, or ECG/telemetry.

Since completing the Phase 1 FIH trial, we have conducted a Phase 1 extended dose escalation trial evaluating PLN-74809 at higher doses.

This was a randomized, double-blind, placebo-controlled trial evaluating safety and tolerability as well as PK in 96 healthy volunteers at single doses up to 640 mg and multiple doses up to 320 mg.

The PK profile of the higher dose cohorts remained in line with previous cohorts, and PLN-74809 remained well tolerated with no serious adverse events or severe adverse events reported in either cohort.

Participants with Drug Related Adverse Events in PLN-74809 in Phase 1a Trials

PLN-74809 MAD Steady-State C max and AUC 0-24

Additionally, PLN-74809 was well absorbed, and displayed a half-life of approximately 50 hours.

PLN-74809 reached steady state plasma concentrations after seven days of dosing.

Co-administration of PLN-74809 with

food decreased drug concentrations relative to the fasted state, with AUC decreasing by approximately 40 percent and Cmax by approximately 50 percent.

We have also completed a Phase 1b proof-of-mechanism trial in healthy volunteers.

The purpose of this randomized, double-blind, ascending-dose, placebo-controlled trial was to evaluate PLN-74809’s ability to inhibit TGF-β activation in the lung as measured by pSMAD2 levels in pulmonary alveolar macrophages collected from bronchoalveolar lavage, or BAL, fluid and to further characterize the PK/PD relationship in humans.

We enrolled 18 volunteers across four dose cohorts (each cohort randomized 3:1 active to placebo).

Two cohorts were dosed at 20 mg once daily and two cohorts were dosed at 40 mg once daily.

Volunteers underwent an initial BAL procedure prior to treatment to measure baseline pSMAD levels.

They were then treated with PLN-74809 or placebo for seven days, after which they underwent two additional BAL procedures to measure the amount of pSMAD reduction post-treatment at multiple time points.

By utilizing two cohorts each for the 20 mg and 40 mg doses, we were able to measure pSMAD and drug levels at 4 different time points post treatment for each dose (3-, 6-, 12- and 24-hours post-dose on day 7), allowing assessment of PK/PD relationship over a 24-hour period.

In this Phase 1b trial, 16 participants completed pre- and post-treatment BAL procedures.

Four out of six participants (66%) receiving the high dose of PLN-74809 experienced mean reductions of 58.6% (6.9%) in pSMAD2 levels at six hours post-dose relative to baseline levels.

Notably, all four of the volunteers in the high dose cohort with reductions in pSMAD2 levels also achieved plasma concentrations of PLN-74809 corresponding to the predicted plasma protein adjusted IC50 of 700 ng/ml.

The two volunteers in the high dose cohort who did not achieve these concentrations did not experience reductions in pSMAD2 levels.

In the low dose cohort, no volunteers achieved plasma protein adjusted IC50, and only one volunteer experienced significant reduction in pSMAD2 levels post treatment, relative to baseline levels.

These results demonstrate PLN-74809’s effect on reducing TGF-β activation in the lungs in a dose- and exposure-dependent manner, supporting a PK/PD relationship in humans.

These data support the biological activity of PLN-74809 and guided dose selection and trial design of our ongoing Phase 2a trials.

Treatment with PLN-74809 was well tolerated with no drug-related adverse events.

None of the adverse events reported were observed in more than one participant.

In the 40 mg dose cohort, two trial participants discontinued treatment prematurely (one participant receiving PLN-74809 and one receiving placebo) and did not undergo post-treatment BAL procedures;

these participants were subsequently replaced.

Adverse Events Reported by Participants Receiving PLN-74809 in Phase 1b Trial

Groups Adverse Event Severity Drug Related?

(n = 6) Deafness a

Frequent Bowel Movements Mild No

Middle Ear Infusion Mild No

ECG QT Interval Elongated c

a- Unilateral earwax for 6 hr on day 1;

subject completed 7 days dosing without recurrence or additional adverse events.

b- One subject was replaced due to prolonged QT interval.

c- ECG finding after first dose;

baseline ECG abnormalities were already present.

We conducted an expanded Phase 1b proof-of-mechanism trial evaluating the inhibition of TGF-β signaling as measured through relative pSmad2 levels in alveolar macrophages collected through bronchioalveolar lavage (BAL) at 6 hours and 24 hours after the last dose in the lungs of healthy volunteers.

The trial was conducted in two parts.

Part 1 evaluated PLN-74809 at doses of 80 mg and 160 mg once-daily versus placebo and Part 2 evaluated PLN-74809 at 320 mg once-daily versus placebo.

In addition to safety and pharmacokinetics, the trial evaluated PLN-74809's ability to suppress TGF-β activation in the lungs of healthy volunteers as measured through relative pSmad2 levels in alveolar macrophages collected through bronchioalveolar lavage (BAL) at 6 hours and 24 hours after the last dose.

pSmad2 is a marker of TGF-β activation.

This trial further defines the relationship between plasma exposure of PLN-74809 and TGF-β inhibition in the lung and will guide dose selection in future trials.

All PLN-74809 treatment groups across Part 1 and Part 2 showed pSmad2 suppression relative to placebo at 6 hours and 24 hours.

pSmad2/Smad2 percentage change from baseline, delta versus placebo in Part 1 and Part 2

PLN-74809 dosed at 80 mg once-daily demonstrated mean pSmad2 reductions of 41% and 37% from baseline at 6 and 24 hours, respectively, with up to 76% reduction seen at 24 hours.

PLN-74809 dosed at 160 mg once-daily demonstrated pSmad2 reductions of 58% and 53% from baseline at 6 and 24 hours, respectively, with up to 92% reduction seen at 6 hours.

Statistical significance (p < 0.0001) was achieved at 24 hours for both the 80 mg and 160 mg doses when compared to placebo.

Both the 80 mg and the 160 mg dose cohorts demonstrated exposures above the 50% target inhibitory concentration (IC50) of αvβ6 for 24 hours after dosing.

Alveolar pSmad2/Smad2 Percentage

Change from Baseline at 24 hours

80 mg and 160 mg)

Mean PK/PD response

80 mg and 160 mg)

PLN-74809 dosed at 320 mg once-daily demonstrated a mean pSmad2 reduction of 46% from baseline at 6 hours and a mean increase of 16% from baseline at 24 hours.

The placebo group experienced a mean pSmad2 reduction of 8% from baseline at 6 hours and a mean increase of 151% from baseline at 24 hours.

At both timepoints in the PLN-74809 arm, pSmad2 levels decreased relative to placebo.

The Part 2 treated group showed exposures above IC50 of αvβ6 for 24 hours after dosing.

Alveolar pSmad2/Smad2 percentage change from baseline at 24 hours (Part 2:

On Day 7 at 24 hours post dose, the placebo groups in both Part 1 and Part 2 showed mean pSmad2 increases of 74% and 151%, respectively.

These increases in pSmad2 may have been associated with the 6 hour BAL procedure.

All PLN-74809 treatment groups showed pSmad2 suppression relative to placebo at 24 hours, suggesting that PLN-74809 treatment was able to inhibit TGF-β activation triggered by BAL procedures.

Acute phase response following BAL procedures has been previously described in healthy volunteers and patients.

Comparison of placebo and trial drug response in Part 1 and Part 2

PLN-74809 was well-tolerated with mostly mild adverse events, and no severe adverse events.

There was no dose relationship associated with adverse events, no serious adverse events (SAEs) and no treatment discontinuations due to adverse events.

As of February 2022, more than 450 study participants, including healthy volunteers and patients, with no drug-related serious adverse events or severe adverse advents reported to date.

The most common treatment emergent adverse events, or TEAEs, in PLN-74809-treated volunteers were mild headache (12/184 [6.5%] participants) and mild constipation (6/184 [3.3%] participants).

We have developed a wholly-owned PET tracer of the protein integrin of αvß1.

We filed an IND in December 2020, and the FDA has since issued a “safe to proceed” letter.

We plan to use this PET tracer to evaluate expression levels of αvß1 in various fibrotic tissues.

Additionally, this tracer may allow us to evaluate tissue penetration and target engagement of developmental candidates that bind αvß1, similar to the current Phase 2a PET trial we are running in IPF.

PLN-1474 and NASH

PLN-1474 is a selective inhibitor of αvß1 integrin that is in development for the treatment of liver fibrosis in patients with NASH.

PLN-1474 is an orally bioavailable inhibitor that has shown anti-fibrotic activity in multiple animal models of liver fibrosis as well as in live human NASH fibrotic liver tissue.

In October 2019, we entered into a license and collaboration agreement with Novartis under which Novartis received global rights to develop and commercialize PLN-1474 the treatment of NASH associated liver fibrosis.

We have completed a first-in-human, randomized, double-blind, placebo-controlled Phase 1 dose escalation trial of PLN-1474 that enrolled 84 healthy volunteers across single ascending dose and multiple ascending dose cohorts.

Results showed that PLN-1474 was well tolerated with no dose- or treatment-limiting toxicities with adverse events that were mostly mild with no severe or serious adverse events observed.

The IND application for PLN-1474 was transferred to Novartis in the first quarter of 2021, and Novartis is responsible for all development, manufacturing and commercialization activities.

Background on Liver Fibrosis and NASH

NASH is a severe form of non-alcoholic fatty liver disease, or NAFLD, that is associated with the development of liver fibrosis and potentially life-threatening liver dysfunction.

NAFLD is characterized by increased fat in the liver, or steatosis, and is believed to occur due to a combination of factors including high caloric diet, obesity and metabolic syndrome, type 2 diabetes mellitus and genetics.

Early stages of the disease often have no symptoms other than slightly elevated or fluctuating levels of liver enzymes in some patients.

As excess fat builds up in the liver, it can cause inflammation and injury to the liver tissues.

Over time, NASH can lead to fibrosis of the liver.

Fibrosis can progress to cirrhosis, resulting in impaired liver function and increased risk of liver-related complications and mortality.

It is estimated that 30 to 40 percent of adults in the United States have NAFLD and approximately 30 percent of these patients, or up to 12 percent of adults, will develop NASH.

NASH is already highly prevalent, affecting approximately 16.5 million adults in the United States with approximately 3.3 million at stage F3/F4 liver fibrosis.

NASH is a growing problem with U.S.

cases expected to top 27 million by 2030, with approximately eight million at stage F3/F4 liver fibrosis.

Our Solution, PLN-1474

PLN-1474 is a bioavailable, small molecule, selective inhibitor of αvß1 mediated TGF-β activation.

PLN-1474 is an anti-fibrotic therapy for patients with liver fibrosis associated with NASH.

We have shown that in human fibrotic liver tissue from patients with NASH that the levels of αvß1 are significantly elevated in tissue from patients with late-stage fibrotic disease.

Overexpression of αvß1 is correlated with TGF-β activation as measured by pSMAD3 levels.

Therefore, we believe a single-selective inhibitor of αvß1 is a promising and differentiated approach to treating NASH associated liver fibrosis.

In October 2019, we entered into a license and collaboration agreement with Novartis through which Novartis obtained a global license to PLN-1474.

We have completed a Phase 1 trial of PLN-1474 in healthy volunteers with Novartis reimbursing us for all associated development activities.

The IND application for PLN-1474 was transferred to Novartis in the first quarter of 2021, and Novartis is responsible for all development, manufacturing and commercialization activities.

Applying our Fibrosis Expertise in Developing Additional Products

We are pursuing potential uses of PLN-74809 in additional fibrotic indications.

We use our precision cut human fibrotic tissue assays in addition to our animal model data to inform our clinical development programs and potentially select additional indications where we think our pipeline candidates could have an effect.

Our mission is to advance the understanding of fibrosis by building a biology-, chemistry- and screening- based engine to drive drug development across the spectrum of fibrotic diseases.

While our initial focus is on small molecule integrin inhibitors in lung and liver fibrosis, we are actively pursuing additional treatment modalities across fibrosis indications in multiple different organs.

We have identified other potential non-integrin targets related to TGF-β signaling as well as other pathways across multiple fibrosis indications, such as regulators of epithelial-to-mesenchymal transition, a critical process in fibrosis.

In addition, while our initial focus is on small molecule drug candidates, we are agnostic to treatment modalities in the development of our pipeline.

Our Oncology Program-TGF-β Signaling in the Tumor Microenvironment

Over the past several years, the checkpoint inhibitor class of immuno-oncology drugs has changed the way many cancers are treated.

Checkpoint inhibitors work to block signals that prevent the body’s immune system from recognizing tumor cells.

By blocking checkpoint signals such as PD-1, these drugs have the ability to sensitize T-cells, allowing them to recognize and kill tumor cells.

While checkpoint inhibitors have led to dramatic improvements in survival rates for certain cancer indications, there are still a significant proportion of patients who do not respond to the drugs.

Much effort is being devoted to understanding the root causes of checkpoint inhibitor resistance.

As TGF-β biology has been elucidated, it has become increasingly understood in the scientific literature that TGF-β plays an important anti-inflammatory role in the tumor microenvironment.

One of TGF-β’s core physiologic roles is an anti-inflammatory effect that it provides in the wound healing process.

In the tumor microenvironment, however, certain integrins, such as αvβ8, can be overexpressed on multiple different cell types, resulting in increased activation and signaling of TGF-β.

This over activation of TGF-β can lead to a strong anti-inflammatory effect in the tumor microenvironment, resulting in decreased T-cell infiltration and decreased release of pro-inflammatory cytokines such as granzyme B and interferon g.

This mechanism is becoming increasingly recognized as a potential cause of the resistance to checkpoint inhibitors such as anti-PD-1 therapies seen in many tumors.

We are targeting TGF-β activating integrins such as αvβ8 that are upregulated in certain tumors with the goal of removing the anti-inflammatory effect and, ultimately, sensitizing tumors to checkpoint inhibitors.

This program has generated positive data in preclinical tumor models and our candidate is currently undergoing IND-enabling studies with IND submission expected by the end of 2022.

Integrin Upregulation in the Tumor Microenvironment

We are developing small molecule inhibitors against αvβ8 as well as other TGF-β-activating integrins that have been shown to be upregulated in the tumor microenvironment.

We have shown in an EMT6 anti-PD-1 resistant tumor mouse model that our small molecule inhibitors of αvβ8-mediated TGF-β activation are able to sensitize tumors to anti-PD-1 therapy and extend survival.

We have shown in an EMT6 pancreatic cancer model that tumor growth inhibition by our lead αvβ8 and αvβ1 is significantly greater than what can be seen with an anti- αvβ8 antibody.

Additionally, our molecules perform similarly to monoclonal antibodies against the αvß8 integrin receptor.

We are currently in preclinical stage of our oncology program.

Small Molecule α vβ8 Inhibitors Enhanced PD-1 Activity in an EMT6 Anti-PD-1 Resistant Mouse Tumor Model

Lead α V β 8/1 Inhibitor Superior to Clinical Stage α V β 8 Antibody in Pan02 Pancreatic Mouse Syngeneic Model

Our Muscular Dystrophy Program

Muscular Dystrophy comprises a group of inherited diseases, all characterized by inborn errors in dystrophin, a protein that anchors muscle cells to the extracellular matrix, or ECM, and facilitates contraction of skeletal muscles.

Mutations in the gene that codes for dystrophin can cause the dystrophin protein to be misshapen and ineffective in anchoring the muscle cell to the extracellular matrix.

The lack of dystrophin anchoring results in damage to skeletal muscle cells upon contraction.

Over time, muscle cells are unable to regenerate, and are eventually replaced by fat and fibrosis, resulting in loss of muscle function.

Severe forms of muscular dystrophy cause progressive weakening of the heart and diaphragm, leading to death.

The most common form of muscular dystrophy is Duchenne muscular dystrophy, or DMD, which affects 1 in 3,500 boys worldwide.

Disease progression varies, usually presenting with muscle weakness around age four.

Most DMD patients need a wheelchair by age 12, with most dying in their 20’s.

DMD is caused by mutations to the DMD gene, which codes for dystrophin.

Treatment for DMD is mostly focused on mitigating the symptoms.

Aggressive management of dilated cardiomyopathy with anti-congestive medications is used, including cardiac transplantation in severe cases.

Assistive devices for respiratory complications may be needed, especially at night.

The steroid prednisone is given to improve the strength and function of individuals with DMD.

Prednisone has been shown to prolong the ability to walk by 2 to 5 years.

While a new treatment, eteplirsen, was recently approved in a subset of patients, this remains an area of tremendous unmet medical need.

There are a number of novel modalities such as gene therapy and CRISPR being explored as potential treatments for DMD, but they remain years from approval.

We have identified a target integrin receptor that acts as a natural compensatory mechanism that anchors the muscle cell to the ECM in DMD, as well as other types of muscular dystrophy.

It is expressed on the surface of skeletal muscle cells and has been shown to be upregulated in patients with muscular dystrophy.

The target integrin is able to bind to laminin in the ECM and serve as a substitute for the dystrophin complex that normally holds muscle cells to the ECM.

This compensatory mechanism serves to stabilize the muscle cell membrane, which decreases muscle damage upon contraction.

Moreover, mutations in this integrin, or in the laminin protein that it binds to, have been reported, and result in congenital myopathies with phenotypes similar to those of muscular dystrophy.

Like other integrins, our integrin target can exist in various conformations, some of which are active, and others that are not.

The natural compensatory ability of the target is limited by the number of integrin receptors in the active conformation at any given time.

Our muscular dystrophy program utilizes an allosteric, agonistic, monoclonal antibody which binds to the alpha subunit of the target integrin and stabilizes it in its active conformation.

By maximizing the number of target integrins that are active, the mAb is designed to increase the overall binding of the muscle cell membrane to the ECM and to stabilize the membrane.

Allosteric agonistic monoclonal antibody binds to the inactive integrin inducing conformational change increasing laminin binding

We have developed a humanized antibody that is highly potent and selective for the alpha subunit of the target integrin.

Our mAb candidate has been tested in an mdx /DBA2 DMD mouse model where it showed significantly decreased muscle damage as measured through clinical biomarkers including serum creatinine kinase and troponin.

Treatment with mAb resulted in decreased muscle damage in a mdx/DBA2 mouse model

In addition to protecting against muscle damage, the antibody showed an increase in diaphragm contractility in the mice tested.

The antibody was able to return diaphragm contractility to near the same level as the wild type controls.

This is crucial, given that the primary cause of death in patients with muscular dystrophy is cardiopulmonary failure resulting from progressive wasting of cardiac and respiratory muscles.

Agonistic mAb restored diaphragm force back to the same level as wild type control

The antibody protected the gastrocnemius muscle from eccentric injury in which the muscle loses contractile force over a series of contractions.

Interestingly, mice treated with an antibody that blocks the integrin receptor showed an increase in eccentric injury.

Integrin Agonistic Antibody Protected Gastrocnemius Muscle from Eccentric Injury While Antagonistic Antibody Increased Injury

Lastly, our mAb showed a reduction in hydroxyproline levels in the gastrocnemius muscles of the test mice, suggesting less fibrosis in the muscles, possibly as a result of decreased muscle damage.

Agonistic mAb significantly reduced collagen content in gastrocnemius muscles of treated mice

We have nominated a development candidate and are currently conducting chemistry, manufacturing and controls, or CMC, scale-up activities.

This program is currently undergoing IND enabling studies with IND submission expected by the end of 2022.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic has caused and continues to cause significant industry-wide delays in clinical trials.

There are multiple causes of these delays, including reluctance of patients to enroll or continue in trials for fear of exposure to coronavirus, local and regional shelter-in-place orders and regulations that discourage, hamper, or prohibit patient visits, healthcare providers and health systems shifting away from clinical trials toward the acute care of COVID-19 patients and the FDA and other regulators making product candidates for the treatment of COVID-19 a priority over product candidates unrelated to the pandemic.

People living with IPF are considered at higher risk for developing serious illness if they become infected by the coronavirus.

These patients may be instructed to avoid non-essential visits to medical centers, and to instead self-isolate at home.

We have successfully implemented a hybrid approach to clinical trial participation with home-health solutions for both our IPF and PSC clinical trials designed to minimize the requirements for visits to healthcare facilities in order to mitigate COVID-19 infection risk in these vulnerable populations.

We note the high level of difficulty in projecting the effects of the COVID-19 pandemic on our programs and our company, given the rapid and dramatic evolution in the course and impact of the pandemic and the societal and governmental response to it.

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, strong competition and an emphasis on proprietary products.

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There are a number of biopharmaceutical and biotechnology companies that are currently pursuing the development of products for the treatment of fibrosis.

Companies that we are aware of that are targeting the treatment of various fibrosis indications through inhibiting various parts of the TGF-β pathway include large companies with significant financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, DiCE Therapeutics, Inc., FibroGen, Inc., Gilead Sciences, Inc., Galapagos NV, Morphic Therapeutics, Inc., Novartis AG, and Takeda Pharmaceutical Company .

However, we know of no other companies currently in clinical development with an orally bioavailable small molecule, selective integrin inhibitor.

Prior to February 2021, Galapagos’ Phase 3 autotaxin inhibitor GLPG-1690 and FibroGen’s Phase 3 monoclonal antibody against connective tissue growth factor, or CTGF, were the two most advanced development candidates for treatment of IPF.

Galapagos announced that it terminated both of its Phase 3 trials of GLPG-1690 in IPF in February 2021 due to an unfavorable benefit-risk profile.

Companies that we are aware of that are targeting the treatment of various fibrosis indications through inhibiting various parts of the TGF-β pathway include companies with significant financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, DiCE Therapeutics, Inc., FibroGen, Inc., Merck & Co., Inc., Morphic Therapeutics, Inc., Novartis AG, Scholar Rock and Takeda Pharmaceutical Company.

Boehringer Ingelheim's PDE4B inhibitor (BI 1015550), FibroGen Inc.'s monoclonal antibody against connective tissue growth factor (pamrevlumab) and United Therapeutics' prostacyclin vasodilator (treprostinil) are the most advanced development candidates for the treatment of IPF.

Roche Holding AG recently discontinued its Phase 3 trial of recombinant human pentraxin-2 monoclonal antibody.

Although our novel approach is unique from most other existing or investigational therapies across the disease areas where we are focusing our development, we will need to compete with currently approved therapies, and potentially those in currently in development if they are approved.

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Esbriet, marketed by Roche Holding AG, and Ofev, marketed by Boehringer Ingelheim GmbH.

Companies currently developing product candidates in IPF include AbbVie, Endeavor Biomedicines, FibroGen, Galapagos, Kadmon Holdings, Inc., Galecto Biotech, Inc., Roche Holding AG and Liminal BioSciences, Inc.

Companies currently developing product candidates in IPF include Boehringer Ingelheim Pharmaceuticals, Inc., FibroGen Inc., Galecto Biotech, Inc., Amgen Inc., Bristol Myers Squibb Co., United Therapeutics Corporation, Vicore Pharma Holding, CSL Behring, and Endeavor BioMedicines, Inc.

There are currently no approved therapies for the treatment of PSC.

Companies currently developing product candidates in PSC include Gilead Sciences, Inc., AbbVie Inc., Dr.

Falk Pharma and Intercept Pharmaceuticals, Inc.

Companies currently developing product candidates in PSC include Dr.

Falk Pharma GmbH, Mirum Pharmaceuticals, Inc., Chemomab Therapeutics Ltd., HighTide Therapeutics Inc., and Escient Pharmaceuticals, Inc.

There are currently no FDA-approved therapies for the treatment of NASH.

There are a number of companies developing product candidates for the treatment of NASH including Intercept, Pfizer Inc., Gilead, AbbVie, Novartis, AstraZeneca plc, Eli Lilly & Company, GlaxoSmithKline plc, Amgen, Inc., BMS, Johnson & Johnson, Merck & Co., Inc., Roche, Sanofi S.A., Takeda Pharmace uticals, Novo Nordisk, Genfit SA, Madrigal Pharmaceuticals, Inc., Viking Therapeutics, Inc., Cirius Therapeutics, Inc., NGM Biopharmaceuticals, Akero Therapeutics, Inc.

and Metacrine, Inc.

There are a number of companies developing product candidates for the treatment of NASH including 89bio, Inc., AbbVie Inc., Akero Therapeutics, Inc., Amgen Inc., AstraZeneca plc, Boehringer Ingelheim, Bristol Myers Squibb Co., Cascade Pharmaceuticals, Inc., Cirius Therapeutics, Inc., Dr.

Falk Pharma GmbH, Eli Lilly & Company, Enanta Pharmaceuticals, Inc., Gannex Pharma Co., Ltd., Galectin Therapeutics Inc., Gilead Sciences, Inc., Genfit SA, Genentech, Inc., GlaxoSmithKline plc, Intercept Pharmaceuticals, Inc., Inventiva Pharma, Ionis Pharmaceuticals, Inc., Johnson & Johnson, Madrigal Pharmaceuticals, Inc., Merck & Co., Inc., Metacrine, Inc., NGM Biopharmaceuticals, Inc., NorthSea Therapeutics B.V., Novo Nordisk, Pfizer Inc., Roche Holding AG, Regeneron Pharmaceuticals, Inc., Sanofi S.A., Takeda Pharmaceutical Company, Terns Pharmaceuticals, Inc., Viking Therapeutics, Inc.

and Zydus Therapeutics Inc.

Most of the drugs currently in development for NASH are focused on decreasing liver fat or improving liver inflammation as opposed to direct liver anti-fibrotic approaches.

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With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.

As of February 25, 2022, we own, co-own or license over 170 pending patent applications worldwide in over 20 patent families, including United States and corresponding foreign patent applications.

As of February 25, 2022, four U.S.

patents and one Japanese patent have issued to us that are generally expected to expire between the years 2037 to 2039, subject to possible patent term adjustment and/or extension.

As of March 5, 2023, we own, co-own or license over 250 pending patent applications worldwide in over 26 patent families, including United States and corresponding foreign patent applications.

As of March 5, 2023, nine U.S.

patents and four foreign patents have been issued or allowed.

Our patents and any patents that may issue from our pending patent applications are generally expected to expire between the years 2037 to 2044, subject to possible patent term adjustment and/or extension.

Our policy is to file patent applications to protect technology, inventions and improvements to inventions that are commercially important to the development of our business.

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We own multiple families of patent applications that are directed to small-molecule compositions capable of modulating integrins and methods for treating or preventing diseases associated with integrins.

Certain applications in these families relate to our PLN-74809 and PLN-1474 small-molecule product candidates, backup compounds and structural analogs, various unit dosages, dosing regimens, and routes of administration.

We are also pursuing innovative ways to modulate integrin function using antibodies and have six pending patent application to that technology in the United States.

Certain applications in these families relate to our bexotegrast and PLN-1474 small-molecule product candidates, backup compounds and structural analogs, various unit dosages, dosing regimens, and routes of administration.

We are also pursuing innovative ways to modulate integrin function using antibodies and have 36 pending patent applications to that technology in the United States and foreign jurisdictions.

Patents that may issue from these company owned applications are generally expected to expire between the years 2040 to 2043, subject to possible patent term adjustment and/or extension.

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

In addition to the above, we have established expertise and development capabilities focused in the areas of preclinical research and development, manufacturing and manufacturing process development, quality control, quality

assurance, regulatory affairs, and clinical trial design and implementation.

We believe that our focus and expertise will help us develop products based on our proprietary intellectual property.

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Novartis Collaboration and License Agreement

In October 2019, we entered into a collaboration and license agreement, or the Novartis Agreement, with Novartis Institutes for Biomedical Research, Inc., or Novartis, for the research, development, and commercialization of PLN-1474, and up to three additional integrin targets, or the Research Targets.

Under the terms of the Novartis Agreement, we will be responsible for the clinical development and manufacture of PLN-1474 through the first-in-human study and Novartis will then be responsible for all future development, manufacturing, and commercialization.

Following the completion of our Phase 1 clinical trial for PLN-1474, the PLN-1474 IND was transferred to Novartis in the first quarter of 2021.

During the research term, which shall initially be three years and extendable, we will collaborate, through a joint steering committee, with Novartis on up to three separate research programs, to biologically validate certain potential Research Targets and identify and synthesize potential research compounds for each Research Target in accordance with the applicable research plan.

We will be responsible for advancing product candidates targeting selected Research Targets to development candidate stage and Novartis will then be responsible for all future development, manufacturing, and commercialization.

We have also granted to Novartis an (i) exclusive (even as to us), transferable, sublicensable license to certain of our technology to commercialize licensed products in the field and (ii) co-exclusive (with us), transferable, sublicensable license to research, develop and manufacture certain licensed compounds and licensed products for disease treatment worldwide.

Upon the completion of the first Phase 1 study, such co-exclusive license shall become exclusive for Novartis.

In addition, pursuant to the Novartis Agreement, we have granted to Novartis and its affiliates an (i) exclusive (even as to us), transferable, sublicensable license to certain of our technology to commercialize certain research products in the field and (ii) a coexclusive (with us), transferable, sublicensable license to develop, manufacture, and commercialize certain selected research compounds and research products for disease treatment worldwide.

Upon the selection of relevant candidate small molecule compound selective modulator, such co-exclusive license shall become exclusive for Novartis.

Pursuant to the agreement, we received an upfront, non-refundable license fee of $50.0 million and $25.0 million upon first patient dosed in our Phase 1 trial of PLN-1474.

Additional contingent payments totaling $391.0 million are due to us upon achievement of specified research, development, regulatory and commercial events and Novartis shall pay us tiered royalties, on a product-by-product basis based on annual nets sales of products at percentages ranging from high-single digits to low teens of the applicable licensed products and mid-single digits to high-single digits for any products resulting from the research programs.

Also, Novartis agreed to provide up to $19.6 million and up to $13.4 million in funding for the research and development activities associated with PLN-1474 and integrin research targets, respectively.

As of December 31, 2021 approximately $2.0 million of aggregate research and development funding remains available for use under the arrangement.

Unless earlier terminated, the Novartis Agreement will expire upon the expiration of all royalty obligations.

The royalty period will expire on a product-by-product and country-by-country basis upon the later of (i) ten years from the first commercial sale, (ii) the expiration of all regulatory or data exclusivity and (iii) the expiration of the last-to-expire valid patent claim.

Novartis has the right to terminate the Novartis Agreement for convenience on a target-by-target basis upon sixty (60) days’ prior written notice, so long as such right is exercised prior to the first commercial sale of any licensed product or research product with respect to the applicable target.

After the first commercial sale, Novartis has the right to terminate the Novartis Agreement for convenience on a target-by-target basis upon six (6) months’ prior written notice.

We may not terminate the agreement for convenience.

Either we or Novartis may terminate the Novartis Agreement if the other party is in material breach and such breach is not cured within the specified cure period.

In addition, either we or Novartis may terminate the Novartis Agreement in the event of specified insolvency events involving the other party.

If we terminate the agreement as a result of Novartis’ uncured material breach or Novartis terminates at will, we retain a royalty-bearing, non-exclusive license to certain Novartis technology in order to develop, manufacture and commercialize certain compounds and products as set forth in the Novartis Agreement, subject to certain conditions.

Adimab Collaboration Agreement

In October 2018, we entered into a collaboration agreement, or the Adimab Agreement, with Adimab, LLC, or Adimab, for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates.

has granted to us an exclusive option to acquire the rights to a number of discovered antibodies for development and commercialization as biopharmaceutical products.

We have granted Adimab a non-exclusive, non-sublicensable license under our technology during each research program to perform Adimab’s responsibilities under such research plan.

If we choose to exercise our option with respect to a specific research program, we are required to pay Adimab a non-creditable, non-refundable high six-figure option exercise fee, and milestone payments upon the achievement of certain clinical and regulatory milestone events in the development of therapeutic products and diagnostic products which use the antibodies we have obtained pursuant to our exclusive option of approximately $12 million for each therapeutic product.

For any product that is commercialized pursuant to the Adimab Agreement, we are required to pay Adimab low single digit percentage tiered royalty payments based on annual aggregate worldwide net sales thresholds for such products, subject to reduction as specified in the Adimab Agreement.

Royalty terms with respect to each product will expire on a country-by-country basis upon the later of (a) ten years after the first commercial sale of such product in such country and (b) the expiration of the last patent related to any antibody acquired by us pursuant to our option from a specified research program.

Pursuant to the terms of the Novartis Agreement, t he PLN-1474 IND was transferred to Novartis in the first quarter of 2021 following completion of our first-in-human Phase 1 clinical trial.

Upon transfer of the IND, Novartis assumed responsibility for all future development, manufacturing, and commercialization and we earned research and development services revenues in performing certain activities outlined in the Novartis Agreement.

All such services were substantially complete as of December 31, 2022.

In addition, the Novartis Agreement provided for an early research program for up to three additional integrin targets, or the Research Targets.

The research term, as amended in 2022, concludes in the first quarter of 2023.

During the research term, we collaborate with Novartis to biologically validate certain potential Research Targets and identify and synthesize potential research compounds for each Research Target in accordance with the applicable research plan.

In the second quarter of 2022 we validated one of the Research Targets and began synthesizing potential research compounds.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474 as well as the early research targets and associated compounds.

Please refer to Note 8 to our financial statements appearing elsewhere in this Annual Report for further information about the license and collaboration.

Manufacturing

Our product candidates, PLN-74809 and PLN-1474, are small molecule inhibitors amenable to standard formulation technologies.

Our product candidates, bexotegrast and PLN-1474, are small molecule inhibitors amenable to standard formulation technologies.

We have confirmed the utility of the synthetic process and manufactured multi-kilogram quantities sufficient to provide drug product for our clinical trials.

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We also rely on internal personnel with extensive cGMP manufacturing experience in order to ensure effective technology transfer and to manage the manufacturing and development processes conducted by third-party manufacturers.

We have established an adequate supply of the drug substance for PLN-74809 from our North American, European and Asian contract manufacturing organizations, or CMOs, to satisfy both our clinical and preclinical requirements.

To mitigate supply chain risk and maximize flexibility, we have qualified two, geographically disparate CMOs for the manufacture of PLN-74809 active pharmaceutical ingredient and are currently engaging secondary raw material suppliers and drug product manufacturers to further mitigate global supply chain risk.

The responsibility for manufacture and supply of drug substance for PLN-1474 has been transferred to Novartis pursuant to our collaboration and license agreement.

We have established an adequate supply of the drug substance for bexotegrast from our Asian contract manufacturing organizations, or CMOs, to satisfy both our clinical and preclinical requirements and have evaluated additional suppliers in North America and Europe to mitigate supply chain risk and maximize flexibility.

As our development programs expand and we build new process efficiencies, we expect to continually evaluate this strategy with the objective of satisfying demand for our clinical trials and, if approved, the manufacture, sale, and distribution of commercial products.

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Failure to comply with the applicable U.S.

withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications, or NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

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The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically

evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

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

If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.

If and when those conditions

have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.

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

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

Fast Track designation

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

Among these programs is Fast Track designation.

In May 2014, the FDA published a final Guidance for Industry titled “Expedited Programs for Serious Conditions Drugs and Biologics,” which provides guidance on the FDA programs that are intended to facilitate and expedite development and review of new drug or biological product candidates as well as threshold criteria generally applicable to concluding that a product candidate is a candidate for these expedited development and review programs.

The FDA may designate a product for Fast Track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and nonclinical or clinical data demonstrate the potential to address unmet medical needs for such a disease or condition.

For Fast Track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product’s application before the application is complete.

This rolling review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a Fast Track product may be effective.

The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees.

However, the FDA’s review clock for a Fast Track application does not begin until the last section of the application is submitted.

In addition, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Orphan drug designation and exclusivity

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If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity.

Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same indication for seven years, except in certain limited circumstances.

The first active moiety to be approved to treat a disease with FDA's Orphan Drug designation is entitled to a seven-year period of marketing exclusivity in the United States for that product indication, except in certain limited circumstances.

If a drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than what was designated in its orphan product application, it may not be entitled to exclusivity.

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Moreover, competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

In addition, Congress is considering updates to the orphan drug provisions of the FDCA in response to a recent decision by the U.S.

Court of Appeals for the Eleventh Circuit.

Any changes to the orphan drug provisions could change our opportunities for, or likelihood of success in obtaining, orphan drug exclusivity and would materially adversely affect our business, results of operations, financial condition and prospects.

marketing exclusivity

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However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

The FDCA also

provides three years of marketing exclusivity for a NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, new indications, dosages or strengths of an existing drug.

The FDCA also provides three years of marketing exclusivity for a NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, new indications, dosages or strengths of an existing drug.

This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for the original non-modified version of the drug.

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In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act, or FCA.

A conviction for violation of the federal Anti-Kickback Statute can result in criminal fines and/or imprisonment and requires mandatory exclusion from participation in federal health care programs.

Exclusion from the federal healthcare programs may also be imposed if the government determines that an entity has committed acts that are prohibited by the federal Anti-Kickback Statute.

Violations of the federal Anti-Kickback Statute are punishable by imprisonment for up to ten years and statutory fines of up to $100,000.

Additional criminal fines can be imposed under federal U.S.

criminal procedure laws.

Civil penalties include statutory amounts of up to $100,000 (adjusted for inflation) per violation, assessments of up to three times the total payments between the parties to the arrangement, and exclusion from participation in the federal healthcare programs or suspension from future participation in Medicare and Medicaid.

Further, violation of the federal Anti-Kickback Statute can also form the basis for False Claims Act liability (discussed below).

Although there are a number of statutory exceptions and regulatory safe harbors to the federal Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical and biological products, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor;

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Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in order to have committed a violation.

FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false or fraudulent claim or statement for violations;

• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

Violations of the False Claims Act can result in civil penalties of up to more than $25,000 per false claim or statement (an amount adjusted annually for inflation) plus three times the amount of damages sustained by the government;

pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the creation, use, receipt, maintenance or disclosure of individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

its implementing regulations, which require manufacturers of drugs, devices, biological products and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Centers for Medicare and Medicaid Services, or CMS, under the Open Payments Program, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Effective January 1, 2022, these reporting obligations will extend to include transfers of value made during the previous year to certain non-physician providers such as physician assistants and nurse practitioners;

• the federal Physician Payments Sunshine Act, created under Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, and its implementing regulations, which require manufacturers of drugs, devices, biological products and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the Centers for Medicare and Medicaid Services, or CMS, under the Open Payments Program, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

• analogous state and foreign laws and regulations, such as state and foreign anti-kickback, false claims, consumer protection, transparency and disclosure laws, and unfair competition laws which may apply to pharmaceutical business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payor, including commercial insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources;

state laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to healthcare professionals and entities and, in some states, the reporting of drug wholesale acquisition costs or average manufacturer prices, information related to new drug launches, and drug price increases above certain statutory thresholds;

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

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For example, in June 2018, the State of California enacted the California Consumer Privacy Act of 2018, or the CCPA, which came into effect on January 1, 2020 and provides new data privacy rights for consumers and new operational requirements for companies, which may increase our compliance costs and potential liability.

The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA gives California residents expanded rights to access and delete their personal

information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

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In the event we decide to conduct clinical trials or continue to enroll subjects in our ongoing or future clinical trials, we may be subject to additional privacy restrictions.

The collection, use, storage, disclosure, transfer, or other processing of personal data regarding individuals in the European Economic Area, or EEA, including personal health data, is subject to the EU General Data Protection Regulation, or GDPR, which became effective on May 25, 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the

personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

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

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

The GDPR may 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.

Compliance with the GDPR will be a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities.

In addition, further to the UK’s exit from the EU on January 31, 2020, the GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020.

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

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

Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.

The UK, however, is now regarded as a third country under the EU’s GDPR which means that transfers of personal data from the EEA to the UK will be restricted unless an appropriate safeguard, as recognized by the EU’s GDPR, has been put in place.

Although, under the EU-UK Trade Cooperation Agreement it is lawful to transfer personal data between the UK and the EEA for a 6-month period following the end of the transition period, with a view to achieving an adequacy decision from the European Commission during that period.

Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection (this means that personal data transfers from the UK to the EEA remain free flowing).

Internationally, our operations may also be subject to increased scrutiny or attention from foreign data protection authorities.

For example, our clinical trial programs and research collaborations in the EU may implicate the EU General Data Protection Regulation (EU) 2016/679 (EU GDPR) and certain national EU Member State laws amending the same.

The EU GDPR governs the processing of personal data (i.e., data which identifies an individual or from which an individual is identifiable), including clinical trial data (even in a key-coded form), and grants individuals various data protection rights (e.g., the right to erasure of personal data).

The EU GDPR imposes a number of obligations on companies, including inter alia:

(i) accountability and transparency requirements, and enhanced requirements for obtaining valid consent;

(ii) obligations to consider data protection as any new products or services are developed and to limit the amount of personal data processed;

and (iii) obligations to implement appropriate technical and organizational measures to safeguard personal data and to report certain personal data breaches to the supervisory authority without undue delay (and no later than 72 hours where feasible).

The EU GDPR also provides that EU Member States may introduce further restrictions at a national level, restricting the processing of genetic and/or health data, which could result in increased compliance costs / efforts.

In addition, the EU GDPR prohibits the transfer of personal data from the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws unless a data transfer mechanism has been put in place.

In July 2020, the Court of Justice of the European Union limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the EU-US Privacy Shield for purposes of international transfers and imposed further restrictions on use of standard contractual clauses (SCCs) (i.e., an EU-style data transfer agreement) including, a requirement for companies to carry out a transfer privacy impact assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EEA.

Moreover, new versions of the SCCs (new EU SCCs) have recently been published requiring additional compliance and implementation efforts.

Administrative fines for non-compliance with the EU GDPR can be significant and can amount to up to the greater of €20 million or 4% of annual worldwide turnover.

The EU GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data (i.e., data relating to identified or identifiable individuals), including requirements relating to having legal bases for processing personal data, transferring such personal data outside the EEA, including to the United States, processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, responding to individuals’ requests to exercise their rights in respect of their personal data, implementing safeguards to protect the security and confidentiality of personal data, having data processing agreements with third parties who process personal data on our behalf, providing notification of data breaches, and taking certain measures when engaging third-party processors, conducting data protection impact assessments, and record-keeping.

The EU GDPR increases substantially the penalties to which we could be subject in the event of any non-compliance and permits data protection authorities to impose large penalties for violations of the EU GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

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

Relatedly, following the United Kingdom’s withdrawal from the EU (i.e., Brexit), the EU GDPR has been implemented in the United Kingdom (as the UK GDPR).

The UK GDPR site alongside the UK Data Protection Act 2018 which implements certain derogations in the EU GDPR into UK law.

The requirements of the UK GDPR are (at this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential fines for non-compliance of up to £17.5 million or 4% of annual worldwide turnover.

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

Compliance with the EU GDPR is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities.

The EU GDPR also prohibits the transfer of personal data from the EEA to the United States and other countries that are not recognized as having “adequate” data protection laws by the European Commission unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data.

One of the primary safeguards allowing U.S.

companies to import personal data from the EEA had been certification to the EU-U.S.

Privacy Shield framework administered by the U.S.

Department of Commerce.

However, the European Court of Justice issued a decision in July 2020 which invalidated the EU-U.S.

Privacy Shield framework for international transfers (Schrems II) and imposed further restrictions on using the specific safeguard standard contractual clauses (SCCs) including, a requirement for companies to carry out a transfer privacy impact assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under the SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EU.

Following that decision, the Swiss Federal Data Protection and Information Commissioner took a similar view and considered that data transfers based on the Swiss-U.S.

Privacy Shield framework are no longer lawful (despite the fact that Schrems II is not directly applicable in Switzerland (unless the Swiss based company is subject to the EU GDPR) although the Swiss-U.S.

Privacy Shield has not been officially invalidated).

Further to Schrems II, the European Commission published new EU SCCs in June 2021, which place onerous obligations on the contracting parties.

Therefore, until recently, there were few, if any, viable alternatives to the SCCs.

However, on 7 October 2022, President Biden introduced an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework which will act as a successor to the invalidated EU-U.S.

Privacy Shield.

If approved by the European Commission and implemented, the agreement will facilitate the transatlantic flow of personal data and provide additional safeguards to any existing data transfer mechanisms (including SCCs) for companies transferring personal data from the EU to the U.S.

However, before entities rely on the new EU-U.S.

Privacy Shield, there are still legislative and regulatory steps that must be undertaken both in the U.S.

and in the EU.

Therefore, at present the new EU SCCs are still the primary safeguard available for personal data transfers from the EU to the U.S.

As such, the current legal position may have implications for our cross-border data flows and may result in compliance costs.

In addition, further to the UK’s exit from the EU on January 31, 2020, the EU GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020.

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

The UK GDPR and the UK Data Protection Act 2018 set out

the UK’s data protection regime, which is independent from but aligned to the EU’s data protection regime.

Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.

As a result, we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions.

It should also be noted that the new EU SCCs do not automatically apply in the UK since Brexit, and the UK Government has not yet formally acknowledged the new EU SCCs, i.e., as a valid data transfer mechanism under the UK GDPR.

Indeed, on 11 August 2021, the UK Information Commissioner’s Office (ICO) launched a public consultation on its draft international data transfer agreement and guidance.

This included the publication of a draft UK addendum that can be used with the new EU SCCs – however, this is not (at this time) finalized and as such, for the time being transfers from the UK to a third country should continue to be made in reliance on the ‘old’ SCCs.

The European Commission adopted the adequacy decision for the UK in June 2021, allowing a free flow of personal data from the EU to the UK where it benefits from an essentially equivalent level of protection to that guaranteed under EU data protection law.

It should be noted that the UK GDPR also prohibits the transfer of personal data from the UK to other countries that are not recognized as having “adequate” data protection laws, including the U.S., in a similar manner to the EU.

In addition, the UK Government has published its own form of SCCs, known as the International Data Transfer Agreement and International Data Transfer Addendum to the new EU SCCs.

The UK Information Commissioner’s Office has also published its version of the transfer impact assessment and revised guidance on international transfers, although companies may choose to either use the EU style or UK style transfer impact assessment.

In terms of international data transfers between the UK and US, it is understood that the UK and the US are negotiating an adequacy agreement.

Current and future healthcare reform legislation

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The ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (increased to 70% pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) 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.

Under the Inflation Reduction Act of 2022, or the IRA, this coverage gap discount program will be eliminated beginning January 1, 2025.

Manufacturers will then be required to pay 10% of the negotiated price of brands, biologics and biosimilar products when Medicare Part D beneficiaries are in the initial coverage phase, and 20% of the negotiated price during the catastrophic phase of Medicare Part D coverage.

There have been numerous historic judicial, administrative, executive, and legislative challenges and amendments (including recent amendments that expand access to care) to certain aspects of the ACA.

In June 2021, the Supreme Court dismissed a lawsuit challenging the constitutionality of certain aspects of the AC, without ruling on the meris of the constitutionality arguments.

In June 2021, the Supreme Court dismissed a lawsuit challenging the constitutionality of certain aspects of the ACA, without ruling on the meris of the constitutionality arguments.

In the future, there may be additional legislative, regulatory, executive, or judicial actions that result in healthcare reform.

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Other legislative and regulatory changes have been proposed or adopted in the United States since the ACA was enacted, including several legislative and regulatory changes that are focused on capping or reducing healthcare costs, as well as measures that would address healthcare fraud and abuse, value-based care, drug pricing and other reforms.

For example, in August 2022, President Biden signed into law the IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and changes to the Medicare Part D benefit design.

Among other reforms, the Inflation Reduction Act of 2022 imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation;

implements changes to the Medicare Part D benefit that, beginning in 2025, will cap benefit annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers;

and, beginning in 2026, establishes a “maximum fair price” for a fixed number of high spend pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the Centers for Medicare and Medicaid Services.

The IRA explicitly excludes from price negotiation orphan drugs designated for only one rare disease or condition and for which the only approved indication is for such disease or condition.

However, those drugs with multiple orphan designations are not explicitly excluded from drug price negotiation.

It remains to be seen how the maximum fair prices or other drug pricing provisions imposed by the IRA will affect orphan drug development or the broader pharmaceutical industry.

The increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates.

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Additionally, to the extent that any of our product candidates, once approved, are sold in a foreign country, we may be subject to applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals.

European Union clinical trials regulation

European Union clinical trials regulation and clinical data sharing

In the EU, a Clinical Trial Application, or CTA, must be submitted for each clinical trial to each country’s national competent authority, or NCA, and at least one independent Ethics Committee, or EC, much like the FDA and an IRB, respectively.

Once the CTA is approved in accordance with a country’s requirements, the corresponding clinical trial may proceed.

Under the current regime (the EU Clinical Trials Directive 2001/20/EC and corresponding national laws) all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred.

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014, or Regulation, which entered into effect on January 31, 2022.

The Regulation replaces the Clinical Trials Directive 2001/20/EC and overhauls the current system of approvals for clinical trials in the EU.

Specifically, the Regulation is directly applicable in all Member States (meaning that no national implementing legislation in each EU Member State is required) and aims at simplifying and streamlining the approval of clinical trials in the EU.

For instance, the new Regulation provides for a streamlined application procedure via a single-entry point and strictly defined deadlines for the assessment of CTAs.

Under the current regime (the EU Clinical Trials Regulation 536/2014, which has been in effect since January 31, 2022 replacing the EU Clinical Trials Directive 2001/20/EC) all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred.

In addition to data privacy requirements, many jurisdictions have mandatory clinical trial information obligations on sponsors.

In the EU this is under the Transparency Regulation No 1049/ 2001, EMA Policy 0043, EMA Policy 0070, as well as the Clinical Trials Regulation No 536/2014, all of which impose on sponsors the obligation to make publicly available certain information stemming from clinical studies.

In the EU, the transparency framework provides for a wide right for (EU-based at the moment) interested parties to submit an access to documents request to the EMA for information included in the marketing authorization application dossier for approved medicinal products.

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It is possible for competitors to access and use this data in their own research and development programs anywhere in the world, once this data is in the public domain.

On May 3, 2022, the European Commission published a proposal for a regulation on the European Health Data Space, or EHDS, which aims to further enable exchange of electronic health data both for primary use (among national EU healthcare systems for patient care) and secondary use (among private companies and regulators to enable scientific research).

Whilst the regulation is currently under discussions among the EU legislators, the text is expected to be finalized by the end of 2023 and for the EHDS to become reality in 2025.

This will impose new obligations, but also create opportunities, for entities engaged in health-related research to share and access health data on a scale much larger than what is foreseen under current applicable transparency provisions.

European drug review and approval

To obtain a marketing authorization in the European Economic Area, or EEA (comprising the EU Member States, plus Norway, Iceland, and Liechtenstein), a company may submit marketing authorization applications either under a centralized procedure administered by the European Medicines Agency, or EMA, or one of the procedures administered by competent authorities in the EEA Member States (decentralized procedure, national procedure, or mutual recognition procedure).

To obtain a marketing authorization in the EEA (comprising the EU Member States, plus Norway, Iceland, and Liechtenstein), a company may submit marketing authorization applications either under a centralized procedure administered by the European Medicines Agency, or EMA, or one of the procedures administered by competent authorities in the EEA Member States (decentralized procedure, national procedure, or mutual recognition procedure).

The centralized procedure is compulsory for certain medicines, including those produced by biotechnology, products designated as orphan medicinal products, advanced therapy medicinal products (gene therapy, somatic cell therapy and tissue-engineered products) and those with a new active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, autoimmune and other immune dysfunctions, viral diseases, or diabetes.

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The centralized procedure provides for the grant of a single marketing authorization that is valid throughout the EEA.

Under the centralized procedure, the maximum timeframe for the evaluation of a marketing authorization application, or MAA, by the EMA is 210 days, excluding clock stops, when additional written or oral information is to be provided by the applicant in

response to questions asked by the Committee for Medicinal Products for Human Use, or CHMP.

Clock stops may extend the timeframe of evaluation of a MAA considerably beyond 210 days.

Where the CHMP gives a positive opinion, it provides the opinion together with supporting documentation to the European Commission, who make the final decision to grant a marketing authorization, which is issued within 67 days of receipt of the EMA’s recommendation.

Accelerated assessment might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of major public health interest, particularly from the point of view of therapeutic innovation.

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There are no international agreements on mutual recognition of authorizations in relation to medicinal products.

However, marketing authorization dossiers can be submitted to Swissmedic with clinical data, irrespective of the location where a clinical trial was conducted, that were collected in accordance with globally applicable international standards such as the Good clinical Practice (GCP) of the International Conference on Harmonization (ICH), which are based on the Declaration of Helsinki.

However, marketing authorization dossiers can be submitted to Swissmedic with clinical data, irrespective of the location where a clinical trial was conducted, that were collected in accordance with globally applicable international standards such as the Good Clinical Practice, or GCP, of the International Conference on Harmonization, or ICH, which are based on the Declaration of Helsinki.

Furthermore, if a medicinal product or procedure is already authorized in a country having equivalent medicinal product control, the results of tests carried out for this purpose shall be taken into account.

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Now that the UK (which comprises Great Britain and Northern Ireland) has left the EU, Great Britain will no longer be covered by centralized marketing authorizations (under the Northern Irish Protocol, centralized marketing authorizations will continue to be recognized in Northern Ireland).

All medicinal products with a current centralized marketing authorization were automatically converted to Great Britain marketing authorizations on January 1, 2021.

For a period of two years from January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), the UK medicines regulator, may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure.

All medicinal products with an existing centralized marketing authorization were automatically converted to Great Britain marketing authorizations on January 1, 2021.

For a period of two years from January 1, 2021, the Medicines and Healthcare Products Regulatory Agency, or MHRA, the UK medicines regulator, may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure.

A separate application will, however, still be required.

The MHRA has launched the Innovative Licensing and Access Pathway (ILAP), a new accelerated assessment procedure for marketing authorization applications that enables companies to enter the UK market faster.

The MHRA has ceased to participate in the assessment of any centralized procedures since January 1, 2021.

Since then, the MHRA has launched the Innovative Licensing and Access Pathway, or ILAP, a new accelerated assessment procedure for marketing authorization applications facilitating the interaction with pricing authorities and HTA bodies and aiming to enable companies to enter the UK market faster.

European orphan drug designation and exclusivity

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namely when the pediatric studies have been conducted in accordance with an agreed PIP and other requirements are satisfied.

During such period of market exclusivity, marketing authorization applications for “similar medicinal products” will not be accepted, unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product, the marketing authorization holder consents to the second

orphan medicinal product application, or where the marketing authorization holder cannot supply enough orphan medicinal product.

In the EEA, a “similar medicinal product” is a medicinal product containing a similar active substance or substances as contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic indication.

The ten-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 the maintenance of market exclusivity.

The general pharmaceutical legislative framework, as well as the framework applicable to orphan and pediatric medicinal products in the EU, is under review.

The European Commission expects to publish its position on this in March 2023.

However, draft proposals by the European Commission for a new Regulation set to replace Regulation (EC) No 726/2004 and a new Directive replacing Directive 2001/83 on the Community Code relating to medicinal products for human use were recently leaked to the press on January 31, 2023.

Although the final proposals are not yet known, it is expected that there will be a reduction in applicable regulatory exclusivities which will significantly affect all medicinal products that will be authorized after the legislative changes have taken effect.

Brexit and the Regulatory Framework in the United Kingdom

On January 31, 2020.

The UK officially left the EU on January 31, 2020.

A transition period began on February 1, 2020, during which EU pharmaceutical law remained applicable to the UK.

This transition period ended on December 31, 2020.

Since the regulatory framework in the UK covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU Directives and Regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the UK, as UK legislation now has the potential to diverge from EU legislation.

However, as UK legislation now has the potential to diverge from EU legislation, the future regulatory regime which applies to products and the approval of product candidates in the UK may change.

It remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the UK in the long-term.

The MHRA published detailed guidance for industry and organizations to follow which will be updated as the UK’s regulatory position on medicinal products evolves over time.

The regulatory framework for medicines that existed before the end of the transition period following Brexit has been preserved in UK domestic legislation as ‘retained EU law,’ which has prevented substantial divergence to the regulation of medicines.

‘Retained EU law,’ which has prevented substantial divergence to the regulation of medicines.

However, some changes to the UK legislation have been necessary, including the implementation of the Northern Ireland Protocol (NIP), pursuant to which the EU pharmaceutical legal framework continues to apply in Northern Ireland (subject to periodic consent of the Northern Ireland Legislative Assembly), and only products compliant with EU law can be placed in the Northern Ireland market.

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Successful commercialization of new drug products depends in part on the extent to which coverage and reimbursement, as applicable, for those drug products will be available from government health administration authorities, private health insurers, and other organizations.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug products they will cover and pay for and establish reimbursement levels.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drug products they will cover and pay for and establish

reimbursement levels.

The availability and extent of coverage and reimbursement by governmental and private payors is essential for most patients to be able to afford a drug product.

7 unchanged sentences

Accordingly, in markets outside the United States, the reimbursement for drug products may be reduced compared with the United States.

In the United States, the decisions about Medicare reimbursement for new drug products are typically made by CMS, an agency within the HHS.

In the United States, the decisions about Medicare reimbursement for new drug products are typically made by CMS, an agency within the U.S.

Department of Health and Human Services, or HHS.

CMS decides whether and to what extent a new drug product will be covered and reimbursed under Medicare, and private payors tend to follow CMS coverage guidelines.

1 unchanged sentence

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, established the Medicare Part D program to provide a voluntary prescription drug benefit to Medicare beneficiaries.

Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient

prescription drugs.

Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient prescription drugs.

While all Medicare drug plans must give at least a standard level of coverage set by Medicare, Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each Part D prescription drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level.

3 unchanged sentences

Any negotiated prices for any of our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain.

Additionally, beginning in 2025, manufacturers must pay additional discounts for products covered under Medicare Part D.

Moreover, while the MMA Part D plan policies applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policies and payment limitations in setting their own payment rates coverage guidelines.

11 unchanged sentences

Some countries provide that products may be marketed only after a reimbursement price has been agreed.

Some countries may require the completion of additional studies that compare the cost effectiveness of a particular therapy to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or pricing approval.

Some countries may require the completion of additional studies that compare the cost effectiveness of a particular therapy to currently available therapies or so-called health technology assessments, or HTA, in order to obtain reimbursement or pricing approval.

The outcome of HTA assessments is decided on a national basis and some payors may not reimburse the use of assessed products or may reduce the rate of reimbursement for such products.

5 unchanged sentences

As of December 31, 2022, we had 124 full-time employees, including 41 with Ph.D.

degrees and 64 who are engaged in research and development activities.

Of our employees, 85 were engaged in research and development activities, and 39 were engaged in general and administrative activities.

None of our employees are represented by labor unions or covered by collective bargaining agreements, and we have experienced no work stoppages.

2 unchanged sentences

The biotechnology industry is very competitive and recruiting and retaining such employees is important to the continued success of our business.

We are committed to building an outstanding, committed team and we focus on a culture that values a focus on scientific innovation, inclusion, collaboration, and equity.

We are committed to building an outstanding, committed team and fostering a rewarding work environment and a culture that values scientific innovation, inclusion, collaboration, and equity.

We believe that each employee brings unique perspectives and strengths, and by embracing these strengths, we can do our best work for patients.

We focus on recruiting, retaining, and developing employees from a diverse range of backgrounds to conduct our research, development, and clinical activities.

As part of our measures to attract and retain a highly skilled workforce, we provide a number of benefits to our full-time employees, including medical, dental and vision insurance, life insurance, 401k retirement program with a company match, flexible spending accounts, and paid holiday and vacation time.

We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development opportunities that enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives.

As part of our measures to attract and retain a highly skilled workforce, we offer a number of benefits to our full-time employees to help support their health and financial well-being, including medical, dental and vision insurance, life insurance, 401k retirement program with a company match, flexible spending accounts, and paid holiday and vacation time.

We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, development opportunities that enable continued learning and growth and a robust recognition program that recognizes and celebrates their accomplishments.

In addition, we regularly conduct an employee survey to gauge employee engagement and identify areas of focus.

The health and safety of our employees is a priority.

In 2022, we maintained the employee benefits enhancements that were implemented in response to the COVID-19 pandemic.

For example, we increased company-wide flexible work arrangements, provided resources to enable employees to work from home, and introduced weekly onsite COVID-19 testing for all employees routinely working onsite.

For example, we increased company-wide flexible work arrangements, provided weekly onsite COVID-19 testing for all employees routinely working onsite through the Omicron surge and provided at-home COVID-19 test kits to any employee who may have been exposed to COVID-19 at work.

Our management has continued to assess and respond to the evolving needs of our workforce throughout the pandemic.

9 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