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Item 1. Business

2022-03-02 compared with 2021-03-31 · 434 added, 262 removed, 921 unchanged (43% of the section changed)

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Pieris Australia Pty Ltd., a wholly-owned subsidiary of Pieris GmbH, was formed on February 14, 2014 to conduct research and development activities in Australia.

Pieris Pharmaceuticals Securities Corporation, a wholly-owned subsidiary of Pieris Pharmaceuticals, Inc.

was formed on December 14, 2016 to buy, sell, deal in, or hold securities on its own behalf and not as a broker, and will engage in its activities exclusively for investment purposes.

Pieris Pharmaceuticals Securities Corporation, a wholly-owned subsidiary of Pieris Pharmaceuticals, Inc., was formed on December 14, 2016 to buy, sell, deal in, or hold securities on its own behalf and not as a broker, and will engage in its activities exclusively for investment purposes.

Business Overview

We are a clinical-stage biotechnology company that discovers and develops Anticalin-based drugs to target validated disease pathways in unique and transformative ways.

Our clinical pipeline includes an inhaled IL-4Rα antagonist Anticalin protein to treat uncontrolled asthma and an immuno-oncology, or IO, bispecific targeting HER2 and 4-1BB.

Our clinical pipeline includes an inhaled IL-4Rα antagonist Anticalin protein to treat uncontrolled asthma, an immuno-oncology, or IO, bispecific targeting HER2 and 4-1BB, and an IO bispecific targeting PD-L1 and 4-1BB.

Proprietary to us, Anticalin proteins are a novel class of therapeutics validated in the clinic and through partnerships with leading pharmaceutical companies.

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We also believe that the drug-like properties of the Anticalin drug class have been demonstrated in various clinical trials with different Anticalin-based drug candidates, including PRS-060/AZD1402, cinrebafusp alfa and others.

Our core Anticalin technology and platform were developed in Germany, and we have collaborations with major multi-national pharmaceutical companies.

Our core Anticalin technology and platform were developed in Germany, and we have collaborations with multiple major pharmaceutical and biotechnology companies.

• We entered into a license and collaboration agreement, or the Servier Collaboration Agreement, with Les Laboratoires Servier and Institut de Recherches Internationales Servier, or Servier, in January 2017 in IO.

• In May 2017, we entered into an alliance with AstraZeneca AB, or AstraZeneca, to treat respiratory diseases.

On March 29, 2021, we and AstraZeneca entered into the first amendment to the Non-exclusive Anticalin Platform License Agreement dated May 2, 2017 and the second amendment to the License and Collaboration Agreement dated

Under the amendments, the parties agreed to restructure certain commercial economics for the AZD1402/PRS-060 program by adjusting various milestones and royalty provisions, while fundamentally maintaining the overall value split between AstraZeneca and the Company.

In connection with the amendments, we achieved a $13.0 million milestone in connection with the initiation of the phase 2a study for this program and we and AstraZeneca entered into a Subscription Agreement pursuant to which we have agreed to issue to AstraZeneca, 3,584,230 shares of our common stock for a total purchase price of $10.0 million in a private placement transaction.

Under the amendments, the parties agreed to restructure certain commercial economics for the PRS-060/AZD1402 program by adjusting various milestones and royalty provisions, while fundamentally maintaining the overall value split between AstraZeneca and the Company.

In connection with the amendments, we achieved a $13.0 million milestone in connection with the initiation of the phase 2a study for this program and we and AstraZeneca

entered into a subscription agreement pursuant to which we have agreed to issue to AstraZeneca, 3,584,230 shares of our common stock for a total purchase price of $10.0 million in a private placement transaction.

• In February 2018, we entered into a license and collaboration agreement, or the Seagen Collaboration Agreement, with Seagen Inc.

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Under the co-promotion option, we will be entitled to increased royalties from that program in the event that we choose to exercise the option.

In addition, we entered into a clinical trial and supply agreement with Seagen to evaluate the safety and efficacy of combining our cinrebafusp alfa with Seagen’s TUKYSA ® (tucatinib), a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of an upcoming phase 2 study.

In addition, we entered into a clinical trial and supply agreement with Seagen to evaluate the safety and efficacy of combining cinrebafusp alfa with Seagen’s TUKYSA ® (tucatinib), a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of the initiated phase 2 study.

Finally, as part of this transaction, we entered into a subscription agreement pursuant to which we agreed to issue to Seagen 3,706,174 shares of our common stock for a total purchase price of $13.0 million in a private placement transaction.

In connection with our efforts to develop multispecific Anticalin-based proteins designed to engage immunomodulatory targets, we have gained non-exclusive access to antibody building blocks that can be utilized to develop multispecific antibody-Anticalin fusion proteins.

• On April 24, 2021, the Company and BP Asset XII, Inc., or Boston Pharmaceuticals, a subsidiary of Boston Pharma Holdings, LLC, entered into an exclusive product license agreement, or the BP Agreement, to develop PRS-342, a 4-1BB/GPC3 preclinical immuno-oncology Anticalin-antibody bispecific fusion protein.

• On May 19, 2021, the Company and Genentech, Inc., or Genentech, entered into a research collaboration and license agreement, or the Genentech Agreement, to discover, develop and commercialize locally delivered respiratory and ophthalmology therapies that leverage the Company’s proprietary Anticalin technology.

Our current development plans focus on two core pillars, respiratory diseases and IO.

The lead respiratory Anticalin-based drug candidate, PRS-060/AZD1402, antagonizes IL-4Rα, thereby inhibiting by IL-4 and IL-13, two cytokines, small proteins mediating signaling between cells within the human body, known to be key mediators in the inflammatory cascade that drive the pathogenesis of asthma and other inflammatory diseases.

We believe that the small size and biophysical stability of PRS-060/AZD1402 facilitates direct delivery to the lungs through the use of an inhaler, which may enable high pulmonary concentrations of the drug candidate to be achieved at lower doses than would be reached with antibodies that are systemically delivered.

Further, we believe an inhaled drug may be better tolerated than systemically-administered antibodies.

PRS-060/AZD1402 was tested in a nebulized formulation in 54 healthy volunteers at nominal dose levels ranging from 0.25 mg to 400 mg in a phase 1 SAD study.

Data from that study were presented at the American Thoracic Society International Conference in May 2019 showing that PRS-060/AZD1402 was well tolerated when given as a single inhaled or intravenous doses to healthy volunteers and there was systemic target engagement (as measured by pSTAT6 inhibition).

We presented interim data from the then ongoing PRS-060/AZD1402 phase 1 MAD study at the European Respiratory Society International Congress in October 2019 and reported that PRS-060/AZD1402 was safe and well-tolerated at all doses, led to a statistically significant reduction in fractional exhaled nitric oxide, or FeNO, a validated biomarker for eosinophilic airway inflammation, and showed dose-dependent systemic target engagement in patients with mild asthma and elevated levels of FeNO (≥ 35ppb).

Following the addition of 4 new cohorts, the phase 1 MAD study has now concluded, and additional data generated are currently planned to be publicly disclosed in 2021.

In addition to Ukrainian regulatory approval, AstraZeneca has also recently received ethics approval and regulatory acknowledgement for the phase 2a study of PRS-060/AZD1402in Australia.

In this global, two-part phase 2a study, PRS-060 will be evaluated at up to three dose levels in an inhaled dry powder formulation versus placebo.

The first part of the study will evaluate the compound in approximately 45 moderate asthmatics controlled on standard-of-care asthma therapy over four weeks to establish the safety and pharmacokinetics of the dry powder formulation.

The second part of the study will assess its efficacy, safety, and pharmacokinetics in up to three arms plus a placebo arm in up to 360 moderate uncontrolled asthmatics with a blood eosinophil count of ≥ 150 cells/μL and FeNO ≥ 25 ppb.

Patients will be dosed and monitored over four weeks, with FEV1 improvement compared to placebo as the primary endpoint.

We have been the sponsors of the phase 1 SAD/MAD studies for PRS-060/AZD1402, after which AstraZeneca has taken responsibility for further clinical development of PRS-060/AZD1402.

We have the right to opt-into co-development of PRS-060/AZD1402 with AstraZeneca after completion of the phase 2a study.

We also have a separate option to co-commercialize PRS-060/AZD1402 with AstraZeneca in the United States.

Beyond PRS-060/AZD1402, our alliance with AstraZeneca includes the development of four inhaled Anticalin-based drug candidates for the treatment of respiratory diseases which have been initiated as part of the collaboration:

two programs were

initiated in 2018, one program was initiated in 2019 and one was initiated in 2020.

The Company also continues to advance several proprietary discovery-stage respiratory programs.

Pieris expects to share data and rationale for advancement of one of its proprietary programs in 2021.

The lead respiratory Anticalin-based drug candidate, PRS-060/AZD1402, antagonizes IL-4Rα, thereby inhibiting IL-4 and IL-13, two cytokines, which are small proteins mediating signaling between cells within the human body, known to be key mediators in the inflammatory cascade that drive the pathogenesis of asthma and other inflammatory diseases.

We believe that the small size and biophysical stability of PRS-060/AZD1402 facilitates direct delivery to the lungs through the use of an inhaler, which may enable relatively high pulmonary concentrations of the drug candidate to be achieved.

PRS-060/AZD1402 was tested in a nebulized formulation and an IV arm for PK assessment in 54 healthy volunteers at nominal dose levels ranging from 0.25 mg to 400 mg in a phase 1 single-ascending dose, or SAD, study.

Data from that study were presented at the American Thoracic Society International Conference in May 2019 showing that PRS-060/AZD1402 was well-tolerated when given as a single inhaled or intravenous doses to healthy volunteers and there was systemic target engagement (as measured by pSTAT6 inhibition) at doses greater than 2 mg.

PRS-060/AZD1402 was also tested in a phase 1 multiple-ascending dose, or MAD, study in 30 patients that were randomized to receive delivered doses via nebulizer ranging from 2 mg to 60 mg (5 mg to 150 mg nominal dose) twice daily for nine consecutive days and one final dose on the 10 th day, and 12 patients were randomized to receive placebo at the same intervals, We presented interim data from the PRS-060/AZD1402 phase 1 MAD study at the European Respiratory Society International Congress in October 2019 and reported that PRS-060/AZD1402 was safe and well-tolerated at all doses, led to a statistically significant reduction in fractional exhaled nitric oxide, or FeNO, a validated biomarker for pulmonary eosinophilic airway inflammation, and showed dose-dependent systemic target engagement in patients with mild asthma and elevated levels of FeNO (≥ 35ppb).

Inhibition of FeNO levels was seen at doses of 2 mg and above.

At 2 mg there was minimal systemic target engagement supporting the concept that pulmonary target engagement by the drug is sufficient to reduce airway inflammation.

Following the addition of 4 new cohorts, the phase 1 MAD study has now concluded.

We sponsored the phase 1 SAD/MAD studies for PRS-060/AZD1402, after which AstraZeneca took responsibility for further clinical development of PRS-060/AZD1402.

The phase 2a asthma study is ongoing in multiple sites globally.

This phase 2a study is a two-part, multi-center, placebo-controlled clinical study of PRS-060/AZD1402 that will evaluate PRS-060/AZD1402 at three dose levels, 1, 3 and 10 mg, using a dry powder formulation administered twice daily.

In part 1a of the study, 31 asthma patients, controlled on standard of care (medium dose inhaled corticosteroids (ICS) with long-acting beta agonists (LABA)), were randomized to receive PRS-060/AZD1402 at 1 mg or 3 mg, or to receive a placebo twice daily over four weeks to establish the safety profile and pharmacokinetics of the dry powder formulation of PRS-060/AZD1402.

The safety review following completion of part 1a included an evaluation, compared to placebo, of the incidence of adverse events, changes in laboratory markers (immuno-biomarkers, clinical chemistry, and hematology), and forced expiratory volume in one second (FEV1).

AstraZeneca has begun enrollment of part 2a of the study to evaluate efficacy, safety, and pharmacokinetics of PRS-060/AZD1402.

In part 2a, asthma patients, uncontrolled on medium dose ICS LABA, that have a blood eosinophil count of ≥ 150 cells/μL and FeNO ≥ 25 ppb are being randomized to receive PRS-060/AZD1402 administered at 1 or 3 mg twice daily or a placebo.

Following a four-week run-in period, patients will be dosed and monitored over four weeks.

FEV1 improvement compared to placebo will be the primary endpoint in this portion of the study.

AstraZeneca has also begun

enrollment of part 1b of the study to evaluate the safety of the high dose, 10 mg, of PRS-060/AZD1402 compared to placebo in asthma patients controlled on standard of care.

The 10 mg dose or placebo is administered twice daily over four weeks.

Although we expect to announce topline data from the phase 2a study this year, we are actively evaluating the feasibility of study timelines in the current geopolitical environment and will update guidance in the orderly course of business, if needed.

Upon receipt of the topline data and notice from AstraZeneca, including a product development plan and budget, the Company will have 30 days to opt into co-development of the program with AstraZeneca at one of two levels, neither of which includes an option exercise fee.

If we do not choose to participate in co-development, we would still be entitled to potential sales milestones and royalties.

At the first opt-in level, Pieris would be responsible for 25% of the cost-share with a predetermined cost cap for an increased amount of potential sales milestones and royalties compared to not opting-in.

At the second opt-in level, we would be responsible for 50% of the cost-share without a cost cap which would result in a gross margin share.

The Company also has a separate option to co-commercialize PRS-060/AZD1402 with AstraZeneca in the United States independent of the co-development opt-in decision.

Of the four respiratory programs initially included in the AstraZeneca alliance beyond PRS-060/AZD1402, three are in the discovery stage, the targets and disease areas of which are undisclosed.

In January 2022, the Company and AstraZeneca jointly discontinued one discovery-stage program as they were not able to validate an exploratory target.

Pieris retains co-development and co-commercialization options for two of the three remaining active discovery programs.

The Company also continues to advance other proprietary discovery-stage respiratory programs.

Our lead fully proprietary respiratory asset, PRS-220, an oral inhaled Anticalin protein targeting connective tissue growth factor, or CTGF, is being developed as a local treatment for idiopathic pulmonary fibrosis, or IPF, and has passed the drug candidate nomination stage.

We received a €14.2 million grant from the Bavarian Ministry of Economic Affairs, Regional Development and Energy supporting research and development of the program for post-acute sequelae of SARS-CoV-2 infection (PASC) pulmonary fibrosis, or PASC-PF, also known as post-COVID-19 syndrome pulmonary fibrosis, or “long COVID”.

PRS-220 is progressing in all activities required to support a regulatory submission for clinical evaluation.

We presented initial preclinical data for PRS-220 at the European Respiratory Society International Congress 2021, or ERS, demonstrating a more potent and durable target engagement profile compared to a clinical-stage, systemically delivered anti-CTGF antibody benchmark.

Additionally, the targeting of CTGF locally in the lung showed increased attenuation of fibrotic lung remodeling in vivo compared to the antibody.

This outcome correlates with superior lung tissue exposure of PRS-220 compared to that of the antibody in head-to-head studies, where intratracheally administered PRS-220 efficiently penetrates the fibrotic, interstitial lung tissue of mice.

Clinical development for the program in IPF is expected to begin in 2022 once regulatory clearance is obtained.

We have also entered into a multi-program research collaboration and license agreement with Genentech, a member of the Roche Group, to discover, develop and commercialize locally delivered respiratory and ophthalmology therapies.

We have initiated joint discovery activities in each of the two committed programs.

The lead IO Anticalin-based drug candidate in our pipeline, cinrebafusp alfa, is designed to target the immune receptor 4-1BB and the tumor target HER2.

Cinrebafusp alfa is a genetic fusion of a variant of a HER2-targeting antibody with an Anticalin protein specific for 4-1BB.

Cinrebafusp alfa is a genetic fusion of a HER2-targeting antibody with an Anticalin protein specific for 4-1BB.

The proposed mode of action of this 4-1BB/HER2 bispecific is to promote 4-1BB clustering by bridging 4-1BB-positive T cells with HER2-positive tumor cells, thereby providing a potent co-stimulatory signal to tumor antigen-specific T cells.

Cinrebafusp alfa is intended to localize 4-1BB activation in the tumor, and to thereby both increase efficacy and reduce systemic toxicity compared to 4-1BB-targeting antibodies.

We will present an updated dataset for cinrebafusp alfa in an oral presentation at the American Association for Cancer Research, or AACR, Annual Meeting 2021 on April 10, 2021.

The presentation will include additional clinical benefit and safety data from cohort 13b (18 mg/kg, administered Q2W), as well as biomarker data across all active dose cohorts.

The Company is preparing for the phase 2 study of cinrebafusp alfa, expected to begin in the summer of 2021.

The phase 2 study will evaluate cinrebafusp alfa in combination with ramucirumab and paclitaxel in high HER2-expressing gastric cancer and in combination with tucatinib in low HER2-expressing gastric cancer.

Collaboration partners Lilly and Seagen will supply ramucirumab and tucatinib, respectively, for these study arms.

The phase 1 study, a multicenter, open-label, dose escalation study, was designed to determine the safety, tolerability, and potential anti-cancer activity of cinrebafusp alfa in patients with advanced or metastatic HER2-positive solid tumors for which standard treatment options are not available, are no longer effective, or are not tolerated, or in patients that have refused standard therapy.

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At SITC, we reported that cinrebafusp alfa was well-tolerated and had a favorable safety profile at all doses and schedules tested, demonstrated anti-tumor activity in a heavily pre-treated patient population across multiple tumor types and showed a potent increase in CD8+ T cell numbers in the tumor microenvironment in patients, indicative of 4-1BB agonism on T cells.

We continued to enroll patients in that study at higher dose cohorts and different dose regimens.

We also reported initial data from a phase 1 escalation study of cinrebafusp alfa in combination with atezolizumab at our R&D day on November 19, 2019.

We also reported initial data from a phase 1 escalation study of cinrebafusp alfa in combination with atezolizumab in November 2019.

We reported that cinrebafusp alfa in combination with atezolizumab was well-tolerated and had a favorable safety profile at all doses tested, demonstrated anti-tumor activity in a heavily pre-treated patient population across multiple tumor types and showed a potent increase in CD8+ T cell numbers in the tumor microenvironment in patients demonstrating a clinical benefit, indicative of 4-1BB agonism on T cells and a mode of action distinct from atezolizumab alone.

We presented additional interim data from the phase 1 monotherapy study and atezolizumab combination study of cinrebafusp alfa at the European Society for Medical Oncology, or ESMO, Virtual Congress in September 2020.

Data showed that cinrebafusp alfa had an acceptable safety profile at all doses and schedules tested in each clinical study, demonstrated anti-tumor activity in a heavily pre-treated patient population across multiple tumor types and showed a potent increase in CD8+ T cell numbers in the tumor microenvironment in patients, indicative of 4-1BB agonism on T cells.

Data showed that cinrebafusp alfa had an acceptable safety profile at all doses and schedules tested in each clinical study, demonstrated anti-

tumor activity in a heavily pre-treated patient population across multiple tumor types and showed a potent increase in CD8+ T cell numbers in the tumor microenvironment in patients, indicative of 4-1BB agonism on T cells.

Additionally, a significant expansion of CD8+ T cells in the tumor microenvironment of responders and a substantial increase of peripheral soluble 4-1BB were observed in the active dose cohorts, suggesting 4-1BB-mediated target engagement.

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In the atezolizumab combination trial, four patients achieved a confirmed partial response at active dose levels.

In July 2020, we announced that our phase 1 studies of cinrebafusp alfa were placed on partial clinical hold by the FDA, or the Agency, while we conducted an additional in-use stability and compatibility study requested by the FDA.

Treatment of currently-enrolled patients continued, although no new patients were enrolled pending resolution of the partial hold.

The Company has completed the in-use studies it deems necessary in connection with the partial clinical hold of the cinrebafusp alfa phase 1 studies.

As part of the now-completed studies that supported a robust process for administration of cinrebafusp alfa in the clinical setting, we have optimized the level of an existing excipient to enhance the stability of cinrebafusp alfa under prescribed as well as stressed conditions that could occur in preparation of the drug candidate for patient administration in the real-world clinical setting.

In November 2020, we provided these results to the FDA in the form of a Type A briefing package and received feedback in December that the FDA agrees with the adequacy of the stability data supporting the use of the existing excipient as a co-diluent for cinrebafusp alfa and the clinical proposal to initiate continued development of cinrebafusp alfa.

The FDA lifted the partial clinical hold in January 2021.

We plan to advance cinrebafusp alfa into a phase 2 study for the treatment of HER2+ gastric cancer in combination with ramucirumab and paclitaxel in 2021.

In January 2022, the first patient was dosed in the two-arm phase 2 study for cinrebafusp alfa in gastric cancer in the United States.

Supported by additional data we presented from the phase 1 monotherapy study of cinrebafusp alfa in an oral presentation at the American Association for Cancer Research Virtual Congress, or AACR, in April 2021, the first arm of the phase 2 study includes the combination with ramucirumab and paclitaxel in HER2-high gastric cancer, while the second arm is in combination with tucatinib in HER2-low gastric cancer.

Collaboration partners Lilly and Seagen are supplying ramucirumab and tucatinib, respectively.

The criteria for advancement of this program will evaluate a composite of measures, including a minimum target of 50% ORR in the HER2-high arm and a minimum target of 40% ORR in the HER2-low arm, duration of response, and safety.

The Company expects to report data from the arm evaluating cinrebafusp alfa in combination with tucatinib in HER2-low gastric cancer in 2022.

The Company expects to report data from the arm evaluating cinrebafusp alfa in combination with ramucirumab and paclitaxel in HER2-high gastric cancer in 2023.

In June 2021, FDA granted orphan drug designation to cinrebafusp alfa for the treatment of HER2-high and HER2-low expressing gastric cancers.

The supporting data presented at AACR included an evaluation of 78 patients who had been enrolled in the monotherapy study as of the February 2021 cutoff date, including four additional patients enrolled in the active dose cohorts (≥2.5 mg/kg) since the data were presented at the ESMO Virtual Congress in September 2020.

Out of 42 response-evaluable patients at the time of the data cutoff of February 25, 2021, according to RECIST 1.1, one patient with stage 4 rectal adenocarcinoma achieved a confirmed complete response at the 18 mg/kg Q2W dose (cohort 13b), four patients achieved a partial response (three at the 8 mg/kg Q2W dose (cohort 11b)) and one at the 18 mg/kg Q2W dose (cohort 13b)), and stable disease was observed in 17 patients as best response out of 42 evaluable patients across the predicted active dose ranges (cohorts 9-13b), translating to an ORR of 12% and a DCR of 52%.

Consistent with the mechanism of action of cinrebafusp alfa, dose-dependent immune activation was demonstrated by showing an increase in CD8+, T cell, NK cells and cytotoxic activity in the tumor microenvironment and an increase of soluble 4-1BB in the blood, indicating target engagement of 4-1BB and activation of immune cells.

Cinrebafusp alfa demonstrated durable anti-tumor activity in a heavily pre-treated patient population.

Additionally, clinical benefit was observed in patients with “cold” tumors as well as those with low HER2 expression who were enrolled into the study on the basis of archived HER2-status and were later re-assessed on the basis of a pre-treatment biopsy.

Cinrebafusp alfa also showed an acceptable safety profile at all doses and schedules tested in the clinical study with no dose-limiting toxicities.

The totality of response data generated in cohorts 11b (8 mg/kg Q2W) and 13b support the recommended phase 2 dose of a two-cycle loading dose of 18 mg/kg (Q2W), following by an 8 mg/kg dose (Q2W) in subsequent cycles.

The last update of the atezolizumab combination study of cinrebafusp alfa was presented at the ESMO Virtual Congress in September 2020.

As of the July 2020 cutoff date, 41 patients had been enrolled and seven dose cohorts have been evaluated at a Q3W dosing schedule ranging from 0.05 mg/kg to 8 mg/kg in combination with a fixed 1200 mg dose of atezolizumab.

In that trial, under RECIST 1.1, four patients achieved a confirmed partial response at active dose levels and an acceptable safety profile was observed at all doses and schedules tested in the clinical study.

In January 2017, we initiated a strategic collaboration with Servier to discover and develop multiple Anticalin-based bispecific therapeutics in IO.

The lead program in the alliance is PRS-344, also known as S095012, a PD-L1/4-1BB antibody-Anticalin bispecific and preclinical data for the PRS-344 program were presented at the SITC 2018 Annual Meeting.

We achieved two preclinical milestones under the program, one in December 2018 and another in February 2019.

The lead program in the alliance is PRS-344, also known as S095012, a 4-1BB/PD-L1 Anticalin-antibody bispecific and preclinical data for the PRS-344/S095012 program were presented at the SITC 2018 Annual Meeting.

We achieved two preclinical milestones under the program, one in December 2018 and another in February 2019 in addition to a clinical development milestone as the first patient was dosed in a global phase 1/2 in patients with solid tumors in November 2021.

We also executed our option to opt into co-development and U.S.

commercialization of PRS-344 during the first quarter of 2019.

We anticipate filing an IND/CTA application for PRS-344 in 2021 and are currently completing CMC activities associated with the scale-up manufacture of the drug product.

We hold exclusive commercialization rights for PRS-344 in the United States and will receive royalties on ex-U.S.

commercialization of PRS-344/S095012 during the first quarter of 2019.

We hold exclusive commercialization rights for PRS-344/S095012 in the United States and will receive royalties on ex-U.S.

sales from Servier for this program.

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We have handed the program over to Seagen, which is responsible for further advancement and funding of the asset.

The program is one of up to three potential programs in the Seagen alliance, and we believe the achieved milestone further validates our approach and leadership in immuno-oncology bispecifics, complementing the encouraging clinical data seen with cinrebafusp alfa.

We continue to explore opportunities to develop additional differentiated Anticalin-based multispecific therapeutics in IO.

During the third quarter of 2021, we initiated the second program within the collaboration with Seagen.

We retain a co-promotion option for one of the programs in the United States.

We continue to explore opportunities to develop additional differentiated multispecific therapeutics in IO.

We are performing proof of concept and proof of mechanism studies on additional fully proprietary programs to support drug candidate nomination.

Additionally, we have several academic collaborations that support our research and development objectives, including collaborations to assist in target and biomarker identification and translational research related to our drug candidates in IO and respiratory diseases.

Our goal is to become a fully-integrated biotechnology company by discovering and developing Anticalin-based therapeutics to target validated disease pathways in unique and transformative ways and to later commercialize our therapeutic products.

We intend to engage with partners for many of our programs in a combination of geographic and indication-based arrangements to maximize our business opportunities.

We also intend to retain certain development and commercial rights on selected products as our experience in drug development grows.

Additionally, we have several academic collaborations that support our research and development objectives, including collaborations to assist in target and biomarker identification and validation as well as translational research related to our drug candidates in IO.

Our corporate vision is to become a fully-integrated biotechnology company by discovering and developing Anticalin-based therapeutics to target validated disease pathways in unique and transformative ways with the ultimate goal of commercializing our therapeutic products.

We intend to engage with partners for many of our programs in a combination of geographic and program-based arrangements to maximize our business opportunities.

We also intend to retain certain development and commercial rights on selected products as our experience in late-stage drug development grows.

Key elements of our strategy include:

• Supporting AstraZeneca in the execution of the PRS-060/AZD1402 phase 2 studies.

We have reported promising data from our phase 1 SAD and MAD studies of PRS-060/AZD1402 and have been working with AstraZeneca for drug supply and other preparations for the phase 2a study of PRS-060/AZD1402.

In addition to Ukrainian regulatory approval, AstraZeneca has also recently received ethics approval and regulatory acknowledgement for the phase 2a study of PRS-060/AZD1402 in Australia.

• Collaborating with AstraZeneca on the execution of the PRS-060/AZD1402 phase 2 studies.

We previously reported promising data from our phase 1 SAD and MAD studies of PRS-060/AZD1402.

We achieved a $13.0 million milestone in connection with the initiation of patient enrollment in the phase 2a study of PRS-060/AZD1402 in the first quarter of 2021.

• Advancing cinrebafusp alfa into a phase 2 study to evaluate the drug candidate in combination with ramucirumab and paclitaxel in high HER2-expressing gastric cancer and in combination with tucatinib in low HER2-expressing gastric cancer.

We presented additional detailed data from the phase 1 monotherapy study and atezolizumab combination study of cinrebafusp alfa in an oral presentation session at the ESMO Virtual Congress in September 2020.

We reported that cinrebafusp alfa was well tolerated and had a favorable safety profile at all doses and schedules tested, demonstrated anti-tumor activity in a heavily pre-treated patient population across multiple tumor types and showed a potent increase in CD8+ T cell numbers in the tumor microenvironment of responders, indicative of 4-1BB agonism on T cells.

In July 2020, we announced that our phase 1 studies of cinrebafusp alfa have been placed on partial clinical hold by the FDA while we conduct an additional in-use stability and compatibility study requested by the FDA.

Pieris has completed the studies requested by the Agency and submitted a Complete Response Letter and an amendment of the Ph1 monotherapy protocol to assess the safety and pharmacokinetics of cinrebafusp alfa in combination with the increased concentration of the excipient in December 2020.

In January 2021, FDA lifted the partial clinical hold of the phase 1 studies of cinrebafusp alfa.

We will present an updated dataset for cinrebafusp alfa in an oral presentation at the AACR Annual Meeting 2021 on April 10, 2021.

The presentation will include additional clinical benefit and safety data from cohort 13b (18 mg/kg, administered Q2W), as well as biomarker data across all active dose cohorts.

Additionally, we plan to advance cinrebafusp alfa into a phase 2 study for the treatment of low-HER2 and high-HER2 expressing gastric cancer in the summer of 2021.

• Advancing PRS-344 to initiation of a phase 1 study.

PRS-344 is currently completing CMC activities associated with the scale-up manuf acture of the drug product, and we intend to file an IND for the program in 2021.

In addition, we and Servier will present preclinical data for PRS-344 as part of a poster session at the AACR Annual Meeting in 2021.

The presentation will showcase synergistic data, including in vitro data evaluating potential effects of combining 4-1BB with PD-L1 and the effects of PRS-344 on CD8+ T cells, as well as dose-dependent anti-tumor response in in vivo preclinical models.

PRS-344 is expected to enter phase 1 studies this year.

The efficacy portion (part 2a) of this phase 2a study is currently ongoing following a successful sponsor evaluation of safety data from part 1a (1 and 3 mg dose compared to placebo) of the study.

Successful development of PRS-060/AZD1402 would both further validate our platform and could provide a convenient and effective option for uncontrolled asthma patients as a potential first-in-class inhaled biologic.

• Advancing cinrebafusp alfa into a phase 2 study to evaluate the drug candidate in combination with ramucirumab and paclitaxel in HER2-high expressing gastric cancer and in combination with tucatinib in HER2-low expressing gastric cancer.

In January 2022, we dosed the first patient in the two-arm phase 2 study for cinrebafusp alfa in gastric cancer in the United States.

Supported by additional data we presented from the phase 1 monotherapy study of cinrebafusp alfa in an oral presentation at the American Association for Cancer Research Virtual Congress, or AACR, in April 2021, the first arm of the phase 2 study includes the combination with ramucirumab and paclitaxel in HER2-high expressing gastric cancer, while the second arm is in combination with tucatinib in HER2-low expressing gastric cancer.

Collaboration partners Lilly and Seagen are supplying ramucirumab and tucatinib, respectively.

The Company expects to report initial data from the arm evaluating cinrebafusp alfa in combination with tucatinib in HER2-low gastric cancer in 2022.

The Company expects to report data from the arm evaluating cinrebafusp alfa in combination with ramucirumab and paclitaxel in HER2-high gastric cancer in 2023.

In June 2021, FDA granted orphan drug designation to cinrebafusp alfa for the treatment of HER2-high and HER2-low expressing gastric cancers, indications with high unmet medical need.

• Advancing PRS-344/S095012 through phase 1/2 study.

Together with Servier, we dosed the first patient in the phase 1/2 study for PRS-344/S095012 in November 2021.

• Advancing PRS-220 to initiation of phase 1 study.

We continue developing PRS-220 as a CTGF-targeting, inhaled treatment of idiopathic pulmonary fibrosis (IPF), an indication of high unmet medical need.

In addition, we are exploring PRS-220 in another type of pulmonary fibrosis, post-acute sequelae of COVID-19 pulmonary fibrosis (PASC-PF).

We completed the drug candidate nomination stage in 2021, followed by chemistry, manufacturing, and control, or CMC, activities such as the development of a robust process for large-scale manufacturing and the development of a nebulized formulation.

We are now conducting clinical-enabling activities including the non-clinical safety assessment of the drug and plan to enter phase 1 study in 2022.

• Continuing to build our platform by entering into new partnerships and license and collaborative arrangements and advancing our currently partnered programs.

We have entered into partnership and collaborative arrangements with pharmaceutical companies in a diverse range of therapeutic areas and geographies.

We have active strategic partnerships with the global pharmaceutical companies Servier, AstraZeneca and Seagen.

We have active strategic partnerships with the global pharmaceutical companies Servier, AstraZeneca, Seagen and Genentech.

Together with our partners, we intend to advance multiple drug candidates through preclinical studies and to select further drug candidates for clinical development in the future.

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• Pursuing additional opportunities for our Anticalin technology.

We intend to continue to identify, vet and pursue opportunities to develop novel Anticalin therapeutics for respiratory diseases, oncology and additional diseases.

The flexibility of our Anticalin platform presents a unique opportunity to adapt and develop Anticalin proteins with therapeutic potential across a broad range of

We intend to continue to identify, vet and pursue opportunities to develop novel Anticalin-based therapeutics for respiratory diseases, oncology and additional diseases.

• Pursuing other platform development activities.

We continue to make investments in our Anticalin platform, including in display and other technologies used to discover and optimize Anticalin proteins against targets of interest to increase speed, throughput and quality of the selection process.

In addition, we continue to make investments in our platform for the characterization and manufacture of Anticalin proteins to develop drug candidates with excellent drug-like properties that can be efficiently produced.

In addition, we continue to make investments in our platform for the characterization and manufacturing of Anticalin proteins to develop drug candidates with excellent drug-like properties that can be efficiently produced.

Anticalin Platform Technology

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Anticalin proteins are derived from human proteins called lipocalins, which are naturally occurring low-molecular weight human proteins of approximately 17 to 21 kDa molecular mass typically found in blood plasma and other bodily fluids.

The lipocalin class of proteins defines a group of extracellular specific-binding proteins that, collectively, exhibit extremely high structural homology, yet have a low amino acid sequence identity (less than 20%), making them attractive “templates” for amino acid diversification.

The lipocalin class of proteins defines a group of specific extracellular binding proteins that, collectively, exhibit extremely high structural homology, yet have a low amino acid sequence identity (less than 20%), making them attractive “templates” for amino acid diversification.

Lipocalins naturally bind to, store and transport a wide spectrum of molecules.

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The graphic below shows the tear lipocalin (left) and neutrophil gelatinase-associated lipocalin, or NGAL (right).

We currently develop our Anticalin proteins from either tear lipocalin, found primarily in human tear fluid as well as the lung epithelium, or NGAL, a protein involved in the innate immune system, by making discrete mutations in the genetic code of the ligand binding regions and regions of the proteins that are amenable for amino acid exchanges.

We currently develop our Anticalin proteins from two scaffolds, namely the tear lipocalin, found primarily in human tear fluid as well as the lung epithelium, and NGAL, a protein involved in the innate immune system, by selection from diverse libraries with mutations in the genetic code of the ligand binding regions and regions of the proteins that are amenable for amino acid exchanges.

These mutations have the potential to lead to highly specific, high-affinity binding proteins for both small and large molecular targets.

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The ability to generate highly-diverse and high-quality Anticalin libraries and to select for the best binders among the large pool of Anticalin proteins by display technologies gives us the opportunity to select specific and high affinity Anticalin proteins for a wide variety of targets.

The flexibility inherent in the Anticalin proteins’ cup-like structure allows us to choose both small-molecule targets that can be bound more inside the ‘cup’ as well as larger protein targets that can be bound more by the flexible loop region outside of the ‘cup’.

The flexibility inherent in the Anticalin proteins’ cup-like structure allows us to choose both small-molecule targets that are capable of binding inside the ‘cup’ as well as larger protein targets that are predominantly bound by the flexible loop region outside of the ‘cup’.

Our phase 1 studies for PRS-060/AZD1402, our prior phase 1 and 2 studies of PRS-080, our prior phase 1 study of PRS-050, as well as the phase 1 study of a PCSK9-specific Anticalin protein, indicate that these proteins appear to have low immunogenic potential and thereby have the potential to exhibit a favorable safety profile.

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To obtain a specific Anticalin protein, we take advantage of the breadth of our proprietary Anticalin libraries, generated through our protein engineering expertise.

We have created, and will continue to create, proprietary Anticalin libraries by rationally diversifying the certain lipocalin regions, thereby generating Anticalin libraries suitable for identifying binders to different types of targets.

By utilizing bacterial or mammalian expression platforms from the earliest stages of drug discovery through Current Good Manufacturing Practice, or cGMP, manufacturing, we have created a seamless platform that improves the quality, yield and cost-effectiveness of our drug candidates comprising a single Anticalin protein.

Some Anticalin-based bi- and multi- specific drug candidates, such as cinrebafusp alfa and PRS-344, are expressed in standard mammal expression systems.

In this way, Anticalin protein manufacturing is not limited to bacterial systems, with the underlying expression system being driven on a program-by-program basis.

We created, and will continue to create, proprietary Anticalin libraries by rationally diversifying certain lipocalin regions, thereby generating Anticalin libraries suitable for identifying binders to different types of targets.

By utilizing bacterial and mammalian expression platforms from the earliest stages of drug discovery through current Good Manufacturing Practice, or cGMP, manufacturing, we created seamless platforms that facilitate the selection of high-quality and cost-effective drug candidates.

Anticalin-based drug candidates have been proven to be suitable for expression in

standard mammalian expression systems.

Thus, Anticalin protein manufacturing is not limited to bacterial systems, and the expression system can be selected on a program-by-program basis.

See “—Manufacturing” below.

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Anticalin proteins are small in size and are monomeric.

Therefore, we believe Anticalin proteins are generally more stable biophysically than antibodies composed of four polypeptide chains, which will potentially enable unique routes of administration, such as pulmonary delivery.

Therefore, we believe Anticalin proteins are generally more biophysically stable than antibodies, which are composed of four polypeptide chains.

This will potentially enable unique routes of administration, such as pulmonary delivery.

Higher-molecular-weight entities such as antibodies are often too large to be formulated and delivered effectively through these methods.

We believe Anticalin proteins will also be less expensive to manufacture than antibodies due to their lower molecular weight and less bulky structure as well as the ability to leverage the prokaryotic-based manufacturing systems, a less costly manufacturing system than mammalian cell-based manufacturing systems, to create them.

We believe Anticalin proteins may also be less expensive to manufacture than antibodies due to their lower molecular weight and less bulky structure as well as the ability to leverage the prokaryotic-based manufacturing systems, a less costly manufacturing system than mammalian cell-based manufacturing systems, to create them.

• Optimization of half-life .

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We believe that a monovalent “backbone” is an advantage in situations where pure antagonism of certain cellular receptors is desired.

The dual-binding nature of antibodies, which have two “arms,” can be a disadvantage in cases when the antibodies bind to and cross-link cell-surface receptors.

The dual-binding nature of antibodies, which have two “arms,” can be a disadvantage when the antibodies bind to and cross-link cell-surface receptors.

Such cross-linking often leads to undesirable activation of the cells bearing those receptors.

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Further, when it is called for by the biology we are addressing, we can create multispecific Anticalin proteins that can simultaneously bind (i) two or more different targets or (ii) different epitopes on the same target by genetically linking Anticalin proteins with distinct specificities or by genetic fusion of an Anticalin protein with an antibody.

We believe this multispecificity offers advantages in biological settings where binding to multiple

targets can enhance the ability of a drug to achieve its desired effects, such as killing cancer cells.

We believe this multispecificity offers advantages in biological settings where binding to multiple targets can enhance the ability of a drug to achieve its desired effects, such as killing cancer cells.

Novel Anticalin proteins genetically fused to each other or to existing antibodies for simultaneous target engagement are expressed as a fusion protein without generally compromising on manufacturability.

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PRS-060/AZD1402 is derived from human tear lipocalin, has a 20 pM affinity for human IL-4Rα and has a favorable stability profile.

Following the results reported in the “Clinical data” section below, and presented at the American Thoracic Society International Conference in May 2019 and European Respiratory Society International Congress in October 2019, AstraZeneca made preparations for a global phase 2a study of PRS-060/AZD1402.

We anticipate the first patient will be dosed in the second quarter of 2021.

Following the results reported in the “Clinical data” section below, and presented at the American Thoracic Society International Conference in May 2019 and European Respiratory Society International Congress in October 2019, AstraZeneca started a global phase 2a study of PRS-060/AZD1402.

We believe that PRS-060/AZD1402 represents a first-in-class inhaled biologic targeting IL-4Rα for the treatment of asthma.

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Benralizumab is an anti-IL5 receptor monoclonal antibody marketed by AstraZeneca for severe eosinophilic asthma;

in 2019 AstraZeneca reported global sales for benralizumab in the amount of $704 million.

in 2020 AstraZeneca reported global

sales for benralizumab in the amount of $949 million.

Dupilumab is an anti-IL4Rα monoclonal antibody marketed by Sanofi/Regeneron for atopic dermatitis and moderate-to-severe uncontrolled asthma;

in 2020, Sanofi/Regeneron reported total global sales of dupilumab in the amount of $3,976 million.

Tezepelumab is an anti-TSLP monoclonal antibody marketed by Amgen and AstraZeneca for severe asthma;

tezepelumab was approved by the FDA in December 2021.

Challenges in using conventional therapy

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Finally, in 2007, the FDA issued a black box warning for omalizumab due to reported cases of anaphylaxis, a potentially life-threatening allergic reaction suffered by some patients who had taken the drug.

Beyond omalizumab, there are four approved biologics, or antibodies, for the treatment of asthma.

Three target the IL-5 pathway and one targets IL-4Rα.

Beyond omalizumab, there are five approved biologics, or antibodies, for the treatment of asthma.

Three target the IL-5 pathway, one targets IL-4Rα, and one targets thymic stromal lymphopoietin (“TSLP”).

GSK's mepolizumab, which targets IL-5, was approved for severe eosinophilic asthma in adults and children older than 12 in 2015.

Teva’s reslizumab, also targeting IL-5, was approved in 2016 and AstraZeneca’s benralizumab, which targets IL-5 receptor alpha, or IL-5Rα, was approved in November 2017.

Dupilumab is an antibody that targets IL-4Rα that is delivered subcutaneously and was approved for the treatment of moderate-to-severe atopic dermatitis in March 2017.

Amgen's and AstraZeneca's tezepelumab, which targets TSLP, was approved in December 2021 as an add-on maintenance treatment for adult and pediatric patients ages 12 years and older with severe asthma, Dupilumab is an antibody that targets IL-4Rα that is delivered subcutaneously and was approved for the treatment of moderate-to-severe atopic dermatitis in March 2017.

In October 2018, Regeneron and its partner Sanofi announced that the FDA had approved dupilumab as “add-on maintenance therapy in patients with moderate-to-severe asthma aged 12 years and older with an eosinophilic phenotype or with oral corticosteroid-dependent asthma.” In the phase 3 Liberty Asthma Quest study, dupilumab (300 mg every 2 weeks) in the pre-specified high eosinophilic group (eosinophil blood count of ≥ 300 cells/microliter) demonstrated a reduction in annualized rate of severe exacerbations by 67.4% and an improvement in forced expiratory volume in one second, or FEV1, by 0.24L.

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Since dosing by inhalation is a common route of administration in asthma patients, it could represent a more convenient dosage regimen for patients than dosing of antibodies by injection.

PRS-060/AZD1402 was safe and well tolerated in a SAD phase 1 study, and the drug candidate has been evaluated in a MAD phase 1 study with interim data suggesting that PRS-060/AZD1402 was safe and well tolerated at all doses, led to a statistically significant reduction in FeNO and showed dose-dependent systemic target engagement in patients with mild asthma and elevated levels of FeNO.

PRS-060/AZD1402 was safe and well-tolerated in a SAD phase 1 study, and was evaluated in a MAD phase 1 study with interim data suggesting that PRS-060/AZD1402 was safe and well-tolerated at all doses, led to a statistically significant reduction in FeNO and showed dose-dependent systemic target engagement in patients with mild asthma and elevated levels of FeNO.

Preclinical data

In in vitro assays, PRS-060/AZD1402 specifically bound to immobilized targets such as human IL-4Rα in a concentration-dependent manner.

We tested the binding of PRS-060/AZD1402 to various targets in an enzyme-linked immunosorbent assay,

or ELISA, a standard in vitro assay platform.

We tested the binding of PRS-060/AZD1402 to various targets in an enzyme-linked immunosorbent assay, or ELISA, a standard in vitro assay platform.

In these tests, PRS-060/AZD1402 bound to IL-4Rα with subnanomolar affinity and it did not bind to three other human cell-surface interleukin receptors (IL-6R, IL-18Rα, IL-23Rα).

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the drug candidate was safe and well-tolerated in the volunteers in that study.

Data from that

study were presented at the American Thoracic Society International Conference in May 2019 showing that PRS-060/AZD1402 was well-tolerated when given as a single inhaled or intravenous doses to healthy volunteers and there was systemic target engagement (as measured by pSTAT6 inhibition).

We presented interim data from the PRS060/AZD1402 phase 1 MAD study at the 2019 European Respiratory Society International Congress in October 2019 and reported that PRS-060/AZD1402 was safe and well-tolerated at all doses, led to a statistically-significant reduction in FeNO, a validated biomarker for eosinophilic airway inflammation and showed dose-dependent systemic target engagement in patients with mild asthma and elevated levels of FeNO (≥ 35ppb).

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Minimal systemic exposure and target engagement were observed at the 2 mg dose, suggesting that local target engagement by the drug may be sufficient to reduce airway inflammation, as evidenced by FeNO reduction at that 2 mg dose level.

In order to further investigate the safety and efficacy profile of PRS-060/AZD1402, the phase 1 MAD study recruited 4 additional cohorts in 2020.

The MAD study is now complete, and outcomes are planned to be publicly disclosed in 2021 following completion of the clinical study report.

AstraZeneca has received regulatory approval from Australia and Ukraine for a global phase 2a study of PRS-060/AZD1402.

Patient screening has begun following a COVID-19-related inventory challenge that we believe has now been resolved.

Dosing of the first patient with PRS-060/AZD1402 is expected in the second quarter of 2021.

The two-part phase 2a study is evaluating PRS-060/AZD1402, which is being conducted with a dry powder formulation, at up to three dose levels versus placebo.

The first part of the study will evaluate PRS-060/AZD1402 in moderate asthmatics controlled on standard-of-care asthma therapy over four weeks to establish the safety and pharmacokinetics of the dry powder formulation.

The second part of the study will evaluate efficacy, safety, and pharmacokinetics of PRS-060/AZD1402 in moderate asthmatics uncontrolled on standard-of-care asthma therapy over four weeks with FEV1 improvement as the primary endpoint.

We sponsored the phase 1 SAD/MAD studies for PRS-060/AZD1402, after which AstraZeneca took responsibility for further clinical development of PRS-060/AZD1402.

A phase 2a asthma study of PRS-060/AZD1402 is ongoing in multiple sites globally.

This phase 2a study is a two-part, multi-center, placebo-controlled clinical study of PRS-060/AZD1402 that will evaluate PRS-060/AZD1402 at up to three dose levels using a dry powder formulation administered twice daily.

In part 1a of the study, 31 asthma patients, controlled on standard of care (medium dose inhaled corticosteroids (ICS) with long-acting beta agonists (LABA)), received PRS-060/AZD1402 twice daily over four weeks to establish the safety profile and pharmacokinetics of the dry powder formulation of PRS-060/AZD1402.

AstraZeneca began enrollment of part 2a of the study to evaluate efficacy, safety, and pharmacokinetics of PRS-060/AZD1402 administered twice daily to asthma patients, uncontrolled on medium dose ICS with LABA, that have a blood eosinophil count of ≥ 150 cells/μL and FeNO ≥ 25 ppb in two active arms and a placebo arm.

Following a four-week run-in period, patients will be dosed and monitored over four weeks.

FEV1 improvement compared to placebo will be the primary endpoint in this portion of the study.

AstraZeneca began enrollment of part 1b of the study to evaluate the safety of the high dose in asthma patients controlled on standard of care who will receive PRS-060/AZD1402 twice daily over four weeks.

We expect to announce topline data from the phase 2a study this year, although we are actively evaluating the feasibility of study timelines in the current geopolitical environment and will update guidance in the orderly course of business, if needed.

The Company also retains a separate option to co-commercialize PRS-060/AZD1402 with AstraZeneca in the United States.

PRS-220 Targeting Connective Tissue Growth Factor (CTGF) in IPF and PASC-PF

The project is currently in the IND-enabling stage and first-in-human ("FIH") trials are planned to begin in 2022.

Idiopathic pulmonary fibrosis, or IPF, is a devastating and fatal lung disease of unknown cause with median survival of only three to five years after diagnosis.

In patients with IPF, fibrotic remodeling and excess deposition of extracellular matrix, or ECM, causes the destruction of lung architecture leading to loss of lung elasticity and lung function, impairment of gas exchange and finally organ failure.

To date, there is no cure for IPF.

Treatment options for IPF are very limited, with two FDA-approved drugs, Ofev (nintedanib) and Esbriet (pirfenidone), only capable of slowing down disease progression but not arresting the insidious progression of the disease.

Moreover, due to gastrointestinal and other drug-related side effects, nintedanib and pirfenidone are not well-tolerated, leading many patients to discontinue treatment.

Thus, a high unmet medical need exists for alternative treatment options for IPF that effectively attenuate the lung function decline or arrest the insidious decline of lung function while offering an improved safety profile with fewer side effects and greater tolerability.

What is PASC-PF?

Following COVID-19, a substantial proportion of patients experience persistent impairment of lung function with associated radiographic-detected lung abnormalities.

This phenomenon is known as PASC-PF.

Acute COVID-19 is known to cause extensive lung inflammation and injury, and studies suggest that approximately 30% of patients hospitalized with severe COVID-19 will develop persistent respiratory symptoms with persistent lung abnormalities.

Given the high number of SARS-CoV-2 infections worldwide and the substantial proportion of patients suffering from severe COVID-19, PASC-PF represents a high unmet medical need that is expected to create a substantial burden on patients and the global healthcare systems.

Based on similarities between PASC-PF and IPF, anti-fibrotic drugs including nintedanib and pirfenidone are considered to be promising agents for the treatment of PASC-PF and are currently under investigation for this indication.

We believe that anti-CTGF therapy might provide a more effective and safer alternative.

Biology of CTGF

CTGF, or CCN2, is a member of the CCN family of proteins, a family of matricellular proteins associated with the ECM involved in intercellular signaling.

In adulthood, CTGF is expressed at a low level but can be strongly induced by certain stimuli such as cytokines, growth factors or mechanical stress.

CTGF contributes to the control of various biological processes, such as proliferation, differentiation, adhesion and angiogenesis.

CTGF is known to interact with a variety of proteins including receptors, cytokines and ECM proteins.

Among the different cytokines and growth factors that interact with CTGF, transforming growth factor β, or TGF-β, is known to play a crucial role in the development of fibrotic diseases.

In order to mediate functions such as cell adhesion, motility and tissue remodeling, CTGF interacts with integrins and components of the ECM such as fibronectin, aggrecan and heparan sulfate proteoglycans.

Specifically, in the context of cell adhesion, CTGF is thought to play a role as a molecular bridge between the ECM to integral cell surface proteins.

Role and validation of CTGF as a target for IPF

The pathogenesis of fibrosis is considered to be a dysregulated wound healing process in response to repetitive microinjuries leading to excessive deposition of ECM and impairment of tissue function.

CTGF has been associated with fibrotic remodeling in various organs and is highly expressed in fibrotic tissues of different origin, including renal fibrosis, scleroderma, cardiac fibrosis and IPF.

CTGF is a key mediator of wound healing and fibrosis through its interaction with several factors regulating cell proliferation, differentiation, motility, adhesion, and ECM deposition.

TGF-β and CTGF are widely regarded as universal mediators of fibrogenesis.

TGF-β has been identified as a transcriptional regulator of CTGF, and as supported by preclinical studies, both cytokines are thought to promote fibrotic tissue remodeling in a collaborative manner.

In lung tissue from IPF patients, CTGF levels are found to be elevated when compared to donor tissue with epithelial cells and myofibroblasts being the main cell types expressing the protein in diseased lung tissues (Figure 1).

Figure 1 Immunohistochemistry of CTGF in human (A) donor and (B) IPF lung tissues.

Inhibition of CTGF by monoclonal antibodies in preclinical models of lung fibrosis provided evidence supporting its function as a driver of fibrotic lung remodeling in vivo .

Lung specific overexpression of CTGF in mice demonstrated that CTGF is sufficient to drive fibrotic remodeling of the lung in vivo .

Moreover, local targeting of CTGF in the lung using an siRNA-based approach attenuated bleomycin-induced lung fibrosis in mice.

Based on this evidence, we believe that local targeting of CTGF in the lung is essential to achieve anti-fibrotic activity.

Current approaches to clinical CTGF targeting

In a phase 2 clinical trial (PRAISE), the anti-CTGF monoclonal antibody pamrevlumab/FG-3019 attenuated disease progression in patients suffering from IPF, demonstrating proof of concept for targeting of CTGF for the treatment of IPF.

In the PRAISE study, a relative reduction of the decline in percentage of predicted forced vital capacity ("FVC") by 60.3% was observed at week 48, as compared to placebo.

Patients in the pamrevlumab group also experienced fewer protocol-defined progression events (defined as death or ≥10 % decline in FVC %-predicted) as compared to the placebo group.

In addition, pamrevlumab demonstrated good tolerability with a safety profile similar to placebo.

The overall frequency of treatment-emergent adverse events was similar in the treatment and the placebo groups.

The safety and efficacy of pamrevlumab will be further evaluated in phase 3 trials (ZEPHYRUS I + II;

NCT03955146, NCT04419558) in patients with IPF.

Rationale for local targeting of CTGF

Based on the high expression of CTGF in lung tissue of IPF patients and its reported pro-fibrotic role in the lung in preclinical models, local targeting of CTGF in the lung is considered essential for driving the anti-fibrotic effect.

PRS-220 is being developed as a first-in-class inhaled antagonist of the pro-fibrotic mediator CTGF.

The inhaled route of administration of PRS-220 offers several advantages over pamrevlumab, the parenterally administered CTGF-targeted monoclonal antibody that is currently in clinical development for IPF.

In comparison to parenteral administration of a monoclonal antibody, inhaled administration of PRS-220 is expected to result in greater exposure of the drug at the site of the disease.

Meanwhile, it is known that parenterally administered monoclonal antibodies have a low lung bioavailability with approximately 15% penetrating the lung tissue.

Moreover, inhaled administration of PRS-220 is also expected to result in greater lung exposure by avoidance of the CTGF drug “sink” in the peripheral circulation.

CTGF is present in the circulation and levels were found to be increased in IPF patients.

Another advantage of an inhaled therapy is the convenience of home-based dosing with a portable, handheld nebulizer, as opposed to the office-based injections or intravenous route of delivery of parenteral monoclonal antibodies such as pamrevlumab.

Preclinical data

PRS-220 is a NGAL-based mutant selected from Pieris’ proprietary Anticalin libraries using phage display technology and high-throughput screening.

PRS-220 binds to CTGF with high affinity in the picomolar range as measured by surface plasmon resonance, or SPR, and does not show binding to other members of the CCN2 protein family.

Compared to the anti-CTGF antibody pamrevlumab, PRS-220 binds with higher affinity and retains a more stable target engagement over a longer period of time (Figure 2).

Figure 2 SPR binding experiment showing the binding of PRS-220 (left) and pamrevlumab (right) to CTGF.

The 1:1 binding model was used to fit the data of PRS-220.

The bivalent analyte model was used to fit the data of the antibody pamrevlumab.

CTGF-Fc was immobilized on a CM5 chip, and PRS-220 and pamrevlumab were used as analytes.

Pamrevlumab was generated in-house.

PRS-220 targets the functionally active epitope of CTGF as shown by competition ELISA where PRS-220 effectively displaces the clinically active pamrevlumab from CTGF (Figure 3).

Figure 3 Competition of PRS-220 with pamrevlumab for binding to CTGF and competition of pamrevlumab with itself for binding to CTGF.

Competition was assessed in an ELISA-based format using coated pamrevlumab and biotinylated CTGF as tracer.

To assess the lung biodistribution of PRS-220 upon local lung delivery, we challenged mice with bleomycin to induce lung fibrosis.

Once fibrosis was established in the animals, fluorescently-labeled PRS-220 was given intratracheally and the distribution of the drug was analyzed using Light Sheet imaging, revealing a favorable lung tissue distribution profile of PRS-220 in the fibrotic lungs.

PRS-220 was not only detected in the airways but also penetrated the fibrotic, interstitial lung tissue (Figure 4A).

Compared to intravenously administered pamrevlumab, which was analyzed in parallel, PRS-220 showed a higher coverage of the fibrotic tissue (Figure 4B).

Figure 4 Lung biodistribution of PRS-220 upon intratracheal delivery to fibrotic lungs of mice.

(A) Alexa-647 labeled PRS-220 (100 µg/mouse) was administered to the lungs of mice via the intratracheal route at day 21 after bleomycin challenge.

The lung tissue distribution was analyzed 2, 8, and 24 hours after PRS-220 administration by Light Sheet imaging of the left lung lobes (630 nm excitation channel).

The figure shows representative 3D overview images (scale bars 500 µm) and magnified 2D sections from 3D scanned lungs (scale bars 150 µm).

Lungs of saline treated mice imaged at the PRS-220 specific wavelength served as negative controls.

(B) Compound accumulation in fibrotic tissue determined by Light Sheet imaging and quantitative analysis (n = 2-5 per group).

100 µg Alexa-647 labeled pamrevlumab was administered intravenously at day 21 after bleomycin challenge.

Developability assessments of PRS-220 showed favorable biophysical properties ensuring robustness and stability for large-scale manufacturing and nebulized inhaled administration.

Aerosols generated using vibrating mesh technology show aerodynamic properties suitable for effective lung deposition.

Proprietary Respiratory Platform

We continue to advance several proprietary discovery-stage respiratory programs.

We expect to share data and rationale for advancement of one of our proprietary respiratory programs at a medical meeting in 2021.

We continue to advance other proprietary discovery-stage respiratory programs.

AstraZeneca Respiratory Collaboration beyond PRS-060/AZD1402

As further described below, our license and collaboration agreement with AstraZeneca, or the AstraZeneca Collaboration Agreement, includes four programs beyond PRS-060/AZD1402.

We retain co-development and co-commercialization rights to two out of those four programs.

We have initiated discovery work on all four of the additional development candidates under the collaboration.

The targets and disease areas of those four programs are undisclosed.

As further described below, our license and collaboration agreement with AstraZeneca, or the AstraZeneca Collaboration Agreement, includes three programs beyond PRS-060/AZD1402.

We retain co-development and co-commercialization rights to two out of those three programs.

Discovery work is ongoing for on all of the additional development candidates under the collaboration.

The targets and disease areas of those three programs are undisclosed.

Genentech Collaboration

In May 2021, we and Genentech, a member of the Roche Group, entered into a multi-program Research Collaboration and License Agreement to discover, develop and commercialize locally delivered respiratory and ophthalmology therapies that leverage the Company’s proprietary Anticalin-based technology.

These two focus areas of the collaboration are uniquely suited to the advantages offered by the small size of Anticalin proteins when delivered locally.

The first two programs have been initiated and Pieris is responsible for discovery research and early preclinical development of these programs, and Genentech will be responsible for IND-enabling activities, clinical development, and commercialization of the programs.

Genentech will also have the option to select additional targets in return for an option exercise fee.

Cinrebafusp alfa Targeting 4-1BB (CD-137) in Oncology

Cinrebafusp alfa is a bispecific protein targeting the immune receptor 4-1BB and the tumor target HER2.

It is generated by genetic fusion of an Anticalin protein specific for 4-1BB to each heavy chain of a variant of a HER2-targeting antibody.

mode of action of this 4-1BB/HER2 bispecific is to promote 4-1BB clustering by bridging 4-1BB-positive T cells with HER2-positive tumor cells, and to thereby provide a potent co-stimulatory signal to tumor antigen-specific T cells.

It is generated by genetic fusion of an Anticalin protein specific for 4-1BB to each heavy chain of a HER2-targeting antibody.

The mode of action of this 4-1BB/HER2 bispecific is to promote 4-1BB clustering by bridging 4-1BB-positive T cells with HER2-positive tumor cells, and to thereby provide a potent co-stimulatory signal to tumor antigen-specific T cells.

Cinrebafusp alfa is intended to localize 4-1BB activation in the tumor, and to thereby both increase efficacy and reduce systemic toxicity compared to 4-1BB-targeting antibodies being developed by third parties in clinical trials.

We initiated a phase 1 dose-escalation study of cinrebafusp alfa in HER2 positive patients in September 2017 and a phase 1 dose-escalation study of cinrebafusp alfa in combination with atezolizumab in HER2 positive patients in August 2018.

In January 2022, we dosed the first patient in the two-arm phase 2 cinrebafusp alfa study.

Biology of the co-stimulatory immune receptor 4-1BB

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In a T cell pre-stimulated by the T cell receptor, or TCR, binding to a cognate major histocompatibility complex, or MHC, target, co-stimulation via 4-1BB leads to further enhanced activation, survival and proliferation, as well as the production of pro-inflammatory cytokines and an improved capacity to kill.

Validation of 4-1BB as a therapeutic target in cancer

The benefit of 4-1BB co-stimulation for the elimination of cancerous tumors has been demonstrated in a number of murine in vivo models.

The forced expression of 4-1BBL on a tumor, for example, leads to tumor rejection.

Likewise, the forced expression of an anti-4-1BB single chain antibody fragment, or scFv, on a tumor leads to a CD4+ T cell and NK-cell dependent elimination of the tumor.

A systemically administered anti-4-1BB antibody has also been demonstrated to lead to retardation of tumor growth.

Human ex vivo data support the potential of 4-1BB as a co-stimulatory receptor in cancer therapy.

It has been reported that for T cells isolated from human tumors, 4-1BB is an effective marker for those that are tumor-reactive.

Based on this observation, we believe that 4-1BB targeting can be utilized to improve adoptive T cell therapy, or ACT, by augmenting the expansion and activity of CD8+ melanoma tumor-infiltrating lymphocytes, or TILs.

Finally, the potential of 4-1BB targeting has also been shown in nonclinical combination therapy studies, where an additional benefit was demonstrated by combination of 4-1BB agonism with checkpoint blockade or NK cell-targeting antibodies.

Current approaches to clinical 4-1BB targeting

Clinical validation of 4-1BB targeting therapies

The demonstration of the potential therapeutic benefit of 4-1BB co-stimulation in nonclinical models has spurred the development of therapeutic antibodies targeting 4-1BB, utomilumab and urelumab.

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The toxicity data of urelumab indicates that such a non-selective activation leads to unacceptable toxicity, potentially making it impossible to find a therapeutic window for such 4-1BB-targeting antibodies.

We therefore hypothesized that to obtain an ideal 4-1BB-targeting agent, a bispecific molecule should be designed that targets 4-1BB on one end and a differentially expressed tumor target on the other end.

A visualization of the general concept is

provided in Figure 1, below.

We therefore hypothesized that to obtain an ideal 4-1BB-targeting agent, a bispecific molecule should be designed to target 4-1BB on one end and a differentially expressed tumor target on the other end.

A visualization of the general concept is provided in Figure 5, below.

HER2/4-1BB bispecific is envisioned to promote 4-1BB clustering by bridging T cells with HER2-positive tumor cells, and to thereby provide a potent co-stimulatory signal to tumor antigen-specific T cells, further enhancing its TCR-mediated activity and leading to tumor destruction.

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The resulting clustering of the co-stimulatory TCR provides a local co-activating signal to the T cell, further enhancing its TCR-mediated activity and leading to tumor destruction.

(C) Toxic side effects are expected to be manageable, as target-negative cells do not lead to co-stimulation of T cells due to a lack of target-mediated receptor clustering, and healthy tissue is spared by tumor-costimulated T cells due to the absence of a primary, TCR-mediated signal.

(C) Toxic side effects are expected to be manageable, as target-negative cells do not lead to co-stimulation of T cells due to a lack of target-mediated receptor clustering, and healthy tissue is spared by tumor-co-stimulated T cells due to the absence of a primary, TCR-mediated signal.

Design and Generation of HER2/4-1BB bispecific cinrebafusp alfa.

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We utilized a sandwich ELISA experiment to investigate whether cinrebafusp alfa can bind both targets at the same time, which is a necessary prerequisite for the envisioned mode of action of cinrebafusp alfa.

The figure below shows that a sigmoid binding curve results from this titration, proving that both targets can indeed be engaged at the same time, fulfilling the key requirement for simultaneous co-stimulatory engagement of T cells by HER2-positive target cells.

Figure 6 below shows that a sigmoid binding curve results from this titration, proving that both targets can indeed be engaged at the same time, fulfilling the key requirement for simultaneous co-stimulatory engagement of T cells by HER2-positive target cells.

Figure 6 Cinrebafusp alfa simultaneous binding to targets HER2 and 4-1BB.

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We continue to enroll patients in that study at higher dose cohorts and different dose regimens.

We also reported initial data from a phase 1 escalation study of cinrebafusp alfa in combination with atezolizumab at our R&D day on November 19, 2019.

We presented additional interim data from the phase 1 monotherapy study and atezolizumab combination study of cinrebafusp alfa in an oral presentation session at the ESMO Virtual Congress in September 2020.

We presented additional interim data from the phase 1 monotherapy study and atezolizumab combination study of cinrebafusp alfa in an oral presentation at the ESMO Virtual Congress in September 2020.

As of the July 2020 cutoff date, 74 patients had been enrolled in the monotherapy study, including 21 additional patients enrolled in the active dose cohorts (≥2.5 mg/kg) since the data were presented at the SITC 2019 Annual Meeting, and 41 patients had been enrolled in the atezolizumab combination therapy study.

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In that trial, under RECIST 1.1, four patients achieved a confirmed partial response at active dose levels.

We plan to advance cinrebafusp alfa into a phase 2 study for the treatment of HER2+ gastric cancer in combination with ramucirumab and paclitaxel in 2021.

PRS-344 consists of a PD-L1-targeting antibody and 4-1BB-targeting Anticalin proteins genetically fused to each arm of the C-terminal heavy chain of the antibody.

In January 2022, we dosed the first patient in the two-arm phase 2 study for cinrebafusp alfa in gastric cancer in the United States.

Supported by additional data we presented from the phase 1 monotherapy study of cinrebafusp alfa in an oral presentation at the American Association for Cancer Research Virtual Congress, or AACR, in April 2021, the first arm of the phase 2 study will include the combination with ramucirumab and paclitaxel in HER2-high gastric cancer, while the second arm will be in combination with tucatinib in HER2-low gastric cancer.

Collaboration partners Lilly and Seagen are supplying ramucirumab and tucatinib, respectively.

The Company plans to report initial data from the arm evaluating cinrebafusp alfa in combination with tucatinib in HER2-low gastric cancer in 2022.

The Company expects to report data from the arm evaluating cinrebafusp alfa in combination with ramucirumab and paclitaxel in HER2-high gastric cancer in 2023.

In June 2021, FDA granted orphan drug designation to cinrebafusp alfa for the treatment of HER2-high and HER2-low expressing gastric cancers.

data were presented at the ESMO Virtual Congress in September 2020.

Out of 42 response-evaluable patients at the time of the data cutoff of February 25, 2021, according to RECIST 1.1, one patient with stage 4 rectal adenocarcinoma achieved a confirmed complete response at the 18 mg/kg Q2W dose (cohort 13b), four patients achieved a partial response (three at the 8 mg/kg Q2W dose (cohort 11b) and one at the 18 mg/kg Q2W dose (cohort 13b)), and stable disease was observed in 17 patients as best response out of 42 evaluable patients across the predicted active dose ranges (cohorts 9-13b), translating to an ORR of 12% and a DCR of 52%.

Cinrebafusp alfa demonstrated durable anti-tumor activity in a heavily pre-treated patient population.

Cinrebafusp alfa also showed an acceptable safety profile at all doses and schedules tested in the clinical study with no dose-limiting toxicities.

PRS-344/S095012

PRS-344/S095012 consists of a PD-L1-targeting antibody and 4-1BB-targeting Anticalin proteins genetically fused to each arm of the C-terminal heavy chain of the antibody.

4-1BB is a co-stimulatory receptor belonging to the TNFR super-family.

Clustering of 4-1BB on the surface of T cells leads to T cell activation, proliferation and cytokine secretion.

The mode of action of PRS-344 is to promote 4-1BB clustering by bridging 4-1BB-positive T cells with PD-L1-positive tumor cells, and to thereby provide a potent co-stimulatory signal to tumor antigen-specific T cells.

PRS-344 is intended to localize 4-1BB activation in the tumor in a PD-L1 dependent manner.

a transmembrane protein belonging to the B7 family and is expressed on a variety of cells including T cells, B cells, epithelial cells and vascular endothelial cells.

The mode of action of PRS-344/S095012 is to promote 4-1BB clustering by bridging 4-1BB-positive T cells with PD-L1-positive tumor cells, and to thereby provide a potent co-stimulatory signal to tumor antigen-specific T cells.

PRS-344/S095012 is intended to localize 4-1BB activation in the tumor in a PD-L1 dependent manner.

PD-L1 is a transmembrane protein belonging to the B7 family and is expressed on a variety of cells including T cells, B cells, epithelial cells and vascular endothelial cells.

Most importantly, PD-L1 is found at high levels on tumor cells of several cancer types including but not limited to melanoma, lung, bladder, colon and breast cancer.

Binding of PD-L1 to its receptor PD-1 leads to exhaustion of tumor-infiltrating T cells.

PRS-344 blocks the PD-1/PD-L1 interaction and thus is capable of reversing T cell exhaustion in the tumor microenvironment.

Preclinical data shows that the synergistic effect observed by targeting PD-L1 and 4-1BB simultaneously is stronger with PRS-344 than with the combination of anti-PD-L1 and anti-4-1BB antibodies.

PRS-344/S095012 blocks the PD-1/PD-L1 interaction and thus is capable of reversing T cell exhaustion in the tumor microenvironment.

Preclinical data shows that the synergistic effect observed by targeting PD-L1 and 4-1BB simultaneously is stronger with PRS-344/S095012 than with the combination of anti-PD-L1 and anti-4-1BB antibodies.

Figure 10 The combination of anti-PD-L1 benchmark and anti-4-1BB benchmark demonstrates the strong synergistic effect of T cell co-stimulation and checkpoint blockade in T cell activation.

With PRS-344, this synergistic effect is massively increased.

Together with our partner Servier, we are completing CMC activities associated with the scale-up manufacture of the drug-product, while preparing for an IND/CTA submission in 2021.

This first-in-human study will consist of evaluating the safety and tolerability profile of PRS-344 and determining its maximum tolerated dose, or MTD, and/or the recommended phase 2 dose, or RP2D, in patients with solid tumors.

In addition, the PK profile as well as pharmacodynamic effects of the PRS-344 will be characterized in the study.

With PRS-344 /S095012, this synergistic effect is massively increased.

Regulatory clearance for the phase 1/2 study of PRS-344/S095012, a 4-1BB/PD-L1 bispecific, has been granted in multiple countries and the first patient was dosed in November 2021.

The first-in-human study will consist of evaluating the safety and tolerability profile of PRS-344/S095012 and determining its maximum tolerated dose, or MTD, and/or the recommended phase 2 dose, or RP2D, in patients with solid tumors.

In addition, the PK profile as well as pharmacodynamic effects of the PRS-344/S095012 will be characterized in the study.

Any initial signs of anti-tumoral activity will be correlated to safety and PK and further explored in expansion cohorts.

IO Market with respect to cinrebafusp alfa and PRS-344

IO Market with respect to cinrebafusp alfa and PRS-344/S095012

In 2020, there were approximately 1.807 million estimated new cancer cases in the United States (NCI Surveillance, Epidemiology, and End Results Program) and approximately 19.3 million cancer cases worldwide (IARC GLOBOCAN 2020).

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Tasuku Honjo for their discovery of CTLA-4 and PD-1-targeting antibodies, respectively.

By the end of 2018 a total of six anti-PD-1 or PD-L1 monoclonal antibodies and one CTLA4 targeting antibody have been approved in the United States.

Global sales in 2018 for these seven checkpoint inhibitors exceeded $16 billion.

In addition, other than the six anti-PD-1 or PD-L1 monoclonal antibodies approved in the United States, four other anti-PD-1 monoclonal antibodies had been approved in China by the end of 2019 and additional anti-PD-1 or PD-L1 monoclonal antibodies have filed for approval in both the United States and China.

By the end of 2021, a total of seven anti-PD-1 or PD-L1 monoclonal antibodies and one CTLA4 targeting antibody have been approved in the United States.

In addition, other than the seven anti-PD-1 or PD-L1 monoclonal antibodies approved in the United States, eight other anti-PD-1 antibodies had been approved in China by the end of 2021.

The majority of the global sales of checkpoint inhibitors comes from two anti-PD-1 monoclonal antibodies:

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Current antibody-based therapies targeting tumor cell destruction or immune activation are hampered by, among other factors, low response rates and the induction of immune-related adverse events.

Our IO pipeline beyond cinrebafusp alfa and PRS-344 is designed to target checkpoint proteins or, like cinrebafusp alfa, co-stimulatory proteins.

These programs consist of a variety

of multifunctional biotherapeutics that can encompass a fusion of antibodies with Anticalin proteins or two or more Anticalin proteins to each other.

Our IO pipeline beyond cinrebafusp alfa and PRS-344/S095012 is designed to target checkpoint proteins or, like cinrebafusp alfa, co-stimulatory proteins.

These programs consist of a variety of multifunctional biotherapeutics that can encompass a fusion of antibodies with Anticalin proteins or two or more Anticalin proteins to each other.

These combined molecules have the potential to build upon current therapies by modifying or regulating one or more immune functions on a single fusion protein, thereby having the potential to elevate immune responses within a tumor microenvironment.

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This belief is based on the shared underlying biology such as checkpoint and co-stimulatory biology found within tumors arising in different organs.

Servier Collaboration Beyond PRS-344

In February 2020, we and Servier agreed to extend the research term of the three programs in development beyond PRS-344 for one year.

Servier Collaboration beyond PRS-344/S095012

In February 2020, we and Servier agreed to extend the research term of the three programs in development beyond PRS-344/S095012 for one year.

This research extension includes reimbursement for Pieris’ internal efforts and an extension of the research license.

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In February 2021, the research term was extended again for another 12 months.

Given the discontinuation of the two preclinical stage programs in March 2020, and as further described below, our Servier Collaboration Agreement includes one additional program beyond PRS-344, PRS-352.

We retain co-development and co-commercialization rights to only PRS-344.

We retain co-development and co-commercialization rights to PRS-344/S095012.

PRS-352 is a preclinical-stage program within the Servier alliance addressing undisclosed targets in IO.

We have successfully completed non-GLP preclinical work in 2020 and PRS-352 is currently under further development at Servier.

We successfully completed non-GLP preclinical work in 2020 and handed over the program for further development at Servier.

In 2021, we received a preclinical milestone with regard to PRS-352.

Seagen Collaboration

In addition, our collaboration with Seagen to discover and develop Anticalin-based tumor-targeted bispecific therapeutics in IO includes up to three programs.

We retain a co-development and co-commercialization option for one of these three programs.

We achieved a key development milestone for one of the programs in the Seagen collaboration in 2020, a bispecific tumor-targeted costimulatory agonist, triggering a $5 million payment.

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In March 2021, Seagen made a $13.0 million equity investment in Pieris as part of an ongoing collaboration between the companies.

Additionally, the companies have entered into a clinical trial and supply agreement to evaluate the safety and efficacy of combining Pieris' cinrebafusp alfa with Seagen's tucatinib, a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of the upcoming phase 2 study to be conducted by Pieris.

The companies have also amended their existing immuno-oncology collaboration whereby Pieris' option to co-develop and co-commercialize the second of three programs in the collaboration has been converted to a co-promotion option in the United States.

study to be conducted by Pieris.

During the third quarter of 2021, we initiated the second program within the collaboration with Seagen.

Boston Pharmaceuticals Collaboration

In April 2021, we and Boston Pharmaceuticals, a subsidiary of Boston Pharma Holdings, LLC, entered into an exclusive product license agreement to develop PRS-342/BOS-342, a 4-1BB/GPC3 preclinical immuno-oncology Anticalin-antibody bispecific fusion protein.

We completed the material and know-how transfer to BP and are currently supporting BP in manufacturing and IND-readiness activities for PRS-342/BOS-342.

The pharmaceutical and biotechnology industries are characterized by rapidly-advancing technologies, intense competition and a strong emphasis on proprietary products.

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PRS-060/AZD1402

Like PRS-060/AZD1402, new developments for the treatment of uncontrolled moderate to severe asthma patients mainly include drug candidates targeting the Th2 pathway by interfering with IL-4/IL-13, IL-5, IL-33, TSLP or CRTH2.

Such agents include mepolizumab (GSK, IL-5), reslizumab (Teva, IL-5), benralizumab (AstraZeneca, IL-5Rα), tezepelumab (Amgen/AstraZeneca, TSLP), etokimab (AnaptysBio, IL-33) and REGN-3500/SAR-440340 (Regeneron/Sanofi, IL-33).

These drugs are in later clinical development than PRS-060/AZD1402 (tezepelumab, etokimab and REGN-3500/SAR-440340), or have been approved (mepolizumab, reslizumab, benralizumab) for severe eosinophilic asthma.

Dupilumab (Sanofi/Regeneron, IL-4Rα) has been approved for severe to moderate asthma;

Such agents include mepolizumab (GSK, IL-5), reslizumab (Teva, IL-5), benralizumab (AstraZeneca, IL-5Rα), tezepelumab (Amgen/AstraZeneca, TSLP) and CBP201 (Connect Biopharma, IL-4Rα).

These drugs are in later clinical development than PRS-060/AZD1402 or have been approved for severe eosinophilic asthma.

Dupilumab (Sanofi/Regeneron, IL-4Rα) has been approved for moderate to severe asthma;

the antibody omalizumab, directed against IgE, is also approved and marketed for the treatment of uncontrolled, moderate to severe asthma patients.

However, in contrast to PRS-060/AZD1402, these antibodies are given to patients through injection and distribute systemically through the blood stream.

CSJ117 (Novartis), an inhaled Fab fragment that targets TSLP, is currently in phase 2 clinical development.

CSJ117 (Novartis), an inhaled Fab fragment,and AZD8360 (AstraZeneca/Amgen), an inhaled antibody fragment, that both target TSLP, are currently in phase 2 and phase 1 clinical development, respectively.

There are a number of other companies presently marketing or developing other therapies for asthmatic patients.

The rationale behind the multispecific tumor-targeted co-stimulatory molecules is to activate the immune system in the tumor microenvironment.

Other companies that also develop multispecific drug candidates designed to activate the immune system in a tumor dependent manner by targeting a co-stimulatory receptor, such as 4-1BB, include Roche, Molecular Partners, Alligator Biosciences, Aptevo Therapeutics and Genmab, among others.

Additionally, there are multiple drug candidates in preclinical or clinical trials targeting other co-stimulatory receptors, either in a tumor dependent or monospecific manner, including OX40, CD40, GITR, CD27 and ICOS.

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Pembrolizumab from Merck & Co was the second PD-1 inhibitor to be approved and the first one in the United States.

In addition to nivolumab and pembrolizumab, there are multiple approved checkpoint inhibitors targeting the PD-1/PD-L1 pathway, for example, those from Roche, AstraZeneca, Pfizer and Merck KGaA.

In addition to nivolumab and pembrolizumab, there are multiple approved checkpoint inhibitors targeting the PD-1/PD-L1 pathway, for example, those from Roche, AstraZeneca, Regeneron, Pfizer and Merck KGaA.

Additionally, a number of other companies, such as Amgen, Affimed, Macrogenics, F-star, Molecular Partners, Xencor, Immunocore and Zymeworks, also pursue other multispecific approaches in oncology, in which such therapies are in clinical or preclinical development.

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It is designed to both promote 4-1BB clustering by bridging 4-1BB-positive T cells with HER2-positive tumor cells, and to thereby provide a co-stimulatory signal to tumor antigen-specific T cells and inhibit HER2 signaling.

Other drug candidates targeting the co-stimulatory receptor 4-1BB include urelumab, which was being developed by Bristol-Myers Squibb, and utomilumab, which is being developed by Pfizer, and is currently in clinical development (Trialtrove, December 10, 2020), among others.

Other drug candidates targeting the co-stimulatory receptor 4-1BB include urelumab, which was being developed by

Bristol-Myers Squibb, and utomilumab, which is being developed by Pfizer, and is currently in clinical development (Trialtrove, December 10, 2020), among others.

In the HER2-positive space, several companies are active with approved clinical and preclinical drugs candidates.

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The two other drugs are pertuzumab and ado-trastuzumab emtansine which both are marketed for breast cancer patients.

In addition to cinrebafusp alfa, there are also other HER2 targeting drug candidates in clinical development designed to induce an immune response by bridging HER2-positive tumor cell with immune cells, for example, GBR 1302, a bispecific antibody targeting HER2 and CD3, from Glenmark, or NJH-395, an immune stimulating antibody conjugate targeting HER2 and TLR7/8, from Novartis (Pharmaprojects, December 10, 2020).

Further trials with cinrebafusp alfa are being planned in gastric cancer this year.

Trastuzumab in combination with cisplatin and 5-FU, or capecitabine, is currently standard of care for 1 st line HER2+ metastatic gastric, or GEJ adenocarcinoma.

Other drug candidates or novel combinations being developed in HER2+ cancer include pembrolizumab in combination with trastuzumab and chemotherapy (Merck & Co, KEYNOTE-811), trastuzumab deruxtecan (Daiichi Sankyo/AstraZeneca, DESTINY-Gastric01, -Gastric02 and -Gastric03), margetuximab in combination with a checkpoint inhibitor, with or without chemotherapy (MacroGenics, MAHOGANY) and ZW25 (Zymeworks), among others.

In addition to cinrebafusp alfa, there are also other HER2 targeting drug candidates in clinical development designed to induce an immune response by bridging HER2-positive tumor cell with immune cells, for example, RG6194, a bispecific antibody targeting HER2 and CD3, from Roche, or NJH-395, an immune stimulating antibody conjugate targeting HER2 and TLR7/8, from Novartis (Pharmaprojects, December 10, 2020).

Phase 2 trials for cinrebafusp alfa in gastric cancer are currently ongoing.

Trastuzumab in combination with cisplatin and 5-FU, or capecitabine, is currently recommended as standard of care for 1st line therapy for HER2+ metastatic gastric, or GEJ adenocarcinoma according to NCCN guidelines (NCCN Guidelines Version 5.2021 Gastric Cancer).

Other drug candidates or novel combinations being developed in HER2+ gastric cancer include pembrolizumab in combination with trastuzumab and chemotherapy (Merck & Co, KEYNOTE-811), which received accelerated approval in the United States as 1st line therapy in May 2021, trastuzumab deruxtecan (Daiichi Sankyo/AstraZeneca, DESTINY-Gastric01, -Gastric02 and -Gastric03), an anti-HER2 ADC which was approved in the United States as 2L therapy in January 2021, margetuximab, an anti-HER2 antibody, in combination with a checkpoint inhibitor, with or without chemotherapy (MacroGenics, MAHOGANY), ALX148, an anti-CD47 antibody, in combination with trastuzumab, ramucirumab and paclitaxel (ALX Oncology, ASPEN-06 ), and Zanidatamab ZW25, a bispecific HER2/HER2 antibody (Zymeworks), among others.

There are also other non-HER2 targeted drug candidates or combinations being developed more broadly, which may or may not overlap with drug candidates being developed in a HER2+ patient population.

One company has publicly disclosed a competitor HER2 and 4-1BB bispecific program.

At least two companies have publicly disclosed a competitor HER2 and 4-1BB bispecific program.

MacroGenics presented data on a HER2 and 4-1BB bispecific during their R&D day on December 13 th , 2016.

In addition to MacroGenics, other companies have also disclosed 4-1BB-based bispecific drug candidates.

Roche and Molecular Partners have both presented data on bispecific drug candidates targeting fibroblast activation protein, or FAP, and 4-1BB.

Alligator Bioscience, together with Aptevo Therapeutics, have disclosed a 4-1BB-based bispecific drug candidate targeting 5T4.

However, depending on the tumor target, it may not constitute direct competition to cinrebafusp alfa if there is no overlap in expression with HER2.

PRS-344 is bispecific Anticalin-antibody fusion protein targeting 4-1BB and PD-L1.

Similar to cinrebafusp alfa, PRS-344 is designed to promote 4-1BB clustering by bridging 4-1BB-positive T cells with, in the case of PRS-344, PD-L1-positive tumor cells, and to thereby provide a co-stimulatory signal to tumor antigen-specific T cells.

Furthermore, the direct PD-L1- targeting activity of PRS-344 may provide an additional therapeutic benefit by checkpoint blockade.

Multiple companies have publicly disclosed competing 4-1BB and PD-L1 bispecific programs, including, for example, Genmab in collaboration with BioNTech (GEN1046), Incyte in collaboration with Merus (MCLA-145), Inhibrx in collaboration with Elpiscience (INBRX-105), F-star (FS-222), MacroGenics and Numab in collaboration with CStone (NM21-1480).

GEN1046, MCLA-145, INBRX-105, NM21-1480 and FS-222 are currently in clinical development.

Yuhan Corporation and ABL Bio presented a poster on a HER2 and 4-1BB bispecific (ABL105/ YH3236) at AACR 2020.

PRS-344/S095012

PRS-344/S095012 is bispecific Anticalin-antibody fusion protein targeting 4-1BB and PD-L1.

Similar to cinrebafusp alfa, PRS-344/S095012 is designed to promote 4-1BB clustering by bridging 4-1BB-positive T cells with, in the case of PRS-344/S095012, PD-L1-positive tumor cells, and to thereby provide a co-stimulatory signal to tumor antigen-specific T cells.

Furthermore, the direct PD-L1- targeting activity of PRS-344/S095012 may provide an additional therapeutic benefit by checkpoint blockade.

Multiple companies have publicly disclosed competing 4-1BB and PD-L1 bispecific programs, including, for example, Genmab in collaboration with BioNTech (GEN1046), Incyte in collaboration with Merus (MCLA-145), Inhibrx in collaboration with Elpiscience (INBRX-105), F-star (FS-222), Numab in collaboration with CStone (NM21-1480), ABL Bio in collaboration with I-MAB (ABL503), Antengene (ATG-101), among others.

GEN1046, MCLA-145, INBRX-105, NM21-1480, FS-222, ABL 503 and ATG-101 are currently in clinical development.

In addition to the currently approved drugs, Ofev (nintedanib) and Esbriet (pirfenidone), there are multiple other programs in development for the treatment of IPF.

The majority of these programs are at an early stage and include a variety of targets.

There is one competing program targeting CTGF in phase III clinical development, pamrevlumab (Fibrogen), an antibody administered by intravenous infusion.

Besides pamrevlumab, there are further programs targeting CTGF at an early stage of development.

Other late-stage competitors include tyvaso (United Therapeutics, inhaled formulation of treprostinil sodium) and PRM-151 (Roche, rhPTX-2), which are currently being tested in phase III clinical trials.

Furthermore, a number of competing programs are in phase II clinical development, such as GB-0139 (Galecto, galectin-3), BMS-986278 (Bristol-Myers Squibb, LPA1), CC-539 (Bristol-Myers Squibb, JNK1), PLN-74809 (Pliant Therapeutics, avbeta1/avbeta 6) and setanaxib (GenKyoTex, NOX1/4).

Whereby the first listed program is administered by inhalation and the subsequent programs are administered orally.

Additionally, to the previously stated competitors, there are several other programs that are being developed for the treatment of IPF.

Manufacturing

We do not own or operate, and currently have no plans to establish, any manufacturing facilities.

We currently rely and expect to continue to rely on third-party contract manufacturer organizations, or CMOs, for the manufacture of our drug candidates for larger scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that are approved.

We currently rely on multiple CMOs for all of our clinical supplies, including drug substances and finished drug products, and label and packaging for our preclinical research and clinical trials, including the phase 1 and 2 studies for PRS-060/AZD1402, the phase 1 and planned phase 2 studies for cinrebafusp alfa and the planned phase 1 study for PRS-344.

We currently rely and expect to continue to rely on third-party contract manufacturer organizations, or CMOs, for the manufacture of our drug candidates for

larger scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that may be approved for marketing.

We currently rely on multiple CMOs for all of our clinical supplies, including drug substances and finished drug products, and label and packaging for our preclinical research and clinical trials, including the phase 2a studies for PRS-060/AZD1402, the phase 2 studies for cinrebafusp alfa, the phase 1 study for PRS-344/S095012, and the planned phase 1 study for PRS-220.

We believe that we will be able to contract with other CMOs to obtain drug substances if our existing sources of drug substances were no longer available or sufficient, but there is no assurance that the drug substances would be available from other CMOs on acceptable terms, on the timeframe that our business would require or at all.

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We have also experienced reduced capacity offered by CMOs due to the COVID-19 pandemic.

We do not have any current contractual relationships for the manufacture of commercial supplies of any of our drug candidates if they are approved, and we intend to enter into agreements with a CMO and one or more back-up manufacturers for the commercial production of our product candidates as they near potential approval.

We do not have any current contractual relationships for the manufacture of commercial supplies of any of our drug product candidates if they are approved.

We intend to enter into agreements with a CMO and one or more back-up manufacturers for the commercial production of our product candidates as they near potential approval.

Any drug products to be used in clinical trials and any approved product that we may commercialize will need to be manufactured in facilities, and by processes, that comply with the FDA’s cGMP requirements and comparable requirements of the regulatory agencies of other jurisdictions in which we are seeking approval.

We currently employ internal resources to manage our CMOs.

We believe that PRS-060/AZD1402, cinrebafusp alfa and PRS-344 and our other Anticalin-branded drug candidates can be manufactured in reliable and reproducible biologic processes from readily available starting materials.

We believe that PRS-060/AZD1402, cinrebafusp alfa, PRS-344/S095012, PRS-220 and our other Anticalin-branded drug candidates can be manufactured in reliable and reproducible biologic processes from readily available starting materials.

PRS-060/AZD1402 is produced using a bacterial expression system similar to those that have been used in the past for the production of other proteins and which systems are widely used in the industry.

Cinrebafusp alfa and PRS-344 are produced using mammalian expression systems similar to those systems that are widely used in the industry for the production of antibodies.

Cinrebafusp alfa, PRS-344/S095012 and PRS-220 are produced using mammalian expression systems similar to those systems that are widely used in the industry for the production of antibodies.

We believe that the manufacturing process is amenable to scale-up and will not require unusual or expensive equipment.

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Intellectual Property and Exclusivity

Our commercial success depends in part on our ability to obtain and maintain exclusivity of our proprietary Anticalin technologies through intellectual property protection for our drug candidates, libraries of different protein scaffolds and consensus sequences, the fundamental Anticalin platform technology, including novel therapeutic and diagnostic discoveries, as

well as other proprietary know-how and trade secrets, and to operate without infringing on the intellectual property rights of others.

Our commercial success depends in part on our ability to obtain and maintain exclusivity of our proprietary Anticalin-based technologies through intellectual property protection for our drug candidates, libraries of different protein scaffolds and consensus sequences, the fundamental Anticalin platform technology, including novel therapeutic and diagnostic discoveries, as well as other proprietary know-how and trade secrets, and to operate without infringing on the intellectual property rights of others.

We seek to protect our exclusive position of Anticalin technologies by, among other means, prosecuting our own international, U.S.

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patent applications and corresponding pending patent applications in a number of foreign jurisdictions as well as pending provisional patent applications, as described in further detail below.

In applicable jurisdictions, we will seek patent term extensions for certain issued patents of ours, including the patent term adjustment period in the United States.

If we obtain marketing approval for our drug candidates in the United States or certain jurisdictions outside of the United States, we may be eligible for regulatory protection, such as 12 years of data exclusivity for new biological entities in the United States and as mentioned below, up to five years of patent term extension potentially available in the United States, eight to 11 years of data and marketing exclusivity potentially available for new drugs in the European Union, up to five years of patent extension in Europe (supplemental protection certificate) and eight years of data exclusivity potentially available in Japan.

In applicable jurisdictions, such as the United States, we will seek patent term extensions for certain issued patents of ours.

If we obtain marketing approval for our drug candidates in the United States or certain jurisdictions outside of the United States,

we may be eligible for regulatory protection, such as 4 years of data exclusivity and 12 years of market exclusivity for new biological entities in the United States and as mentioned below, up to five years of patent term extension potentially available in the United States, eight to 11 years of data and marketing exclusivity potentially available for new drugs in the European Union, up to five and a half years of patent extension in Europe (supplemental protection certificate) and eight years of exclusivity, similar to data exclusivity in the United States, potentially available in Japan under its re-examination system.

There can be no assurance that we will qualify for any such regulatory exclusivity or that any such exclusivity will prevent competitors from seeking approval solely on the basis of their own studies.

See “Government Regulation.”

We hold issued patents and pending patent applications in the United States and other foreign jurisdictions, which patents are related to libraries of different scaffolds and consensus sequences such as human apolipoprotein D, human NGAL and human tear lipocalin, and are expected to expire between 2020 and 2030, subject to any patent term adjustments and terminal disclaimers in the United States.

We hold issued patents and pending patent applications in the United States and other foreign jurisdictions, which patents are related to libraries of different scaffolds and consensus sequences such as human apolipoprotein D, human NGAL and human tear lipocalin, and are expiring or expected to expire between 2022 and 2030, subject to any patent term adjustments and terminal disclaimers in the United States.

We also own a number of patents and patent applications at various stages of prosecution directed towards compositions of matter and in some cases, formulations or methods of use, of our preclinical and clinical drug candidates.

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Strategic Partnerships and Other License Agreements

Since 2007, we have entered into several strategic partnerships and other license or option agreements to complement our drug discovery and development.

Specifically, we have entered into strategic partnerships with Servier, AstraZeneca and Seagen, or collectively, the Strategic Partnerships, and other non-strategic license agreements or collectively, the License Agreements.

Since inception, we have entered into several strategic partnerships and other license or option agreements to complement our drug discovery and development.

Specifically, we have entered into strategic partnerships with Servier, AstraZeneca, Seagen and Genentech, or collectively, the Strategic Partnerships, and other non-strategic license agreements or collectively, the License Agreements.

Under the Strategic Partnerships and License Agreements, we have developed and conducted or will develop and conduct selection and screening of drug candidates, as well as in vitro potency and efficacy testing, using our Anticalin-brand drug discovery platform, our Anticalin libraries and other proprietary methods to generate, identify and characterize drug candidates against certain biological targets associated with several diseases.

The Strategic Partnerships have provided us with approximately $127.1 million in cash from upfront and milestone payments through December 31, 2020.

The current Strategic

Partnerships have provided us with approximately $172.2 million in cash from upfront and milestone payments through December 31, 2021.

With respect to discontinued agreements, we have no ongoing performance obligations and do not expect to receive any significant additional consideration pursuant to those agreements.

Under our ongoing Strategic Partnerships and License Agreements, our partners are obligated to use commercially reasonable efforts to develop and commercialize drug candidates identified in the course of the collaboration.

We are entitled to receive from our partners’ research, development and regulatory milestone payments and, in some cases, including in the Servier, AstraZeneca and Seagen collaborations, royalties on net sales for products developed and commercialized under these collaborations.

With respect to our Strategic Partnerships, we have commercial rights, including the option to co-develop or co-commercialize one or more therapeutic programs with the applicable partners.

We are entitled to receive from our partners’ research, development and regulatory milestone payments and, in some cases, including in the Servier, AstraZeneca, Seagen and Genentech collaborations, royalties on net sales for products developed and commercialized under these collaborations.

With respect to most of our Strategic Partnerships, we have commercial rights, including the option to co-develop, co-commercialize or co-promote one or more therapeutic programs with the applicable partners.

We plan to continue to actively seek out additional collaboration partners that fit within our corporate development strategy.

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On March 29, 2021, we entered into the first amendment to the Non-exclusive Anticalin Platform License Agreement dated May 2, 2017 and the second amendment to the License and Collaboration Agreement dated May 2, 2017.

In connection with the amendments, we entered into a Subscription Agreement pursuant to which we have agreed to issue to AstraZeneca 3,584,230 shares of our common stock for a total purchase price of $10.0 million in a private placement transaction.

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if any program is terminated by AstraZeneca, we will have full rights to such program.

The AstraZeneca Collaboration Agreement may also be terminated by AstraZeneca or us for material breach upon 180 days’ notice of a material breach (or 30 days with respect to payment breach), provided that the applicable party has not cured such breach by the permitted cure period (including an additional 180 days if the breach is not susceptible to cure during the initial 180-day period) and dispute resolution procedures specified in the applicable AstraZeneca Agreement have been followed.

The AstraZeneca Collaboration Agreement may also be terminated by AstraZeneca or us for material breach upon 180 days’ notice of a material breach (or 30 days with respect to payment breach), provided that the applicable party has not cured such breach by the permitted cure period (including an additional 180 days if the breach is not susceptible to cure during the initial 180-day period) and dispute resolution procedures specified in the AstraZeneca Collaboration Agreement have been followed.

Each party may also terminate an AstraZeneca Agreement if the other party challenges the validity of patents related to certain intellectual property licensed under such AstraZeneca Agreement, subject to certain exceptions for infringement suits, acquisitions and newly-acquired licenses.

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Pursuant to the terms of the Servier Agreements, we, along with Servier, initially pursued five bispecific therapeutic programs.

In September 2019, Servier notified the Company of its decision to discontinue co-development of PRS-332, a PD-1-LAG-3 bispecific that served as the initial development program under the Pieris-Servier alliance, for strategic reasons.

After having conducted an extensive portfolio review, Servier decided in March 2020 to focus on continued and accelerated development of the two most advanced programs, PRS-344 and PRS-352, and to discontinue development of two earlier-stage programs in the collaboration.

Under the Servier Agreements, we received an upfront payment of €30.0 million (approximately $32.0 million) and have achieved two preclinical milestones related to PRS-344.

In September 2019, Servier notified the Company of its decision to discontinue co-development of PRS-332, a PD-1-LAG-3 bispecific that

served as the initial development program under the Pieris-Servier alliance, for strategic reasons.

After having conducted an extensive portfolio review, Servier decided in March 2020 to focus on continued and accelerated development of the two most advanced programs, PRS-344/S095012 and PRS-352, and to discontinue development of two earlier-stage programs in the collaboration.

Under the Servier Agreements, we received an upfront payment of €30.0 million (approximately $32.0 million) and have achieved two preclinical milestones related to PRS-344/S095012 as well as one clinical milestone related to PRS-344/S095012 and one preclinical milestone related to PRS-352.

We may also receive additional development-dependent and commercial milestone payments for each program.

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Additionally, Seagen will pay us up to $1.2 billion in total success-based payments, as of December 31, 2021, across three product candidates.

The companies will pursue multiple antibody-Anticalin fusion proteins during a research phase, and Seagen has the option to select up to three therapeutic programs for further development.

On March 25, 2021 we announced an amendment to the Seagen Collaboration Agreement whereby our option to co-develop and co-commercialize the second of three programs in the collaboration was converted to a co-promotion option in the United States, with Seagen solely responsible for the development and overall commercialization of that program.

The companies will pursue multiple Anticalin-antibody fusion proteins during a research phase, and Seagen has the option to select up to three therapeutic programs for further development.

On March 25, 2021 we announced an amendment to the Seagen Collaboration Agreement whereby our option to co-develop and co-commercialize the second of three programs in the collaboration was converted to a co-promotion option for one of the three programs in the United States, with Seagen solely responsible for the development and overall commercialization of that program.

We will be entitled to increased royalties in the event that we choose to exercise the co-promotion option for that program.

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In June 2020, we and Seagen entered into amendments to the Seagen Agreements, or together, the Amendment.

The Amendment extended the deadline for Seagen to nominate a second and third antibody target and triggered a $5.0 million milestone payment due from Seagen as Seagen made a go decision on the first antibody target.

In addition to the March 2021 second amendment to the Seagen Collaboration Agreement, we entered into a clinical trial and supply agreement with Seagen to evaluate the safety and efficacy of combining our cinrebafusp alfa with Seagen’s TUKYSA ® (tucatinib), a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of an upcoming phase 2 study.

(tucatinib), a small-molecule tyrosine kinase HER2 inhibitor, for the treatment of gastric cancer patients expressing lower HER2 levels (IHC2+/ISH- & IHC1+) as part of the phase 2 study.

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The Lilly Agreement may also be terminated (a) by either party for an uncured material breach by the other party upon 60 days’ notice, subject to a reasonable extension if such material breach requires more than 60 days to cure;

(b) by either party in the event that the Study

unreasonably affects patient safety, provided that the terminating party promptly notifies the other party and the other party is given the opportunity to propose modifications to the Study to address the safety issues;

(b) by either party in the event that the Study unreasonably affects patient safety, provided that the terminating party promptly notifies the other party and the other party is given the opportunity to propose modifications to the Study to address the safety issues;

(c) by either party, following 15 days’ written notice, if regulatory action is taken preventing the terminating party from providing its compound or if the terminating party decides to discontinue development of its compound;

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and (e) by Lilly in the event of certain safety concerns related to the use of ramucirumab in the Study.

Our ASKA Option Agreement

On February 27, 2017, we entered into an exclusive option agreement, or the ASKA Option Agreement, with ASKA Pharmaceutical Co., Ltd., or ASKA, an exclusive option to license development and commercial rights to our anemia drug, PRS-080, in Japan, South Korea and certain other Asian markets following completion of a multi-dose phase 2a study to be conducted by us in dialysis-dependent anemia patients.

On January 20, 2020, ASKA notified us that it does not intend to exercise its option to obtain an exclusive license to develop and commercialize the PRS-080.

ASKA’s decision was based on a strategic portfolio review as well as certain commercial considerations.

The term of the ASKA Option Agreement ended as of the date of ASKA’s notification of its decision not to exercise its option rights.

In view of the Company’s strategic focus on IO and respiratory diseases, including the continued development of cinrebafusp alfa, PRS-344 and PRS-060/AZD1402, the Company does not intend to continue the development of PRS-080.

Our collaboration with Boston Pharmaceuticals

On April 24, 2021, we and BP Asset XII, Inc., or Boston Pharmaceuticals, a subsidiary of Boston Pharma Holdings, LLC, entered into an exclusive product license agreement, or the BP Agreement, to develop PRS-342, a 4-1BB/GPC3 preclinical immuno-oncology Anticalin-antibody bispecific fusion protein.

Under the terms of the BP Agreement, Boston Pharmaceuticals exclusively licensed worldwide rights to PRS-342.

We received an upfront payment of $10.0 million and are further entitled to receive up to $352.5 million in development, regulatory and sales-based milestone payments, tiered royalties up to low double-digits on sales of PRS-342 and a percentage of consideration received by Boston Pharmaceuticals in the event of a sublicense of a program licensed under the BP Agreement or a change of control of Boston Pharmaceuticals.

We will also contribute up to $4.0 million toward manufacturing activities.

The term of the BP Agreement ends upon the expiration of all of Boston Pharmaceuticals’ payment obligations thereunder.

The BP Agreement may be terminated by Boston Pharmaceuticals in its entirety for convenience beginning nine months after its effective date upon 60 days’ notice or, for any program under the BP Agreement which has received marketing approval, upon 120 days’ notice.

If any program is terminated by Boston Pharmaceuticals, we will have full rights to continue such program.

The BP Agreement may also be terminated by Boston Pharmaceuticals or us for an uncured material breach by the other party upon 180 days’ notice (60 days in the case of non-payment of undisputed amounts due and payable), subject to extension for an additional 180 days in certain cases and subject, in all cases, to dispute resolution procedures.

The Agreement may also be terminated due to the other party’s insolvency.

We may also terminate the BP Agreement if Boston Pharmaceuticals challenges the validity of any patents licensed under the BP Agreement, subject to certain exceptions.

We do not have any obligations to assist in the research and development efforts of Boston Pharmaceuticals under the BP Agreement.

However, we have an obligation to fund up to $4.0 million in costs, including out-of-pocket costs incurred by Boston Pharmaceuticals, in connection with the manufacture of products under the BP Agreement.

The arrangement with Boston Pharmaceuticals provides for the transfer of the following:

(i) exclusive license of PRS-342, (ii) non-exclusive Pieris platform license, (iii) initial know-how, (iv) product cell line license, and (v) materials (as each such term is defined under the BP Agreement).

Our collaboration with Genentech

On May 19, 2021, we and Genentech, Inc., or Genentech, entered into a Research Collaboration and License Agreement, or the Genentech Agreement, to discover, develop and commercialize locally delivered respiratory and ophthalmology therapies that leverage the Company’s proprietary Anticalin technology.

Upon signing the Genentech Agreement, Genentech paid the Company a $20 million upfront fee.

In addition, we may be eligible to receive up to approximately $1.4 billion in additional milestone payments across multiple programs, as well as tiered royalty payments on net sales at percentages ranging from the mid-single to low double-digits, subject to certain standard reductions and offsets.

Under the terms of the Genentech Agreement, we will be responsible for discovery and preclinical development of two initial programs.

We will be responsible for research activities following target nomination through the late-stage research go decision.

We and Genentech will then collaborate on drug candidate characterization until the development go decision.

After the development go decision, Genentech will be responsible for pursuing the preclinical and clinical development of each program, and thereafter, the commercialization efforts.

Each party will be responsible for the costs incurred to perform their respective responsibilities.

Genentech has an option to expand the collaboration to encompass two additional programs with the payment of a $10 million fee per additional program.

If Genentech exercises its option to start additional programs, payment to us of additional fees, milestone payments and royalties would result.

Unless earlier terminated, the term of the Genentech Agreement continues until no royalty or other payment obligations are or will become due under the Genentech Agreement.

The Genentech Agreement may be terminated (i) by either party based on insolvency or breach by the other party and such insolvency proceeding is not dismissed or such breach is not cured within 90 days;

or (ii) after nine months from the effective date of the Genentech Agreement, by Genentech as a whole or on a product-by-product and/or country-by-country basis upon 90 days’ prior written notice before the first commercial sale of a product or upon 180 days’ prior written notice after the first commercial sale of a product.

While the Genentech Agreement allows for up to four research programs, only two research programs are initially identified and committed in the Genentech Agreement.

To reach a total of up to four research programs, we have granted Genentech options to nominate an additional two collaboration targets of their choosing, subject to the legal availability of the target to be researched.

Genentech will have three years after the effective date to nominate the subsequent targets.

We have also granted Genentech options to replace any of the collaboration targets identified with another target.

However, at no point will there be more than four identified collaboration targets for which there are ongoing research programs.

The arrangement with Genentech provides for the transfer of the following goods or services:

(i) exclusive research and commercial license for the collaboration programs, (ii) a non-exclusive platform improvement license, (iii) research and development services, (iv) participation in a governance committee, and (v) replacement target options on the first two programs upon a screening failure, which were assessed as material rights.

In-License Agreements

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On July 4, 2003, we entered into our TUM License which was subsequently renewed and amended on July 26, 2007.

The TUM License established a joint research effort led by Prof.

Arne Skerra, Chair of Biological Chemistry of TUM, to optimize Anticalin technologies for use in therapeutic, prophylactic and diagnostic applications and as research reagents, and to gain fundamental insights in lipocalin scaffolds.

The TUM License established a joint research effort led by Professor Arne Skerra, Chair of Biological Chemistry of TUM, to optimize Anticalin technologies for use in therapeutic, prophylactic and diagnostic applications and as research reagents, and to gain fundamental insights in lipocalin scaffolds.

We provided certain funding for TUM research efforts performed under the agreement.

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The research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, sales, among other things, of drug products are extensively regulated by governmental authorities in the United States and other countries.

The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory requirements, require the expenditure of substantial time and financial resources.

The processes for obtaining regulatory approvals in the

United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory requirements, require the expenditure of substantial time and financial resources.

Government regulation of drug and biological products

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An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can

As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

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An IRB must operate in compliance with FDA regulations.

Information about certain clinical trials, including details of the protocol and eventually study results, also must be submitted within specific time frames to the National Institutes of Health for public dissemination on the ClinicalTrials.gov data registry.

Information about certain clinical trials, including details of the protocol and eventually study results, also must be submitted within specific time frames to the National Institutes of Health, or NIH, for public dissemination on the ClinicalTrials.gov data registry.

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

Sponsors are also obligated to disclose the results

of their clinical trials after completion.

Sponsors are also obligated to disclose the results of their clinical trials after completion.

Disclosure of the results of these trials can be delayed in some cases for up to two years after the date of completion of the trial.

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

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

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

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

The Food and Drug Administration Safety and Innovation Act, or the FDASIA, enacted in 2012, made permanent the PREA to require a sponsor who is planning to submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to submit an initial Pediatric Study Plan, or PSP, within sixty days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 clinical trial.

The Food and Drug Administration Safety and Innovation Act, or the FDASIA, enacted in 2012, made permanent the PREA to require a sponsor who is planning to

submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to submit an initial Pediatric Study Plan, or PSP, within sixty days of an end-of-phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the phase 3 or phase 2/3 clinical trial.

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

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The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity.

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

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

The approval process is lengthy and often difficult, and the FDA may refuse to approve an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information.

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

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

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

In addition, with the enactment of FDASIA in 2012, Congress created a new regulatory program for product candidates designated by FDA as “breakthrough therapies” upon a request made by the IND sponsors.

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

effects observed early in clinical development.

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

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

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

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

Reference product exclusivity for biological products

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The BPCIA amended the PHSA to create an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product.

A federal district court ruling in Texas in 2018 struck down the Affordable Care Act in its entirety based on constitutionality, and in December 2019 the Fifth Circuit Court of Appeals upheld the lower court’s finding that the individual mandate in the law is unconstitutional.

However, the Fifth Circuit also reversed and remanded the case to the district court to determine if other reforms enacted as part of the Affordable Care Act but not specifically related to the individual mandate or health insurance, including the BPCIA, could be severed from the rest of the Affordable Care Act so as not to be declared invalid.

It is unclear how this decision, subsequent appeals including potentially to the U.S.

Supreme Court, and other efforts to repeal and replace the Affordable Care Act will affect the implementation of that law and our business.

To date, the FDA has approved a number of biosimilars, and numerous biosimilars have been approved in Europe.

To date, the FDA has approved a number of biosimilars, including the first interchangeable monoclonal antibody biosimilar in 2021, and numerous biosimilars have been approved in Europe.

The FDA has also issued several guidance documents outlining its approach to reviewing and approving biosimilars and interchangeable biosimilars.

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(2) animal studies (including toxicity);

and (3) one or more

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

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

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

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

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

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

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

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

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

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

The BPCIA is complex and is still being interpreted and implemented by the FDA and by federal judges.

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

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Whether or not we obtain FDA approval for a product candidate, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the 28-member European Union, before we may commence clinical trials or market products in those countries or areas.

It is not yet clear how the United Kingdom’s withdrawal from the European Union, which took place on January 31, 2020, will affect the approval of medicinal products in the UK.

With the United Kingdom withdrawal from the European Union on January 31, 2020, UK licensing decisions will be transferred from EMA to The Medicines and Healthcare Products Regulatory Agency, or MHRA, the UK Regulatory Body.

For a period of two years following January 1, 2021, the UK will continue to adopt decisions taken by the European Commission on the approval of new marketing authorizations.

However, companies will be required to submit an identical application to the MHRA upon the Medicinal Products for Human Use, or CHMP, positive opinion of the application.

The MHRA will then wait for the European Commission decision on approval.

The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly between countries and jurisdictions and can involve additional testing and additional administrative review periods.

The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.

Regulatory approval in one country or jurisdiction

does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

European Union drug development, review and approval

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Furthermore, the applicant may only start a clinical trial at a specific study site after the competent ethics committee has issued a favorable opinion.

The clinical trial application must be accompanied by, among other documents, an IMPD (the Common Technical Document) with supporting information prescribed by Directive 2001/20/EC, Directive 2005/28/EC, and where relevant the implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents.

The clinical trial application must be accompanied by, among other

documents, an IMPD (the Common Technical Document) with supporting information prescribed by Directive 2001/20/EC, Directive 2005/28/EC, and where relevant the implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents.

All suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the competent national authority and the Ethics Committee of the Member State where they occurred.

In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014 (Clinical Trials Regulation) was adopted and it is anticipated to come into application in late 2020 or early 2021.

The Clinical Trials Regulation will be directly applicable in all the EU Member States, repealing the current Clinical Trials Directive 2001/20/EC.

Conduct of all clinical trials performed in the European Union will continue to be bound by currently applicable provisions until the new Clinical Trials Regulation becomes applicable.

In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014 (Clinical Trials Regulation) was adopted and it became effective on January 31, 2022.

The Clinical Trials Regulation will be directly applicable in all of the EU Member States, repealing the current Clinical Trials Directive 2001/20/EC.

The extent to which ongoing clinical trials will be governed by the Clinical Trials Regulation will depend on when the Clinical Trials Regulation becomes applicable and on the duration of the individual clinical trial.

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The main characteristics of the regulation include:

a streamlined application procedure via a single entry point, the “EU portal”;

a streamlined application procedure via a single entry point, the “EU portal” or Clinical Trial Information System, or CTIS;

a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors;

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These third-party payors are increasingly challenging the price and examining the cost-effectiveness of medical products and services.

addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products.

In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products.

The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved.

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The requirements governing drug pricing vary widely from country to country.

Some countries provide that drug products may be marketed only after a reimbursement price has been agreed.

Some countries provide that drug 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 our product candidate to currently available therapies (so called health technology assessment, or HTA) in order to obtain reimbursement or pricing approval.

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• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

• the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-approved drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Department of Health and Human Services information related to payments and other transfers of value to

physicians, teaching hospitals, and certain advanced non-physician health care practitioners and physician ownership and investment interests;

Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and regulations pertaining to our financial relationships and interactions with foreign government officials, which prohibit U.S.

companies and their employees, officers and representatives from paying, offering to pay, promising or authorizing the payment of anything of value to any foreign government official (including, potentially, healthcare professionals in countries in which we operate or may sell our products), government staff member, political party or political candidate to obtain or retain business or to otherwise seek favorable treatment;

• the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-approved drugs, devices, biologics and medical supplies covered by Medicare, Medicaid or the Children's Health Insurance Program to report, on an annual basis, to the Department of Health and Human Services, or DHHS, information related to payments and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician health care practitioners and physician ownership and investment interests;

• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving health care items or services reimbursed by nongovernmental third-party payors, including private insurers.

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State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Notably, in November 2020, the DHHS finalized significant changes to the regulations implementing the Anti-Kickback Statute, as well as the civil monetary penalty rules regarding beneficiary inducements, with the goal of offering the health care

industry more flexibility and reducing the regulatory burden associated with those fraud and abuse laws, particularly with respect to value-based arrangements among industry participants.

Health care reform in the United States and potential changes to health care laws

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In addition, in August 2017, the FDA Reauthorization Act was signed into law, which reauthorized the FDA’s user fee programs and included additional drug and device provisions that build on the Cures Act.

Furthermore, the next FDA reauthorization package is currently being negotiated and is due to be finalized by Congress in 2022, while several other FDA-related changes are also being proposed in Congress, including within a “Cures 2.0” bill that is likely to have bipartisan support.

If we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

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Centers for Medicare and Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

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

The current Presidential administration and members of the U.S.

Congress have indicated that they may continue to seek to modify, repeal or otherwise invalidate all, or certain provisions of, the Affordable Care Act.

For example, the Tax Cuts and Jobs Acts was enacted in 2017, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance.

As noted above, a 2018 federal district court ruling struck down the Affordable Care Act in its entirety, although in 2019, the Fifth Circuit Court of Appeals limited this ruling to the individual mandate and remanded the case to the district court to determine if other reforms not specifically related to the individual mandate or health insurance could be severed from the rest of the Affordable Care Act.

It is unclear how this decision, subsequent appeals including potentially to the U.S.

Supreme Court, and other efforts to repeal and replace the Affordable Care Act will affect the implementation of that law and our business.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and as a result certain sections of the Affordable Care Act have not been fully implemented or effectively repealed.

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

Supreme Court upheld the Affordable Care Act when it dismissed a legal challenge to the law’s constitutionality.

Further legislative and regulatory changes under the Affordable Care Act remain possible, although the new federal administration under President Biden has signaled that it plans to build on the Affordable Care Act and expand the number of people who are eligible for health insurance subsidies under it.

It is unknown what form any such changes or any law would take, and how or whether it may affect the pharmaceutical industry as a whole or our business in the future.

We expect that changes or additions to the Affordable Care Act, the Medicare and Medicaid programs, such as changes allowing the federal government to directly negotiate drug prices, and changes stemming from other health care reform measures, especially with regard to health care access, financing or other legislation in individual states, could have a material adverse effect on the health care industry in the United States.

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

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

Notably, on December 20, 2019, former President Trump signed the

Further Consolidated Appropriations Act for 2020 into law (P.L.

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

For example, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive health care provisions and amendments to existing laws, including a requirement that all manufacturers of drug products covered under Medicare Part B report the product’s average sales price to DHHS beginning on January 1, 2022, subject to enforcement via civil money penalties.

As another example, on December 20, 2019, former President Trump signed the Further Consolidated Appropriations Act for 2020 into law (P.L.

116-94) that includes a piece of bipartisan legislation called the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 or the “CREATES Act.” The CREATES Act aims to address the concern articulated by both the FDA and others in the industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a REMS for certain products, to deny generic and biosimilar product developers access to samples of brand products.

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

At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on

certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In December 2020, the U.S.

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

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

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On December 17, 2014, Pieris, Pieris GmbH and the former stockholders of Pieris GmbH entered into an acquisition agreement, or the Acquisition Agreement.

Pursuant to the Acquisition Agreement, the stockholders of Pieris GmbH contributed all their equity interests in Pieris GmbH to Pieris in exchange for shares of Pieris common stock, which resulted in Pieris GmbH becoming a wholly-owned subsidiary of Pieris, which we refer to as the Acquisition.

Pursuant to the Acquisition Agreement, the stockholders of Pieris GmbH contributed all of their equity interests in Pieris GmbH to Pieris in exchange for shares of Pieris common stock, which resulted in Pieris GmbH becoming a wholly-owned subsidiary of Pieris, which we refer to as the Acquisition.

Upon the closing of the Acquisition on December 17, 2014, Pieris ceased to be a “shell company” under applicable rules of the Securities and Exchange Commission, or the SEC.

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We aim to provide location-specific attractive benefits packages in all of our locations.

shared compensation and benefits philosophy and have implemented size and phase-appropriate solutions for each country.

We pursue a shared compensation and benefits philosophy and have implemented size and phase-appropriate solutions for each country.

Diversity and Inclusion

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Response to COVID-19

Beginning in March 2020, we have supported our employees and government efforts to curb the COVID-19 pandemic through a multifaceted communication, infrastructure and behavior modification and enforcement effort, with the main objective to keep our laboratories in operation while protecting our employees’ health and safety:

Beginning in March 2020 and continuing through all of 2021, we have supported our employees and government efforts to curb the COVID-19 pandemic through a multifaceted communication, infrastructure and behavior modification and enforcement effort, with the main objective to keep our laboratories in operation while protecting our employees’ health and safety:

• Establishing clear and regular COVID-19 policies, safety protocols and weekly updates to all employees;

• Increasing physical distancing in workspaces for employees working onsite by scheduling adjustments and adding work from home flexibility;

• Adjusting attendance policies to encourage those who are sick to stay home;

• Adjusting attendance policies to encourage those who are sick or are able to perform their work from home to stay home;

• Increasing cleaning protocols across all locations;

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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