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Item 1. Business

2024-02-29 compared with 2023-03-16 · 973 added, 613 removed, 1096 unchanged (59% of the section changed)

We were founded on the belief that engineered cells will be one of the most important transformations in medicine over the next several decades.

Damage to cells is the underlying pathology of almost every human disease, and we believe the ability to replace or repair damaged cells through cellular engineering can address the underlying root cause of a host of diseases.

We view engineered cells as having the potential to be as therapeutically disruptive as biologics to clinical practice.

Our long-term aspirations are to be able to control or modify any gene in the body, to replace any cell that is damaged or missing, and to markedly improve access to cellular and gene-based medicines.

We have brought together an experienced group of scientists, engineers, and company builders and equipped them with technologies to move this vision forward.

We are developing ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including oncology, diabetes, central nervous system (CNS) disorders, and genetic disorders, among others.

We expect initial clinical data from our CD19-targeted directed allogeneic chimeric antigen receptor (CAR) T program, SC291, in 2023, which, importantly, will tell us both about SC291 as a drug candidate and the translatability of our hypoimmune platform technology to patients.

We also continue to make progress developing our cell engineering platforms and advancing our product candidates through preclinical development, with the goal of submitting multiple Investigational New Drug applications (INDs) in 2023 and beyond.

We believe the time is right to develop engineered cell therapies across a broad range of therapeutic areas.

The field has seen initial clinical proof of concept for gene and cell replacement approaches across multiple diseases, including cancer and certain genetic disorders, through the application of adeno-associated virus (AAV) based gene therapies, autologous CAR T cell therapies, and autologous and allogeneic grafts/transplants.

Although such existing approaches have limitations, they provide evidence that a broad range of ex vivo and in vivo engineered cells can have transformative clinical potential in at least a subset of patients.

Substantial progress in the understanding of genetics, gene editing, gene control, protein engineering, stem cell biology, immunology, process analytics, and computational biology have converged to create an opportunity to markedly increase the breadth and depth of the potential impact of genetic and cellular medicines.

The burden of diseases that can be addressed at their root cause through engineered cells is significant.

We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice.

Key to making this vision a reality will be finding consistent and scalable means of manufacturing cell-based medicines, and we have invested significantly in our hypoimmune (HIP) platform technology, which we refer to as our HIP platform, with the twin goals of using allogeneic cells that evade immune detection in patients and that we can manufacture at scale.

We are developing cell engineering programs to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including oncology, diabetes, B-cell-mediated autoimmune, and central nervous system (CNS) disorders, among others.

We currently have four clinical trials that are ongoing, or that we expect to commence in the near-term, evaluating our product candidates, or product candidates developed using our technologies, across seven diseases in multiple therapeutic areas, including B-cell malignancies, B-cell-mediated autoimmune disease, and type 1 diabetes (T1D), as described below.

• ARDENT is an ongoing Phase 1 clinical trial evaluating SC291, our hypoimmune-modified CD19 targeted allogeneic chimeric antigen receptor (CAR) T program, in B-cell malignancies, including non-Hodgkin’s lymphoma (NHL) and chronic lymphoblastic leukemia (CLL ) ;

• GLEAM is a Phase 1 clinical trial evaluating SC291 in patients with lupus nephritis (LN), extrarenal lupus (ERL), and antineutrophil cytoplasmic antibody (ANCA)-associated vasculitis;

• VIVID is a Phase 1 clinical trial evaluating SC262, our hypoimmune-modified CD22 CAR T program, in patients with relapsed and/or refractory B-cell malignancies who have received prior CD19 CAR T therapy;

• Investigator-sponsored first-in-human study (IST) evaluating UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with type 1 diabetes mellitus.

In January 2024, we disclosed initial interim clinical data from the ARDENT trial.

As of January 5, 2024, the cut-off date for our early interim analysis, six patients had been dosed with SC291 and four patients were evaluable (defined as patients dosed with SC291 who had at least one disease assessment), of whom three were dosed with 60M CAR T cells (Dose Level 1) and the other was dosed with 120M CAR T cells (Dose Level 2).

With respect to the four evaluable patients at these two dose levels, we observed no dose limiting toxicities, no SC291-related serious adverse events, and no incidences of graft versus host disease (GvHD).

We also observed no cytokine release syndrome (CRS) or immune effector cell-associated neurotoxicity syndrome (ICANS) of any grade or any infections of Grade 3 or higher.

Additionally, we observed at least a partial response in three of the patients, including ongoing complete responses in one patient from Dose Level 1 after three months and the patient from Dose Level 2 after two months.

The SC291 drug product contains CAR T cells that are fully edited hypoimmune cells, which we describe as HIP-edited CAR-T cells, along with partially edited cells, which we describe as non-HIP CAR T cells.

In vitro testing showed evidence that blood and immune cells from each of the four evaluable patients had mounted an immune response to the non-HIP CAR T cells but not to the HIP-edited CAR T cells.

Specifically, HIP-edited CAR T cells from the drug product were not rejected by the innate immune response mediated by the patient’s natural killer (NK) cells, nor did the patients have T cell or antibody responses that recognized these cells.

In contrast, we observed immune responses against the non-HIP CAR T cells in the drug product.

Importantly, this evidence suggests that the patients had an intact immune system capable of recognizing allogeneic cells and that the HIP CAR T cells were able to evade these responses.

These results were consistent across all four evaluable patients and provide early support for the idea that the immune evasion profile of our HIP gene edits in multiple pre-clinical models may translate into human subjects.

We believe this observation supports further dose escalation and dose expansion in the ARDENT trial and broader application of our HIP technology in allogeneic cell therapies in other indications.

We are continuing to enroll and dose patients in the ARDENT trial and expect to share additional data in 2024.

We seek to overcome several existing limitations of gene and cell therapy through our ex vivo and in vivo cell engineering platforms, both of which may facilitate the development of therapies that can transform the lives of patients by repairing cells in the body when possible and replacing them when needed.

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Of these, we view effective in vivo delivery as the greatest current limitation to dramatically expanding the impact of this class of therapeutics.

To this end, our initial focus is on cell-specific delivery as well as increasing the diversity and size of payloads.

We believe we have the potential to develop transformative engineered cells as medicines because of our people and our capabilities:

To this end, our initial focus is on cell-specific delivery of genetic payloads.

Based upon early clinical as well as extensive preclinical data from our HIP platform, we announced in October 2023 our decision to increase our focus on our ex vivo cell therapy product candidates.

We expect to focus a meaningful portion of our research and development resources and activities for at least the next several years on advancing HIP-modified ex vivo manufactured cells as therapeutics.

Our people are the most important strength of the company.

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We believe that in order to successfully develop engineered cells as medicines, significant investments in infrastructure and cross-functional capabilities need to be coupled with deep scientific expertise in the cell types of interest within each program.

Our leadership team includes multiple world-class scientists, including researchers who have made seminal discoveries in gene delivery, immunology, CAR T cells, gene editing, and stem cell biology.

Our leadership team includes multiple world-class scientists, including researchers who have made seminal discoveries in gene delivery, immunology, CAR T cells, stem cell biology, and gene editing.

We expect to continue to bring in senior world-class scientists to lead our efforts in each therapeutic area we intend to pursue.

Additionally, our research teams have significant experience in various areas of biology.

We have surrounded this team of discovery scientists with drug developers experienced in advancing product candidates through the development process with expertise in areas such as pharmacology, toxicology, regulatory, clinical development, and clinical operations.

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• Board and Investors with Shared Long-Term Vision .

Our board of directors is composed of renowned company builders, scientists, drug developers, and investors who share our long-term vision of advancing engineered cells as medicine to change the lives of patients.

Our board of directors is a resource that has enabled our strategy of consolidating technologies, assets, and people to expand the potential impact of our long-term vision.

Our capabilities enable us to take a comprehensive approach to the most important and difficult aspects of engineering cells.

We are pursuing ex vivo and in vivo cell engineering and can leverage the synergistic proficiencies required to succeed in both approaches.

We are primarily pursuing ex vivo cell engineering and can leverage the synergistic proficiencies required to succeed in both approaches.

We believe we can capitalize on the shared expertise and infrastructure between the platforms to maximize the potential success and the reach of each of our potentially transformative therapies.

We have built deep internal capabilities across a wide range of areas focused on solving the most critical limitations in engineering cells including:

Gene Delivery .

We believe our delivery technologies have broad potential, with both near-term and long-term applications across a number of indications.

We are investing in technologies that allow payload delivery to specific cell types, increase the diversity and size of payloads, enable repeat dosing of patients, and increase the volume of distribution inside the body in order to target and access more diverse cells.

Genome Modification .

The ability to knock-out, knock-in, modify, disrupt, and control expression of genes is fundamental to the success of our platforms.

We have hired world-class scientists with experience in each of these capabilities and across multiple modalities.

We are building internal capabilities that enable high throughput cell engineering and gene editing and control using multiple technologies through use of natural systems, protein engineering, and synthetic biology.

We believe our capabilities across multiple modalities will allow us to use the appropriate system for the biologic problem of interest.

We are developing proprietary gene editing capabilities as well as seeking strategic partnerships in key areas.

• Stem Cell and Disease Biology .

Developing our platforms into therapies for patients requires a deep understanding of both cell and disease biology.

Furthermore, we are investing significantly in our people and the technologies that enable the differentiation of pluripotent stem cells (PSC) into mature cells that can be used as therapeutics.

• Immunology .

The immune system can be harnessed to treat multiple diseases, and it can also limit the therapeutic effect of many cell- and gene-based therapies.

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Additionally, our hypoimmune technology has the potential to “hide” cells from the immune system, unlocking the potential of allogeneic ex vivo therapies for the treatment of numerous diseases.

Stem Cell and Disease Biology .

Developing our platforms into therapies for patients requires a deep understanding of both cell and disease biology.

Furthermore, we are investing significantly in our people and the technologies that enable the differentiation of pluripotent stem cells into mature cells that can be used as therapeutics.

In each therapeutic area we intend to pursue, we have brought in-house senior world-class scientists to lead our efforts in these areas, and our research teams have significant experience in various areas of biology.

Our ex vivo and in vivo Cell Engineering Platforms

The advent of recombinant DNA technology in the 1970s ushered in a new era of therapeutics, enabling the synthetic manufacture of human protein therapies at scale for the first time.A critical inflection point occurred when key technological advancements eventually enabled the broad development of monoclonal antibodies with suitable therapeutic properties.

• Genome Modification .

The ability to knock-out, knock-in, modify, disrupt, and control expression of genes is fundamental to the success of our platforms.

We believe our capabilities across multiple modalities will allow us to use the appropriate system for the biologic problem of interest.

• Gene Delivery .

We believe our delivery technologies have broad potential, with both near-term and long-term applications across a number of indications.

We are investing in technologies that allow payload delivery to specific cell types and increase the diversity of payloads.

Our Cell Engineering Platforms

The advent of recombinant DNA technology in the 1970s ushered in a new era of therapeutics, enabling the synthetic manufacture of human protein therapies at scale for the first time.

A critical inflection point occurred when key technological advancements eventually enabled the broad development of protein drugs, including monoclonal antibodies with suitable therapeutic properties.

These advancements, combined with progress in understanding disease biology, allowed biologics to become the second largest therapeutic class.

We believe engineered cells are at a similar inflection point, with key recent technological advancements providing the potential for the broad applicability of this therapeutic class.

Ex vivo cell engineering

Engineering cells ex vivo requires the ability to engineer and manufacture cells at scale and then deliver them to the patient so that they engraft, function appropriately, and have the necessary persistence in the body.

Our goal for ex vivo cell engineering is to replace any cell in the body with cells that engraft, function, and persist over time, and to manufacture those cells cost-effectively at scale.

Our goal for ex vivo cell engineering is to replace or add any cell in the body such that those cells engraft, function, and persist over time, and to manufacture those cells cost-effectively at scale.

Our ex vivo cell engineering platform uses our hypoimmune technology to create cells that can “hide” from the patient’s immune system to enable persistence of allogeneic cells.

We are striving to make therapies using pluripotent stem cells with our hypoimmune genetic modifications as the starting material, which we then differentiate into a specific cell type, such as a pancreatic islet cell, before treating the patient.

We are primarily focused on making therapies using PSCs with our hypoimmune genetic modifications as the starting material, which we then differentiate into a specific cell type, such as a pancreatic islet cell, before treating the patient.

Additionally, there are cell types for which effective differentiation protocols from a stem cell have not yet been developed, such as T cells.

For such cell types, instead of starting from a pluripotent stem cell, we can use a fully differentiated allogeneic cell, sourced from a donor, as the starting material to which we then apply our hypoimmune genetic modifications.

Our goal is to manufacture genetically modified cells that are capable of both replacing the missing cell and evading

the patient’s immune system.

For such cell types, instead of starting from a PSC, we can use a fully differentiated allogeneic cell, sourced from a donor, as the starting material to which we then apply our hypoimmune genetic modifications.

Our goal is to manufacture genetically modified cells that are capable of both replacing the missing cell and evading the patient’s immune system.

We are now applying our ex vivo cell engineering technologies to make cell products for the treatment of multiple diseases.

We anticipate initial clinical data in 2023 from our CD19-targeted allogeneic CAR T program, SC291, as well as from an investigator sponsored trial using hypoimmune cadaveric primary human islet cells transplanted in type 1 diabetes patients, each of which we expect will provide opportunities to further understand these technologies.

In vivo cell engineering

Engineering cells in vivo requires the development of both an appropriate delivery vector as well as a payload to effectively modify the target cell.

Our goal for in vivo cell engineering is to repair and control the genes of any cell in the body.

The ultimate aim is to achieve the delivery of any payload, to any cell, in a specific and repeatable way.

Our in vivo cell engineering platform harnesses fusogen technology, which targets cell surface receptors, enabling cell-specific delivery for a meaningful number of different cell types.

We have shown in preclinical studies that our fusogen technology can specifically target numerous cell surface receptors that, when combined with delivery vehicles to form fusosomes, allow cell-specific delivery across multiple different cell types.

We anticipate sharing data in 2024 from multiple clinical trials exploring these therapeutics in various diseases.

Our Portfolio Strategy

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• prioritize efforts where success in one area begets success in others.

We are developing a broad pipeline of product candidates focused on creating transformative ex vivo and in vivo engineered cell therapies across a range of therapeutic areas.

We are developing a broad pipeline of clinical product candidates focused on creating transformative ex vivo therapies across a range of therapeutic areas.

We are in the early stages of development across a broad pipeline of product candidates, which are summarized below:

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We are first applying our hypoimmune technology to donor derived T cells to be used as allogeneic cell therapies for hematologic malignancies.

Our most advanced hypoimmune product candidate is SC291, a CD19-directed allogeneic CAR T program for the treatment of non-Hodgkin’s lymphoma ( NHL ) , chronic lymphocytic leukemia ( CLL ) , and acute lymphoblastic leukemia (ALL), for which we received IND clearance in January 2023.

We are also developing SC262, a CD22-directed allogeneic CAR T for the treatment of NHL, CLL, and ALL, as well as SC255, a B cell maturation antigen (BCMA)-directed allogeneic CAR T, for the treatment for multiple myeloma (MM).

These programs are designed to address a major limitation of existing allogeneic CAR T cell therapies:

the need to evade host versus graft responses (HvGR) that occur when a patient’s immune system kills the transplanted T cells, limiting the potential benefit of the therapy.

The rapid killing of the transplated cell is a major contributor to the short-lived responses seen in patients treated with allogeneic CAR Ts.

The rapid killing of the transplanted cell may be a major contributor to the short-lived responses seen in patients treated with allogeneic CAR Ts.

One approach to avoid HvGR has been to effectively eliminate a patient’s immune system for a short period using chemotherapy, which puts the patient at risk for severe infections.

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Our hypoimmune technology is designed to enable cells to “hide” from the patient’s immune system, giving our allogeneic CAR T cell program the potential to create medicines that persist longer in patients and avoid the risks associated with higher doses of chemotherapy.

Cellular persistence of SC291 in patients for two months or greater would exceed the persistence seen by allogeneic CAR T product candidates that are currently in the clinic.

This persistence may potentially translate into higher rates of durable complete reponsesin treated patients.

Based upon data from other clinical trials, we estimate that cellular persistence of three to six months can lead to long-term complete reponse rates that are comparable to those seen with autologous CAR T cells to date, the current standard of care.

Average cell persistence of greater than six months has the potential to translate into durable complete response rates that create a new standard of care.

We expect initial clinical data with cellular persistence from early patients in 2023.

Our allogeneic T cell platform is designed to enable the substitution of CAR constructs in a modular fashion.

Our most advanced hypoimmune product candidate is SC291, a CD19 allogeneic CAR T program that we are evaluating as a potential treatment for NHL and CLL in the ARDENT trial.

Results of our early interim analysis of clinical safety and other clinical responses as well as immune responses to SC291 are discussed above under “Overview” and below under “Allogeneic T Cell Platform — SC291.”

In November 2023, the FDA cleared our Investigational New Drug application (IND) to evaluate SC291 in patients with LN, ERL, and ANCA-associated vasculitis, which we refer to as our GLEAM trial.

B-cell depleting therapies, such as anti CD20 antibodies (e.g., rituximab), have shown clinical benefit in the treatment of multiple autoimmune disorders that involve production of autoimmune antibodies, including LN, ERL, ANCA-associated vasculitis and many others.

The rituximab trials in systemic lupus erythematosus (SLE) afforded the key insight that the depth of B-cell depletion was associated with improved patient responses.

While these antibodies are adept at depleting B-cells in circulation for many patients, they are unable to penetrate deeply into the germinal centers of the lymph node and tissues, where the pathogenic B-cells continue to survive and drive disease.

CD19 CAR T cells are known to cause deep B-cell depletion in CAR T recipients.

Georg Schett and his research group in Erlangen, Germany tested the treatment of refractory SLE patients with autologous CD19 CAR T cells and were successful in inducing long-lasting drug-free remissions for these patients in the study.

In our ongoing ARDENT trial, we have observed the pharmacodynamic effect of peripheral blood B-cell depletion, which refers to diminishing B-cell counts in the peripheral blood, associated with SC291 treatment in patients.

While pharmacodynamic effects seen in oncology patients may not translate to patients with autoimmune disease, we believe these data increase the probability that SC291 treatment confers similar B-cell depletion, the putative mechanism of benefit, to patients with B-cell-mediated autoimmune disorder.

SC291 also provides the benefit of being available “off the shelf,” avoiding the complex management of patients around the apheresis procedure for cell harvest and between cell harvest and infusion required for treatment with autologous CAR T products while also providing the potential for increased manufacturing scalability.

We expect to share data from the GLEAM trial in 2024.

Initial clinical success with SC291 would support the expansion of our allogeneic CAR T efforts with additional product candidates targeting other patient populations.

For the near-term, we are prioritizing clinically-validated targets as well as CAR constructs that have shown promising safety and efficacy profiles in hematologic malignancies in the autologous context.

As noted above, SC262 is a CD22- directed allogeneic CAR T that offers the potential to treat both CD19 treatment-naïve patients as well as those that have experienced CD19 treatment failures in NHL, CLL, and ALL.

The CD22 CAR construct that we use in SC262, which we have licensed from the National Institutes of Health, has already been evaluated in multiple academic clinical trials, data from which have shown complete responses in a substantial number of patients that have relapsed following treatment with a CD19-directed CAR T therapy.

We intend to prioritize development for patients that have previously failed a CD19-directed CAR T therapy.

SC255 is a BCMA-directed allogeneic CAR T for the treatment of MM.

The BCMA CAR construct that we use in SC255, which we have licensed from IASO Biotherapeutics and Innovent Biologics, is currently being evaluated in Phase 1b/2 trials as part of an autologous CAR T candidate, CT103A, in heavily pretreated patients with relapsed and/or refractory MM.

Data from such trials presented at the American Society of Hematology Annual Meeting in December 2022 showed an overall response rate of 95.0%, a minimal residual disease (MRD) negativity rate of 95%, and a complete response/stringent complete response (CR/sCR) rate of 74% in 100 patients.

At one year, 80% of patients continue to be MRD negative.

In the future, additional candidates may be nominated to address hematological malignancies, solid tumors, and autoimmune disease.

Regenerative Pipeline for Allogeneic CAR T Therapy

Our allogeneic T cell platform is designed to enable the substitution of CAR constructs in a modular fashion.

For the near-term, we are prioritizing clinically-validated targets as well as CAR constructs, such as our CD19 CAR, that have shown promising safety and efficacy profiles in hematologic malignancies in the autologous context.

We are developing SC262, our hypoimmune-modified CD22-directed allogeneic CAR T program, initially as a potential treatment for patients with relapsed and/or refractory B-cell malignancies who have received prior CD19-directed CAR T therapy in NHL, CLL, and acute lymphocytic leukemia (ALL).

In January 2024, the FDA cleared our IND to evaluate SC262 in this patient population.

We refer to the Phase I clinical study as our VIVID trial.

The CD22 CAR construct that we use in SC262, which we licensed from the National Institutes of Health, has already been evaluated in multiple academic clinical trials of autologous CAR T cell therapies, data from which have shown complete responses (CR) in a substantial number of patients that have relapsed following treatment with a CD19-directed CAR T therapy.

Data from a Phase 1 trial (n=38) of NHL patients conducted at Stanford University, where 97% of patients were either refractory and/or relapsed after prior CD19 CAR T therapy, demonstrate a CR rate of 53% and an overall response rate (ORR) of 68%.

Seventy-five percent of the CRs lasted 12 months or longer.

Modular Pipeline for Allogeneic CAR T Therapy

Allogeneic CAR T development candidates are manufactured from T cells purified from donor PBMCs.

T cells undergo genome modification to disrupt MHC class I and class II expression (which inactivates adaptive immune responses), disrupt TCR expression (which minimizes graft vs.

host disease) and overexpress CD47 (which enables cells to evade the innate immune system, including macrophages and natural killer (NK) cells).

host disease) and overexpress CD47 (which enables cells to evade the innate immune system, including macrophages and NK cells).

Development candidates principally differ in the CAR expressed by the cells.

Expansion during manufacturing allows production of hundreds of patient doses per donor (based on current scale and accounting for hold back necessary for testing and dose variability).

We are developing SC255, a B-cell maturation antigen (BCMA)-directed allogeneic CAR T, for the treatment of multiple myeloma (MM).

The BCMA CAR construct that we use in SC255, which we licensed from IASO Biotherapeutics and Innovent Biologics is part of equecabtagene autoleucel (Fucaso;

China’s National Medical Products Administration has approved the new drug application for this drug in adult patients with relapsed or refractory multiple myeloma who previously received 3 or more lines of therapy, including a proteasome inhibitor (PI) and an immunomodulatory drug (IMiD).

Data from such trials presented at the American Society of Hematology Annual Meeting in December 2023 showed an overall response rate of 96%, a minimal residual disease (MRD) negativity rate of 94%, and a complete response/stringent complete response (CR/sCR) rate of 78% in 103 patients.

At one year, 81% of patients continue to be MRD negative.

The SC255 program has completed a battery of pre-clinical tests and is currently gated based on resource availability.

In the future, additional candidates may be nominated to address hematological malignancies, solid tumors, and autoimmune disease.

We are developing SC379, our PSC-derived glial progenitor cell (GPC) product candidate, as a therapy to deliver to patients with certain central nervous system disorders healthy allogeneic GPCs, which are the precursors to both astroglia and myelin-producing oligodendrocytes.

SC379 has the potential to treat patients with myelin- and glial-based disorders, which represent a broad group of debilitating neurological disorders, such as multiple sclerosis (MS) and a number of neurodegenerative disorders, none of which have effective treatment alternatives.

We intend to develop SC379 for the treatment of secondary progressive MS, Pelizaeus-Merzbacher disease (PMD), other myelin-based disorders, Huntington’s disease, and other astrocytic diseases.

Our goal is to begin clinical testing for SC379 as early as 2025.

PSC-derived Pancreatic Islet Cells

Our most advanced stem cell-derived hypoimmune product candidate is SC451, PSC-derived pancreatic islet cells for the treatment of diabetes, with an initial focus on type I diabetes mellitus (T1DM).

Approximately 1.6 million people in the United States, and 2.4 million in Europe , have T1DM.

SC451 is our PSC-derived hypoimmune pancreatic islet product candidate for the treatment of diabetes, with an initial focus on type 1 diabetes mellitus (T1DM).

Greater than 8 million patients worldwide have T1DM.

T1DM is a disease in which a patient’s immune system attacks and kills pancreatic beta cells, leading to complete loss of insulin production in affected individuals.

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Although the introduction of insulin has had a profoundly positive impact on patients, people with T1DM have approximately 15 years shorter life expectancies than people without diabetes and are consistently at risk for complications such as coma, stroke, myocardial infarction, kidney failure, and blindness from poorly controlled blood glucose.

We and our collaborators have shown that we can develop high quality stem cell-derived islet cells that, when transplanted, normalize blood glucose and cure diabetes in animal models.

We and our collaborators have shown that we can develop high quality stem cell-derived islet cells that, when transplanted in animal models, normalize blood glucose and cure diabetes.

We have also shown that our hypoimmune cells induce no systemic immune response, even in non-human primates (NHPs) with a pre-existing immune response to non-hypoimmune cells, and that our allogeneic NHP hypoimmune islet cells survive for the duration of our NHP studies, the longest of which is about forty weeks.

To demonstrate applicability in the context of T1DM, we have developed a proprietary mouse model in-house, with humanized immune cells from a T1DM patient, and showed that hypoimmune modifications enabled T1DM patient-derived stem cell islet cells to evade both the autoimmune and allogeneic response.

As a result, we believe our stem cell - derived hypoimmune pancreatic islet cells have the potential to create a disruptive treatment for

T1DM, offering patients life-long normal blood glucose without immunosuppression.

We are working on process development and IND-enabling studies to allow for an IND submission for SC451 as early as 2024 .

We are planning to support the conduct of an investigator sponsored trial of allogeneic hypoimmune primary islet cells in T1DM patients in 2023 (the IST).

As a result, we believe our stem cell-derived hypoimmune pancreatic islet cells have the potential to create a disruptive treatment for T1DM, offering patients life-long normal blood glucose without immunosuppression.

We are working on process development and IND-enabling studies.

In November 2023, the Swedish Medical Products Agency authorized Uppsala University Hospital’s clinical trial application (CTA) for an investigator-sponsored, first-in-human study evaluating UP421, an allogeneic, primary islet cell therapy engineered with our hypoimmune technology, in patients with T1DM (the IST).

Human pancreatic islet transplantation from allogeneic donors into T1DM patients has been shown to reduce or even eliminate long-term exogenous insulin dependence, albeit when administered with immunosuppression which leads to toxicity.

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We believe that a stem cell-derived islet product candidate such as SC451 would likely maximize the benefit to patients, with superior manufacturing scalability and consistency when compared to primary islet cells.

However, we are optimistic that immunology insights gained from the IST, particularly whether the hypoimmune modifications lead to long-term survival and evasion of either allogeneic or autoimmune killing of the cells, may provide direct insights and learnings applicable to SC451, accelerating development of this product candidate.

Fusosome for Hematologic Malignancy

Our most advanced CAR T cell fusosome product candidate is SG299, a CD8-targeted fusosome that delivers a CD19 CAR to target CD19+ cancer cells, and we are developing it to treat patients with hematologic malignancies.

SG299 was previously referred to as SG295, and was renamed in connection with our transition to a new manufacturing process for this product candidate, as described elsewhere in this Annual Report.

This program is an opportunity to develop potential product candidates that can expand access to CAR T cell therapy to patients in need.

We believe the ability to deliver a payload encoding a CAR to a T cell without significant ex vivo manipulation has the potential to be more effective than ex vivo manufactured CAR T cell products.

We plan to generate therapeutically active CAR T cells without the complexities and delays associated with the processes of T cell collection and ex vivo manufacturing that are used in currently approved CAR T products .

Furthermore, the ex vivo expansion of cells in the presence of high cytokine concentrations, although necessary for the manufacture of currently approved CAR T cell products, also contributes to marked changes in T cell quality that may not be therapeutically beneficial.

The generation of a CAR T cell within the natural physiological environment in vivo has the potential to improve the quality of the CAR T cell generated, potentially improving both efficacy and the side effect profile.

Finally, the effectiveness of ex vivo manufactured CAR T cells currently depends on the administration of a lymphodepleting preparative regimen prior to infusion to facilitate expansion of the CAR T cell product, which can have adverse safety implications.

We do not expect to need a lymphodepleting regimen prior to in vivo delivery of the CAR gene, as our goal is to expose our fusosomes to as many T cells in the body as possible.

Our goal is to submit an IND for SG 299 in 2023.

Initial clinical success would unlock meaningful standalone value in the development of SG 299 in NHL , CLL , and ALL , support and validate the expansion of our in vivo CAR T efforts, and support the validation of our fusogen platform overall, which we are pursuing in therapeutic areas beyond oncology with the goal of targeted delivery of DNA and gene editing machinery to specific cells in vivo.

However, we are optimistic that immunology insights gained from the IST, particularly whether the hypoimmune modifications lead to long-term survival and evasion of either allogeneic or autoimmune killing of the cells, may provide direct insights and learnings applicable to SC451, potentially accelerating development of this product candidate.

We expect data from the IST to be shared in 2024.

Our ex vivo Cell Engineering Platform

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We believe that it is critical to have expertise in the developmental biology of stem cell differentiation and a deep understanding of the desired cell biology of stem cell differentiation in order to generate cells that function appropriately, as well as a deep understanding of the desired cell phenotype.

The latter requires expertise in

normal and disease biology.

The latter requires expertise in normal and disease biology.

Furthermore, clinical understanding of disease pathology and transplant medicine is required to determine how to engraft the right cell in the right environment.

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We are investing proactively in process development, including process optimization and scale up, analytical development, CMC regulatory, supply chain, quality, and other manufacturing sciences in order to develop processes that can enable scalable manufacturing of cell therapies and broad patient access.

We have entered into agreements with a number of CDMOs and other partners for access to facilities and reagents in our supply chain necessary to manufacture our product candidates.

We have also built a pilot manufacturing plant in South San Francisco, California and entered into a long-term lease agreement for a facility in Bothell, Washington, where we intend to build our own clinical trial and commercial current Good Manufacturing Practice (cGMP) manufacturing capabilities.

We also entered into a lease agreement under which we have obtained access to manufacturing capabilities within University of Rochester Medical Center’s cell-based manufacturing facility to support manufacturing for early-stage clinical trials.

We are also investing to obtain and ensure access to high quality donor-derived T cells and GMP-grade pluripotent stem cell lines for our programs.

We have entered into agreements with contract development and manufacturing organizations (CDMOs) and other partners for access to facilities and reagents in our supply chain necessary to manufacture our product candidates.

We have built a pilot manufacturing plant in South San Francisco, California and entered into a long-term lease agreement for a manufacturing facility in Bothell, Washington, where we intend to build our own clinical trial and commercial current Good Manufacturing Practice (cGMP) manufacturing capabilities.

We entered into a lease agreement under which we have obtained access to manufacturing capabilities within University of Rochester Medical Center’s cell-based manufacturing facility to support manufacturing for early-stage clinical trials.

We are also investing to obtain and ensure access to high quality donor-derived T cells and GMP-grade PSC lines for our programs.

We will continue to invest in our manufacturing capabilities to ensure our pipeline needs are met.

Our Approach to Building our ex vivo Cell Engineering Portfolio

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• existing proof of concept in humans and/or animal models demonstrates that cell transplantation should have a clinical benefit;

evidence exists that the cell type can be successfully differentiated from pluripotent stem cells and that such stem cell-derived cells can function appropriately in vivo;

• evidence exists that the cell type can be successfully differentiated from PSC and that such stem cell-derived cells can function appropriately in vivo;

• there has been the ability to hire or partner with world experts in the field to ensure our programs are rooted in a deep understanding of the underlying cell and disease biology;

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The advent of stem cell technology and subsequent improvements in methods to generate functional differentiated cells at scale have the potential to address the shortage of donor tissues and organs.

In addition, over the past decade, a deeper understanding of the immunology of host versus graft responses, coupled with novel techniques to manipulate the immunological profile of cells via gene editing, have raised the prospect that ex vivo engineered cells can benefit patients without the requirement for significant immunosuppression.

In addition, over the past decade, a deeper understanding of the immunology of HvGR, coupled with novel techniques to manipulate the immunological profile of cells via gene editing, have raised the prospect that ex vivo engineered cells can benefit patients without the requirement for significant immunosuppression.

Sources of allogeneic cells

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The recognition that every cell in the body originates from a zygote, or fertilized egg, led to the research and ultimate discovery of human ESCs, with the derivation of the first human ESC line in 1998.

ESCs are pluripotent stem cells which have the potential to differentiate into any cell type and are derived from the inner cell mass of a blastocyst or pre-implantation stage embryo.

ESCs are PSCs which have the potential to differentiate into any cell type and are derived from the inner cell mass of a blastocyst or pre-implantation stage embryo.

They are typically cultured in vitro and grown through cycles of cell division, known as passages, until a line of cells is established that can proliferate without differentiating, and retain their pluripotency while remaining well characterized, including being free of potentially deleterious genetic mutations.

Because pluripotent stem cells can divide indefinitely without exhaustion, an ESC line can be used to generate cell banks, consisting of large numbers of well-characterized vials of cells, that can be frozen and stored for future use.

Because PSCs can divide indefinitely without exhaustion, an ESC line can be used to generate cell banks, consisting of large numbers of well-characterized vials of cells, that can be frozen and stored for future use.

Induced Pluripotent Stem Cells

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MHC class I molecules typically display peptides from degraded intracellular proteins on the cell surface.

for example, as a result of a protein mutation, it may result in the activation of a cytotoxic T cell response specific to the peptide-MHC complex via the T cell receptor (TCR) on the T cell surface.

Cells display peptides from normal “self” proteins on MHC class I, which typically will not activate an immune response due to a process called tolerance, where the body recognizes these peptides as “self.” However, if a cell displays a peptide from a foreign or mutated protein on MHC class I, for example, as a result of a protein mutation, it may result in the activation of a cytotoxic T cell response specific to the peptide-MHC complex via the T cell receptor (TCR) on the T cell surface.

The activated T cell then eliminates the cell.

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Although this approach can reduce the adaptive immune response to donor cells, the human immune system has evolved so that parts of the innate immune system will recognize cells missing MHC molecules and eliminate them.

For example, natural killer (NK) cells express receptors known as inhibitory killer-cell immunoglobulin-like receptors (inhibitory KIRs).

For example, NK cells express receptors known as inhibitory killer-cell immunoglobulin-like receptors (inhibitory KIRs).

KIRs recognize self MHC class I molecules on the surface of cells and provide inhibitory signals to the NK cells to prevent their activation.

Cells missing MHC class I molecules are correspondingly eliminated by NK cells because of the lack of inhibitory KIR signaling and a resulting cytolytic activation.

Known as the “missing self-hypothesis,” this important redundancy in immunology enables the elimination of virally infected or transformed cells that have downregulated MHC class I, but has complicated the development of allogeneic cells as broadly applicable therapeutics.

Known as the “missing self-hypothesis,” this important redundancy in immunology enables the elimination of virally infected or transformed cells that have downregulated MHC class I, but it has complicated the development of allogeneic cells as broadly applicable therapeutics.

Our hypoimmune technology seeks to engineer cells to avoid immune rejection by addressing both the adaptive and innate immune response.

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These cells may avoid immune rejection as they would be recognized as “self.” Autologous approaches have demonstrated effectiveness in certain diseases, such as autologous CAR T cells for hematological malignancies, but these approaches are limited in their adoption due to manufacturing cost and complexity.

Furthermore, autologous approaches are generally limited to cells that exist in the patient in suspension, such as blood cells, and they cannot be applied to treat acute illnesses, such as myocardial infarction or stroke, due to the time it takes to prepare these cells for administration.

Furthermore, autologous approaches are generally limited to cells that exist in the patient in suspension, such as blood cells.

Our Solution – Hypoimmune Technology

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Our goal is to create a universal cell capable of evading immune detection, regardless of cell type or transplant location.

Our current clinical hypoimmune technology, which is being used in our SC291 product candidate, combines three genome modifications to “hide” these cells from the host immune system:

Our current clinical hypoimmune technology, which is being used in our SC291, SC262, and SC255 product candidates, combines three genome modifications to “hide” these cells from the host immune system:

• disruption of MHC class I expression;

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We and our licensors have carried out a series of experiments in various model systems of increasing immunological complexity.

and (v) and transplanting NHP hypoimmune iPSC-derived differentiated cells, such as cardiomyocytes, into MHC mismatched allogeneic NHPs.

These included (i) transplanting undifferentiated mouse hypoimmune iPSCs into MHC mismatched allogeneic mice, (ii) transplanting mouse hypoimmune iPSC-derived differentiated cells, such as endothelial cells, into MHC mismatched allogeneic mice, (iii) transplanting human hypoimmune iPSCs into MHC mismatched humanized allogeneic mice, (iv) transplanting NHP hypoimmune iPSCs into MHC mismatched allogeneic NHPs, (v) transplanting NHP hypoimmune iPSC-derived differentiated cells, such as cardiomyocytes, into MHC mismatched allogeneic NHPs, and (vi) transplanting NHP hypoimmune primary cells, such as islets, into MHC mismatched diabetic and non-diabetic NHPs.

Each mouse experiment evaluated:

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• whether differentiated cells derived from our hypoimmune cells were successfully engrafted in the recipient without needing immunosuppression and without eliciting an immune response.

We have also investigated the NHP immune response to human iPSCs, NHP iPSCs, as well as NHP iPSC-derived differentiated cells.

We are encouraged by data given the similarity of the NHP immune system to the human immune system since they representthe strictest test outside of evaluating these cells in humans.

We have also investigated the NHP immune response to human iPSCs, NHP iPSCs, NHP iPSC-derived differentiated cells, and NHP primary islets.

Importantly, we have shown that hypoimmune primary islets can mediate insulin independence in a fully immunocompetent diabetic NHP without immunosuppression.

This confirms that hypoimmune modifications confer immune evasion without compromising islet function in this setting.

We are encouraged by the data from these investigations, given the similarity of the NHP immune system to the human immune system and that NHP models represent the strictest test outside of evaluating these cells in humans.

We are evaluating both iPSCs as well as differentiated cells transplanted into the microenvironments we intend to target in humans.

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These modifications protected the cells from the recipient mouse’s adaptive immune system, but NK cells rapidly killed the transplanted cells.

These data highlight the importance of making all three genome modifications (MHC class I, MHC class II, and CD47 overexpression) to protect cells from the immune system following an allogeneic transplant.

These data highlight the importance of all three genome modifications (MHC class I, MHC class II, and CD47 overexpression) in protecting cells from the immune system following an allogeneic transplant.

Next, to ensure that hypoimmune genome modifications protected differentiated cells and that these modifications did not impact the ability of iPSCs to differentiate into various cell types, commonly referred to as pluripotency, the scientists tested whether the hypoimmune iPSCs cells could be differentiated into three different cell types, function in vivo , and evade the host immune system.

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The hypoimmune iPSCs successfully differentiated into all three cell types, the cells functioned in the mouse, and the transplanted cells survived for the full standard observation period with no evidence of immune system activation despite having received no immune suppression.

Differentiated cells derived from unmodifiediPSC cells led to immune activation in the host mice, which did not survive.

These data provide initial proof of concept that iPSCs can be genetically modified and differentiated into target cells that can engraft, function, and evade the recipient’s immune system following transportation.

Differentiated cells derived from unmodified iPSC cells led to immune activation in the host mice, which did not survive.

Human iPSC-derived hypoimmune cells transplanted into MHC mismatched allogeneic humanized mouse

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Our current clinical hypoimmune technology combines the following three gene modifications to “hide” cells from the host immune system:

disruption of MHC class I and class II expression (which inactivates adaptive immune responses), and overexpression of CD47 (which “hides” cells from the innate immune system, including macrophages and natural killer (NK) cells).

Pluripotent stem cells from healthy donors are used as the starting material which are then genetically modified with the hypoimmune modifications.

These edited cells are then differentiated into cell types of therapeutic interest, which could be administered to the patient as “off the shelf” therapies.

PSCs from healthy donors are used as the starting material and are then genetically modified with the hypoimmune modifications.

These edited cells are then differentiated into cell types of therapeutic interest, which could potentially be administered to the patient as “off the shelf” therapies.

First, the three genome modifications described above were replicated in human iPSCs to engineer a human hypoimmune cell line with properties comparable to the mouse hypoimmune cells in vitro .

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It was observed that the human hypoimmune cells survived the full length of the experiment and failed to elicit any type of immune response.

From this data we concluded that in humanized mice, the human hypoimmune cells can evade the immune system.

From this data we concluded that in humanized mice, human hypoimmune cells can evade the immune system.

Pluripotency of human hypoimmune cells was confirmed by differentiation into two different cell types, endothelial cells and cardiomyocytes, which exhibited the characteristics of normal endothelial cells and cardiomyocytes.

Finally, to test whether these the differentiated cell types derived from human hypoimmune cells continue to evade the immune system, the differentiated cells were transplanted into humanized mice, and the transplanted cells survived for the full standard observation period.

Finally, to test whether the differentiated cell types derived from human hypoimmune cells could continue to evade the immune system, the differentiated cells were transplanted into humanized mice, and the transplanted cells survived for the full standard observation period.

In contrast, differentiated cells derived from unmodified human iPSC cells did not survive after being transplanted, as anticipated.

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The second cohort received an initial injection of NHP hypoimmune cells in one leg, which allowed assessment of immune evasion in a naïve recipient.

In order to model certain aspects of autoimmune disease, this cohort also

received a second injection of unmodified NHP iPSCs in the other leg, which.

In order to model certain aspects of autoimmune disease, this cohort also received a second injection of unmodified NHP iPSCs in the other leg, which enabled assessment of the impact of injecting hypoimmune cells into an NHP with a pre-existing immune response to unmodified cells.

No immunosuppression was administered to any of the NHPs in the study.

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In addition, we recently conducted experiments in which we observed immune evasion and cell survival of hypoimmune NHP iPSC-derived cardiomyocytes and retinal pigment epithelial cells (RPEs).

In separate experiments, these cardiomyocytes and RPEs were injected into the hearts and eyes (subretinal space), respectively, of healthy allogeneic NHP recipients without

immunosuppression.

In separate experiments, these cardiomyocytes and RPEs were injected into the hearts and eyes (subretinal space), respectively, of healthy allogeneic NHP recipients without immunosuppression.

Both the hypoimmune cardiomyocytes and RPEs were found to evade systemic adaptive and innate immune responses and survived for the duration of the applicable experiment.

Separately, we have shown that hypoimmune NHP islet cells transplanted into a non-matched allogeneic NHP survive for the duration of the study, which at this point is 40 weeks.

We conducted an experiment to better understand whether hypoimmune modifications impair the function of islet cells and to confirm that these modifications enable the islet cells to evade immune responses.

For these experiments, we made hypoimmune genetic modifications to NHP primary islets and then transplanted these islets intramuscularly, without immunosuppression, into a different NHP.

We found that the hypoimmune islets were viable for the full duration of the study (approximately 10 months) and did not elicit either an adaptive or innate immune response.

By contrast, unmodified NHP primary islets injected into a separate NHP were rejected within one week.

These results suggest that hypoimmune modifications enable allogeneic immune evasion by NHP primary islet cells and increase our confidence in the clinical translatability of this approach.

Primary Allogeneic Hypoimmune NHP Pancreatic Islet Cells Survive in NHPs for 10 Months Without Immunosuppression

Hypoimmune NHP primary islets (top row) or unmodified wild type (wt) NHP primary islets (bottom row) were introduced via intramuscular injection into allogeneic NHPs.

Unmodified NHP primary islets are undetectable in recipient NHPs by week 1 while hypoimmune NHP primary islets introduced into naïve NHPs were viable and detectable until the experiment was terminated at 40 weeks following injection.

Primary islet cell survival in vivo is followed over time using bioluminescence imaging (BLI).

In January 2024, we presented data from a study transplanting allogeneic HIP-modified pancreatic islet cells into a fully immunocompetent, diabetic NHP.

Subsequent to diabetes being induced in the NHP with streptozotocin, daily insulin injections were performed to re-establish glucose control.

After 78 days, the NHP underwent transplantation of HIP primary islets by intramuscular injection, resulting in insulin independence without the use of any immunosuppression.

As early as one week after the transplantation, the NHP’s serum c-peptide level had normalized, and it remained stable throughout the follow-up period of six months.

The NHP showed tightly controlled blood glucose levels for six months, was completely insulin-independent, and was continuously healthy throughout this period with no use of any immunosuppression.

Up to six months following HIP primary islet transplantation, peripheral blood mononuclear cells and serum were obtained from the NHP for immune analyses.

HIP primary islets showed no T cell recognition, no graft-specific antibodies, and were protected from NK cell and macrophage killing.

To demonstrate that the NHP’s insulin-independence was fully dependent on the HIP primary islets and that there was no regeneration of the animal’s endogenous islet cell population, we triggered the destruction of the HIP primary islets using a CD47-targeting antibody.

This resulted in a loss of glycemic control and return to exogenous insulin dependence.

We believe these data demonstrate potential evidence for immune evasion of HIP primary islets, graft-mediated insulin-independence of the diabetic NHP, and a potential safety strategy.

Hypoimmune Islet Cells Achieve Insulin Independence after Allogeneic Transplantation in a Fully Immunocompetent NHP

Fasting glucose monitoring in an NHP for about 10 months encompassing pre STZ, post STZ, post HIP islet cell transplant, and post anti-CD47 phases of the study:

Diabetes mellitus was induced in a male NHP with STZ and daily insulin injections were started.

Blood glucose was monitored twice daily and showed major instability over approximately two weeks until a well-controlled steady state was reached.

After 78 days, the NHP was underwent intramuscular transplantation with allogeneic HIP islet cells.

Insulin support was gradually withdrawn over approximately 12 days.

The NHP did not receive immunosuppression before, during or after HIP islet cell transplantation.

The NHP showed tightly controlled blood glucose levels and was completely insulin independent for six months.

Following anti-CD47 mediated ablation of the graft, blood glucose levels increased steadily.

Insulin injections were resumed eight days after the start of anti-CD47 antibody at the previously established maintenance dose.

Despite insulin supplementation, widely fluctuating blood glucose levels were observed and no steady state was re-established for the remainder of the study.

Hypoimmune Islet Cells Normalize C-peptide Levels after Allogeneic Transplantation in a Fully Immunocompetent NHP

NHP serum C-peptide declines after induction of diabetes post STZ.

As early as one week after the transplantation, NHP serum c-peptide level normalized (indicated by c-peptide levels of >2ng/ml) and remained stable throughout the follow-up period of six months.

Destruction of HIP islet cells by anti-CD47 antibody coincides with the decline in C-peptide levels in the serum, confirming that HIP islet cells were required for continued production of C-peptide in the NHP.

Based on our preclinical data to date, we believe our hypoimmune technology has the potential to address the most fundamental limitation of ex vivo therapies, persistence, and thereby unlock waves of potentially disruptive therapies across a variety of cell types.

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Using hypoimmune NHP iPSCs, we observed in vitro that the addition of an anti-CD47 antibody binds to and blocks CD47 expressed in the hypoimmune cells and restores their sensitivity to the missing-self killing response mediated by NK cells.

We also assessed this strategy in mice, which were transplanted with human iPSCs that formed small teratomas.

Finally, we have conducted in vitro and in vivo experiments with this strategy using a number of human cancer lines, showing that an anti-CD47 antibody resensitizes cancer cells to killing by NK cells and macrophages.Treatment with an anti-CD47 antibody resulted in the loss of immune evasion and the rapid killing of these transplanted cells.

We have identified several additional safety switches with in vivo activity and intend to continue to explore them, and potentially including multiple safety switches in our therapeutic programs moving forward.

We also assessed this strategy in mice that were transplanted with human iPSCs that formed small teratomas.

Treatment with an anti-CD47 antibody resulted in the loss of immune evasion and the rapid killing of these transplanted cells.

As described above, use of an anti-CD47 antibody in a fully immunocompetent NHP was sufficient to trigger destruction of transplanted allogeneic HIP islet cells following initial survival of such cells for six months.

We believe these data support use of anti-CD47 antibodies as a potential safety strategy.

We have identified several additional safety switches with in vivo activity and intend to continue to explore them and potentially include multiple safety switches in our therapeutic programs moving forward.

Anti-CD47 Administration Results in the Rapid Clearance of Hypoimmune NHP iPSCs In Vitro

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We carried out these head-to-head comparisons in K562 cells, a cell line that is naturally deficient in MHC class I and class II, and in which the lack of the MHC class I molecule should result in rapid cell killing by stimulated innate immune cells such as NK cells due to the activation of the “missing self” response.

We compared three molecules, HLA-E, HLA-G and PDL-1, that have previously been proposed to play a role in inhibiting innate immune responses against CD47.

We compared three molecules, HLA-E, HLA-G, and PDL-1, each of which has previously been thought to play a role in inhibiting innate immune responses, against CD47.

In this assay, overexpression of these three molecules conferred limited protection from NK cell killing as compared to CD47 overexpression.

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Allogeneic T Cell Programs (SC291, SC262, SC255)

Our allogeneic T cell programs utilize T cells from healthy donors to generate CAR T therapies that will initially target CD19, a protein expressed on the cell surface of B cell malignancies, to treat patients with refractory B cell lymphomas and leukemias.

We believe that applying the hypoimmune technology to allogeneic T cells will enable us to create differentiated allogeneic CAR T therapies.

We believe our allogeneic T cell and T cell fusosome discovery programs provide us with two potentially disruptive programs to address the limitations of adoptive T cell therapy for cancer, each with idiosyncratic risks and opportunities.

We also believe each approach, if successful, will be able to address separate and valuable opportunities.

Our allogeneic T cell programs utilize T cells from healthy donors to generate CAR T therapies for various targets, including CD19, a protein expressed on the cell surface of B-cell malignancies, for the potential treatment of patients with relapsed and/or refractory B-cell- malignancies and autoimmune diseases.

We believe that applying our hypoimmune technology to allogeneic T cells will enable us to create differentiated allogeneic CAR T therapies.

We believe our allogeneic T cell programs are potentially disruptive programs that could address the limitations of adoptive T cell therapy for cancer.

Specifically, as part of our allogeneic T cell programs, we have the opportunity to perform multiple gene edits in a T cell, which may allow us to make intentional modifications to control T cell function or deliver more complex chimeric receptors and signal integration machinery to enable the T cell to distinguish tumor cells based on surface antigen combinations and improve the specificity of targeting.

These approaches may prove especially valuable in targeting solid tumors, which have remained largely refractory to CAR T approaches to date.

We also have developed a scaled manufacturing process that we beleve we can rapidly leverage to manufacture allogeneic CAR T cells across multiple targets.

We also have an earlier-stage program in which we are exploring the possibility of differentiating hypoimmune PSCs into T cells (the iPSC T cell program).

We expect that progress with our allogeneic T cell programs will also inform the iPSC T cell program.

Separately, our fusogen technology has the potential for the in vivo generation of CAR T cells in a patient, offering a distinct advantage in terms of manufacturability and scalability that may enable the introduction of gene-modified T cells earlier in the course of a patient’s therapy.

Additionally, modifying the T cells inside the body without the need for ex vivo manipulation of the cells may generate CAR T cells with more favorable attributes.

Finally, eliminating the need for conditioning chemotherapy may improve tolerability for the patient, potentially opening up novel opportunities in less sick patients while also improving patient outcomes.

Our Investigational New Drugapplication (IND) for our CD19-directed allogeneic CAR T cell therapy, SC291, which we submitted to the United States Food and Drug Administration (FDA) in December 2022, was cleared by the FDA in January 2023.

We intend to enroll patients in our Phase 1a/b studies in 2023 and 2024.

We intend to follow this drug candidate with SC262, a CD22- directed allogeneic CAR T that has the potential to treat patients that are CD19 treatment-naïve, as well as those that have experienced CD19 treatment failures, with a goal of submitting an IND in 2023.

We intend to focus our development toward patients that have previously failed a CD19-targeted CAR T therapy.

We are also advancing SC255, our allogeneic T cell program targeting BCMA for multiple myeloma, with the goal of submitting an IND as early as 2024.

We also have developed a scaled manufacturing process that we believe we can rapidly leverage to manufacture allogeneic CAR T cells across multiple targets.

Our most advanced product candidate is SC291, a CD19-directed allogeneic CAR T program.

We are currently enrolling and dosing patients in the ARDENT trial evaluating SC291 in patients with NHL and CLL.

In addition, in November 2023, we received IND clearance for the clinical study of SC291 in B-cell-mediated autoimmune diseases, including LN, ERL and ANCA-associated vasculitis, which we refer to as the GLEAM trial.

The clinical trial startup activities for the GLEAM trial are currently underway, and we expect to share clinical data in 2024.

In January 2024, we received IND clearance to evaluate SC262, a CD22-directed allogeneic CAR T, for the treatment of patients with relapsed and/or refractory B-cell malignancies who have received prior CD19-directed CAR T therapy, which we refer to as the VIVID trial.

Clinical trial startup activities for the VIVID trial are also currently ongoing.

We expect to share data from the VIVID trial in 2024.

SC255, is our B-cell maturation antigen (BCMA)-directed allogeneic CAR T, for the treatment for multiple myeloma (MM).

The SC255 program has completed a battery of pre-clinical tests and is currently gated based on resource availability.

Background on B-Cell Malignancies

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DLBCL, if left untreated, may have survival measured in weeks or months.

Other common subtypes of NHL include mantle cell lymphoma (MCL), follicular lymphoma (FL), and marginal zone B-cell lymphoma (MZL).

CLL is the most common type of leukemia and occurs most frequently in older individuals, with diagnoses in people under 30 years of age occurring only rarely.

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ALL is a type of leukemia that results from an uncontrolled proliferation of lymphoblasts, which are immature white blood cells.

The lymphoblasts, which are produced in the bone marrow, cause damage and death by inhibiting the production of normal cells.

Lymphoblasts, which are produced in the bone marrow, cause damage and death by inhibiting the production of normal cells.

Approximately 6,000 patients are diagnosed with ALL in the United States each year, and the vast majority of the approximately 1,500 ALL deaths per year occur in adults.

Approximately 80% of cases of ALL in the United States and Europe are B-cell ALL, which almost always involves cancer cells that express the CD19 protein.

The five-year overall survival rate in ALL adults over the age of 60 is approximately 20%, and in patients with R/R ALL after two or more lines of therapy, the median disease-free survival is less than six months.

The five-year overall survival rate in ALL adults over the age of 60 is approximately 20%, and the median disease-free survival in patients with R/R ALL after two or more lines of therapy is less than six months.

B-cell ALL is the most common cancer in children.

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These cells secrete large quantities of the same antibody, resulting in patient symptoms that result from the myeloma cells crowding out other plasma and bone marrow cells, including increased risk of infection, risk of bone destruction, and kidney disease.

MM is the second most common hematologic malignancy, and comprises approximately 2% of all cancers, and accounts for over 34,000 new cases per year with 12,600 deaths estimated to have occurred in 2022 in the United States.

MM is the second most common hematologic malignancy, comprising approximately 2% of all cancers and accounting for over 34,000 new cases per year, with 12,600 deaths estimated to have occurred in 2022 in the United States.

High Mortality in Lymphoma, Leukemia and Multiple Myeloma in United States and EU5

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Current Treatment Landscape and Unmet Need

First-line therapy for NHL typically consists of multi-agent cytotoxic drugs in combination with the monoclonal antibody Rituxan.

First-line therapy for NHL typically consists of multi-agent cytotoxic drugs in combination with the monoclonal antibody rituximab.

In younger patients with NHL who have good organ function, high dose chemotherapy followed by stem cell transplantation is often used.

Patients often relapse, however, and over the last three years, several therapeutics have been approved in the United States for the treatment of patients with R/R NHL who have received prior therapies.

These approved therapies include CD19 CAR T therapies tisagenlecleucel, axicabtagene ciloleucel, and lisocabtagene maraleucel, CD19 antibody drug conjugate therapy polatuzumab

vedotin, and CD19 antibody tafasitamab.

Patients often relapse, however, and since 2017, several therapeutics have been approved in the United States for the treatment of patients with R/R NHL who have received prior therapies.

These approved therapies include CD19 CAR T therapies tisagenlecleucel, axicabtagene ciloleucel, and lisocabtagene maraleucel, CD19 antibody drug conjugate therapy polatuzumab vedotin, and CD19 antibody tafasitamab.

Recently, two autologous CD19 CAR T products have been approved in second-line patients with R/R NHL after proving to be superior to standard of care in pivotal trials, raising the possibility that CD19 CAR T cell therapies may have the potential to have a broader impact for patients with NHL.

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Lack of Response / Relapse .

Only about 50% of patients treated with an approved CD19-directed CAR T therapy will have a complete response and approximately one-third of patients with a complete response will replapse relatively quickly.

The emerging post-approval data from approved CAR T therapies tisagenlecleucel and axicabtagene ciloleucel indicate that relapse can result from one of two primary factors.

The emerging post-approval data from approved CAR T therapies tisagenlecleucel, axicabtagene ciloleucel and lisocabtagene maraleucel indicate that relapse can result from one of two primary factors.

1) The first involves loss of CD19 expression on malignant cells, resulting in tumor escape.

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Manufacturing .

Because autologous CAR T therapies are patient-specific products, their manufacturing process is complex and requires a significant amount of time and labor.

Because autologous CAR T therapies are patient-specific products, their manufacturing process is complex and requires a significant amount of resources, including time and labor.

Given this, infrastructure and cost considerations and limitations have resulted in limited patient access to these therapies.

Even for patients who are fortunate enough to have access to approved CAR T therapies, delays, commonly of at least one month, resulting from scheduling difficulties and issues that arise during manufacturing may prevent use of and the utility of these therapies in patients with rapidly progressing malignancies.

Certain groups are seeking to overcome access limitations by using healthy donor-derived, or allogeneic, CAR T cells instead of patient T cells to yield “off-the-shelf”

therapeutics that can be manufactured consistently.

However, efficacy and durability concerns remain, largely due to the inability to effectively control the host versus graft response and the risk of eventual immune rejection of these products by the recipient.

We are developing our ex vivo allogeneic T cell programs to address this host versus graft response and prevent immune rejection.

Certain groups are seeking to overcome access limitations by using healthy donor-derived, or allogeneic, CAR T cells instead of patient T cells to yield “off-the-shelf” therapeutics that can be manufactured consistently.

However, efficacy and durability concerns remain, largely due to the inability to effectively control the HvGR response and the risk of eventual immune rejection of these products by the recipient.

We are developing our ex vivo allogeneic T cell programs to address this HvGR and prevent immune rejection.

Background on B-Cell-Mediated Autoimmune Disease

Autoimmune diseases arise from immune system dysfunction whereby the body’s immune cells mistakenly attack healthy cells and tissues in the body.

These diseases are typically characterized by defects in the adaptive immune response involving B-cells and/or T cells.

These diseases can manifest across multiple organ systems and lead to a decreased quality of life or even severe disability in patients.

B-cell depletion has been shown to provide clinical benefit in autoimmune disorders mediated by dysfunctional B-cells, including SLE, systemic sclerosis, myositis, MS, ANCA-associated vasculitis, and others.

Collectively, these diseases afflict more than 5 million patients in the United States alone.

SLE is a chronic autoimmune disease that predominantly affects women of childbearing age.

Immunologic abnormalities, especially the production of antinuclear antibodies (ANA), are a prominent feature of the disease.

The exact cause of SLE remains unclear, but it is thought to result from a combination of genetic predisposition and environmental triggers.

SLE presents with a wide range of clinical signs and symptoms, as well as serologic findings, and can affect multiple organ systems.

SLE has a prevalence of approximately 400,000 across the United States, EU5, and Japan.

About 60% of SLE patients are diagnosed with LN after clinical indication of kidney involvement.

The remainder are classified as having extrarenal lupus.

The renal complications are detected through an abnormal urinalysis arising during the disease course.

LN is one of the most severe complications of SLE, in which autoantibodies cause damage to the glomerular structures in the kidney, which can result in end-stage renal disease (ESRD).

Patients with ESRD have a 5-year survival rate of 50%.

ANCA-associated vasculitis is a group of diseases characterized by loss of immunological tolerance to neutrophil protein, which causes inflammation of small blood vessels.

The primary clinical manifestations of the disease occur in the upper respiratory tract, in the kidneys, or as asthma.

The cause of ANCA-associated vasculitis is not fully understood and believed to be in part due to genetic susceptibility and environmental triggers.

There are about 60,000 ANCA-associated vasculitis patients in the United States.

Left untreated, ANCA-associated vasculitis is associated with significant morbidity, but with proper treatment, the 5-year survival rate ranges from 80% to 90%.

Current Treatment Landscape and Unmet Need

Currently, there is no standard of care treatment for achieving drug-free remission in LN patients;

therefore, patients often require life-long therapy.

While a combination approach using antimalarials (hydroxychloroquine), systemic steroids, and conventional immunosuppressant medicines (such as azathioprine (AZA), Mycophenolate mofetil (MMF), and cyclophosphamide) are first-line options, a significant proportion of patients continue to have high disease activity and recurrent relapses despite therapy.

Rituximab, initially approved by the FDA in 1997 for the treatment of R/R NHL, is a monoclonal antibody (mAb) that selectively targets the B-cell specific surface molecule CD20.

The LUNAR trial of rituximab failed to meet the primary endpoint of complete renal response after treatment with rituximab, although the trial demonstrated partial responses in selected patients.

Complete peripheral depletion of B-cells with rituximab was not observed in all participants, and even in participants where complete peripheral depletion of B-cells was observed, less than 50% achieved complete response.

A retrospective analysis of these data demonstrated that deeper B-cell depletion was associated with improved complete renal responses, and that poor tissue B-cell depletion was associated with non-response.

The continued persistence of autoreactive B-cells in protected microenvironments, such as the lymphoid germinal center structures, correlated with the partial success of this approach in LN.

Treatments for ERL include low intensity therapies such as low-dose corticosteroids, antimalarials, and NSAIDS.

Based on worsening disease manifestations, additional immunosuppression medications can include high dose prednisone, methotrexate (MTX), AZA, and MMF, which are known to have side effects and increase the risk of significant infection.

The pivotal trial of the anti-BAFF mAb belimumab in these patients demonstrated a clinically meaningful improvement in patient outcomes in a large trial that enabled the first FDA drug approval for the treatment adult patients with SLE.

Although this large trial demonstrated a reduction of disease activity compared to placebo control, approximately 20% in all groups still experienced a severe disease flare.

Anifrolumab, a mAb targeting the interferon alfa signature known to be elevated in SLE patients, was approved by the FDA in 2021 for the treatment of adult patients with SLE.

Only 15% of the patients met the criteria for remission at 52 weeks, highlighting the unmet need in patients.

Since the 1970s, cyclophosphamide has been the standard of care therapy for ANCA-associated vasculitis, demonstrating a survival benefit compared to corticosteroids alone.

However, the dose-limiting toxicity of cyclophosphamide results in treatment failure and risk of chronic relapse.

Rituximab was approved for this indication based on a clinical trial in which it was shown to be non-inferior to cyclophosphamide for remission (at six months), supporting the role of B-cell depletion in the treatment of these patients.

A complement C5a receptor, avacopan, was recently approved in this indication.

Despite this recent success and FDA and European Medicines Agency approval, 35-45% of patients do not achieve remission of disease at one year with these new therapies.

There is strong evidence to suggest that B-cell depletion with CD19-directed CAR T cell therapy is feasible and highly effective in patients with SLE.

In a study published in 2022 from Germany, five SLE patients between 18 and 24 years of age were treated with autologous CD19-directed CAR T cell therapy.

These SLE patients had multiorgan involvement and were refractory to a variety of immunosuppressive drug treatments.

After lymphodepleting chemotherapy with fludarabine and cyclophosphamide, autologous CD19-directed CAR T cells were administered as a single intravenous infusion.

Full depletion of B-cells was observed from peripheral blood in all patients from Day 2 following CAR T cell infusion, resulting in an improvement in clinical symptoms and evidence of decline of ANAs.

These data suggest that CD19-directed CAR T cell therapy induces deep B-cell depletion in tissues such as lymph nodes and highlights a key advantage in the use of CD19-directed CAR T cell therapy compared to antibody-mediated B-cell depletion.

All patients achieved remission status by three months, with drug-free remission maintained over a median of eight months.

B-cells did reappear in these patients after approximately 110 days;

however, these B-cells were naïve and showed non-class-switched B-cell receptors, suggesting elimination of B-cell subsets generating autoantibodies and a reset of the B-cell repertoire.

Despite the reconstitution of B-cells, patients did not experience flares of SLE or need additional immunosuppressive medication, indicating the achievement of drug-free remission.

As of December 2023, the drug-free clinical remission in the first patient continues almost three years following CAR T treatment.

Previous studies using CD19-directed CAR T cell therapy in lymphoma and leukemia have reported CRS and ICANS occurring frequently after treatment.

However, the five SLE patients receiving CAR T cell therapy had either no reported CRS or only Grade 1 CRS.

None of these five patients developed ICANS, indicating low therapy-related toxicity with CAR T cell treatment in these patients.

As of ASH 2023, this group had treated a total of fifteen patients across three B-cell mediated autoimmune diseases, namely SLE, Idiopathic Inflammatory Myositis and Systemic Sclerosis.

Clinical remission was reported across all patients and CAR T treatment was well tolerated without the need for further immunosuppression.

The first patient (treated for SLE) continued to be in remission beyond 800 days.

In the ongoing ARDENT trial, we have observed the pharmacodynamic effect of peripheral blood B-cell depletion, which refers to diminishing B-cell counts in the peripheral blood, associated with SC291 treatment in patients.

Limitations of Allogeneic CAR T Therapies

We believe our hypoimmune cells have the potential to create a differentiated platform for developing allogeneic T cells, and to address two major hurdles associated with use of allogeneic T cells.

The first is the risk of graft versus host disease, in which the allogeneic donor T cells target and kill recipient tissues.

The first is the risk of GvHD, in which the allogeneic donor T cells target and kill recipient tissues.

Multiple CAR T cell product candidates in clinical development have prevented this reaction through gene edits targeting components of the T cell receptor, such as TCR-alpha gene.

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We are prioritizing clinically-validated cancer antigens as well as CAR constructs that have shown robust safety and efficacy profiles in hematologic malignancies in the autologous context.

Our manufacturing process begins with T cells from healthy donors, into which we introduce the CAR gene,make the gene modifications necessary to avoid GvHD, and incorporate our hypoimmune modifications to prevent HvGD.

Our manufacturing process begins with T cells from healthy donors, into which we introduce the CAR gene, make the gene modifications necessary to avoid GvHD, and incorporate our hypoimmune modifications to prevent host versus graft disease.

We then expand these cells ex vivo , which enables us to both make many batches from a single T cell donor as well as create comparable CAR T cells derived from different donors.

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For our preclinical studies, human donor T cells were genetically modified ex vivo to generate T cells with hypoimmune modifications (disruption of MHC class I/class II;

overexpression of CD47), TCR-alpha disruption (to mitigate graft versus host disease), and the expression of a CD19 CAR.

overexpression of CD47), TCR-alpha disruption (to mitigate GvHD), and the expression of a CD19 CAR.

These cells, as well as unmodified CD19 CAR T cells, were then tested in vivo for their tumor-killing activity in a human xenograft mouse model for leukemia (Nalm-6).

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Furthermore, the absence of adaptive or innate immune system activation by hypoimmune CD19 CAR T cells in the humanized mice was confirmed in vitro.

Absence of T Cell, B Cell, NK Cell, and Macrophage Responses in a Human Xenograft Mouse Model Following Injection of Hypoimmune Donor-Derived CD19 CAR T Cells

Immune cells from humanized animals receiving hypoimmune donor-derived CD19 CAR T cells showed no response when exposed to hypoimmune CAR T cells in vitro.

Delivery of hypoimmune cells did not result in production of donor-specific antibodies, as evidenced by binding of IgM antibodies to the surface of donor cells, demonstrated by increased mean fluorescent intensity (MFI).

Hypoimmune cells were not susceptible to killing by NK cells nor macrophages, indicating protection from the “missing self” signal.

Clinical Data

In January 2024, we disclosed initial interim clinical data from the ongoing ARDENT trial.

Results of our early interim analysis of clinical safety and other clinical responses are discussed above under “Overview.”

Analysis of Patient Immune Responses to SC291

In vitro testing showed evidence that blood and immune cells from each of the four evaluable patients had mounted an immune response to the non-HIP CAR T cells but not to the HIP-edited CAR T cells.

Specifically, HIP-edited CAR T cells from the drug product were not rejected by the innate immune response mediated by the patient’s NK cells, nor did the patients have T cell or antibody responses that recognized these cells.

In contrast, we observed immune responses against the non-HIP CAR T cells in the drug product.

Importantly, this evidence suggests that the patients had an intact immune system capable of recognizing allogeneic cells and that the HIP CAR T cells were able to evade these responses.

We believe this observation supports further dose escalation and dose expansion in the ARDENT trial and broader application of our HIP technology in allogeneic cell therapies in other indications.

Initial Clinical Safety and Efficacy of SC291 in ARDENT Clinical Trial

SC291 is a Mixture of T cell Subpopulations Including HIP and Non-HIP CAR T Cells

Patient T cells Kill WT CAR T Cells But Do Not Kill DKO T cells or HIP CAR T Cells

T cells from a patient receiving SC291 showed no activation when exposed to HIP CAR T (CD47-CD19 CAR;

HLAI/II deficient) cells from SC291 drug product in vitro.

Patient T cells were collected 5 days prior to SC291 infusion (D-5) and at Day 13 (D13) and Day 28 (D28) after SC291 infusion.

Robust patient T cell activation was detected versus WT CAR T cells (CD47-CD19 CAR) from SC291 drug product in vitro.

In contrast, no T cell activation was seen versus dKO T cells (HLA I/II deficient cells) and HIP CAR T cells from SC291 drug product in vitro.

T cells from a patient receiving SC291 showed no killing of HIP CAR T cells in SC291 drug product in vitro.

Patient T cells were collected 5 days prior to SC291 infusion (D-5) and Day 28 (D28) after SC291 infusion.

Robust patient T cell-mediated killing was detected versus WT CAR T cells and dKO T cells from SC291 drug product in vitro.

In contrast, no patient T cell-mediated killing was seen versus HIP CAR T cells in SC291 drug product in vitro.

Patient Generates Antibodies Against WT CAR T Cells But Not DKO T Cells or HIP CAR T Cells

Patient receiving SC291 generated an antibody response to WT CAR T cells, but not to dKO T cells or HIP CAR T cells.

Antibody response was assessed from patient sample collected 5 days prior to SC291 infusion (D-5) and at Day 28 (D28) after SC291 infusion.

Antibody production was measured by quantifying the binding of IgG to WT CAR T cells, dKO T cells, and HIP CAR T cells purified from the SC291 drug product.

Only HIP CAR T Cells Evade Patient NK Cell Killing

NK cells from a patient receiving SC291 kill dKO T cells but not HIP CAR T cells.

Patient NK cells were isolated at Day 13 after SC291 infusion.

An in vitro NK-cell mediated cell killing assay was performed over a four-hour period with fluorescent labelled dKO T cells or HIP CAR T cells.

Patient NK cells rapidly killed the dKO T cells as evidenced by the extinction of the GFP signal.

In contrast, patient NK cells did not kill HIP CAR T cells.

Development Plan and Key Next Steps

With the clearance of our SC291 IND in January 2023, our next key milestone is initial data testing SC291 in patients with lymphoma and leukemia.

We believe that early data from the SC291 clinical study will help us understand the therapeutic potential of this therapy.

Early data showing cell expansion and responses will give us insights into the quality of the CAR T cells we manufacture.

More importantly, the ability to evade immune detection with corresponding enhanced persistence of the CAR T may predict higher and more durable complete responses for patients.

Cellular persistence of SC291 in patients for two months or greater would exceed the persistence seen by allogeneic CAR T product candidates that are currently in the clinic.

This may potentially translate into longer remissions in treated patients.

Cellular persistence of three to six months would match the persistence of the approved autologous CAR T products and potentially translate into comparable long term remissions.

More consistent robust early cellular expansion and cellular persistence of greater than six months may translate into higher durable response rates when compared to approved autologus CAR T products.

Additionally, data from this clinical study should give us insight into the potential of our hypoimmune platform for additional CAR T programs targeting other antigens and cancers, as well as the potential for the platform more broadly in areas beyond cancer.

In parallel, we are progressing SC262, a CD22- targeted allogeneic CAR T therapy that offers the potential benefit of treating both CD19 treatment-naïve patients as well as those that have experienced CD19 therapy treatment failures, with the goal of submitting an IND in 2023.

We will focus initial development toward patients that have previously failed to respond or relapsed after treatment with a CD19-directed CAR T cell treatment.

We are also advancing our SC255 allogeneic T cell program targeting BCMA for MM, with the goal of submitting an IND as early as 2024.

We believe the initial ARDENT safety and clinical data described above support continued dose escalation and expansion within the trial to treat additional patients and monitor outcomes over longer periods of time.

We expect to share additional data from the ARDENT trial in 2024.

We also expect to report progress on the GLEAM trial, in which we are evaluating SC291 in LN, ERL, and ANCA-associated vasculitis.

The potential for B-cell depletion with SC291, as seen in ARDENT, may provide clinical benefit to patients with B-cell-mediated autoimmune disease.

We also plan to share data from our VIVID trial, in which we are evaluating SC262 (hypoimmune-modified CD22 CAR T) in patients with relapsed and/or refractory B-cell malignancies who have received prior CD19-directed CAR T therapy.

We are also advancing our SC255 allogeneic T cell program targeting BCMA for MM.

The SC255 program has completed a battery of pre-clinical tests and is currently gated based on resource availability.

Pancreatic Islet Cell Program

Our pancreatic islet cell program aims to restore glucose control in type 1 diabetes mellitus (T1DM) patients by transplanting hypoimmune PSC-derived pancreatic islet cells without the need for immunosuppression.

Current therapies for T1DM require continual management, and we believe that effectively restoring islet cell functionality will meaningfully improve patient outcomes for T1DM patients, which is supported by data from patients who have successfully received primary islet transplants with immunosuppression.

We are developing SC451, hypoimmune PSC-derived pancreatic cells, with a goal of submitting an IND as early as 2024.

Our pancreatic islet cell product candidate, SC451, is a hypoimmune PSC-derived pancreatic islet cell product candidate that aims to restore glucose control in T1DM patients by transplantation into these patients without the need for immunosuppression.

Current therapies for T1DM require continual management, and we believe that effectively restoring islet cell functionality will meaningfully improve outcomes for T1DM patients, which is supported by data from T1DM patients who have successfully received primary islet transplants with immunosuppression.

We are currently engaged in preclinical activities for SC451.

In November 2023, the Swedish Medical Products Agency authorized Uppsala University Hospital’s a CTA for the IST, a first-in-human study evaluating UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with T1DM.

Patients in this study will receive no immunosuppression.

We believe that immunology insights gained from the IST, particularly with respect to whether HIP modifications lead to long-term survival and evasion of either allogeneic or autoimmune killing of the transplanted cells, may provide direct insights applicable to our SC451 program.

We expect data from the IST to be shared in 2024.

Background on Type 1 Diabetes Mellitus

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In T1DM, activated T lymphocytes infiltrate the islets and selectively kill the beta cells, progressively reducing the body’s capacity to produce insulin.

Once the reserve capacity of beta cells is exhausted, blood glucose rises, and the patient will have a life-long battle to control blood glucose levels.

Once the reserve capacity of beta cells is exhausted, blood glucose rises, and the patient will have a lifelong battle to control blood glucose levels.

Without insulin therapy, T1DM is rapidly fatal.

T1DM affects approximately 860,000 patients in the United States, with adults constituting 80% of the patient pool.

In EU5, there are an estimated 870,000 patients with T1DM, and 118,000 under the age 18.

T1DM current affects more than eight million patients worldwide.

Current Treatment Landscape and Unmet Need

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All current therapies require patients to carefully monitor their dietary intake, which, although inconvenient in adults, is a frequent point of failure in adolescents.

Pancreas transplantation for uncontrollable diabetes was first performed in the 1960s, and established the principle that replacing the beta cells (here in the context of the whole pancreas) could restore physiological glucose control.

Pancreas transplantation for uncontrollable diabetes was first performed in the 1960s and established the principle that replacing the beta cells (here, in the context of the entire pancreas) could restore physiological glucose control.

Pancreas transplants are complicated surgical interventions, require lifelong immunosuppression, and are limited due to organ availability.

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We focus our efforts around three goals:

(i) deriving highly functional islet cells from PSCs, (ii) using our hypoimmune technology to genetically modify these cells to evade allogeneic immune responses, and (iii) using our hypoimmune technology to

genetically modify these cells to evade autoimmune destruction of islet cells.

This strategy requires building on lessons from pancreatic islet transplantation, recent advances in understanding pancreatic islet developmental biology, and our hypoimmune technology.

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If successful, the hypoimmune genome modifications will protect these PSC-derived islet cells from both autoimmune and allogeneic rejection by the patient’s immune system and potentially remove the need for toxic immunosuppression in transplant recipients.

Hypoimmunity also eliminates the need for physical separation of the islet cells from the rest of the body by a device or encapsulation technology, which may allow for tighter glucose control by eliminating the lag time between glucose sensing and insulin secretion as well as avoid the fibrotic reaction inherent in encapsulation technologies to date.

Hypoimmunity also eliminates the need for physical separation of the islet cells from the rest of the body by a device or encapsulation technology, which may allow for tighter glucose control by eliminating the lag time between glucose sensing and insulin secretion as well as avoiding the fibrotic reaction inherent in encapsulation technologies to date.

Preclinical Data

We are developing a proprietary protocol to differentiate hypoimmune PSCs into mature, glucose-sensitive, insulin-secreting islet cells using licensed technology from Washington University in St.

Louis (Washington University) as well as our own research insights.

This technology enables differentiation of islet cells at a greater purity and with superior function compared to published stem cell-based protocols.

We are developing a proprietary protocol to differentiate hypoimmune PSCs into mature, glucose-sensitive, insulin-secreting islet cells.

We are exploring ways to optimize the differentiation of islet cells at a greater purity and with superior function compared to published stem cell-based protocols.

The principal function of beta islet cells, the insulin-secreting cells within an islet, is to maintain steady levels of glucose in circulation.

The beta islet cells sense when glucose levels rise in the bloodstream and release insulin in response.

In vitro , our PSC-derived islets respond to glucose and robustly secrete insulin at an equivalent level to primary human islets, as depicted in the figure below.

In vitro , we have observed that our PSC-derived islet populations can respond to glucose and secrete insulin.

Human PSC-Derived Islet Cells Exhibit Glucose-Induced Insulin Release

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Human PSC-derived islet cells using technology licensed from Washington University demonstrate similar levels of insulin secretion as the cadaveric islets.

These PSC-derived islet cells were tested in a mouse model of T1DM induced by the beta cell toxin, streptozotocin (STZ).

These PSC-derived islet cells were tested in a mouse model of T1DM induced by the beta cell toxin, STZ.

When transplanted into the kidney of the T1DM mice, these islet cells normalize glucose levels in an equivalent fashion to primary human islets.

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From Hogrebe et al, Nature Biotechnology 2020.

For these experiments, we made hypoimmune genetic modifications to NHP primary islets that were then transplanted intramuscularly, without immunosuppression, into a different NHP.

We found that these cells were viable for the full duration of the study (approximately 10 months) and did not incite either an adaptive or innate immune response.

By contrast, unmodified NHP primary islets were rejected within one week.

These results suggest that hypoimmune modifications enable allogeneic immune evasion in NHP primary islet cells and increase our confidence in the clinical translatability of this approach.

Primary Allogeneic Hypoimmune NHP Pancreatic Islet Cells Survive in NHPs for 10 Months Without Immunosuppression

Hypoimmune NHP primary islets (top row) or unmodified wild type (wt) NHP primary islets (bottom row) were introduced via intramuscular injection into allogeneic NHPs.

Primary islet cell survival in vivo is followed over time using bioluminescence imaging (BLI).

We next tested whether hypoimmune modifications to iPSC-derived islet cells can enable evasion of autoimmune rejection.

We approached this question in two ways.

First, we carried out transplantation experiments in the non-obese diabetic (NOD) mouse model, which develops spontaneous T1DM due to induction of autoantibodies and autoreactive T cells the kill the islet cells.

We isolated islets from pre-diabetic NOD mice and applied hypoimmune technology to these islets to generate hypoimmune NOD islet cells, which we transplanted into diabetic NOD mice.

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We then split the iPSCs into two groups – one group to which we applied hypoimmune modifications and one that remained unmodified – before differentiating these cells into islet cells using our differentiation protocol.

The end result is two different cell products for testing – (i) hypoimmune iPSC-derived islet cells and (ii) unmodified iPSC-derived islet cells.

The end result was two different cell products for testing – (i) hypoimmune iPSC-derived islet cells and (ii) unmodified iPSC-derived islet cells.

To simulate the immune environment of a T1DM patient, we developed a proprietary humanized mouse model (T1D mice) which is populated with immune cells from the same T1DM patient donor and subsequently in which diabetes is induced via STZ.

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T1D patient PBMCs were used to generate iPSCs, which were used to generate unmodified and hypoimmune autologous islet cell.

B, Unmodified iPSC-derived autologous islets are cleared by the immune system of the humanized T1D mouse by Day 7 and did not restore glycemic control C, Hypoimmune iPSC-derived autologous islets (injected on left side of mouse) survive for durationof experiment (until Day 29) while unmodified iPSC-derived autologous islets (injected on right side of mouse at Day 15 post hypoimmune iPSC-derived autologous islet injection) are cleared within a week of injection.

B, Unmodified iPSC-derived autologous islets are cleared by the immune system of the humanized T1D mouse by Day 7 and did not restore glycemic control C, Hypoimmune iPSC-derived autologous islets (injected on left side of mouse) survive for duration of experiment (until Day 29) while unmodified iPSC-derived autologous islets (injected on right side of mouse at Day 15 post hypoimmune iPSC-derived autologous islet injection) are cleared within a week of injection.

Development Plan and Key Next Steps

We are planning to support an investigator sponsored trial of allogeneic hypoimmune primary islet cells in T1DM patients in 2023.

Allogeneic primary islet cell transplantation into T1DM patients has been shown to reduce long-term exogenous insulin dependence, albeit when administered with immunosuppression .

Under the IST, a group of experienced pancreatic islet transplantation experts will transplant allogeneic hypoimmune primary islet cells intramuscularly into T1DM patients without immunosuppression.

We expect that data from the IST will provide insight into the impact of hypoimmune modifications that we plan to apply to our SC451 program in enabling evasion of allogeneic and autoimmune rejection .

We expect that data from the IST will be available as early as the second half of 2023.

We believe that a stem cell-derived islet product candidate such as SC451 would likely maximize the benefit to patients, with superior manufacturing scalability as compared to primary islet cells.

However, if the IST demonstrates persistence of allogeneic hypoimmune primary islet cells, it may accelerate our development of SC451.

Our work on the SC451 program is currently focused on manufacturing GMP-grade, genome-edited, pluripotent stem cell banks;

In November 2023, the Swedish Medical Products Agency authorized Uppsala University Hospital’s clinical trial application for the IST, a first-in-human study evaluating UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with T1DM.

Allogeneic primary islet cell transplantation into T1DM patients has been shown to reduce long-term exogenous insulin dependence when administered with immunosuppression.

Subjects in this study will receive no immunosuppression.

We expect that data from the IST, particularly with respect to whether HIP modifications lead to long-term survival and evasion of either allogeneic or autoimmune killing of the transplanted cells, will provide insight into the impact of HIP modifications that we plan to apply to our SC451 program in enabling evasion of allogeneic and autoimmune rejection.

We believe that a stem cell-derived islet product candidate such as SC451 would likely maximize the benefit to patients, with potentially greater manufacturing scalability as compared to primary islet cells.

Further, if the IST demonstrates persistence of allogeneic hypoimmune primary islet cells, it may accelerate our development of SC451.

Our work on the SC451 program is currently focused on manufacturing GMP-grade, genome-edited, PSC banks;

scaling manufacturing;

and characterizing the product.

We are working through process development and IND-enabling studies with the goal of filing an IND as early as 2024.

Our GPC program, SC379, aims to deliver to patients healthy allogeneic GPCs, which are the precursors to both astroglia and myelin-producing oligodendrocytes.

This program has the potential to treat myelin- and glial-based disorders, which represent a broad group of debilitating neurological disorders, such as multiple sclerosis (MS) and a number of neurodegenerative disorders, none of which have effective treatment alternatives.

We intend to develop our stem cell-derived GPC therapy for secondary progressive MS, Pelizaeus-Merzbacher disease (PMD) other disorders of myelin, Huntington’s disease, and other astrocytic diseases.

Our goal is to submit three INDs for SC379 as early as 2024.

This program has the potential to treat myelin- and glial-based disorders, which represent a broad group of debilitating neurological disorders, such as MS and a number of neurodegenerative disorders, none of which have effective treatment alternatives.

We intend to develop our stem cell-derived GPC therapy for secondary progressive MS, PMD other disorders of myelin, Huntington’s disease, and other astrocytic diseases.

Background on Myelin- and Glial -Based Disorders

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There is no treatment for PMD, which is typically fatal in childhood.

We intend to deliver intracerebral transplants of stem cell-derived GPCs to the brains of PMD patients, with the goal of replacing PLP1 mutant oligodendrocytes with healthy cells capable of producing normally compact myelin.

We intend to evaluate the delivery of intracerebral transplants of stem cell-derived GPCs to the brains of PMD patients, with the goal of replacing PLP1 mutant oligodendrocytes with healthy cells capable of producing normally compact myelin.

Prevalence of PMD in the general population is estimated to be approximately 1 in 100,000 in the United States.

Although we are initially targeting PMD as our proof of concept, we believe our stem-cell derived GPCs may have broader applicability to other congenital leukodystrophies as well, which as a group affect a more significant population, or about 1 in 7,600 births.

Multiple Sclerosis (MS) .

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The encoded polyglutamine expansions of mutant huntingtin protein disrupts its normal functions and protein-protein interactions, ultimately yielding widespread neuropathology, most rapidly evident in the neostriatum.

We have found that glial pathology is a major contributor to the functional deficits of HD and repairing the glial pathology has significant and positive effects in animal models.

We have found that glial pathology is a major contributor to the functional deficits of HD, and repairing the glial pathology has been shown to have significant and positive effects in animal models.

In the United States, there are approximately 41,000 symptomatic HD patients and more than 200,000 at risk of inheriting HD.

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Currently approved treatments for RRMS may be divided into three broad categories of disease -modifying therapies:

((i) first-line injectables (such as beta-interferons and Copaxone ® ), (ii) newer oral agents (such as Tecfidera ® , Gilenya ® , Mayzent ® , and Zeposia ® ), and (iii) high-efficacy agents (such as Tysabri ® , Lemtrada ® , and Ocrevus ® ).Despite many recently successful drug launches in the RRMS space, these drugs still only slow the progression of disease and aid in the recovery from attacks, and there remains no treatment that confers functional restoration or effective cure for this RRMS.

(i) first-line injectables (such as beta-interferons and Copaxone ® ), (ii) newer oral agents (such as Tecfidera ® , Gilenya ® , Mayzent ® , and Zeposia ® ), and (iii) high-efficacy agents (such as Tysabri ® , Lemtrada ® , and Ocrevus ® ).

Despite many recently successful drug launches in the RRMS space, these drugs still only slow the progression of disease and aid in the recovery from attacks, and there remains no treatment that confers functional restoration or effective cure for RRMS.

There are currently no treatments that stop or reverse HD.

Treatment is limited to several medications that can help minimize symptoms, including the drug tetrabenazine, antipsychotic drugs, antidepressants, and tranquilizers.

Treatment is limited to several medications that can help minimize symptoms, including tetrabenazine, antipsychotic drugs, antidepressants, and tranquilizers.

Our GPC Program Approach

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We believe that these data, as depicted in the figures below, suggest the feasibility of iPSC-derived hGPC implantation in treating childhood disorders of myelin formation and maintenance.

hGPCs G reatly E xtend the S urvival of H ypomyelinated M ice

hGPCs Greatly Extend the Survival of Hypomyelinated Mice

A, Dot map indicating distribution of human iPSC-derived GPCs at 7 months of age, following neonatal engraftment in a shiverer mouse brain.

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C, D, Myelination in sagittal sections taken at different mediolateral levels from 2 additional 7-month-old mice, each engrafted with iPSC-derived hGPCs at birth.

E, Kaplan-Meier plot of survival of iPSC-OPC implanted (n=22) vs.

E, Kaplan-Meier plot of survival of iPSC-Oligodendrocyte progenitor cells implanted (n=22) vs.

saline-injected (n=19) control mice.

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Until recently, it was unclear whether GPCs can migrate extensively in adult brain tissue, as would be required for the repair of diffusely demyelinated adult brains.

To explore whether the introduction of stem-cell derived hGPCs delivered directly into the adult brain could remyelinate axons in the setting as might be encountered clinically in MS, our collaborators studied three different biologic models.

To explore whether the introduction of stem cell-derived hGPCs delivered directly into the adult brain could remyelinate axons in such a setting as might be encountered clinically in MS, our collaborators studied three different biologic models.

First, it was shown that stem cell-derived hGPCs can disperse within and myelinate the brains of adult shiverer mice (as depicted in the figure below).

Second, it was shown that neonatally-engrafted hGPCs can generate new oligodendrocytes and remyelinate demyelinated axons after chemically-induced demyelination.

This result demonstrated the ability of already-resident hGPCs to remyelinate previously myelinated axons after a new demyelinating insult as an adult, as well as the ability of transplanted hGPCs to reside as a functional reservoir of new myelinogenic cells in the host brains.

This result demonstrated the ability of already-resident hGPCs to remyelinate previously myelinated axons after a new demyelinating insult experienced as an adult, as well as the ability of transplanted hGPCs to reside as a functional reservoir of new myelinogenic cells in the host brains.

Third, it was shown that hGPCs transplanted into the adult brain after chemically induced demyelination can remyelinate denuded axons.

These data suggest that transplanted hGPCs can disperse broadly and differentiate as myelinogenic cells in the adult brain, and that they are able to remyelinate demyelinated axons and white matter lesions of the brain after an insult as an adult.

hGPCs Mediate Robust Myelination After Transplantation into the Adult Shiverer Brain

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It was confirmed in preclinical mouse studies that stem cell-derived hGPC transplant ameliorated both the neuronal and glial pathology of HD by restoring synaptic homeostasis and normal synaptic function to the most affected regions of the host brain.

The majority of the studies with human GPCs thus far have been xenogeneic grafts of human GPCs to neonatal or adult mice or rats (and in a small sample POC study limited to adult tissue-derived hGPCs, NHPs).

The majority of the studies with human GPCs thus far have been xenogeneic grafts of human GPCs to neonatal or adult mice or rats (and, in a small sample proof-of-concept study limited to adult tissue-derived hGPCs, NHPs).

Our collaborators have also performed studies with murine GPCs transplanted into both developing and adult mice, which have confirmed allogeneic GPC migration and integration.

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A GMP-compliant protocol has been established, which will be used to produce cells for our IND-enabling safety and toxicity studies.

We are transferring this protocol to a GMP facility to produce clinical-grade cells and plan to use these cells for initial clinical trial supply.

We have transferred this protocol to a GMP facility to produce clinical-grade cells and plan to use these cells for initial clinical trial supply.

Development Plan and Key Next Steps

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Since GPCs are not a terminally differentiated cell type and divide and differentiate in vivo post-transplantation, we plan to continue to assess potential safety risks, including the risk of tumorigenicity.

We expect to submit IND applications for SC379 for SPMS, PMD, and HD as early as 2024.

Our in vivo Cell Engineering Platform

In vivo cell engineering aims to treat human disease by delivering a therapeutic payload to cells inside a patient’s body to repair or control genes.

Historically there have been four key challenges to in vivo cell engineering:

Delivering any payload (such as DNA, RNA, proteins, organelles, integrating versus non-integrating, size),

to any cell (by increasing the volume of distribution),

in a specific (for instance just T cells), and

repeatable way (such as achieving limited immunogenicity to allow re-dosing).

Our in vivo cell engineering platform is focused on engineering fusogens that, when combined with delivery vehicles, can effectively deliver a payload to a desired cell or location in the appropriate quantities in vivo .

The combination of a fusogen with a delivery vehicle, is referred to as a fusosome.

We believe our platform provides us with the flexibility to deliver a wide range of payloads to make different modifications for different diseases, as well as delivery vehicle options to address volume of distribution and re-dosing, which could fundamentally expand the treatment potential for in vivo therapies.

Our Approach to Building our in vivo Cell Engineering Platform

We have approached the development of our in vivo cell engineering platform by investing in solutions to overcome the key challenges outlined above:

We believe the critical limitation for in vivo cell engineering is delivery, and therefore, we are investing significantly in delivery technologies, including our fusogen technology, which is designed to enable both cell-specific delivery and delivery of diverse payloads.

We were founded with core technology in this area, which was the product of a multi-year effort by a Flagship Labs innovation team at Flagship Pioneering.

Gene modification.

There has been substantial recent progress in gene modification and the field is now at the point at which virtually any desired modification can be performed in vitro .

However, no single technology or platform is optimal for all possible applications.

To this end, we are developing capabilities across multiple technologies and investing to develop our own novel technologies to be applied on a case-by-case basis.

We also have entered into, and intend in the future to enter into, agreements with other companies that have capabilities in this area.

Manufacturing.

We are investing proactively in process development, analytical development, chemistry, manufacturing, and controls (CMC) regulatory, supply chain, quality, and other manufacturing sciences in order to enable scalable manufacturing of our in vivo therapies and ensure broad access.

We have also built a pilot manufacturing plant in South San Francisco, California and entered into a long-term lease agreement for a facility in Bothell, Washington where we intend to build our own clinical trial and commercial GMP manufacturing capabilities.

As described above, we also entered into a lease agreement for access to University of Rochester Medical Center’s cell-based manufacturing facility to support manufacturing for early-stage clinical trials.

Our Approach to Building our in vivo Cell Engineering Portfolio

We have prioritized cell types for our programs when:

existing proof of concept in humans and animal models demonstrates that in vivo cell engineering should have a clinical benefit;

high unmet need can be addressed by modifying a particular cell type;

delivery is the most critical bottleneck, such that delivering payloads specifically to the target cell type could lead to highly differentiated and transformative therapeutics;

an opportunity to apply the technology more broadly exists, which creates the potential for more medicines if successful (for example, delivery to hematopoietic stem cells unlocks the potential to treat many diseases with different payloads).

Based on this prioritization, we are initially focused on two cell types:

T cells and hematopoietic stem cells.

History of in vivo Cell Engineering and Current Limitations

Starting several decades ago, the nascent field of gene therapy focused on experimenting with different means of transmitting genetic payloads via viral vectors.

Seminal work by Dr.

Richard Mulligan, our Vice-Chairman and Head of SanaX, and colleagues established the promise of gene therapy by delivering genes into host chromosomes, thereby correcting genetic deficits.

More recently, significant investments have resulted in improved safety and efficacy of viral vectors.

However, most approaches continue to concentrate on adapting the innate capabilities of various viruses to transmit these payloads.

Profound benefits have been realized in cases when there is direct correlation between the biological activity transmitted by the therapy and the genetic activity that is missing in the patient.

Adeno-associated virus (AAV) vectors are broadly used by gene therapy researchers due to their broad tissue tropism, lack of pathogenicity, and ability to target both dividing and non-dividing cells.

Although these therapies have had a categorical impact on their target patient populations, they have only scratched the surface of the potential of in vivo cell engineering, with success limited to a small number of patients.

Broad impact of gene therapies has been limited by challenges within three key areas:

Payload delivery is limited by :

Limited Cell Specificity .

Most commonly used AAV vectors have broad tissue specificities.

If a specific type of cell needs to be targeted within a tissue or organ to achieve the desired therapeutic effect, a lack of targeting specificity can result in a limited amount of payload reaching the desired cell.

Moreover, the transduction of non-target cells can necessitate the use of high doses of vector to achieve the maximal therapeutic effect in the desired target tissue, which in turn can lead to toxicities due to the transduction of non-target cells, as well as create challenges in manufacturing at adequate scale.

Lipid nanoparticles (LNPs) target any cell expressing the LDL receptor, making them both non-specific and mainly absorbed by hepatocytes in the liver when dosed systemically.

Limited Volume of Distribution .

Volume of distribution refers to the ability of a therapeutic to reach various tissues.

Although AAV vectors can be used to systemically deliver payloads to certain tissues, such as muscle, in the case of other therapeutically important targets, such as cells of the CNS, only a small proportion of cells can be transduced.

Immunogenicity .

Most viruses used as vectors elicit an immune response in the patient, causing the patient’s immune system to attack the vector.

Previous exposure to the virus used as a vector increases the immune response and may limit the benefit or create safety issues for the patient.

Many patients, for example, demonstrate pre-existing antibodies to specific AAV serotypes which can limit transduction efficiencies, and therefore clinical benefit.

Furthermore, once an AAV vector is administered to a patient, in most cases the infection leads to an immune response that precludes the ability to re-dose.

Genome modification is limited by:

Payload Size and Type Restrictions .

The natural genome size of a virus vector imposes a discrete limit on the amount of biological information that can be transmitted.

Currently, there exist a number of important disease targets that require the delivery of payloads too large for AAV, which has a maximum payload capacity between 4.5-5kb.

In addition to the need to deliver sequences encoding a desired protein that may not fit into an AAV vector, the increasing interest in the use of gene editing machinery to correct specific gene defect via homologous recombination or transposition will require delivery vehicles capable of a larger payload capacity than is currently available.

For most viruses currently used for in

vivo therapy, the payload type is generally limited to the specific genetic material of the virus (e.g., DNA or RNA).

In addition, n on-viral delivery with LNPs has largely been limited to RNA and proteins to date, with scant evidence for DNA deliver y .

The ability to deliver additional payloads, such as proteins, could unlock novel therapeutic opportunities.

Durability Limitations .

Obtaining the persistence of the desired level of expression over long periods of time can be problematic, due to both immune reactions and the silencing of vector expression.

In cases when the target cells are undergoing replication, for example, as in pediatric patients, durability of expression by non-integrating vectors or delivery of material that does not permanently change the cell’s DNA can also be limited by the gradual loss of vector sequences as infected cells replicate.

Execution in manufacturing is limited by:

Complex manufacturing .

Today, the adage of “the process is the product” applies with particular relevance to in vivo viral vector-based therapies.

These therapies are relatively more complex to characterize and control during manufacturing compared to other common biologically derived modalities such as recombinant proteins and antibodies.

Similarly, process and analytical sciences that can enable significant scale-up for in vivo therapies are still well behind that of proteins and antibodies.

Current vector manufacturing has limited scale and yield, which limits access for patients.

Our Solution – Fusogen Technology

To address some of the existing challenges of in vivo cell engineering, we are developing our fusogen technology by engineering proteins found in nature to enable the delivery of any payload to specific cells.

Background on Fusogens

Fusogens are a well-studied class of naturally occurring proteins that mediate the trillions of cell-to-cell and intracellular fusion events occurring in the human body every second.

In 2013, the Nobel Prize in Physiology or Medicine was awarded for the elucidation of the roles of fusogens in mediating intracellular trafficking in nature.

First, fusogens enable recognition of a specific target membrane.

Second, they promote membrane fusion by acting as thermodynamic engines for opposing membranes, pulling them together and thereby promoting fusion.

Our Fusogen Technology

Fusogens are widely used by enveloped viruses to confer target specificity and to drive the process of introducing material in target cells.

A well-known current example of a viral fusogen is found in the SARS-CoV-2 coronavirus that causes COVID-19.

This virus uses its spike glycoprotein to target cells expressing the ACE2 receptor and to fuse with the cell membrane of host cells and release the viral genome into the cell.

Many other biological processes using fusogens for the delivery of complex, diverse, and large payloads to specific cell types have also been found.

For example, the process of fertilization occurs as a result of a sperm fusing specifically with the egg and the transfer of the paternal genetic material to the oocyte.

Similarly, the fusion of myoblasts with other myoblasts is essential for the formation, growth, and regeneration of skeletal muscle.

The myoblast delivers an entire novel nucleus to the muscle cell, highlighting the utility of this system to deliver quite large and complex payloads.

These and a myriad of other processes rely on this vast class of protein machines.

Applying fusogens to in vivo cell engineering

Building on both our team’s deep understanding of fusogen biology and extensive research in protein engineering, we are developing a technology designed to allow us to engineer the biological properties of these naturally occurring proteins.

In doing so, we are developing a highly modular system that can specifically target numerous cell surface receptors and thereby deliver diverse therapeutic payloads to a variety of cell types.

Our current programs use fusogens derived from a virus from the paramyxoviridae family.

The fusogen protein complex is comprised of two proteins:

the receptor recognition G protein and membrane fusion F protein.

The combination of a fusogen with a delivery vehicle such as a gene therapy vector or lipid vesicle is referred to as a fusosome.

The diagram below depicts the mechanism of fusogen-mediated membrane fusion.

This protein complex is found on the outer membrane of the fusosome (1).

As the fusosome interacts with cells, only those with the target receptor will engage the G protein of the fusogen complex (2).

The binding of the G protein to the receptor stimulates the F protein to initiate its membrane fusion activity.

The F protein first partially unfolds to bind to the target membrane (3) and then refolds to bring the target and fusosome membranes in proximity (4), to ultimately promote membrane fusion (5), and subsequent payload delivery.

Mechanism of Fusogen-Mediated Membrane Fusion

The G protein can be engineered for a high degree of cell selectivity.

To accomplish this, we first engineer the G protein so that its natural binding domain is no longer functional.

We then add a targeting scaffold to the G protein that re-directs the fusogen to a cell-specific receptor.

The targeting scaffold can be any one of naturally occurring or synthetic single chain affinity binders, such as single chain variable fragment (scFvs), camelid single-domain antibodies (VHHs), or designed ankyrin repeat proteins (DARPins).

Finally, we iteratively rebuild our fusogen using insights from protein engineering to improve titers, or potency.

By serially swapping different targeting scaffolds, we believe we can target multiple different cell surface receptors, giving us the ability to target many different cell types.

Re-targeting the specificity of the G protein is a challenging protein engineering problem because altering the protein structure directly impacts all aspects of biological function.

However, once we have achieved the desired specificity and potency of the G protein for a certain cell type, we have the ability to deliver a variety of payloads to that cell.

This feature of the technology should allow us to create multiple therapies targeting a variety of diseases with each successful fusogen.

As a result, we believe success with any initial therapy targeting a given cell type could meaningfully advance lead candidate selection for other indications and increases our confidence that we will be successful with subsequent therapies targeting that same cell type.

Addressing key in vivo cell engineering challenges

We believe that our in vivo cell engineering platform enables us to address key challenges associated with successful in vivo cell engineering – payload delivery, genome modification, and execution in manufacturing:

Payload delivery

High cell specificity for diverse cell types .

We believe we can engineer fusogens with cell specificity to maximize on-target effects, while reducing or eliminating off-target risk.

In our research, we have used fusogens to successfully target numerous cell surface receptors and cell types.

As an example, in preclinical studies, we have demonstrated that our fusogens can specifically target CD8, CD4, or CD3 T cells (see the subsection titled “Our in vivo Cell Engineering Pipeline—T cell Fusosome Program”), potentially enabling delivery of a payload in vivo to transduce specific T cell populations and enabling targeted cell killing through the creation of CAR T cells.

Engineering Fusogens to Target a Variety of Cell Types

Figure A depicts the increased transduction efficiency (measured in titer) of a fusogen engineered for targeting CD20 on receptor enriched B cells as compared to B cells that were negative for the receptor.

Similar transduction efficiency was also observed in an engineered fusogen targeting a neuronal surface protein, GRIA4, as depicted in Figure B.

Neuronal-specific transduction of the Green Fluorescent Protein (GFP) payload in the murine hippocampal region was observed using a fusosome specific for GRIA4 when injected into the hippocampal space (as depicted by the green coloring in Figure D) compared to widespread transduction when using a VSV-G fusogen (Figure C).

Confirmation of neuron-specific targeting of the fusogen can be observed by the

colocalization of GFP positive cells (green, Figure E) with the presence of a neuron-specific protein (NeuN in red, Figure F) and considering the high degree of overlap (colocalization seen as yellow, Figure G).

Figures C-G from Anliker et al, Nature Methods, 2010.

Broad volume of distribution .

Our SanaX business unit is actively working on next generation approaches to broaden the volume of distribution, including exploring cells as fusosome delivery vehicles.

Immunogenicity .

We have initially focused our efforts on selecting fusogens for which the general population does not have pre-existing immunity.

We are also working with a number of fusogens that exist naturally in humans, as neither these native fusogens nor re-targeted versions are likely to induce an immune response, making re-dosing more readily attainable.

Genome modification

High degree of payload flexibility .

We have successfully delivered a variety of payloads, including DNA, RNA, and proteins, using viral delivery methods and have used cells engineered to express specific fusogens to deliver organelles to a broad range of target cells.

Using VLPs, we have shown that we can deliver a variety of genome modification tools specifically to a cell.

We believe this capability provides us the opportunity to potentially intervene in a wide range of human diseases.

Diverse Payload Delivery via Fusosomes

Cre protein loaded cell-based fusosomes delivered recombinase activity to cells that activated the expression of a red fluorescent protein in cells already expressing GFP, seen as orange cells (Figures A, B).

By contrast, fusosomes in which the fusogen is not included, but only contain Cre protein, showed no recombinase activity, or no orange cells (Figure C).

Fusosomes loaded with fluorescently -labeled RNA showed cellular localization and green fluorescence consistent with cytoplasmic delivery and translation of delivered RNA (Figures D-G).

Flow cytometric analysis showed cellular uptake of fluorescent RNA (Cy5, Y axis) and GFP expression from the RNA (GFP, X axis) (Figure H).

Importantly, the inclusion of a fusogen in the fusosome dramatically increased GFP expression due to the translation of the RNA.

Cell-based fusosomes delivered red fluorescent mitochondria with respiration activity to cells with respiration-negative green mitochondria, (Rho0 cells) shown in Figure I.

An increased oxygen consumption rate (OCR), due to respiration, was seen in Rho0 cells after fusosome-mediated delivery of active mitochondria using two distinct fusogens (Figure J).

Expanded payload capacity .

Our current fusosome has approximately twice the genetic capacity of the commonly used AAV vectors.

This greater payload size increases the potential for our fusosomes to address defects in larger genes or conditions when delivery of multiple genes may be required.

Our research efforts include other fusosomes with even larger payload capacities.

For example, we are exploring using a cell as the delivery vehicle, which can confer an almost limitless capacity.

Durability limitations .

We can engineer our fusosomes to deliver payloads that integrate into the target cell genome or that are non-integrating.

Integrated payloads allow the genetic information transmitted by the vector to be propagated durably with the genetic material of the target cell when it undergoes cell division.

Thus, conditions that require this type of genetic propagation, such as diseases arising from issues in essential genes that are functioning in growing tissues, or in T cell expansion occurring following target antigen recognition, can be better addressed through use of integrating payloads.

Our preclinical studies have also demonstrated the ability of our fusosome system to deliver non integrating gene-editing machinery, such as CRISPR, with this system.

In this case, the entire payload does not integrate, but instead, this payload transiently delivers the machinery to permanently modify the DNA in the target cell, enabling us to make targeted, specific, and durable repairs to the genome of the target cell.

Execution in Manufacturing

Manufacturing of cell and gene therapies remains complex due to incumbent challenges in areas such as product consistency, process robustness, and scalability.

Our fusosome approach has significant advantages over current solutions.

Targeted delivery of complex payloads in vivo has the potential to create autologous, gene-modified cells without the complexities of ex vivo manufacturing.

We believe that these therapies have the potential to have greater product consistency, improved scale, and lower costs than current autologous solutions.

Currently, there are a number of therapies either approved or in development for ex vivo modification of autologous and allogeneic T cells and autologous hematopoietic stem cells (HSCs).

Additionally, vectors that deliver payloads to random or off-target cells not only create the risk for toxicities, but they necessitate meaningfully larger doses in order to ensure adequate delivery to the targeted cells.

Our targeted delivery offers the potential for meaningfully lower doses, which could decrease scale needs in manufacturing.

Further, we are investing across a number of areas to improve manufacturing scale, costs, consistency, and product quality in the near- and long-term, including by establishing and maintaining our relationships with our contract development manufacturing organizations (CDMO) partners and investing in establishing and operating our own GMP manufacturing facility.

Manufacturing novel fusosome compositions is complex.

Since our inception, we have invested in improving the manufacturing of our therapies, including by investing in in scientific and process engineering aspects thereof.

Our investments include use of novel producer cell lines, novel processes, and analytical technology, as well as incorporating suspension bioreactors into our manufacturing processes early in the research phase.

By building out these capabilities early, we hope to improve the probability of technical success for our programs, which will enable us to deliver consistent supply while managing cost of goods and improve patient access.

Our in vivo Cell Engineering Pipeline

T Cell Fusosome Programs (SG299, SG242, SG233, SG221, SG239)

Our most advanced CAR T cell fusosome product candidate is SG299, a CD8-targeted fusosome that delivers a CD19 CAR to target CD19+ cancer cells that we are developing to treat patients with hematologic malignancies.

SG299 was previously referred to as SG295, and was renamed in connection with our transition to a new manufacturing process for this product candidate.

SG299 has at least a 50X improvement in potency over SG295, which may translate into better efficacy, safety, and long-term manufacturability.

As such, we plan to use this second-generation manufacturing process to manufacture SC299 for use in our preclinical studies and future clinical trials.

We intend to submit an IND for SG299 as early as 2023.

We are also developing SG242, a CD4-targeted fusosome that delivers a CD19 CAR, for patients with NHL, CLL, and ALL, and multiple other candidates, including fusosomes that target T cells and deliver a BCMA CAR for the treatment of MM (SG221 and SG239) and a CD22 CAR for the treatment of NHL, CLL, and ALL (SG233).

T Cell Fusosome Approach

Our T cell fusosome approach provides us with an opportunity to develop CAR T cell therapies that can be more broadly accessible to patients than treatments that are currently available.

We also believe that the ability to deliver a payload encoding a CAR to a T cell inside the body has the potential for improved effectiveness over ex vivo manufactured CAR T cell products.

Experience thus far has demonstrated that both CD8+ and CD4+ T cells contribute to the CAR T cell response in patients that receive autologous CAR T cell therapies with conditioning lymphodepletion.

Thus, our fusosome programs will deliver the CAR gene using fusogens that directly and specifically target the CD8 co-receptor or the CD4 co-receptor on T cells following a single intravenous injection.

We believe that these approaches could result in the generation of therapeutically active CAR T cells without the complexities and delays associated with the process of T cell collection and ex vivo manufacturing.

Furthermore, ex vivo expansion in the presence of high cytokine concentrations, although necessary for the manufacture of approved CAR T cell products, also contributes to marked changes in T cell quality that may not be therapeutically beneficial.

We believe the generation of an in vivo CAR T cell, within the natural

physiological environment, has the potential to improve the quality of the CAR T cell generated, which may ultimately improve both efficacy and the side effect profile.

Finally, the effectiveness of ex vivo manufactured CAR T cells is dependent on the administration of a lymphodepleting preparative regimen prior to infusion to facilitate expansion of the CAR T cell product, which can have meaningful adverse safety implications.

We do not expect to use a lymphodepleting regimen prior to in vivo delivery of the CAR gene, as our goal is to expose our fusosomes to as many T cells in the body as possible.

Preclinical Data

Our preclinical data have demonstrated that fusosomes can deliver a genetic payload specifically and efficiently to human T cells in culture, as well as in immunodeficient mice with intraperitoneally-injected human peripheral blood mononuclear cells (PBMCs) that have been infused with a single dose of a fusosome.

The T cells can be categorized into functional subsets based on the expression pattern of cell surface molecules.

CD3 is a protein expressed on all T cells, CD4 is expressed on helper T cells that primarily activate T and B cells to carry out their function, and CD8 is found on cytotoxic T cells that primarily kill cancerous or virally infected cells.

We generated fusogens against these three cell-surface molecules and have demonstrated that we can deliver a marker gene to cells bearing these cell surface proteins in vitro .

Fusogens Demonstrate the Ability to Target Multiple T Cell Subtypes

Fusosomes can efficiently and specifically deliver GFP, which is used to identify cells that have been genetically modified by the fusogen, to three different types of T cells in culture (CD8, CD4, and CD3).

Expression of GFP is restricted to the population of T cells that express the specific T cell receptor targeted by the fusogen (CD8, CD4, or CD3).

We have further established that fusosome delivery of a CD19 CAR gene to CD4+ or CD8+ T cells results in killing of human B cells and CD19+ leukemia cells in culture:

Delivery of CD19 CAR to CD4 T Cells Leads to in vitro Killing of B Cells and CD19+ Leukemia Cells

The fusosome-generated CD4 CAR is functional and eradicates both nonmalignant B cells (CD19+/RFP-) as well as CD19+ leukemia cells expressing NALM6-RFP.

We have also validated, in vivo , the tumor-killing activity of CD8+ T cells to which a CD19 CAR has been delivered via a fusosome:

Delivery of CD19 CAR to CD8 Cells Leads to in vivo Killing of Leukemia Cells in a Human Xenograft Mouse Model

Demonstrates activity of CD8-targeted fusosome delivering CD19 CAR to human T cells in a murine leukemia xenograft model (Nalm-6).

Note that when compared to untreated controls, fusosome delivery results in eradication of leukemia cells.

Activated T cells were cultured with CD3/CD28 beads for three days prior to injection.

CD8-targeted fusosome delivering the CD19 CAR is effective regardless of activation status of T cells at time of injection.

Represents quantification of luminescence (representing leukemic burden) from mice shown in left panel.

Both cohorts of fusosome -treated mice had significantly reduced tumor burden when compared to control as early as D10 (p ≤ .0001;

One-way ANOVA Bonnferroni).

Experimental note:

Tumors injected on day zero, donor T cells injected on day three, and fusosome injected on Day Four.

Using a human xenograft mouse model for leukemia (Nalm-6), we observed both prolonged survival and clearance of the leukemic cells.

During the manufacture of autologous CAR Ts, cytokine signaling must be activated in order to successfully produce functional CAR T cells.

In our mouse experiments the CD8-targeted fusosome was able to generate CD19 CAR cells just as effectively with activated as non-activated donor T cells.

We have also begun to develop new fusosome compositions that target new T cell types and deliver CARs that target other therapeutic antigen targets for hematologic malignancies.

In one set of experiments, we successfully achieved dose-dependent tumor control in the Nalm-6 mouse xenograft model following intravenous infusion of a CD4 T cell-targeted fusosome that delivers a CD19 CAR.

In a separate set of experiments, we successfully achieved dose dependent tumor control in the same tumor model following intravenous infusion of a CD8 T cell-targeted fusosome that delivers a CD22 CAR.

Several of our human T cell fusogens, including our lead candidate CD8 fusogen, cross-react on NHP T cells.

In one experiment, we used this CD8 fusogen to deliver a CD20 CAR into six NHPs.

We selected the CD20 CAR for this experiment as a surrogate target because the CD19 CAR that we use for our SG299 program does not cross-react with NHP B cells.

As shown below, a single intravenous administration of our CD8-targeted fusosome containing a CD20 CAR was associated with B cell depletion, including in the blood and in lymph nodes, in four out of six NHPs, occurring between days seven and 14.

This result is consistent with reported observations that peak expansion of ex vivo manufactured CAR T cells typically occurs during the second week.

Serum cytokines were transiently elevated at day seven in all fusosome-treated NHPs.

CD20 CAR transgene (by vector copy number) and CD20 CAR mRNA could be detected in peripheral blood between days three and 10, and in the spleen at study termination.

Importantly, there was no infusion-related toxicity or evidence of CAR-associated toxicity (i.e., cytokine release syndrome or neurotoxicity), other than the intended B cell depletion.

In addition, the NHPs received no T cell activating agent or lymphodepletion, which could support a path for the fusogen platform to enable delivery of CAR therapy without the lymphodepletion regimens required by existing ex vivo approaches and their associated toxic side effects.

The delivery of fusosomes without toxicity and with evidence of activity in NHPs are critical milestones for our fusosome programs.

This and future animal experiments will also provide important information on dosing parameters, durability of the effect, and provide pharmacokinetic, pharmacodynamic, and toxicology data.

Delivery of CD20 CAR to CD8 Cells Causes B Cell Depletion in NHPs

Graph demonstrates activity of CD8-targeted fusosome delivering CD20 CAR in NHPs.

CD8-targeted fusosome was delivered as a single intravenous infusion.

B cell counts were quantified in peripheral blood using flow cytometry for CD20+ cells.

Given expected NHP-to-NHP variability in baseline counts, data is represented as a single line per NHP and is shown as deviation from baseline level for each NHP at day 14, when maximal expansion of CAR T cells are expected.

Significant B cell depletion is observed in four out of six NHPs.

Note that no T cell activation was provided prior to fusosome delivery.

Development Plan and Key Next Steps

We intend to complete GLP toxicology studies and GMP manufacturing for SG299 in 2023.

We intend to submit an IND for SG299 for the treatment of patients with B cell malignancies later in 2023.

HSC Fusosome Program

We are developing our SG418 product candidate, which is an HSC-targeted fusosome that is designed to target and repair genetic abnormalities underlying diseases such as sickle cell disease (SCD) and beta-thalassemia, with the goal of achieving preclinical proof of concept as early as 2023.

Background on hemoglobinopathies

Devastating inherited hematologic disorders, including sickle cell disease, beta-thalassemia, and other hemoglobinopathies, are caused by a monogenic variant, and patients suffering from these diseases are candidates for in vivo cell engineering.

SCD is caused by a single point mutation in the beta globin gene (HbB).

The resulting mutant form of the protein, referred to as HbS, is prone to aggregate into long, rigid molecules that deform red blood cells (RBCs) into a sickle shape, obstructing blood vessels and undergoing premature lysis.

The consequences are severe pain, referred to as sickle cell crisis, tissue infarction, infection, anemia, stroke, and early death.

SCD is the most common inherited blood disorder in the United States, affecting an estimated 100,000 individuals, and 134,000 individuals in Europe.

The global prevalence of SCD is estimated to be approximately 4.4 million individuals and is most common among people of African, Middle Eastern, and South Asian descent.

Beta-thalassemia is an inherited blood disorder caused by any one of over 200 mutations in HbB which results in reduced production of functional hemoglobin.

Transfusion-dependent beta-thalassemia (TDBT) is the most severe form of this disease, often requiring multiple transfusions per year.

Patients with TDBT suffer from failure to thrive, persistent infections, and life-threatening anemia.

Frequent blood transfusions can lead to iron overload that then requires iron chelation therapy, which itself is associated with significant toxicities, resulting in low levels of adherence.

Even with frequent transfusions, patients with TDBT continue to suffer from failure to thrive, persistent infections, and life-threatening anemia.

The prevalence of beta-thalassemia globally is estimated to be 288,000.

The total combined prevalence of beta-thalassemia in the United States and Europe is estimated to be approximately 19,000 patients, mostly in Europe.

Of the patients currently treated in the United States and Europe, we believe approximately 50% and 10%, respectively, are transfusion dependent.

Beta-thalassemia is especially prevalent in developing countries of Africa, South Asia, Southeast Asia, the Mediterranean region, and the Middle East.

Although historically prevalent in Mediterranean North Africa and South Asia, thalassemias are now encountered in other regions as a result of changing migration patterns.

As such, there is a growing focus on developing new therapeutics aimed at improving quality of life for this significant unmet medical need.

Correction of the causal monogenic defects could potentially provide a one-time, curative treatment approach, rather than the current lifelong, multidisciplinary standard of care treatment.

Current Treatment Landscape and Unmet Need

Despite its clear and well-known genetic nature, SCD remains underserved, with existing treatment strategies mostly supportive in nature.

Allogeneic HSC transplantation (HSCT) is currently the only potentially curative therapy available.

However, HSCT is limited by donor availability, with only approximately 15-30% of patients worldwide finding matched donors.

Furthermore, chronic GvHD is a major risk that contributes to the long-term morbidities associated with allogeneic HSCT.

Otherwise, treatment options largely manage disease symptoms, including analgesia during crises, hydroxyurea, L-glutamine, and anti-infectives.

Recently, two disease-modifying treatments, crizanlizumab and voxelotor, were approved by the FDA.

Crizanlizumab was approved for treating crises in SCD patients who are unresponsive to either hydroxyurea or L-glutamine.

Voxelotor is an oral small molecule inhibitor of HbS polymerization, which compared to placebo, was associated with a reduction in acute crises.

Although these agents represent a meaningful advance in the treatment of SCD, they focus on supportive care and do not address the mutation in the gene that is the root cause of the disease.

As in SCD, there are limited treatment options available for TDBT, and those that exist are supportive in nature.

Allogeneic HSCT is similarly potentially curative, but is also limited by donor availability, the risk of GvHD, and other comorbidities that result from the procedure.

Because of the need for recurring blood transfusions, patients require ongoing chelation therapy to avoid iron load from the transfusions and its associated organ damage.

However, this treatment is burdensome and associated with significant toxicities, and consequently, has low adherence.

Currently, luspatercept, which significantly reduces the frequency of blood transfusions needed, is only FDA-approved therapy for beta-thalassemia.

However, even with this therapy, safety concerns remain and include a possible increased risk for hypertension and thromboembolic events.

There are several therapies in development to treat diseases of the hematopoietic system that have demonstrated clinical proof of concept through ex vivo gene modification.

These approaches directly address the genetic activity missing in SCD and TDBT by supplying a novel gene to the patient’s cell or by editing the genome to enhance hemoglobin expression.

The ex vivo process begins with the mobilization and removal of cells from the blood, a process known as leukapheresis.

Next, these cells undergo a process to enrich for cells expressing an HSC marker, CD34.

The enrichment of CD34+ cells increases the percentage of long-lived HSCs, the key stem cell that is both persistent and can differentiate into all the cells of the blood.

However, even under enrichment, long-lived HSCs make up less than 1% of all the CD34+ cells.

CD34+ cells are transduced with either a novel gene or genome editing complexes, each of which has a distinct therapeutic action.

The cells are then cryopreserved and sent back to the patient.

Before transplantation, the patients receive conditioning chemotherapy to prepare the body so that the gene-modified cells engraft after re-infusion.

The current conditioning regimens are toxic, with significant risks and side effects, although less toxic regimens are in development.

Key questions remain regarding durability and safety, particularly over time, of these transplanted ex vivo modified HSCs.

Furthermore, manufacturing complexities, cost, and the complications from the myeloablative conditioning chemotherapy regimens remain significant obstacles to widespread adoption.

There are multiple ongoing efforts to improve this approach by focusing on HSC procurement, transduction, gene editing, milder conditioning regimens, and transplantation efficiency.

We believe that the most meaningful opportunity to improve outcomes is to eliminate the complex ex vivo modification and transplantation steps by using our fusogen technology to develop fusosomes that specifically target HSC and other key hematopoietic cells via in vivo delivery.

Our HSC Fusosome Approach

The use of an in vivo fusosome-based delivery system bypasses the requirement for ex vivo manufacturing and would require no conditioning chemotherapy.

Without the manufacturing complexity and the requisite hospital stay for a patient who has undergone conditioning, as well as the concomitant costs and risks of each, in vivo therapies have the potential to meaningfully increase the number of patients that receive these therapies.

Targeting HSCs in vivo using fusogens requires identifying the appropriate cells and their corresponding cell surface receptors.

HSCs have no single specific marker, but there are a number of cell surface proteins that are highly enriched on HSCs.

Some of these

markers also appear on erythrocytic, or red blood cell, progenitors, which may help establish both short-term and long-term efficacy.

We have an ongoing program to discover fusogens with appropriate target specificity.

In parallel, we are establishing our capability to deliver different payloads using the fusosome system.

Our goal is to establish the appropriate cell specificity with the ability to use the appropriate gene modification system to achieve the right outcome for patients.

Development Plan and Key Next Steps

The next major milestones are to identify candidate fusogens for HSC targeting and fusosome compositions with relevant genome modification payloads.

Our goal is to achieve preclinical proof of concept for SG418 as early as 2023 and submit an IND in the next several years.

Despite the significant advances in the development of successful cell and gene therapies that have been made to date, there remain a number of fundamental limitations of existing technologies that prevent achieving the maximal breadth of application of these new therapeutic approaches.

We wish to lead both the present and future of cell and gene therapy, and we are therefore committed to investing in research and other activities that will ensure a leadership position for the long-term.

To this end, we have established SanaX as a distinct research arm of our organization.

In contrast to the industry’s traditional research activities that are focused primarily on near-term product development using existing technologies, SanaX is devoted to finding solutions to the limitations of today’s technology in order to expand the breadth of therapeutic opportunities.

SanaX research efforts are aimed at making fundamental improvements to existing technologies and establishing new paradigms for gene and cell delivery that will ultimately lead to the development of completely new therapeutic modalities.

Truly novel technology development requires the unique ability to thoughtfully marry rigorous experimental science with specific technical goals.

Often, fundamental biological problems must be understood in depth in order to define the pathway to a new technological and therapeutic capability.

SanaX has established a unique physical and cultural environment with individuals that possess the requisite intellectual and technical capabilities essential for success.

One characteristic of the SanaX research environment that we believe will be extremely valuable is a “nimbleness” that enables the team to immediately embrace new technical or scientific information and/or meet specific unanticipated therapeutic needs.

In addition, several collaborative efforts with outside investigators possessing specific biological sector expertise have been established to enhance our internal efforts.

Current SanaX research activities are focused in several areas for which we believe advances in technology are most critical.

Some of these efforts include:

evaluating the use of cells, rather than viruses, as delivery vehicles;

re-purposing several different virus vector systems and VLPs to expand the therapeutic payloads that may be delivered by the different viruses and VLPs;

developing novel approaches to the production of different viral vectors;

developing novel methods for enabling the exogenous control of transgene expression via small molecule drugs;

COVID-19 related research focused on the delivery of specific anti-SARS-Cov-2 antibodies and the evaluation of novel direct anti-viral strategies.

Mulligan, our Vice-Chairman and Head of SanaX, directly oversees the SanaX research effort.

SanaX maintains an independent research budget in order to ensure that these longer-term, disruptive priorities are not sacrificed for near-term needs.

Once SanaX develops an understanding of how a technology can translate into the clinic, a program will move from SanaX into our internal research and development and manufacturing organization or partnered externally.

We anticipate beginning human testing for SC379 in at least one indication as early as 2025.

Manufacturing Strategy and Approach.

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As was the case during the initial development of recombinant biologics, an improvement to our ability to characterize these products will be essential to increasing patient access.

especially critical to have an in-depth understanding of the impact of manufacturing processes on the product quality attributes and resulting clinical performance of the product.

It is especially critical to have an in-depth understanding of the impact of manufacturing processes on the product quality attributes and resulting clinical performance of the product.

From inception, we have recognized the key role manufacturing plays in enabling the access of these innovative engineered cells as medicines.

Two areas of particular focus are product analytical and biological characterization, leading to a better definition of critical product attributes, as well as process understanding, leading to better control the impact of process parameters on these critical product attributes.

We have developed a manufacturing strategy that supports our vision of democratizing access with early investments in people, technology, and infrastructure:

We have developed a manufacturing strategy with early investments in people, technology, and infrastructure, which requires:

• establishing a team with diverse, experienced talents with extensive knowledge of both the process and analytical sciences in the field of cell and gene therapy, as well as CMC product development expertise from preclinical to global commercialization;

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• establishing infrastructure from lab bench to a GMP manufacturing and supply chain network.

To support our ex vivo and in vivo development pipeline, we are initially establishing three manufacturing platforms:

viral vector, allogeneic T cells, and PSC-derived.

Although the three manufacturing platforms are very different in terms of the manufacturing process and supply chain, they also share some common challenges and opportunities.

To support our development pipeline, we are initially establishing manufacturing platforms in allogeneic T cells and PSC-derived therapies.

Although our manufacturing platforms are very different in terms of the manufacturing process and supply chain, they also share some common challenges and opportunities.

For example, product characterization and analytical development are critical, and these capabilities are fungible across platforms.

In addition, we are focusing on some of the key areas in each of the platforms to enable scaled manufacturing.

For the viral vector platform, we are starting early in the research phase with suspension culture process in bioreactors, similar to protein biologics, to maximize process yield and batch-to-batch process robustness at scale.

Transfer to these bioreactors later in development can complicate product comparability assessments.

In addition, we are focusing on some of the key areas in each of our platforms to enable scaled manufacturing.

For the allogeneic T cell platform, we are focusing on scaling the multiplex gene editing process and understanding of the impact of the variability of the starting material from healthy donors to on product quality.

For stem-cell derived therapies, such as islet cells and GPCs, we are focusing on developing a scalable process and analytical technologies to characterize stability of the starting cells, end cell products, and critical product quality attributes.

To establish our manufacturing capability, we started with a non-GMP pilot plant for ex vivo and in vivo engineered cell platform processes with up to 200L bioreactor scale.

To establish our manufacturing capability, we started with a non-GMP pilot plant for engineered cell platform processes with up to 200L bioreactor scale.

This provides the infrastructure for process and technology development, technology transfer support, and production for non-GMP material such for GLP toxicology studies.

In addition, we are taking a hybrid approach to establish our end-to-end supply chains for the three manufacturing platforms, leveraging a combination of internal manufacturing capability and external CDMOs for clinical supplies, in a staged manner:

In addition, we are taking a hybrid approach to establish our end-to-end supply chains for our manufacturing platforms, leveraging a combination of internal manufacturing capability and external CDMOs for clinical supplies, in a staged manner:

• we will use CDMOs for initial GMP supply to support our upcoming INDs and early-stage clinical trials;

we intend to build the internal manufacturing facilities needed to support late-stage clinical trials and commercialization of our therapies.

• we intend to build the internal manufacturing facilities needed to support clinical trials and commercialization of our therapies.

In addition, we anticipate we will use CDMOs for at least some portions of our supply chain for the foreseeable future.

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

For example, we are aware that some of our competitors, including Novartis AG, Gilead Sciences, Inc., Bristol-Myers Squibb Company, Novo Nordisk A/S, Johnson & Johnson, Allogene Therapeutics, Inc., CRISPR

Therapeutics AG, Precision BioSciences, Inc., Caribou Biosciences, Inc., Fate Therapeutics, Inc., Century Therapeutics, Inc., bluebird bio, Inc., 2seventy bio, Inc., Orchard Therapeutics plc , Aruvant Sciences, Inc., Sanofi S.A., Editas Medicine, Inc., Beam Therapeutics Inc.

(Beam), Vertex Pharmaceuticals Incorporated, Eli Lilly and Company, Astellas Pharma Inc., and Bayer AG might be conducting large-scale clinical trials for therapies that could be competitive with our ex vivo and in vivo programs.

For example, we are aware that some of our competitors, including Novartis AG, Gilead Sciences, Inc., Bristol-Myers Squibb Company, Novo Nordisk A/S, Johnson & Johnson, Legend Biotech Corporation, Allogene Therapeutics, Inc., Cargo Therapeutics, Inc., CRISPR Therapeutics AG, Caribou Biosciences, Inc., Cabaletta Bio, Inc., Kyverna Therapeutics, Inc., Fate Therapeutics, Inc., Century Therapeutics, Inc., 2seventy bio, Inc., Vertex Pharmaceuticals Incorporated, and Eli Lilly and Company might be conducting large-scale clinical trials for therapies that could be competitive with our ex vivo and in vivo programs.

Among companies pursuing ex vivo and in vivo cell engineering, we believe we are substantially differentiated by our robust intellectual property portfolio, extensive research, rigorous and objective approach, and multidisciplinary capabilities.

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We have in-licensed and developed numerous patents and patent applications, which include claims directed to compositions, methods of use, processes, dosing, and formulations, and possess substantial know-how and trade secrets relating to the development and commercialization of our ex vivo and in vivo cell engineering platforms and related product candidates, including related manufacturing processes.

As of February 2023, our in-licensed and owned patent portfolio consisted of approximately 39 licensed or owned U.S.

As of January 2024, our in-licensed and owned patent portfolio consisted of approximately 36 licensed or owned U.S.

issued patents, approximately 76 licensed United States pending patent applications, and approximately 55 owned U.S.

pending patent applications, as well as approximately 69 licensed patents issued in jurisdictions outside of the United States, approximately 336 licensed patent applications pending in jurisdictions outside of the United States (including approximately five licensed pending Patent Cooperation Treaty (PCT) applications), and approximately 110 owned patent applications pending in jurisdictions outside of the United States (including approximately 32 owned pending PCT applications) that, in many cases, are counterparts to the foregoing United States patents and patent applications.

pending patent applications, as well as approximately 58 licensed patents issued in jurisdictions outside of the United States, approximately 281 licensed patent applications pending in jurisdictions outside of the United States, and approximately 259 owned patent applications pending in jurisdictions outside of the United States (including approximately 38 owned pending Patent Cooperation Treaty (PCT) applications) that, in many cases, are counterparts to the foregoing United States patents and patent applications.

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

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Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

Our patents issued as of February 2023 have terms expected to expire on dates ranging from 2023 to 2042.

If patents are issued on our patent applications pending as of February 2023, the resulting patents are projected to expire on dates ranging from 2023 to 2044.

Our patents issued as of January 2024 have terms expected to expire on dates ranging from 2028 to 2042.

If patents are issued on our patent applications pending as of January 2024, the resulting patents are projected to expire on dates ranging from 2028 to 2044.

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

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Corresponding non-provisional patent applications must be filed not later than 12 months after the provisional application filing date.

The corresponding non-provisional application benefits in that the priority date(s) of th is patent application is/are the earlier provisional application filing date(s), and the patent term of the finally issued patent is calculated from the later non-provisional application filing date.

The corresponding non-provisional application benefits in that the priority date(s) of this patent application is/are the earlier provisional application filing date(s), and the patent term of the finally issued patent is calculated from the later non-provisional application filing date.

This system allows us to obtain an early priority date, add material to the patent application(s) during the priority year, obtain a later start to the patent term, and to delay prosecution costs, which may be useful in the event that we decide not to pursue examination in an application.

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Our issued patents and those that may issue in the future may be challenged, invalidated, or circumvented, which could limit our ability to stop competitors from marketing related products or limit the length of the term of patent protection that we may have for our product candidates.

In addition, the rights granted under any issued patents may

not provide us with protection or competitive advantages against competitors with similar technology.

In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology.

Furthermore, our competitors may independently develop similar technologies.

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Patent disputes are sometimes interwoven into other business disputes.

As of February 2023, our registered trademark portfolio contained approximately 26 registered trademarks and pending trademark applications, consisting of approximately one pending trademark application and one registered trademark in the United States, and approximately 20 registered trademarks and approximately four pending trademark applications in the following countries through both national filings and under the Madrid Protocol:

As of January 2024, our registered trademark portfolio contained approximately 24 registered trademarks and pending trademark applications, consisting of approximately two pending trademark applications and two registered trademarks in the United States, and approximately 16 registered trademarks and approximately four pending trademark applications in the following countries through both national filings and under the Madrid Protocol:

Australia, Canada, China, European Union, India, Japan, Republic of Korea, the United Kingdom, Singapore, and Switzerland.

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We agreed that we will not use any of the licensed patent rights for human germline modification, including intentionally modifying the DNA of human embryos or human reproductive cells.

Pursuant to the Harvard Agreement, we paid Harvard an upfront fee of $3.0 million, and we issued 2.2 million shares of our Series A-2 convertible preferred stock to Harvard as partial consideration for the licenses granted under the Harvard Agreement.

Pursuant to the Harvard Agreement, we paid Harvard an upfront fee of $3.0 million, and we issued 2.2 million shares of our Series A-2 convertible preferred stock (which converted to shares of our common stock in connection with our initial public offering) to Harvard as partial consideration for the licenses granted under the Harvard Agreement.

Additionally, we paid $6.0 million to Harvard in connection with the issuance of shares of our Series B convertible preferred stock.

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Pursuant to the terms of the Harvard agreement, we may be required to make up to an aggregate of $175.0 million in success payments to Harvard (Harvard Success Payments), payable in cash, based on increases in the per share fair market value of our common stock.

The potential Harvard Success Payments are based on multiples of increas ing value ranging from 5x to 40x based on a comparison of the per share fair market value of our common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates.

The potential Harvard Success Payments are based on multiples of increasing value ranging from 5x to 40x based on a comparison of the per share fair market value of our common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates.

The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement.

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If we are unable to complete any of the specified milestones by the completion date, or extended completion date, for such milestone, then The Regents has the right and option to either terminate the Agreement, subject to our ability to cure the applicable breach, or convert our exclusive license to a non-exclusive license.

The Regents reserves and retains the right to make, use and practice the invention s , and any related technology, and to make and use any products and to practice any process that is the subject of the UCSF Patent Rights (and to grant any of the foregoing rights to other educational and non-profit institutions) for educational and non-commercial research purposes, including publications and other communication of research results.

The Regents reserves and retains the right to make, use and practice the inventions, and any related technology, and to make and use any products and to practice any process that is the subject of the UCSF Patent Rights (and to grant any of the foregoing rights to other educational and non-profit institutions) for educational and non-commercial research purposes, including publications and other communication of research results.

This reservation of rights does not limit our ability to pursue our programs and product candidates.

Pursuant to the UCSF Agreement, we paid an upfront license fee of $100,000 to The Regents, and we issued The Regents 0.7 million shares of our Series A-2 convertible preferred stock.

Pursuant to the UCSF Agreement, we paid an upfront license fee of $100,000 to The Regents, and we issued The Regents 0.7 million shares of our Series A-2 convertible preferred stock (which converted to shares of our common stock in connection with our initial public offering).

In addition, we entered into an amendment to the UCSF Agreement in December 2020, pursuant to which we issued 37,500 shares of our common stock to The Regents.

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Additionally, upon the achievement of certain commercial milestones, we are required to pay Washington University up to an aggregate of $2.5 million in milestone payments per WU Hypoimmune Product for the first three WU Hypoimmune Products, for an aggregate of $7.5 million in commercial milestones.

We are also obligated to pay royalties as a percentage o f annual net sales of WU Hypoimmune Products in the low single-digits, subject to a minimum amount of royalties payable in advance.

We are also obligated to pay royalties as a percentage of annual net sales of WU Hypoimmune Products in the low single-digits, subject to a minimum amount of royalties payable in advance.

The minimum annual royalty for the first anniversary of the effective date following the first commercial sale will be $100,000 and subsequently will increase up to a maximum minimum annual royalty of $750,000 on the fourth anniversary of the effective date following the first commercial sale.

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Additionally, of certain commercial milestones, we are required to pay Washington University up to an aggregate of $4.5 million per licensed product for the first three licensed products under the 2020 WU Agreement, for an aggregate of $13.5 million in commercial milestones.

We are also obligated to pay royalties as a percentage of annual net sales of licensed products in the low single-digits,

subject to a minimum amount of royalties payable in advance.

We are also obligated to pay royalties as a percentage of annual net sales of licensed products in the low single-digits, subject to a minimum amount of royalties payable in advance.

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(Oscine), a privately-held early-stage biotechnology company pursing a glial progenitor ex vivo cell engineering program, in exchange for $8.5 million in cash, net of certain expenses.

Of the total purchase price, $7.6 million was an upfront cash payment and $0.9 million was set aside (the Oscine Holdback Amount) to satisfy certain general representations and warranties as set forth in the stock purchase agreement.

We had originally entered into a collaboration, license, and option to purchase agreement with Oscine in November 2018.

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The licenses granted pursuant to the Rochester Agreement are subject to certain rights retained by the University of Rochester and the rights of the United States government.

publications related to its scientific research and findings, and for any other non-clinical and non-commercial purpose that is not inconsistent with the rights granted to us under the Rochester Agreement.

The retained rights of the University of Rochester pertain only to its ability to conduct internal academic research other than clinical research and for teaching, education, and other non-commercial research activities, in publications related to its scientific research and findings, and for any other non-clinical and non-commercial purpose that is not inconsistent with the rights granted to us under the Rochester Agreement.

These retained rights do not limit our ability to pursue our programs and product candidates.

Pursuant to the Rochester Agreement, we are obligated to pay to University of Rochester minimum annual royalties beginning in January 2023, the amount of which payments will be $20,000 in 2023, $50,000 in 2025, and $70,000 in 2028 and beyond.

Pursuant to the Rochester Agreement, we paid to University of Rochester a minimum annual royalty of $20,000 in January 2024, and are obligated to pay future minimum annual royalties of $20,000 in 2025, $50,000 in each of 2026, 2027, and 2028, and $70,000 in 2029 and each year thereafter.

The minimum annual royalty payment is creditable against our obligation to pay tiered royalties on annual net sales in the low single-digits.

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The University of Rochester may also terminate the Rochester Agreement, or at its sole discretion terminate the exclusivity of the license granted, upon our failure to meet the diligence obligations under and cure such failure within 90 days of our receipt of notice thereof, or such longer reasonable time determined by University of Rochester, at its discretion, and subject to a good faith negotiation mechanism included in the Rochester Agreement.

Non-Exclusive License and Development Agreement with FUJIFILM Cellular Dynamics, Inc.

In February 2021, we entered into a non-exclusive license and development agreement (as amended, the FCDI Agreement) with FUJIFILM Cellular Dynamics, Inc.

(FCDI), pursuant to which we obtained non-exclusive rights and a license under certain intellectual property rights controlled by FCDI (including intellectual property rights owned by FCDI and patent rights in-licensed from the Wisconsin Alumni Research Foundation) to research, develop, make, have made, use, have used, sell, offer for sale, import, and otherwise exploit human cell therapy products derived from certain iPSC lines for the treatment or prevention of certain diseases.

We anticipate utilizing these intellectual property rights and iPSC lines in certain of our ex vivo cell engineering programs.

Pursuant to the FCDI Agreement, we agreed to pay FCDI an upfront fee of $1.0 million, annual license maintenance fees, and license fees of up to $500,000 per indication for one certain cell type or up to $350,000 per indication for certain other cell types.

We are required to pay FCDI up to an aggregate of $28.5 million per indication upon the achievement of certain specified development and regulatory milestones for up to a total of three indications and up to an aggregate of $14.25 million in specified development and regulatory milestones for each additional indication.

We are also required to pay up to an aggregate of $8.8 million per product upon the achievement of certain specified commercial milestones.

In addition, we are obligated to pay royalties on annual net sales of the relevant products worldwide in the low- to mid-single digits, which obligation shall commence upon the first commercial sale of a relevant product and shall expire after 15 years on a product-by-product and country-by-country basis.

The royalty rates are also subject to reduction upon certain other events.

The FCDI Agreement will continue until terminated in accordance with its terms.

FCDI may terminate the FCDI Agreement upon giving written notice if we fail to make any payment due or upon our material breach, subject, in each case, to our ability to dispute or cure such breach.

We may terminate the FCDI Agreement for convenience upon prior written notice, and either party may terminate upon giving written notice in the event of the other party’s bankruptcy.

License Agreement with Beam

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Pursuant to the Beam Agreement, we originally had the option, for a period of one year from the effective date of the Beam Agreement, to select additional antigen targets, with respect to our allogeneic T cell programs, or human cell types, with respect to our stem cell-derived programs, in each case, upon our payment of an option payment of $10 million per antigen target or cell type.

We subsequently amended the Beam Agreement in July 2022 to extend the term of the option period and to add certain additional rights to the scope of the license for the purpose of supporting research and development of licensed products.

In addition, we may, for a period of three years from the effective date of the Beam Agreement, (i) elect to replace an antigen target, with respect to our allogeneic T

cell programs, or human cell type, with respect to our stem cell-derived programs ( Replacement Right ) previously selected by us, and (ii) select new gene editing targets, or replace gene editing targets previously selected by us, with respect to any licensed product ( Gene Nomination Right ).

In addition, we may (i) until the expiration of such option period, elect to replace an antigen target, with respect to our allogeneic T cell programs, or human cell type, with respect to our stem cell-derived programs (Replacement Right) previously selected by us, and (ii) for a period of three years from the effective date of the Beam Agreement, select new gene editing targets, or replace gene editing targets previously selected by us, with respect to any licensed product (Gene Nomination Right).

In each case, our rights with respect to exercise of the option, Replacement Right, or Gene Nomination Right are subject to certain limitations.

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Pursuant to the NIH Agreement, we paid to the NIH an upfront payment of $1.0 million.

Additionally, we will be obligated to pay to the NIH (i) up to an aggregate of $9.6 million in specified regulatory, developmental, and commercial milestone payments with respect to each licensed product, and (ii) a payment of $1,000,000 upon the assignment of the NIH Agreement to an affiliate upon a change of control.

Additionally, we will be obligated to pay to the NIH (i) up to an aggregate of $9.6 million in specified regulatory, developmental, and commercial milestone payments with respect to each licensed product, and (ii) a payment of $1.0 million upon the assignment of the NIH Agreement to an affiliate upon a change of control.

In addition, we are obligated to pay to the NIH (i) a royalty on net sales of licensed products in the low-single-digits, subject to reduction in certain circumstances, and subject to certain annual minimum royalty payments, and (ii) a percentage, ranging from the mid-single-digits to mid-teens, of revenues from sublicensing arrangements.

Additionally, if we are granted a priority review voucher by the FDA with respect to a licensed product, we will be obligated to pay to the NIH the greater of (i) $5,000,000 or (ii) a percentage in the mid-single-digits of any consideration received for the sale, transfer, or lease of such priority review voucher.

Additionally, if we are granted a priority review voucher by the FDA with respect to a licensed product, we will be obligated to pay to the NIH the greater of (i) $5.0 million or (ii) a percentage in the mid-single-digits of any consideration received for the sale, transfer, or lease of such priority review voucher.

We are also obligated to pay to the NIH a percentage in the low-single-digits of the consideration we receive for any assignment of the NIH Agreement to a non-affiliate.

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In February 2019, we acquired all of the outstanding equity interests in Cobalt Biomedicine, Inc.

(Cobalt), a privately-held early-stage biotechnology company founded by a Flagship Labs innovation team within Flagship Pioneering led by Dr.

Geoffrey von Maltzahn that was developing a fusogen technology platform to specifically and consistently deliver diverse payloads—including DNA, RNA, and proteins—to targeted cells in vivo , in consideration of the issuance of 36.4 million shares of our Series A-2 convertible preferred stock, valued at $136.0 million.

(Cobalt), a privately-held early-stage biotechnology company, in consideration of the issuance of 36.4 million shares of our Series A-2 convertible preferred stock, valued at $136.0 million.

Of the 36.4 million shares of Series A-2 convertible preferred stock issued, 12.1 million shares were contingent on the achievement of a pre-specified development milestone, which was achieved in July 2019.

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Under the Pulsalys Agreement, we are obligated to use commercially reasonable efforts to develop and commercialize licensed products, which efforts we can demonstrate by the achievement of the following diligence milestones:

(i) incurring a minimum annual spend of $1.0 million for each of the five years after the effective date of the Pulsalys Agreement, and (ii) submitting an IND within five years of the effective date of the Pulsalys Agreement.

(i) incurring a minimum annual spend of $1.0 million for each of the five years after the effective date of the Pulsalys Agreement, and (ii) submitting an IND within a certain period of time, originally five years, after the effective date of the Pulsalys Agreement.

In July 2023, we amended the Pulsalys Agreement to extend such five-year period.

Under the Pulsalys Agreement, the Co-Owners will retain the right to practice the licensed patent rights for non-commercial research purposes, alone or in collaboration with third parties.

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The license granted pursuant to the UCLA Agreement is subject to certain rights retained by the California Institute for Regenerative Medicine (CIRM) and the United States government, including a non-exclusive, royalty-free license granted to the United States government in accordance with 35 U.S.C.

If CIRM exercises its rights under Title 17, California Code of Regulations, Section 100600, and the scope of our exclusive license under the UCLA Agreement is impacted, then our financial

obligations therein will be reduced by 50%.

If CIRM exercises its rights under Title 17, California Code of Regulations, Section 100600, and the scope of our exclusive license under the UCLA Agreement is impacted, then our financial obligations therein will be reduced by 50%.

Otherwise, rights retained by CIRM do not limit our ability to pursue our programs and product candidates.

In addition, UCLA retains the right to (i) use the licensed patent rights for educational and research purposes and research sponsored by commercial entities, (ii) publicly disclose research results, (iii) use the licensed patent rights to offer and perform clinical diagnostic and prognostic care solely within the University of California system, and (iv) allow other non-profit and academic institutions to use the licensed patent rights for educational and research purposes and research sponsored by commercial entities, as well as to publicly disclose research results.

Th es e retained rights do not affect our ability to pursue our programs and product candidates .

These retained rights do not affect our ability to pursue our programs and product candidates.

Pursuant to the UCLA Agreement, we paid UCLA an upfront license issue fee of $25,000.

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A separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.

While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a

significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure .

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

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The FDA reviews a BLA for a product candidate to determine, among other things, whether the information provided satisfies the FDA’s legal standards with respect to the safety, purity, and potency of the proposed product candidate, which may include, among other things, demonstrating that the benefits of the product candidate outweigh its known risks for the intended patient population.

The FDA also reviews a BLA to determine whether the facility in which it is manufactured, processed, packed, or held

meets standards designed to assure th at the product candidate will continue to meet the FDA’s legal requirements .

The FDA also reviews a BLA to determine whether the facility in which it is manufactured, processed, packed, or held meets standards designed to assure that the product candidate will continue to meet the FDA’s legal requirements.

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

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

BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

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

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

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

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

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

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

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In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Recently, the court in Catalyst Pharms., Inc.

Becerra , 14 F.4th 1299 (11th Cir.

2021) ( Catalyst ) held that orphan drug exclusivity blocks approval of another company’s application for the same drug for the entire disease or condition for which the drug is granted orphan drug designation, regardless of whether the drug was approved only for a narrower use or indication.

However, in January 2023, the FDA published a notice in the Federal Register in response to the Catalyst decision to clarify that while the agency complies with the court’s order in Catalyst , the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order – that is, the agency will continue tying the scope of orphan drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan-designated disease or condition that have not yet been approved.

It is unclear how future litigation, legislation, agency decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

FDA regulation of companion diagnostics

We or our collaborators may develop an in vitro diagnostic (IVD) to identify appropriate patient populations for investigation or use of our product candidates.

These diagnostics, often referred to as companion diagnostics, are regulated as medical devices.

In the United States, the Federal Food, Drug, and Cosmetic Act and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.

Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.

The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance (or decision to grant a De Novo classification request if there is no predicate device), and premarket approval (PMA).

The FDA classifies medical devices as Class I, Class II, or Class III devices according to their level of risk, with Class III devices being those with the highest risk.

This classification of medical devices affects whether the device will require 510(k) clearance or PMA prior to marketing.

In January 2024, the FDA announced its plans to reclassify certain high-risk in vitro diagnostics, including companion diagnostics, as Class II devices.

As such, to the extent we or our collaborators develop a companion diagnostic, it may be regulated as a Class II or Class III medical device, depending on its intended use and technical characteristics, among other factors.

If use of companion diagnostic is deemed essential to the safe and effective use of a drug product, then the FDA generally will require approval or clearance of the diagnostic contemporaneously with the approval of the therapeutic product.

On August 6, 2014, the FDA issued final guidance titled "In Vitro Companion Diagnostic Devices” addressing the development and approval process for such devices.

According to the guidance, for novel product candidates, a companion diagnostic device and its corresponding drug candidate should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product labeling.

The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a drug generally will be considered an investigational device unless it is employed for an intended use for which the device is already approved or cleared.

If used to make critical treatment decisions, such as patient selection, the diagnostic device may be considered a significant risk device under the FDA’s Investigational Device Exemption (IDE) regulations, in which case the sponsor of the diagnostic device will be required to submit and obtain approval of an IDE application and subsequently comply with the IDE regulations.

However, according to the guidance, if a diagnostic device and a drug are to be studied together to support their respective approvals, both products can be studied in the same investigational study if the study meets both the requirements of applicable IDE regulations and the IND regulations.

The guidance provides that, depending on the details of the study plan and degree of risk posed to subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.

510(k) clearance process

To obtain 510(k) clearance, a premarket notification is submitted to the FDA demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet required the submission of a PMA application.

The FDA’s 510(k) clearance process may take three to 12 months from the date the application is submitted and filed with the FDA, but it may take longer if, among other reasons, the FDA requests additional information, which can significantly prolong the review process.

In some cases, the FDA may require clinical data to support substantial equivalence.

Notwithstanding compliance with all of the 510(k) clearance requirements, such clearance is never assured.

After a device receives 510(k) clearance, any subsequent modification of the device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, will require a new 510(k) clearance or require a PMA.

In addition, the FDA may make substantial changes to industry requirements, including which devices are eligible for 510(k) clearance, which may significantly affect the review and approval process.

De Novo classification process

If a new medical device does not qualify for the 510(k) premarket notification process because no predicate device to which it is substantially equivalent can be identified, the device is automatically classified into Class III.

The Food and Drug Administration Modernization Act of 1997 established a different route to market for low- to moderate-risk medical devices that are automatically placed into Class III due to the absence of a predicate device called the “Request for Evaluation of Automatic Class III Designation,” or the De Novo classification process.

This process allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk rather than requiring the submission and approval of a PMA.

If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device.

The FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for 510(k) premarket notification or determines that the device is not low- to moderate-risk and requires PMA or that general controls would be inadequate to control the risks and special controls cannot be developed.

The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years or longer.

It involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing, and labeling.

PMA applications are subject to an application fee.

In addition, PMAs for certain devices must generally include the results from extensive preclinical and adequate and well-controlled clinical trials to establish the safety and effectiveness of the device for each indication for which FDA approval is sought.

In particular, for a diagnostic, a PMA application typically requires data regarding analytical and clinical validation studies.

As part of the PMA review, the FDA will typically inspect the manufacturer’s facilities for compliance with the Quality System Regulation (QSR), which imposes elaborate testing, control, documentation, and other quality assurance requirements.

The FDA issued a final rule in February 2024 replacing the QSR with the Quality Management System Regulation (QMSR), which incorporates by reference the quality management system requirements of ISO 13485:2016.

The FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the existing QSR.

The FDA will begin to enforce the QMSR requirements upon the QMSR effective date of February 2, 2026.

Approval of a PMA submission is not guaranteed, and the FDA may ultimately respond to a PMA submission with a not approvable determination based on deficiencies in the application and require additional clinical trial or other data that may be expensive and time-consuming to generate and that could substantially delay approval.

If the FDA’s evaluation of the PMA submission is favorable, the FDA typically issues an approvable letter requiring the applicant’s agreement to specific conditions, such as changes in labeling or specific additional information, such as submission of final labeling, in order to secure final approval of the PMA.

If the FDA’s evaluation of the PMA submission or manufacturing facilities is not favorable, the FDA will deny approval of the PMA submission or issue a not approvable letter.

A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable.

The FDA may also determine that additional clinical trials are necessary, in which case approval of the PMA submission may be delayed for several months or years while the trials are conducted and then the data submitted in an amendment to the submission.

If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for the approved indications, which may be more limited than those originally sought by the applicant.

The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale, and distribution.

Once granted, a PMA may be withdrawn by the FDA if compliance with post-approval requirements, conditions of approval, or other regulatory standards are not maintained or problems are identified following initial marketing.

Obtaining FDA marketing authorization, De Novo down-classification, or approval for medical devices is expensive and uncertain, may take several years, and generally requires significant scientific and clinical data.

Post-approval requirements

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Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

does not regulate the behavior of physicians in their choice of treatments.

The FDA does not regulate the behavior of physicians in their choice of treatments.

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

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Other legislative changes have been proposed and adopted since the ACA was enacted, including reductions of Medicare payments to providers through 2032.

In addition, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, beginning January 1, 2024.

The American Rescue Plan Act of 2021 eliminated the statutory Medicaid drug rebate cap.

Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than they receive from the sale of products, which could have a material impact on our business.

Most significantly, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law.

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The IRA permits the Secretary of the Department of Health and Human Services to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry and our business cannot yet be fully determined, it is likely to be significant.

Various industry stakeholders, including certain pharmaceutical companies and the Pharmaceutical Research and Manufacturers of America, have initiated lawsuits against the federal government asserting that the price negotiation provisions of the IRA are unconstitutional.

The impact of these judicial challenges and any future healthcare measures and agency rules implemented by the government on us and the pharmaceutical industry as a whole is unclear.

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

Moreover, there has been recent heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which is likely to continue.

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

For example, the FDA recently authorized the state of Florida to import certain prescription drugs from Canada for a period of two years to help reduce drug costs, provided that Florida’s Agency for Health Care Administration meets the requirements set forth by the FDA.

Other states may follow Florida.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates, if approved, or additional pricing pressures.

Similar political, economic, and regulatory developments are occurring in the European Union (EU) and may affect the ability of pharmaceutical companies to profitably commercialize their products.

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Once the Regulation becomes applicable, it will have a phased implementation depending on the concerned products.

The Regulation intends to boost cooperation among EU

member states in assessing health technologies, including new medicinal products , and provid ing the basis for cooperation at the EU level for joint clinical assessments in these areas.

The R egulation will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.

The Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas.

The Regulation will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.

Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, and ethical) aspects of health technology, and making decisions on pricing and reimbursement.

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We consider our relationship with our employees to be good.

In November 2022, we underwent a portfolio prioritization and corporate restructuring d esigned to optimize development of our programs at or nearing clinical development, to continue investments in our core research platforms and innovation, and to maintain a strong balance sheet.

As part of the prioritization and restructuring, we reduced our workforce by approximately 15% as of December 31, 2022.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees.

The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and, with respect to our employees, cash-based performance bonus awards.

In October 2023, we announced a strategic repositioning to increase our focus on our ex vivo cell therapy product candidates.

As a result, we reduced our near-term investment in our fusogen platform for in vivo gene delivery, including by delaying the investigational new drug application submission for our SG299 program and reducing our workforce by approximately 29%.

Our Corporate Information

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These disclosures will be included on our website under the “Investors” section.

Ris k Factors.

Investing in shares of our common stock involves a high degree of risk.

You should carefully consider the following risks and uncertainties, together with all of the other information contained in this Annual Report, including our financial statements and related notes included elsewhere in this Annual Report, before making an investment decision.

The risks described below are not the only ones we face.

Many of the following risks and uncertainties are, and will continue to be, exacerbated by any worsening of the global geo-political, business, and economic environment.

The occurrence of any of the following risks, or of additional risks and uncertainties not presently known to us or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition, reputation, or results of operations.

In such a case, the trading price of shares of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

Our ex vivo and in vivo cell engineering platforms are based on novel technologies that are unproven and may not result in approvable or marketable products.

This uncertainty exposes us to unforeseen risks, makes it difficult for us to predict the time and cost that will be required for the development and potential regulatory approval of our product candidates, and increases the risk that we may ultimately not be successful in our efforts to use and expand our technology platforms to build a pipeline of product candidates.

A key element of our strategy is to identify and develop a broad pipeline of product candidates using our ex vivo and in vivo cell engineering platforms and advance those product candidates through clinical development for the treatment of various different diseases.

The scientific research that forms the basis of our efforts to develop product candidates with our platforms is still ongoing.

We are not aware of any FDA-approved therapeutics that are cell products derived from pluripotent stem cells (PSCs) or that utilize our fusogen technology.

Further, the scientific evidence that supports the feasibility of developing therapeutic treatments based on our platforms is preliminary, limited, and remains ongoing.

We are therefore exposed to a number of unforeseen risks, and it is difficult to predict the types of challenges and risks that we may encounter during development of our product candidates.

Preclinical and clinical testing of product candidates is inherently unpredictable and may lead to unexpected results, in particular when such product candidates are based on novel technologies.

For example, we have not tested our cell engineering platforms on all pluripotent and differentiated cell types or in all microenvironments, and results from one cell type or microenvironment may not translate into other cell types or microenvironments.

In addition, our current gene editing approaches rely on novel gene editing reagents that may have unanticipated or undesirable effects or prove to be less effective than we expect.

Also, we are in the early stages of testing product candidates developed using our cell engineering platforms in humans, and most of our current data are limited to animal models and preclinical cell lines and assays, which may not accurately predict the safety and efficacy of our product candidates in humans.

Additionally, we and third parties may have limited preclinical and clinical data, and a more limited understanding generally, with respect to certain indications, including autoimmune diseases, and we cannot predict the extent to which the safety and efficacy of a product candidate may vary across indications.

We may encounter significant challenges creating appropriate models and assays for evaluating the safety and purity of our product candidates and may not be able to provide sufficient data or other evidence, to the satisfaction of regulatory authorities, that certain unexpected results observed in preclinical and clinical testing of our product candidates are not indicative of the potential safety issues of such product candidates.

In addition, we may use manufacturing reagents and materials across various programs and initiatives.

Certain reagents and materials may be novel and have unknown or unanticipated effects, including with respect to a product candidate’s safety, efficacy, or manufacturability.

Any unanticipated or adverse effects related or attributed to such reagents or materials could affect all the programs and initiatives in which they are used, and result in delays and harm our ability to timely and successfully progress our product candidates through preclinical and clinical development.

We may develop program plans and timelines for certain product candidates based on our experience with such product candidates in different indications or with other product candidates that incorporate or were developed with the same technologies based on our expectation that such product candidates will perform and act similarly.

However, our product candidates may reveal unexpected, important differences, including with respect to safety or efficacy, when developed in different indications or as compared to such other product candidates, including differences that may require changes to the manufacturing process or clinical development plan that require additional time and resources beyond what we initially anticipated.

Any such occurrence could require us to adjust or alter our development plans, which could delay, harm, or prevent our ability to develop and commercialize such product candidates.

In addition, product candidates developed with our hypoimmune and fusogen technologies have potential safety risks, including those related to genotoxicity associated with the delivery of genome-modifying payloads.

For example, DNA sequences that randomly integrate into a cell’s DNA may increase the risk for or cause certain cancers.

Additionally, gene editing approaches may edit the genome at sites other than the intended DNA target or cause DNA rearrangements, each of which may have oncogenic or other adverse effects.

PSC-derived cell products may have potential safety risks related to genomic and epigenomic variations that have occurred or may occur during the manufacturing process.

We cannot always predict the types and potential impact of these genomic changes, including whether certain changes are or may eventually be harmful.

Accordingly, it may be difficult for us to conduct the level of testing and assay development necessary to ensure that our PSC-derived cell product candidates have an acceptable safety profile when used in humans.

These risks related to genetic variation are also relevant to our product candidates created from donor-derived cells.

Additionally, our stem cell-based product candidates have potential safety risks that may result from cells that are undifferentiated or have not been completely differentiated to the desired phenotype and lead to oncogenic transformations or other adverse effects.

As a result, it is possible that safety events or concerns could negatively affect the development of our product candidates, as described elsewhere in these Risk Factors.

Given the novelty of our technologies, we intend to work closely with the FDA and comparable foreign regulatory authorities to perform the requisite scientific analyses and evaluation of our methods to obtain regulatory approval for our product candidates.

However, due to a lack of experience with similar therapeutics or delivery methods, the regulatory pathway with the FDA and comparable foreign regulatory authorities may be more complex, time-consuming, and unpredictable relative to more well-known therapeutics.

For example, even if we obtain human data to support continued evaluation and approval of our product candidates, the FDA or comparable foreign regulatory authorities may lack experience in evaluating the safety and efficacy of therapeutics similar to our product candidates or may scrutinize such data more closely than data generated from more established types of biological products.

In addition, given that there are no approved PSC- or donor-derived cell therapy products on the market, the FDA and comparable foreign regulatory authorities have not established consistent standards by which to evaluate the safety of such products, and any such standards that they do establish may subsequently change.

Moreover, the FDA remains focused on potential safety issues associated with gene and cell therapy products, and as the number of new gene and cell therapy product candidates submitted for FDA review has increased in recent years, the number of clinical holds imposed by the FDA has also increased.

For example, the FDA has placed clinical holds on certain product candidates pending further evaluation of genomic abnormalities detected in as few as a single patient following administration of such product candidates.

We cannot be certain that the FDA or comparable foreign regulatory authorities will determine that the potential safety risks associated with our product candidates outweigh the potential therapeutic benefits in each indication for which we develop our products, and that they will allow us to commence clinical trials of such product candidates in a timely manner, or at all, or to continue such clinical trials once they have commenced.

If we become subject to a clinical hold with respect to any of our product candidates due to a potential safety issue, we cannot guarantee that we will be able to provide the applicable regulatory authority with sufficient data or other evidence regarding the safety profile of such product candidate such that we will be able to commence or resume clinical development of such product candidates in a timely manner or at all.

Any such event could delay clinical development of such product candidate, including in other indications, or our other product candidates, increase our expected development costs, increase the length of the regulatory review process, and delay or prevent commercialization of our product candidates.

In addition, the evaluation process for our product candidates will take time and resources and may require independent third-party analyses, and our product candidates may ultimately not be accepted or approved by the FDA or comparable foreign regulatory authorities.

As such, even if we are successful in building our pipeline of product candidates from our ex vivo and in vivo cell engineering platforms, we cannot be certain that such efforts will lead to the development of approvable or marketable products, either alone or in combination with other therapies.

In response to reports of T cell malignancies in patients that previously received chimeric antigen receptor (CAR) T cell immunotherapies, the FDA announced in November 2023 that it is investigating the risk of secondary cancers and the need for regulatory action for such therapies as a class and has advised of new patient monitoring and reporting requirements with respect to such therapies.

In January 2024, the FDA imposed a class-wide boxed warning requirement regarding the occurrence of T cell malignancies for all approved CAR T therapies.

The FDA has noted that it currently believes that the overall benefits of these therapies continue to outweigh their potential risks for their approved uses.

However, all currently approved CAR T cell immunotherapies are approved only in oncology indications, and there can be no assurance that the FDA or comparable foreign regulatory authorities will reach the same risk-benefit determination in other indications, such as autoimmune diseases.

We have received and may in the future receive FDA correspondence requesting updates to certain of our CAR T cell clinical trials to address these developments.

Additionally, we and our product candidates may be subject to further regulatory actions or requirements of the FDA or comparable foreign regulatory authorities relating to these therapies, such as requiring a black box warning or other labeling disclosures for any approved products.

The occurrence of any of the foregoing could increase the cost and complexity of development and commercialization of, and limit the commercial opportunity for, such product candidates, any of which could have a material adverse effect on our business.

If we are unable to successfully identify, develop, and commercialize any product candidates, or experience significant delays in doing so, our business, financial condition, and results of operations will be materially adversely affected.

Our ability to generate revenue from sales of any of our product candidates, which we do not expect to occur for at least the next several years, if ever, will depend heavily on the timely and successful identification, development, regulatory approval, and eventual commercialization of any such product candidates, which may never occur.

To date, we have not generated revenue from sales of any products, and we may never be able to develop, obtain regulatory approval for, or commercialize a marketable product.

Before we generate any revenue from product sales of any of our current or potential future product candidates, we will need to manage preclinical, clinical, and manufacturing activities, including undertaking significant clinical development, obtain regulatory approval in multiple jurisdictions, establish manufacturing supply, including commercial manufacturing supply, and build a commercial organization, which will require substantial investment and significant marketing efforts.

We may never receive regulatory approval for any of our product candidates, which would prevent us from marketing, promoting, or selling any of our product candidates and generating revenue.

The successful development of our product candidates will depend on or be affected by numerous factors, including the following:

• our successful and timely completion of preclinical studies and clinical trials for which the FDA and any comparable foreign regulatory authorities agree with the design, endpoints, and implementation;

• the sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;

• the timely receipt of regulatory approvals or authorizations to conduct clinical trials;

• our ability to timely and successfully initiate, enroll patients in, and complete clinical trials;

• our ability to demonstrate to the satisfaction of the FDA or any comparable foreign regulatory authority that the applicable product candidate meets the FDA’s or such comparable foreign regulatory authority’s legal standards with respect to safety, purity, and potency, or efficacy, which may include, among other things, demonstrating that the benefits of the product candidate outweigh its known risks for the intended patient population, and that such product candidate can be manufactured in accordance with applicable legal requirements;

• the timely receipt of marketing approvals for our product candidates from applicable regulatory authorities, including the impact of any changes to the FDA’s Accelerated Approval Program;

• our ability to address any potential interruptions or delays resulting from external factors, including those related to the current global geo-political, business, and economic environment;

• the extent of any clinical or regulatory setbacks experienced by other companies developing similar products or within adjacent fields, including autologous and allogeneic cell-based therapies and the fields of gene editing and gene therapy, which could negatively impact the perceptions of the value and risk of our product candidates and technologies;

• the extent of any post-marketing approval commitments we may be required to make to applicable regulatory authorities, including the conduct of any post-marketing approval clinical studies, and our ability to comply with any such commitments;

• our ability to establish, scale up, and scale out, either alone or with CDMOs, manufacturing capabilities for clinical supply of our product candidates for our clinical trials and, if any of our product candidates are approved, commercial supply (including licensure) of such product candidates.

If we experience issues or delays with respect to any one or more of these factors, we could experience significant delays or be unable to successfully develop and commercialize our product candidates, which would materially adversely affect our business, financial condition, and results of operations.

We may not realize the benefits of technologies that we have acquired or in-licensed or will acquire or in-license in the future.

A key component of our strategy is to acquire and in-license technologies to support our mission of using engineered cells as medicines.

Our ex vivo and in vivo cell engineering technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology that we licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California (UCSF), our ex vivo cell engineering program focused on certain brain disorders that we acquired from Oscine Corp., our fusogen technology that we acquired from Cobalt Biomedicine, Inc.

(Cobalt), and gene editing technology that we licensed from Beam Therapeutics Inc., among others.

We continue to actively evaluate various acquisition and licensing opportunities on an ongoing basis.

The level of success of these acquisition and in-licensing arrangements, including any that we may enter into in the future, will depend on the risks and uncertainties involved, including:

• unanticipated liabilities related to acquired companies;

• difficulty integrating acquired personnel, technologies, and operations into our existing business;

• difficulty retaining key employees, including of any acquired businesses;

• diversion of management time and focus from operating our business to management of acquisition and integration efforts;

• increases in our expenses and reductions in our cash available for operations and other uses;

• higher than expected acquisition or integration costs;

• disruption in our relationships with collaborators, key suppliers, manufacturers, or customers as a result of an acquisition;

• incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs;

• possible write-offs of assets, goodwill or impairment charges, or increased amortization expenses relating to acquired businesses;

• difficulty in and cost of combining the operations and personnel of any acquired business with our own;

• challenges integrating acquired businesses into our business, including our existing operations and culture.

For example, in October 2023, we underwent a strategic repositioning pursuant to which we updated our portfolio to increase our focus on our ex vivo cell therapy product candidates and reduce our near-term investment in our fusogen platform.

As part of this reduction, we shifted our focus on fusogen to research activities.

We expect to encounter increased costs and difficulties if and when we expand preclinical development and initiate clinical development for product candidates derived from our fusogen platform, including those related to scaling up and driving forward clinical development and manufacturing activities.

As a result, there is increased risk that the benefits we expected from the fusogen platform at the time of the Cobalt acquisition may be more expensive and difficult to obtain or may not occur at all.

In addition, foreign acquisitions are subject to additional risks, including those related to integration of operations across different cultures and languages, currency risks, potentially adverse tax consequences of overseas operations, and the particular economic, political, and regulatory risks associated with specific countries.

The occurrence of any of these risks or uncertainties may preclude us from realizing the anticipated benefit of any acquisition, and our financial condition may be harmed.

Additionally, we may not be successful in our efforts to acquire or obtain rights to certain technologies or products that are necessary for the success of our product candidates or technologies on acceptable terms or at all, including because we may be unable to successfully or timely negotiate the terms of an agreement with the third-party owner of such technology or products or such third party may have determined to deprioritize such technology or products.

Such transactions, as well as other strategic relationships we may enter into, may also be impacted by policies of or actions by certain regulatory authorities, such as the Federal Trade Commission (FTC), that have jurisdiction over various aspects of such transactions and relationships.

If we are not able to acquire or obtain rights to certain technologies or products on which certain of our product candidates or technologies may depend, it may be necessary for us to delay, reduce, or curtail the development of such product candidates or technologies, or incur additional costs in order to continue development without such rights.

We may fail to enter into new strategic relationships or may not realize the benefits of any strategic relationships that we have entered into, either of which could materially adversely affect our business, financial condition, commercialization prospects, and results of operations.

Our product development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses.

In addition, our ex vivo and in vivo cell engineering platforms are attractive technologies for potential collaborations due to their breadth of application.

Therefore, for certain of our product candidates, including product candidates that we may develop in the future, we may decide to form or seek strategic alliances, collaborations, or similar arrangements with pharmaceutical or biotechnology companies that we believe will complement or augment our development and potential commercialization efforts with respect to such product candidates, including in territories outside the United States or for certain indications.

We may also pursue joint ventures or investments in complementary businesses that align with our strategy.

To the extent we enter into strategic relationships involving companies located outside the United States, we are subject to similar risks to those described elsewhere in these Risk Factors with respect to foreign acquisitions.

We face significant competition in seeking appropriate collaborators.

Collaborations are complex and time-consuming to negotiate and document.

We may not be successful in our efforts to establish a collaboration or other alternative arrangements for our product candidates on acceptable terms or at all, including because our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate success in clinical trials and ultimately obtain regulatory approval.

Additionally, there have been a significant number of recent business combinations among large pharmaceutical companies that have reduced the number of potential future collaborators and changed the strategies of the resulting combined companies.

In addition, under the terms of certain license agreements applicable to our product candidates, we may be restricted from entering into collaboration or similar agreements relating to those product candidates on certain terms or at all.

If and when we collaborate with a third party for development and commercialization of a product candidate, we expect that we may have to relinquish some or all of the control over the future success of that product candidate to the third party.

Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of our technologies, product candidates, and market opportunities.

The collaborator may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and could determine that such other collaboration is more attractive than a collaboration with us for our product candidate.

Similar risks exist with respect to any joint ventures we may pursue, as well as risks and uncertainties related to the costs, time, and other resources required to manage and gain the benefit of any such joint venture, and any potential liabilities we may incur in connection with a joint venture.

In instances where we enter into collaborations, we could be subject to the following risks, each of which may materially harm our business, commercialization prospects, and financial condition:

• collaborators may have significant discretion in determining the efforts and resources that they will apply to a collaboration and may not commit sufficient efforts, funding, and other resources to the development or marketing programs for collaboration product candidates or may misapply those efforts, funding, or resources;

• collaborators may experience financial difficulties, including those that could negatively impact their ability to perform their obligations pursuant to the collaboration agreement, such as funding and development obligations;

• collaborators may not pursue development and commercialization of collaboration product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results or changes in their strategic focus;

• collaborators may decide or may be required by regulatory authorities to delay clinical trials, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing;

• we may be required to relinquish important rights to our product candidates, such as marketing, distribution, and intellectual property rights;

• we may be required to agree to exclusivity, non-competition, or other terms that restrict our ability to research, develop, or commercialize certain existing or potential future product candidates, including our ability to develop our product candidates in certain indications or geographic regions or combine our product candidates with certain third-party products;

• collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential liability;

• collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

• collaborators may acquire outside of the collaboration or develop, independently or in collaboration with third parties, including our competitors, products that compete directly or indirectly with our product candidates and may decide to advance such product candidates instead of ours;

• collaborators may own or co-own intellectual property rights covering the product candidates that result from our collaboration, and in such cases, we may not have the exclusive right to commercialize such product candidates;

• we and our collaborators may disagree regarding the development plan for a collaboration product candidate, including, for example, with respect to target indications, inclusion or exclusion criteria for a clinical trial, or the decision to seek approval as front-line therapy versus second-, third-, or fourth-line therapy;

• disputes may arise with our collaborators that could result in the delay or termination of the research, development, or commercialization of the applicable product candidates or costly litigation or arbitration that diverts management attention and resources;

• business combinations or significant changes in a collaborator’s business strategy may adversely affect our or the collaborator’s willingness to complete our or such collaborator’s obligations under the collaboration;

• collaborations may be terminated, which may require us to obtain additional capital to pursue further development or commercialization of the applicable product candidates;

• we may not achieve the revenue, specific net income, or other anticipated benefits that justify our having entered into, or otherwise led us to enter into, the collaboration.

If our strategic collaborations do not result in the successful development and commercialization of product candidates, or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration.

Moreover, our initial estimates of the potential revenue we are eligible to receive under our strategic collaborations may include potential payments related to therapeutic programs for which our collaborators may discontinue development.

If we are unable to enter into strategic collaborations, or if any of the other events described in this Risk Factor occur after we enter into a collaboration, we may have to curtail the development of a particular product candidate, reduce or delay the development program for such product candidate or one or more of our other product candidates, delay its potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

If we do not have sufficient funds, we will not be able to bring our product candidates to market and generate product revenue.

Our ability to develop our cell engineering platforms and product candidates and our future growth depend on retaining our key personnel and recruiting additional qualified personnel.

Our success depends upon the continued contributions of our key management, scientific, and technical personnel, many of whom have been instrumental for us and have substantial experience with our cell engineering platforms and their underlying technologies and related product candidates.

Given the specialized nature of our ex vivo and in vivo cell engineering technologies and the fact that we are operating in novel and emerging fields, there is an inherent scarcity of personnel with the requisite experience to fill the roles across our organization.

As we continue developing our product candidates and building our pipeline, we will require personnel with medical, scientific, or technical qualifications and expertise specific to each program.

The loss of key management and senior scientists or other personnel could delay our research and development activities.

In addition, the loss of key executives could disrupt our operations and our ability to conduct our business.

Despite our efforts to retain valuable employees, all of our employees are at-will employees, and members of our management, scientific, and development teams may terminate their employment with us at any time, with or without notice.

Moreover, regulations or legislation impacting our workforce, such as the proposed rule published by the FTC that would, if issued, generally prohibit employers from imposing non-compete obligations on their employees and require employers to rescind existing non-compete obligations, may lead to increased uncertainty in hiring and competition for talent, and harm our ability to protect our company, including our intellectual property, after termination of employment.

If our retention efforts are unsuccessful now or in the future, it may be difficult for us to implement our business strategy, which could have a material adverse effect on our business.

Further, certain of our key employees, including Drs.

Terry Fry and Steve Goldman, retain partial employment at academic institutions.

We may in the future have other employees that have similar employment arrangements.

These arrangements expose us to the risk that these individuals may return to their academic positions full-time, devote less of their time or attention to us than is optimal, or potentially expose us to claims of intellectual property ownership or co-ownership by their respective academic institutions.

The competition for qualified personnel in the biotechnology and pharmaceutical industries is intense, and our future success depends upon our ability to attract, retain, and motivate highly skilled employees, including executives, scientists, engineers, clinical operations and manufacturing personnel, and sales professionals.

We expect that we may continue to face competition for personnel from other companies, universities, public and private research institutions, and other organizations.

We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining qualified employees on acceptable terms, or at all.

Many of the companies with which we compete for experienced personnel may have greater resources than we do and may be able to provide prospective job candidates or our existing employees with more attractive roles, salaries, or benefits than we can provide.

If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, including non-solicitation or non-compete obligations, which may result in a diversion of our time and resources and, potentially, damages.

In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment.

If the perceived benefits of our stock awards decline or are otherwise viewed unfavorably compared to those of companies with which we compete for talent, or if we or our prospects are otherwise viewed unfavorably, this could negatively impact our ability to recruit, motivate, and retain highly skilled employees.

As part of our November 2022 and October 2023 restructurings, we reduced our then-current headcount by approximately 15% and 29%, respectively.

Reductions in our workforce may result in reduced employee morale and negative publicity, which may damage our reputation and make it more difficult for us to retain and motivate our current personnel as well as attract new personnel.

These workforce reductions have also caused us to lose institutional knowledge, capabilities, and subject matter expertise and could negatively affect our efforts to obtain and maintain our intellectual property rights in the event we are unable to identify inventions made or identify or recreate the necessary scientific records or data.

Any of the foregoing could significantly harm our business and future growth prospects.

Though many of our personnel have significant experience with respect to manufacturing biopharmaceutical products, we, as a company, do not have experience in developing or maintaining a manufacturing facility.

We cannot guarantee that we will be able to maintain a compliant facility and manufacture our product candidates as intended, given the complexity of manufacturing novel therapeutics.

If we fail to successfully operate our facility and manufacture a sufficient and compliant supply of our product candidates, our clinical trials and the commercial viability of our product candidates could be adversely affected.

The manufacture of biopharmaceutical products is complex and requires significant expertise, including the development of advanced manufacturing techniques and process controls.

Manufacturers of gene and cell therapy products often encounter difficulties in production, particularly in scaling up, scaling out, validating initial production, ensuring the absence of contamination, and ensuring process robustness after initial production.

These include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, and shortages of qualified personnel, as well as compliance with strictly enforced federal, state, and foreign regulations.

As a result of the complexities involved in biopharmaceutical manufacturing, the cost to manufacture biologics is generally higher than traditional small molecule chemical compounds and the manufacturing process is less reliable and more difficult to reproduce, and this is particularly true with respect to our product candidates.

The application of new regulatory guidelines or parameters, such as those related to control strategy testing, may also adversely affect our ability to manufacture our product candidates in a compliant and cost-effective manner or at all.

We continue to invest in building world class capabilities in key areas of manufacturing sciences and operations, including development of our cell engineering platforms, product characterization, and process analytics.

Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing, including establishing our internal manufacturing capabilities.

However, we have limited experience in managing the manufacturing processes necessary for making cell and gene therapies.

We cannot be sure that the manufacturing processes that we use, or the technologies that we incorporate into these processes, will result in viable or scalable yields of ex vivo and in vivo cell engineering product candidates that will have acceptable safety, purity, and potency, or efficacy, profiles and meet market demand.

A key part of our strategy is operating our own manufacturing capabilities, including our own manufacturing facilities.

In June 2022, we entered into a long-term lease to establish and develop our own current good manufacturing practices (cGMP) manufacturing facility in Bothell, Washington (the Bothell facility).

In addition, in January 2022, we entered into an agreement with the University of Rochester, pursuant to which we have obtained access to manufacturing capabilities within University of Rochester Medical Center’s (URMC) cell-based manufacturing facility (the URMC site) to support manufacturing of product candidates across our portfolio for early-stage clinical trials.

Designing and building out the Bothell facility and the URMC site are time-consuming and require significant resources, including a reallocation of certain of our existing financial, human, and other resources, including the time and attention of our senior management.

In addition, given the volatility in the costs of building materials, as well as the impact of rising rates of inflation in recent years and which may occur in the future, building out our manufacturing capabilities may be more expensive than we expect.

We do not have experience as a company in developing internal manufacturing capabilities, and we may experience unexpected costs or delays or be unsuccessful in developing our internal manufacturing capabilities in time to support registration-enabling clinical trials of our product candidates or at all.

In order to build out the Bothell facility and the URMC site, we will need to continue to engage third-party service providers and obtain equipment and third-party technology necessary to manufacture our product candidates.

However, we may not be able to negotiate agreements with third parties or access necessary technologies on commercially reasonable terms or at all.

Moreover, there is no guarantee that the space that we are leasing to develop the Bothell facility will not change ownership over the term of the lease or be subject to additional zoning or other restrictions, and that, in such an event, we will be able to continue to build or operate the facility without restriction or further delay or cost.

In addition, operating the Bothell facility and the URMC site will require us to continue to hire and retain experienced scientific, quality control, quality assurance, and manufacturing personnel.

As described elsewhere in these Risk Factors, this may be difficult given the intense competition for qualified personnel in the biotechnology and pharmaceutical industries.

In addition, though we plan to design and build out our manufacturing capacities at the URMC site, we do not control URMC’s cell-based manufacturing facility, nor do we have control over how URMC manages and operates this facility.

If URMC does not maintain its cell-based manufacturing facility in accordance with our requirements, we may not be able to manufacture our product candidates in a timely manner or at all, which may delay our ability to commence clinical trials for, obtain regulatory approval for, and commercialize our product candidates.

We currently rely, and expect we will continue to rely, on CDMOs to manufacture our product candidates for preclinical studies and clinical trials.

Moreover, it may take us longer to establish and operationalize our Bothell facility than we originally anticipated, which may delay our ability to begin manufacturing certain of our product candidates internally and extend the period of time during which we must solely rely on CDMOs for the manufacture of such product candidates.

For example, we may rely on our CDMOs for the potential registration and commercial launch of our first product candidate under our current clinical development timelines, and if there are any delays in our ability to establish and operationalize the Bothell facility, we may be required to rely more heavily on our CDMOs for the potential registrations and commercial launches of additional product candidates as well.

Once we have completed the build-out of the Bothell facility and the URMC site, we may be required to transition manufacturing processes and know-how for certain of our product candidates from our CDMOs to the Bothell facility and the URMC site.

To date, we and our CDMOs have limited experience in the technology transfer of manufacturing processes.

Transferring manufacturing processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time.

In addition, transferring production to the Bothell facility and the URMC site may require utilization of new or different processes to meet our facility requirements.

Additional studies may also need to be conducted to support the transfer of certain manufacturing processes and process improvements.

We will not know with certainty whether all relevant know-how and data have been adequately incorporated into the manufacturing process being conducted at our facilities until the completion of studies and evaluations intended to demonstrate the comparability of material previously produced by our CDMOs with that generated by our facilities.

Similar risks and considerations apply to the initial technology transfer from us to our CDMOs for manufacturing of pre-clinical and clinical supply, as well as between CDMOs in the event we are required to switch to a new CDMO.

Operating the Bothell facility and the URMC site will require us to comply with complex regulations.

Moreover, the Bothell facility, and any future commercial manufacturing facilities we may operate, will require FDA or comparable foreign regulatory authority approval, which we may not obtain in time to support registration-enabling clinical trials for our product candidates, if at all.

Even if approved, we would be subject to ongoing periodic unannounced inspections by the FDA, the Drug Enforcement Administration, corresponding state agencies, and comparable foreign regulatory authorities to ensure strict compliance with cGMP, current good tissue practices (cGTPs), and other government regulations.

We may be unable to manufacture our product candidates if we fail to meet regulatory requirements and may be unable to scale up or scale out our manufacturing to meet market demand.

Any failure or delay in the development of our manufacturing capabilities, including at the Bothell facility and the URMC site, could adversely impact the development and potential commercialization of our product candidates.

We may encounter difficulties in managing our growth if and as we expand our operations, including our development and regulatory capabilities, which could disrupt our operations and otherwise harm our business.

We experienced rapid growth following our inception in July 2018.

However, as described elsewhere in these Risk Factors, we undertook workforce reductions as part of our November 2022 and October 2023 restructurings.

These workforce reductions may yield unintended consequences and costs, including difficulty retaining and motivating remaining employees, difficulty attracting and hiring qualified employees, and increased reliance on third parties if needed to support our internal capabilities.

Despite our workforce reductions, if we have success in our initial clinical trials, we expect continued growth in the scope of our operations, particularly if and as we advance our product candidates into and through IND-enabling studies and clinical trials and continue to establish and develop our regulatory, quality, and clinical operations and supply chain logistics and manufacturing.

To manage our growth, we have implemented and improved, and plan to continue to implement and improve, our managerial, operational, and financial systems, and continue to recruit and train additional qualified personnel.

However, due to our limited financial resources and the complexity of managing a company with such growth, we may not be able to effectively manage the expansion of our operations or recruit and train sufficient additional qualified personnel to achieve our business objectives within our desired timelines.

The continued expansion of our operations will be costly and may divert our management and business development resources.

For example, members of management will have significant added responsibilities in connection with effecting and managing our growth, including identifying, recruiting, integrating, maintaining, and motivating current and future employees, effectively managing our internal development efforts, including the clinical and regulatory (e.g., FDA) review process, while complying with our contractual obligations to third parties, and maintaining and improving our operational, financial, and management controls, reporting systems, and procedures.

In addition, as we grow, we may be required to rely more heavily on third-party service providers, which exposes us to risks to which we would not be subject if we performed all work internally, as described elsewhere in these Risk Factors.

Our inability to successfully manage our growth could disrupt our operations and otherwise harm our business, including by delaying execution of our programs and business plans.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs, therapeutic platforms, and product candidates that we identify for specific indications.

Additionally, we have contractual commitments under certain of our agreements to use commercially reasonable efforts to develop certain programs and, thus, do not have unilateral discretion to vary from such efforts.

In addition, we have contractual commitments to conduct certain development plans, and thus may not have discretion to modify such development plans, including clinical trial designs, without agreement from our partners.

As a result, we may forego or delay pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Additionally, we may be required to invest our resources in a limited number of more advanced programs with higher probabilities of success in the shorter term and, consequently, to reduce our investment in promising earlier stage programs.

Such decisions would require us to reduce the breadth and diversity of our product portfolio, which could potentially limit the long-term growth of our pipeline and subject us to greater risk that the failure of any such programs would harm our prospects.

Our spending on current and future research and development programs, therapeutic platforms, and product candidates for specific indications may not yield any commercially viable products.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.

The use of human stem cells exposes us to a number of risks in the development of our human stem cell-derived products, including inability to obtain suitable donor material from eligible and qualified human donors, restrictions on the use of human stem cells, as well as the ethical, legal, and social implications of research on the use of stem cells, any of which could prevent us from completing the development of or commercializing and gaining acceptance for our products derived from human stem cells.

We use human stem cells in our research and development, including induced PSCs (iPSCs) and embryonic stem cells (ESCs), and one or more of our ex vivo cell engineering product candidates may be derived from human stem cells.

The use of such cells in our research, or as starting cell lines in the manufacture of one or more of our product candidates, exposes us to numerous risks.

These risks include difficulties in securing viable, appropriate, and sufficient stem cells as starting material, recruiting patients for our clinical trials, as well as managing a multitude of global legal and regulatory restrictions on the sourcing and use of these cells.

For example, to the extent regulatory requirements differ across jurisdictions, we may face increased difficulty finding cells that meet all applicable jurisdictional requirements, or may be required to develop our product candidates using multiple different types of cells, which could increase the complexity and cost of development.

In addition, certain cells may be subject to restrictions regarding the patient populations in which the resulting products can be used, which could limit the applicability and value of our product candidates.

Further, in some states, use of embryonic tissue as a source of stem cells is prohibited and many research institutions have adopted policies regarding the ethical use of human embryonic tissue.

If these regulations, policies, or restrictions have the effect of limiting the scope of research or other activities we can conduct using stem cells, our ability to develop our ex vivo cell engineering product candidates may be significantly impaired, which could have a material adverse effect on our business.

Additionally, the use of stem cells generally, and ESCs, in particular, has social, legal, and ethical implications.

Certain political and religious groups continue to voice opposition to the use of human stem cells in drug research, development, and manufacturing.

Adverse publicity due to ethical and social controversies surrounding the use of stem cells could lead to negative public opinion, difficulties enrolling patients in our clinical trials, increased regulation, and stricter policies regarding the use of such cells, which could harm our business and may limit market acceptance of any of our product candidates that may receive regulatory approval.

In addition, clinical experience with stem cells, including iPSCs and ESCs, is limited.

We are not aware of any products utilizing iPSCs or ESCs as a starting material that have received marketing approval from the FDA or a comparable foreign regulatory authority.

Therefore, patients in our clinical trials may experience unexpected side effects, and we may experience unexpected regulatory delays prior to or, if approval were to be granted, after regulatory approval.

Furthermore, manufacturing and development of our ex vivo stem cell-derived and allogeneic T cell-derived product candidates will require that we obtain suitable donor material from eligible and qualified human donors.

If we are unable to obtain sufficient quantities of suitable donor material, or if we are unable to obtain such material in a timely manner, we may experience delays in manufacturing our ex vivo product candidates, which would harm our ability to conduct clinical trials for or to commercialize these product candidates.

Moreover, if the consent, authorization, or process for the donation and use of those materials is not obtained or conducted in accordance with applicable legal, ethical, and regulatory requirements, we could face delays in the clinical testing and approval of these product candidates, or, potentially, we could face claims by such human donors or regulatory authorities, which could expose us to damages and reputational harm.

Negative public opinion and increased regulatory scrutiny of research and therapies involving gene editing or other ex vivo or in vivo cell engineering technologies may damage public perception of our product candidates or adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.

Certain aspects of our cell engineering platforms rely on the ability to modify the genome, including by editing genes.

Public perception may be influenced by claims that genome modification is unsafe, and products using or incorporating genome modification may not gain the acceptance of the public or the medical community.

Similarly, general perceptions of products relying on ex vivo or in vivo cell engineering techniques may be impacted by developments across the pharmaceutical and biotechnology industries, including those affecting or related to other companies, including those developing products that are similar or within adjacent fields or that are being developed in the same indications.

Negative perceptions of genome modification, including gene editing, or of cell or gene therapy products generally, may result in fewer physicians being willing to enroll patients into clinical trials of our product candidates or prescribing our treatments, reduce the willingness of patients to participate in clinical trials of our product candidates or use our treatments, or otherwise negatively impact the development of our product candidates.

In addition, given the novel nature of ex vivo and in vivo cell engineering technologies, governments may impose import, export, or other restrictions in order to retain control or limit the use of such technologies.

Further, in order to further understand the risks of novel genome modification technologies, regulatory authorities may require us to provide additional data prior to allowing clinical testing or commercialization of product candidates that use such technologies, which may cause us to incur additional costs and delay our development plans for certain of our product candidates.

Increased scrutiny, negative public opinion, more restrictive government regulations, or enhanced governmental requirements, either in the United States or internationally, would have a negative effect on our business or financial condition and may delay or impair the development and commercialization of our product candidates or demand for such product candidates.

Risks Related to the Development and Clinical Testing of Our Product Candidates

We must successfully progress our product candidates through extensive preclinical studies and clinical trials in order to obtain regulatory approval to market and sell such product candidates.

Even if we obtain positive results in preclinical studies of a product candidate, these results may not be predictive of the results of future preclinical studies or clinical trials.

Before an IND or comparable foreign submission can be submitted to the FDA or a comparable foreign regulatory authority and be cleared or otherwise become effective, which is a prerequisite for conducting clinical trials on human subjects, a product candidate must successfully progress through extensive preclinical studies, which include preclinical laboratory testing, animal studies, and formulation studies conducted in accordance with good laboratory practices.

In addition, to obtain the requisite regulatory approvals to ultimately market and sell any of our product candidates, we or any future collaborator for such product candidate must satisfy the FDA’s or a comparable foreign regulatory authority’s legal standards with respect to safety, purity, and potency, or efficacy, which may include, among other things, demonstrating through adequate and well-controlled clinical trials that the benefits of the product candidate outweigh its known risks for the intended patient population.

Preclinical and clinical testing is inherently unpredictable.

We may obtain positive data from early research involving our product candidates but subsequently encounter unexpected or unexplained results in preclinical or clinical studies that may cause such product candidates to be unsuitable for further development.

We may also need to perform additional research and preclinical or clinical studies for various reasons, including to determine the cause of any unexpected results, including whether such results were caused by our product candidates or other factors, which could delay our development timelines or prevent us from continuing further development at all.

Even if we obtain positive results from preclinical or clinical studies of our product candidates, success in preclinical or clinical studies does not ensure that later preclinical studies or clinical trials will be successful.

A number of biotechnology and pharmaceutical companies have suffered significant setbacks in clinical trials, even after positive results in earlier preclinical or clinical studies, such as adverse findings observed while clinical trials were underway or safety or efficacy observations during clinical trials, including previously unreported adverse events, and we cannot be certain that we will not face similar setbacks.

The design of a clinical trial can determine whether its results have the potential to support approval of a product, and flaws in a clinical trial’s design may not become apparent until the clinical trial is well advanced.

In addition, the results of our preclinical animal studies, including our non-human primate (NHP) studies, may not be predictive of the results of subsequent clinical trials involving human subjects.

Product candidates may fail to show the desired pharmacological properties or safety and efficacy traits in clinical trials despite having successfully progressed through preclinical studies or earlier clinical trials.

If we fail to obtain positive results in preclinical studies or clinical trials of any product candidate, the development timeline and regulatory approval and commercialization prospects for that product candidate, and, correspondingly, our business and financial prospects, would be negatively impacted.

Preclinical testing of our product candidates may be delayed or otherwise unsuccessful, which would harm our ability to commence and successfully complete clinical trials of, and ultimately commercialize, such product candidates.

Applicable laws and regulations require us to conduct preclinical testing of our product candidates in animals before initiating clinical trials involving humans, and the results and timing of such testing are uncertain.

We may experience delays in or difficulty completing studies of our product candidates in animals for various reasons.

For example, due to global supply chain issues caused by global geo-political, economic, and other factors beyond our control, as described elsewhere in these Risk Factors, we have experienced and may continue to experience difficulty and increased costs in accessing animal models, specifically certain NHP models, which could delay completion of our preclinical studies involving such models or harm our ability to conduct or complete such studies at all, and could limit the potential patient population for our product candidates.

In addition, animal testing has been the subject of controversy and adverse publicity.

Animal rights groups and others have attempted to stop animal testing by pressing for legislation and regulation and by disrupting such testing through protests and other means.

To the extent these attempts are successful, our research and development activities may be interrupted or delayed, become more expensive, or both.

We are required to submit an IND or comparable foreign submission to the FDA or comparable foreign regulatory authorities with respect to each product candidate prior to commencing a clinical trial for such product candidate in the applicable jurisdiction.

Although we expect our pipeline to yield additional INDs and plan to submit INDs for each of our product candidates, we may not be able to submit future INDs in accordance with our expected timelines for various reasons, including due to:

• manufacturing challenges or delays, including due to challenges associated with scaling up our manufacturing processes and developing and validating assays or otherwise meeting applicable regulatory requirements;

• delays in our IND-enabling preclinical studies;

• feedback from the FDA that requires us to conduct additional testing or change the design of a planned clinical trial prior to submitting such IND.

Moreover, we cannot guarantee that submission of an IND or comparable foreign submission for a product candidate will result in the FDA or comparable foreign regulatory authorities allowing clinical trials of that product candidate to commence in accordance with our timelines or expectations or at all, or that, once begun, issues will not arise that require suspension or termination of such clinical trials.

For example, the FDA or a comparable foreign regulatory authority may accept an IND or comparable foreign submission for a product candidate but place clinical trials of such product candidate on hold pending the results of additional testing or the development of additional assays, or may otherwise refuse or terminate the applicable submission.

Further, because legal and regulatory requirements for conducting clinical trials vary across jurisdictions, our receipt of authorization to conduct clinical trials in one jurisdiction does not guarantee such authorization will be granted in other jurisdictions.

In addition, such legal and regulatory requirements may change over time, including in a manner that could cause us to incur delays or additional expense in order to comply.

For example, the regulatory landscape related to clinical trials in the European Union (EU) continues to evolve.

The EU Clinical Trials Regulation (CTR), which was adopted in April 2014 and repealed the EU Clinical Trials Directive, became applicable on January 31, 2022.

Unlike the EU Clinical Trials Directive, which required a separate clinical trial application (CTA) to be submitted to both the competent national health authority and an independent ethics committee in each EU member state in which the clinical trial will be conducted, the CTR provides for a centralized process.

The CTR allows sponsors for multi-center trials to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.

The CTA assessment procedure has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules.

The decision of each EU member state is communicated to the sponsor via the centralized EU portal.

Once the CTA is approved, clinical studies may proceed.

The CTR foresees a three-year transition period.

Compliance with the CTR requirements by us and our service providers, such as CROs, may impact our development plans.

For example, because the CTR requires coordination of application review and processing across multiple member states, our ability to commence clinical trials in accordance with our timelines could be delayed.

Further, as discussed elsewhere in these Risk Factors, the United Kingdom (UK) withdrew from the EU in 2020, and uncertainty remains as to whether and to what extent certain UK laws and regulations will be aligned with those of the EU, including the CTR, which does not apply in the UK.

Local requirements in the UK and the EU have diverged and may further diverge in the future, which could impact any UK clinical and development activities we may conduct.

In addition, clinical trial submissions in the UK must be separate from those submitted to EU member states, adding further complexity, cost, and potential risk to any clinical and development activity in the UK.

If we are unable to satisfy applicable legal or regulatory requirements for an IND or comparable foreign submission, or experience delays in doing so, clinical development of our product candidates may be delayed or we may be unable to execute clinical trials of the applicable product candidate in the relevant jurisdiction.

For example, we may decide not to submit an IND or comparable foreign submission in certain jurisdictions due to applicable legal or regulatory requirements in such jurisdiction, including based on future changes to such requirements.

Additionally, even if regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or a comparable foreign submission, we cannot guarantee that such regulatory authorities will not change their requirements in the future, which could require us to make costly changes to and delay the conduct of our clinical trials or require suspension or termination of such trials entirely.

In addition, because the manufacturing of our product candidates, including our ex vivo CAR T cell product candidates, is in its early stages and continues to evolve, we expect that manufacturing-related matters such as chemistry, manufacturing, and controls, including product specifications, will continue to be a focus of regulatory review of our INDs or comparable foreign submissions, which may delay our ability to proceed with the relevant clinical trials.

These considerations also apply to new clinical trials we may submit as amendments to existing INDs or comparable foreign submissions.

Clinical drug development is a lengthy and expensive process with uncertain timelines and outcomes.

If clinical trials of any of our product candidates are prolonged or delayed, or need to be terminated, we may be unable to obtain required regulatory approvals and commercialize such product candidates on a timely basis or at all.

Clinical trials are expensive, complex, and can take many years to complete, and their outcomes are inherently uncertain and their data subject to varying interpretations and analyses.

Product candidates in later-stage clinical trials may fail to produce the same results as observed in earlier trials or fail to show the desired safety and efficacy characteristics despite having progressed through preclinical studies and earlier clinical trials.

We do not know whether our current or future clinical trials will begin on time, need to be redesigned, enroll patients on time, or be completed on schedule, if at all.

Clinical trials may be delayed, suspended, or terminated, or may not be able to be conducted at all, for a variety of reasons, including the following:

• delays in or failure to obtain regulatory authorization to commence a trial;

• delays in or failure to obtain institutional review board (IRB) or ethics committee (EC) approval for each clinical trial site;

• delays in or failure to reach agreement with prospective CROs and other service providers, clinical trial sites, or companion diagnostic development partners on acceptable terms, or at all;

• difficulty in recruiting clinical trial investigators or clinical trial sites of appropriate competencies and experience, including due to pre-existing commitments or resource and other infrastructure constraints, including resource allocation to other clinical trials, such as those of our competitors;

• delays in or inability to timely manufacture sufficient quantities of a product candidate for use in clinical trials, including due to lack of sufficient availability of suitable donor material from eligible and qualified donors for the manufacture of our ex vivo cell engineering product candidates;

• failure of a product candidate to meet acceptable quality or stability standards, or failure to manufacture product candidates in accordance with cGMP and other applicable laws, regulations, and guidelines;

• delays in establishing the appropriate dosage levels in clinical trials;

• delays in or inability to recruit, enroll, and retain suitable patients in a trial, as discussed elsewhere in these Risk Factors;

• failure of patients to complete a trial or return for post-treatment follow-up;

• difficulty in identifying the sub-populations that are the target group for a particular trial, which may delay enrollment and reduce the power of a clinical trial to detect statistically significant results;

• clinical sites deviating from trial protocol or dropping out of a trial;

• delays caused by the addition of new investigators or clinical trial sites or replacement of existing investigators or sites;

• safety, efficacy, or other concerns arising out of investigator-sponsored clinical trials (ISTs) involving our product candidates or technologies;

• safety or tolerability concerns relating to the product candidate being tested that could cause us or governmental authorities, as applicable, to suspend or terminate a clinical trial or program or impose a clinical hold, including if participants are being exposed to unacceptable health or safety risks or experiencing undesirable side effects, there are other unfavorable characteristics of the product candidate, or regulators deem our product candidate to have the potential for comparable undesirable side effects or risks to those of other product candidates, including those under development by us or third parties, due to compositional, biologic, mechanistic, sourcing, or other similarities;

• the failure of third-party contractors to comply with regulatory requirements or meet their contractual obligations in a timely manner or at all;

• changes in regulatory requirements, policies, and guidelines;

• changes in the treatment landscape for our target indications that may make it more difficult to initiate or recruit patients for our clinical trials in certain jurisdictions or may make our product candidates no longer relevant;

• claims that the product candidate being tested infringes third-party intellectual property rights, including any resulting injunctions that may prevent further use of such product candidates and interfere with the progress of the trial;

• business interruptions resulting from geo-political actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods, and fires, or disease.

Clinical trials must be conducted in accordance with the FDA’s and comparable foreign regulatory authorities’ legal requirements, regulations, and guidelines and are subject to oversight by these governmental authorities and IRBs or ECs of the medical institutions where the clinical trials are conducted.

We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or ECs of the institutions at which such trial is being conducted, by the Data Review Committee or Data Safety Monitoring Board for such trial, or by the FDA or comparable foreign regulatory authorities.

Such authorities may impose such a suspension or termination, including following an inspection of clinical trial operations or a clinical trial site, for various reasons, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from use of the product candidate being tested, or changes in governmental regulations or administrative actions.

In addition, the complexity and novelty of certain product candidates, the clinical trial design, and the indications for which such product candidates are being developed, as well as the combination of these factors, could negatively affect our ability to successfully execute and complete clinical trials of such product candidates in accordance with our timelines.

For example, clinical trials involving certain indications, such as autoimmune diseases, may require the involvement and alignment of medical professionals across various specialties.

Additionally, we may evaluate certain of our product candidates in multiple indications, including in oncology and B-cell-mediated autoimmune diseases, and across a broad range of diseases in a single clinical trial.

Because these diseases can vary significantly, doing so may introduce additional complexities and challenges with executing our clinical trials, any of which could increase the time and expense required to commence and complete the applicable trial.

Further, to the extent we develop our product candidates for multiple indications, the occurrence of any potential safety issues or significant side effects with respect to a particular indication or study could negatively affect the development of such product candidate in all indications.

We and third parties involved in our clinical trials may not have sufficient resources to adequately address such complexities in accordance with our timelines or at all.

If we experience delays in completing, or are required to terminate, any clinical trial of our product candidates, the commercial prospects of the relevant product candidates will be harmed, and our ability to generate product revenues from these product candidates will be delayed.

In addition, any delays in completing our clinical trials will increase our costs, delay our ability to obtain regulatory approval for the relevant product candidate, and jeopardize our ability to commence product sales and generate revenues.

Significant clinical trial delays could also allow our competitors to bring products to market before we do or shorten any periods during which we have the exclusive right to commercialize our product candidates, which may impair our ability to commercialize our product candidates and harm our business and results of operations.

Furthermore, as described elsewhere in these Risk Factors, we rely and will continue to rely on third parties that are responsible for executing or supporting our clinical trials, such as CROs and clinical trial sites, including principal investigators, and to the extent they fail to timely and properly perform their obligations, we may experience program delays, incur additional costs, or both, which may harm our business.

In addition, we may experience delays and incur additional costs with respect to clinical trials that we conduct in countries outside the United States, including as a result of increased shipment and distribution costs, compliance with additional regulatory requirements, and the engagement of non-United States-based CROs, and may also be exposed to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening, and medical care.

We will depend on timely and successful enrollment and retention of patients in our clinical trials for our product candidates.

If we experience delays or difficulties enrolling or retaining patients in our clinical trials, our research and development efforts and business, financial condition, and results of operations could be materially adversely affected.

Successful and timely initiation and completion of clinical trials will require that we timely enroll and retain a sufficient number of patients.

Any clinical trials we conduct may be subject to delays for a variety of reasons, including as a result of patient enrollment taking longer than anticipated, patient withdrawal, or the occurrence of adverse events.

These types of developments could cause us to delay the trial or halt further development of the relevant product candidate.

Patient enrollment in clinical trials depends on many factors, including:

• the size and nature of the patient population;

• the severity of the disease under investigation, including patients’ prior lines of therapy and treatment;

• eligibility and exclusion criteria for the trial;

• the number and location of clinical trial sites;

• the proximity of patients to clinical sites;

• the design of the clinical protocol;

• the ability to obtain and maintain patient consents;

• competition with other sponsors or clinical trials for clinical trial sites or patients;

• the perceived risks and benefits of the product candidate under evaluation;

• the ability to recruit and availability of clinical trial investigators and sites with the appropriate competencies and experience;

• the risk that enrolled patients will drop out of the trial before administration of the product candidate or trial completion;

• the availability of patients resulting from the impact of any pandemic, epidemic, or disease outbreak;

• the availability of, and clinicians’ and patients’ satisfaction with, existing and new drugs approved for the indication the clinical trial is investigating;

• clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new therapies that may be approved for the indications the clinical trial is investigating or the approved label expansion of an existing therapy into the indication the clinical trial is investigating.

In particular, our clinical trials will compete with other clinical trials that are in the same therapeutic areas as our product candidates.

In addition, because the number of qualified clinical investigators and clinical trial sites is limited, we expect to conduct at least some of our clinical trials at the same sites as those used by our competitors.

Competition with other clinical trials may reduce the number and types of patients available to participate in our trials, as some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

Moreover, enrolling patients in clinical trials for diseases for which there is an approved standard of care is challenging, as patients will first receive the applicable standard of care, and many patients who respond positively to the standard of care do not enroll in clinical trials.

In addition, although patients who fail to respond positively to the standard of care treatment may be eligible for clinical trials of our product candidates, treatment with prior regimens may render our product candidates less effective in clinical trials.

As a result, the number of eligible patients who have the potential to benefit from our product candidates could be limited, which could extend development timelines or increase costs for our programs.

The circumstances described above and elsewhere in these Risk Factors may make it difficult for us to enroll enough patients to complete our clinical trials in a timely and cost-effective manner.

If we are unable to timely recruit and enroll patients for our clinical trials, enroll a sufficient number of patients to complete our clinical trials as planned, or retain patients in our clinical trials, we may be required to change our trial design, recruit and enroll a different population of patients than we anticipated, or recruit and enroll patients in geographies that are more challenging.

We may not be fully prepared to address such challenges, and even if we are able to address such challenges, the results of our clinical trials may be negatively impacted.

Delays in the completion of any clinical trial we may conduct will increase our costs, slow down the development and approval process, and delay or potentially jeopardize our ability to commence product sales and generate revenue for the relevant product candidate.

In addition, some of the factors that may cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Clinical trials may fail to demonstrate that our product candidates, including any future product candidates, or technologies used in or used to develop such product candidates, meet the FDA’s or a comparable foreign regulatory authority’s requirements with respect to safety, purity, and potency, or efficacy, which would prevent, delay, or limit the scope of regulatory approval and commercialization of such product candidates.

To obtain the requisite regulatory approvals to market and sell any of our current or future product candidates , we or our potential future collaborators must demonstrate with substantial evidence from adequate and well-controlled clinical trials of the product candidate, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidate meets the FDA’s or such comparable foreign regulatory authorities’ legal standards with respect to safety, purity, and potency, or efficacy, which may include, among other things, demonstrating through adequate and well-controlled clinical trials that the benefits of the product candidate outweigh its known risks for the intended patient population.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

Failure can occur at any time during the clinical development process.

Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.

We may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful.

Clinical trials of our product candidates or product candidates developed using our technologies (including those conducted by third parties, such as in the case of ISTs) may not demonstrate that such product candidates or technologies have efficacy and safety profiles necessary to support regulatory approval.

Safety or efficacy results for a particular clinical trial, or between different clinical trials of the same product candidate, can vary significantly due to numerous factors, including differences in the size and type of the patient populations, variety of patients and disease types within a trial, changes in and adherence to the clinical trial protocols and trial procedures, and the rate of dropout among clinical trial participants.

If the results of clinical trials are inconclusive with respect to the efficacy of our product candidates or those developed using our technologies, if we do not meet the clinical endpoints with statistical and clinically meaningful significance, or if there are safety concerns associated with our product candidates or technologies, we may experience delays in obtaining marketing approval, or we may not obtain approval at all.

Additionally, any safety concerns observed in any clinical trial of one of our product candidates, or those developed using our technologies, in our targeted indications could limit the prospects for regulatory approval of such product candidate in those and other indications or the prospects of other product candidates we may develop that are perceived to have the potential for similar safety concerns.

Additionally, some of our trials may be open-label trials in which the patient and/or investigator know whether the patient is receiving the investigational product candidate.

Data generated from open-label clinical trials may exaggerate any therapeutic effect, as patients and/or investigators are aware when a patient has received the experimental treatment, which may cause investigators to interpret the information of the treated group more favorably.

Therefore, positive results observed in open-label trials may not be replicated in later controlled trials.

Even if we or our collaborators (or other third parties, in the case of ISTs) successfully complete any future clinical trials, clinical data are often susceptible to varying interpretations and analyses.

We cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval.

Even if positive results are observed in clinical trials, we cannot guarantee that the FDA or comparable foreign regulatory authorities will view our product candidates as having efficacy.

Further, the FDA or comparable foreign regulatory authorities may not agree with our manufacturing strategy or may not find comparability between our clinical trial product candidates and proposed commercial product candidates, which may result in regulatory delays or a need to perform additional clinical studies.

Moreover, clinical trial results that may be acceptable to support approval of a certain scope in one jurisdiction may be deemed inadequate to support regulatory approval, or may only be deemed sufficient to support a narrower scope of approval, in other jurisdictions.

If the FDA or comparable foreign regulatory authorities determine that the results of clinical trials of our product candidates are not adequate to support approval of a marketing application, we may experience delays in obtaining, or fail to obtain, approval of our product candidates, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.

Even if regulatory approval is obtained for a product candidate, the terms of such approval may limit the scope and use of the specific product candidate, which may also limit its commercial potential.

Our product candidates may cause serious adverse, undesirable, or unacceptable side effects or have other properties that may delay or prevent marketing approval.

If a product candidate receives regulatory approval, and such side effects are identified following such approval, the commercial profile of any approved label may be limited, or we may be subject to other significant negative consequences following such approval.

Our product candidates may cause serious adverse, undesirable, or unacceptable side effects, which could cause us or regulatory authorities to interrupt, delay, or halt our future clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or comparable foreign authorities.

We do not currently, and in the future may not, have sufficient clinical data or other information to enable us to fully anticipate the side effects of our product candidates.

Accordingly, we may observe unexpected side effects or higher levels of expected side effects in clinical trials of our product candidates, including adverse events known to occur in the same classes of therapeutics, such as infusion reaction, cytokine release syndrome, graft-versus-host disease, neurotoxicities, and certain cancers.

Results of our clinical trials could reveal a high and unacceptable severity and prevalence of these or other side effects associated with our product candidates.

In such an event, clinical trials of such product candidates could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of such product candidates for any or all targeted indications.

In addition, the FDA or comparable foreign regulatory authorities may more closely scrutinize any side effects or safety concerns associated with our product candidates in the context of the potential benefits observed in diseases that are not immediately life-threatening, such as certain autoimmune diseases, which could harm our ability to develop or obtain regulatory approval for applicable product candidate in such diseases.

Moreover, the occurrence of such side effects could negatively affect our ability to recruit and enroll patients in our clinical trials or the ability of enrolled patients to complete the clinical trials, or result in product liability claims.

For example, patients with diseases that are not immediately life-threatening, including certain autoimmune diseases, and their physicians may be less likely to enroll or recommend enrollment in clinical trials of our product candidates if there is a risk of certain side effects or safety concerns and may be more likely to cease their participation in such clinical trials if they experience certain side effects.

Similar events may occur if it is determined that there are side effects or safety concerns associated with other products or product candidates that are, or are perceived to be, similar to ours.

Any of these occurrences could significantly harm our business, financial condition, and prospects.

Further, clinical trials by their nature involve only a sample of the potential patient population.

Because our clinical trials will involve only a limited number of patients and limited duration of exposure to our product candidates, rare and severe side effects of our product candidates may not be apparent during early clinical trials and may only be uncovered once a significantly larger number of patients have been exposed to the product candidate, including during later-stage clinical trials or following commercialization, or when longer-term data is available.

As such, even if applicable regulatory authorities initially determine that our product candidates have an acceptable safety profile for their intended use in humans, they may later prove to cause serious side effects in patients that we were unable to observe or predict during their clinical development.

In the event that any of our product candidates receives regulatory approval and we or others later determine that such product may cause undesirable or unacceptable side effects, a number of potentially significant negative consequences could result, including:

• regulatory authorities may withdraw or limit approvals of such product and require us to take such product off the market;

• regulatory authorities may require the addition of labeling statements, specific warnings, or a contraindication or field alerts to physicians and pharmacies, or issue other communications containing warnings or other safety information about the product;

• regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients or that we implement a risk evaluation and mitigation strategy (REMS) plan to ensure that the benefits of the product outweigh its risks;

• we may be required to change the therapeutic dose or the way the product is administered, conduct additional clinical trials, or change the labeling of the product;

• we may be subject to limitations on how we may promote or manufacture the product;

• sales of the product may decrease significantly;

• we may be subject to litigation or product liability claims;

• our reputation may suffer.

Any of these events could prevent us or our potential future partners from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenue from the sale of any products.

Interim, topline, or preliminary data from our preclinical studies or clinical trials that we may announce or publish from time to time may change as more data become available or as we make changes to our manufacturing processes.

These data are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, topline, or preliminary data from our preclinical studies or clinical trials, which are based on a preliminary analysis of then-available data, and the final results and related findings and conclusions are subject to change following a more comprehensive review of the study or trial data.

We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data at the time of our initial disclosure of data.

Further, modifications or improvements to our manufacturing processes for a product candidate may result in changes to its characteristics or behavior that could cause the product candidate to perform differently and affect the results of our preclinical studies or planned or ongoing clinical trials of such product candidate, and potentially require us to conduct additional preclinical studies or clinical trials.

As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated.

Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously disclosed.

As a result, topline data should be viewed with caution until the final data are available.

Similarly, preliminary or interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available.

Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.

Additionally, disclosure of preliminary or interim data by us or our competitors, with respect to clinical trials of their product candidates, could result in volatility in the price of our common stock.

Further, others, including regulatory authorities, investors, or analysts, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses, or may interpret or weigh the importance of data, including any decisions we may make based on that data, particularly limited or preliminary data, differently than we do, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate, and our company in general.

If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, investors, or analysts, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates, as well as our business, operating results, prospects, and financial condition, could be harmed.

Our product candidates or technologies may be involved in investigator-sponsored clinical trials, and we will have limited or no control over the conduct of such trials.

ISTs involving our product candidates or technologies pose or are subject to similar risks to those set forth elsewhere in these Risk Factors relating to clinical trials that we conduct ourselves.

Although ISTs may provide us with clinical data that can inform the development strategy for our product candidates, we will be unable to control the timing, design, and conduct of such ISTs or regulatory matters with respect to such ISTs, including the submission, clearance or approval, or maintenance of any IND or comparable foreign submission required to conduct such ISTs.

In addition, we would not control the data collection and reporting, including timing thereof, with respect to any ISTs, and may not control the manufacturing of the product candidate or technology to be tested in any such ISTs.

A delay in the timely completion of or reporting of data from any potential IST, including as a result of manufacturing complications or delays, which could occur for various reasons such as the need to obtain additional licenses, delays in recruiting, enrolling, or retaining patients, or other potential issues, including those described in these Risk Factors, could have a material adverse effect on our ability to further develop our product candidates or to advance our product candidates through subsequent clinical trials.

Negative results from an IST could have a material adverse effect on our business and prospects and the perception of our product candidates and technologies.

Additionally, there is a possibility that ISTs may be conducted under less rigorous clinical standards than those used in company-sponsored clinical trials.

Accordingly, the FDA and comparable foreign regulatory authorities may more closely scrutinize the resulting data and may not view these data as providing adequate support for future clinical trials, whether sponsored by us or third parties.

In addition, any potential IST could demonstrate marginal efficacy or reveal clinically relevant safety concerns that could delay the further clinical development or regulatory approval of our product candidates.

Further, data from a potential IST may fail to demonstrate efficacy for various reasons, including those unrelated to our product candidates or technologies, which may negatively impact the perception of such product candidates and technologies, despite their potential for future success.

To the extent that the results of any ISTs raise safety or other concerns regarding our product candidates or technologies, regulatory authorities may question the results of such ISTs or other clinical trials involving the relevant product candidate or technology.

Safety concerns arising from any potential ISTs may cause the FDA or comparable foreign regulatory authorities to impose partial or full clinical holds on our product candidates, including product candidates that were developed using the same technology or manufactured using the same reagents and materials as those product candidates that are the subject of such ISTs, which could delay or prevent us from advancing our product candidates into further clinical development and require us to discontinue our development of such product candidates.

The occurrence of any of the foregoing would severely harm our business and prospects.

The manufacture of our product candidates is complex.

We or our CDMOs may encounter difficulties in production, which could delay or entirely halt our or their ability to supply our product candidates for clinical trials or, if approved, for commercial sale.

Our product candidates are considered to be biologics, and the process of manufacturing biologics is complex and requires significant expertise and capital investment, including with respect to the development of advanced manufacturing techniques and process controls.

As described elsewhere in these Risk Factors, we have entered into a long-term lease to establish manufacturing capabilities at the Bothell facility and have entered into an agreement to access manufacturing capabilities within URMC’s cell-based manufacturing facility.

We currently rely, and expect to continue to rely, on CDMOs for the manufacture of certain of our product candidates for preclinical and clinical studies.

We also anticipate that we will continue to rely on CDMOs for at least some portions of our supply chain following commercialization of any product candidates for which we may receive regulatory approval.

As described elsewhere in these Risk Factors, we expect that we will also be required to transition certain manufacturing processes and know-how, including to our CDMOs and to the Bothell facility and the URMC site, over time, which is a complex process with which we have limited experience.

If we experience any delays or issues with the foregoing, our ability to begin manufacturing certain of our product candidates internally could be delayed, and we may need to rely to a greater extent on CDMOs for the manufacture of such product candidates for longer than we currently anticipate.

To date, we and our CDMOs have limited experience in manufacturing of cGMP batches of our product candidates.

Our CDMOs and, once we begin to operate the Bothell facility and the URMC site, we, must comply with cGMPs and other complex regulations and guidelines applicable to the manufacturing of biologics for use in clinical trials and, if approved, commercial sale, and any inability or failure to comply with such regulations and guidelines could delay our clinical trials or prevent us from being able to commence clinical testing at all.

To date, we have not scaled the manufacturing processes with respect to our product candidates for later-stage clinical trials and commercialization, and we and our CDMOs may not have sufficient capacity, resources, or capabilities to scale such manufacturing processes in accordance with our desired timelines or at all.

Further, certain of our product candidates may have characteristics that present increased manufacturing complexity and necessitate longer manufacturing timelines.

If we are unable to successfully scale the manufacturing process for these product candidates, including in compliance with cGMP quality requirements, or adapt such manufacturing process to meet late-stage development or commercial quality requirements, we may not be able to manufacture sufficient quantities of compliant product candidates, or manufacture them in a timely manner, which would harm our ability to clinically develop and commercialize such product candidates.

In addition, the manufacturing of our product candidates, including large-scale manufacturing, may require the development of novel processes for upstream and downstream activities, including analytical technologies, which could cause delays in the scaling of manufacturing, as well as greater costs that could negatively impact the financial viability of our product candidates.

We cannot be sure that the manufacturing processes employed by our CDMOs or the technologies that our CDMOs incorporate into our manufacturing processes will result in viable or scalable yields of ex vivo and in vivo cell engineering product candidates that will have acceptable safety, purity, potency, or efficacy profiles and, if approved, meet market demand.

Our biologic product candidates are susceptible to product loss or reduced manufacturing success rates at various points during the manufacturing process, including due to contamination, equipment damage or failure, including during shipment or storage, failure of equipment to operate as expected, improper installation or operation of equipment, vendor or operator error, damage to, variability of, or improper use of raw materials or consumables necessary for the manufacturing process, inconsistency in yields, variability in product characteristics, and difficulties in scaling the production process.

Any of these issues, and even minor deviations from normal manufacturing processes, could result in reduced production yields, product defects, and other supply disruptions and delays.

If microbial, viral, or other contaminations are discovered in our product candidates or in the facilities in which our product candidates are manufactured, including the Bothell facility, the URMC site, or any future manufacturing facilities, or those of our CDMOs, such supply may have to be discarded, our products may be withdrawn from clinical trials and, if approved, the market, and such facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Moreover, if the FDA or comparable foreign regulatory authorities determine that we or our CDMOs, or our or our CDMOs’ facilities, are not in compliance with applicable laws and regulations, including cGMPs, the FDA or comparable foreign regulatory authority may not approve a biologics license application (BLA) or comparable foreign marketing authorization until the deficiencies are corrected or we replace the manufacturer in our applications with a compliant manufacturer, and we may ultimately be unable to manufacture our product candidates.

The occurrence of any of these issues could delay our ability to commence or timely complete clinical development, obtain regulatory approval of, and commercialize our product candidates.

We also may make changes to our manufacturing processes at various points during development, and even after commercialization, for various reasons, such as to control costs, achieve scale, decrease processing time, or increase manufacturing success rate.

Such changes carry the risk that they will not achieve their intended objectives, and any of these changes could result in changes to a product candidate’s characteristics or behavior or cause our product candidates to perform differently and affect the results of any of our then-ongoing or future preclinical studies or clinical trials, or the performance of the product, once commercialized.

In certain circumstances, if we make changes to our manufacturing process for a product candidate, regulatory authorities may require us to perform comparability studies and collect additional preclinical or clinical data prior to undertaking additional clinical trials or obtaining marketing approval for or commercializing the product candidate produced with such modified process.

For instance, if we make changes to our manufacturing process for a product candidate during the course of preclinical or clinical development, regulatory authorities may require us to demonstrate the comparability of the product used in preclinical studies, earlier clinical phases, or earlier portions of a trial to the product used in later clinical trials or clinical phases or later portions of a trial, as applicable.

If at any point we switch to a different CDMO or supplier of reagents or materials used in the manufacturing process for a product candidate, including, for example, in order to ensure sufficient supply for later-stage clinical trials and potential commercialization, we may also be required to perform comparability studies in order to demonstrate comparability of the applicable product candidate, reagent, or material from the prior CDMO or supplier to that from the new CDMO or supplier, and otherwise demonstrate that the relevant product candidate, reagents, or materials meet the applicable specifications.

We may be unable to successfully generate comparability data, and even if we are able to generate and provide such data, regulatory authorities may disagree with the design of our comparability studies or otherwise determine that the data are insufficient to support a determination of comparability.

Similarly, we may be unable to demonstrate that the relevant materials meet the applicable specifications.

In such an event, we may be required to make further changes to our process or undertake additional preclinical or clinical testing, which could result in manufacturing delays and affect our ability to timely dose patients in our clinical trials, which could delay further development or commercialization of such product candidate, or we may be unable to continue development of the applicable product candidate at all.

Any adverse developments affecting manufacturing operations for any of our product candidates, including those for which we may obtain regulatory approval, may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other supply interruptions that could negatively impact the conduct of our clinical trials or our ability to successfully commercialize any product candidates for which we may obtain regulatory approval.

We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications as a result of defects or storage over an extended period of time, undertake costly remediation efforts, or seek more costly manufacturing alternatives.

Any such issues would harm our ability to timely and successfully complete clinical trials and obtain regulatory approval of our product candidates, which could have a significant negative impact on our business, operations, and prospects.

We are exposed to a number of risks related to the supply chain for the materials required to manufacture our product candidates.

The manufacturing of our product candidates is highly complex and requires sourcing of specialty materials.

Many of the risks associated with the complex manufacturing of our final product candidates are applicable to the manufacture and supply of the raw materials required to make such product candidates.

In particular, these raw materials are subject to inconsistency in yields, variability in characteristics, contamination, difficulties in scaling the production process, and defects.

Similar minor deviations in the manufacturing process for these raw materials could result in supply disruption and reduced production yields for our final product candidates.

In addition, we rely on third parties for the supply of these materials, which exposes us to risks associated with dependence on third parties, as described elsewhere in these Risk Factors.

Further, we use certain reagents and materials across various programs and initiatives, and any difficulties we experience with such reagents or materials, including with respect to sourcing, quality, or other factors, could have a more significant impact on our portfolio and business than if we used different reagents and materials for each of our programs and initiatives.

We must obtain suitable donor material from eligible and qualified donors for the manufacture of product candidates from our ex vivo cell engineering platform.

If we are unable to obtain sufficient quantities of suitable donor material in a timely manner or at all, including if we are unable to find donors who meet the eligibility criteria or as a result of geo-political, economic, and other factors beyond our control that may prevent individuals from donating blood, we may experience delays in manufacturing our ex vivo product candidates, which would harm our ability to conduct clinical trials of or to commercialize these product candidates.

In addition, we require many reagents, which are drug substance intermediates used in our manufacturing processes to bring about chemical or biological reactions, and other specialty raw and intermediate materials, consumables, and equipment, for our manufacturing processes and for quality control testing of our product candidates, some of which are manufactured or supplied by small companies with limited resources and experience with respect to supporting clinical or commercial biologics production.

Some of these suppliers may not have the capacity or resources to support manufacturing of products under cGMP on our timelines or at all or may otherwise be ill-equipped to support our needs, including if and as we expand our manufacturing activities to support later-stage clinical trials and, for any product candidates that may receive regulatory approval, commercialization.

Reagents and other key materials from these suppliers may have inconsistent attributes and introduce variability into our manufactured product candidates, which may contribute to variable patient outcomes and possible adverse events.

We also do not have supply contracts with many of these suppliers and may not be able to enter into supply contracts with them on acceptable terms or at all.

Accordingly, we may experience delays in receiving key reagents, materials, consumables, and equipment to support clinical or commercial manufacturing, which could delay development and commercialization of our product candidates.

For some of these reagents, materials, consumables, and equipment, we and our CDMOs currently rely and may in the future rely on sole source vendors or a limited number of vendors.

We may be unable to continue to source reagents, materials, consumables, or equipment from any of these vendors for various reasons, including due to regulatory actions or requirements affecting a vendor, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demand from other customers and supply limitations, or quality issues.

Additionally, due to global geo-political, economic, and other factors beyond our control, there has been, and there are and may continue to be, a shortage of key materials, consumables, and equipment that are necessary to manufacture our product candidates, including certain consumables such as bags, flasks, and pipette tips, which could affect our or our CDMOs’ ability to obtain the materials, consumables, and equipment necessary to manufacture our product candidates.

If any of the foregoing events were to occur, we may experience delays in manufacturing our product candidates, which would harm our ability to conduct future clinical trials and, if approved, commercialize our products and generate product revenues in a timely manner or at all.

Additionally, as described elsewhere in these Risk Factors, rising rates of inflation in recent years have resulted in substantial increases in the costs associated with manufacturing our product candidates, including the costs of materials, consumables, and equipment, that we are unable to offset.

Given the unpredictable nature of the current economic climate, including future rates of inflation, it may be increasingly difficult for us to predict and control our future expenses, which may harm our ability to conduct our business.

As we continue to develop and scale our manufacturing processes, we expect that we will need to obtain rights to and supplies of certain materials and equipment to be used as part of those processes.

We may not be able to obtain rights to or sufficient quantities of such materials or equipment on commercially reasonable terms, or at all, and our inability to alter our processes in a commercially viable manner to avoid the use of such materials or equipment or find suitable substitutes would have a material adverse effect on our business.

Even if we are able to alter our processes so as to use other materials or equipment, such a change may delay our clinical development or commercialization plans.

As described elsewhere in these Risk Factors, if such a change occurs for product candidate that is already being tested in clinical trials, the change may require us to perform comparability studies, demonstrate that the new materials or equipment meet applicable specifications, and collect additional data from patients prior to undertaking more advanced clinical trials.

We may become exposed to costly and damaging liability claims, either when testing our product candidates in clinical trials or at the commercial stage, and our product liability insurance may not cover all damages arising from such claims.

We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing, and use of pharmaceutical products.

The use of our product candidates in clinical trials, and the sale of any products for which we may obtain approval in the future, may expose us to liability claims.

These claims might be made by patients that use the product, healthcare providers, pharmaceutical companies, or others selling such products.

Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our product candidates or any prospects for commercialization of our product candidates.

Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a drug, even after regulatory approval, may exhibit unforeseen side effects.

Physicians and patients may not comply with any warnings that identify known potential adverse effects or patients who should not use our product candidates.

If any of our product candidates were to cause adverse side effects during clinical trials or after approval, we may be exposed to substantial liabilities.

We would require significant financial and management resources to defend against any product liability claims, even if we are successful in such defense.

Regardless of the merits or eventual outcome, liability claims may result in decreased demand for our product candidates, negative publicity and injury to our reputation, withdrawal of clinical trial participants, investigations by regulatory authorities, costs to defend the related litigation, diversion of management’s time and our resources, substantial monetary awards to clinical trial participants or patients, product recalls, withdrawals, or labeling, marketing, or promotional restrictions, loss of revenue, exhaustion of any available insurance and our capital resources, inability to commercialize our product candidates, and a decline in our share price.

Although we maintain product liability insurance for our product candidates, it is possible that our liabilities could exceed our insurance coverage.

We intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for any of our product candidates.

However, we may be unable to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.

If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims, and our business operations could be impaired.

Risks Related to Our Dependence on Third Parties

We rely, and expect to continue to expect to rely, on CDMOs, including third-party testing laboratories, to manufacture our product candidates, as well as materials used in the manufacturing of our product candidates, including testing of such product candidates and materials.

Any failure by a CDMO to properly produce acceptable materials or product candidates for us or any failure by us or such CDMO to obtain authorization from the FDA or comparable foreign regulatory authorities or otherwise satisfy regulatory requirements with respect to such manufacturing of our product candidates may delay or impair our ability to initiate or complete our clinical trials, obtain regulatory approvals, or commercialize approved products.

We do not currently own or operate any cGMP manufacturing facilities, nor do we have any in-house cGMP manufacturing capabilities.

Until we are able to begin manufacturing our product candidates at our Bothell facility, we will rely in part on CDMOs, including third-party testing laboratories, to manufacture our product candidates for use in preclinical and clinical testing and expect to continue to rely on such CDMOs to manufacture certain of our product candidates thereafter as part of our manufacturing strategy.

A limited number of CDMOs specialize in or have the expertise required to manufacture our product candidates or materials used in their manufacture.

Moreover, our CDMOs have limited capacity at their facilities and require commitments to secure availability well in advance of manufacturing any products or other materials.

Additionally, we face competition from other biopharmaceutical companies to secure manufacturing availability at these facilities.

If the CDMOs on which we rely to manufacture our product candidates and other materials do not have sufficient availability at their facilities to do so in accordance with our timelines or are not otherwise able to meet our expected deadlines, we will experience delays in manufacturing our product candidates or other materials necessary for their manufacture.

For example, because we rely on, and may continue to rely on, single CDMOs for certain manufacturing activities across multiple programs, any issues we may experience with such a CDMO, including inability to secure manufacturing capacity as and when needed, could result in manufacturing delays across all such programs and harm our ability to timely and successfully complete clinical trials and commercialization of our product candidates.

In addition, as described elsewhere in these Risk Factors, we assess and prioritize our programs on an ongoing basis based on various factors.

We may not be able to secure manufacturing capacity for certain programs as and when needed and may be required to prioritize manufacturing activities for certain programs over others, which could lead to manufacturing delays and harm our ability to further develop the relevant product candidates.

We may also experience similar capacity constraints and manufacturing delays in the future with respect to any products we may manufacture at the Bothell facility.

Further, for each new program or CDMO we engage, or in the case of certain changes to the manufacturing process for a product candidate, the relevant manufacturing process and related know-how must be transferred to the CDMO.

This technology transfer is time-consuming and complex.

If we are required to switch from an existing CDMO to a new CDMO, including to meet cGMP quality requirements or support process lock or larger-scale manufacturing for later-stage clinical trials or potential commercialization, we will need to conduct additional technology transfer activities, which could result in delays in further development of the applicable product candidate.

Our CDMOs also face intense competition to attract and retain qualified personnel.

If our CDMOs are unable to attract, retain, and motivate qualified personnel, they may be unable to perform their obligations in a timely manner, or their performance may be substandard or may not meet our quality requirements, which could cause us to experience delays in manufacturing our product candidates.

Further, as described elsewhere in these Risk Factors, there are few alternatives for the CDMOs that we currently engage, and even if one of our CDMOs fails to perform according to our expectations and we decide to switch to an alternative CDMO, there is no guarantee that such alternative CDMO will be able to perform its obligations in a timely manner or that its performance will meet our expectations or quality requirements.

Any delays in manufacturing our product candidates could materially harm our ability to conduct our clinical trials or commercialize our product candidates in a timely manner or at all and could harm our business.

In addition, we rely on multiple CDMOs to produce sufficient quantities of materials required for the manufacture of our product candidates for preclinical testing and clinical trials and intend to continue to rely on such CDMOs for the commercial manufacture of certain of our products, if approved.

Global supply chain shortages and rising rates of inflation in recent years have resulted in substantial increases in the costs of materials, including raw materials, reagents, consumables, and equipment that are required to make or used in the manufacture of our product candidates.

If we are unable to obtain such items from third-party sources, or fail to do so on commercially reasonable terms, we may not be able to produce sufficient supply of product candidate or we may be delayed in doing so.

Such inability or failure, or any substantial delay in obtaining such items, could materially harm our business.

We rely on third parties to produce certain reagents and biological materials that are used in our discovery and development programs.

These materials can be difficult to produce and occasionally have variability from our product specifications.

If these materials do not comply with our product specifications, or in the event of any other disruption in the supply of these materials, our business could be materially adversely affected.

Although we have control processes and screening procedures, biological materials are susceptible to damage and contamination and may contain active pathogens.

Our suppliers may also have low yield from manufacturing batches of these materials, which could increase our costs and slow our development timelines.

Improper storage of these materials, by us or any third-party suppliers, may require us to destroy some of these materials or product candidates generated using such materials.

Reliance on CDMOs entails additional risks to which we would not be subject if we manufactured product candidates ourselves, including those applicable to other third-party service providers, as described elsewhere in these Risk Factors.

In particular, such risks include reliance on the CDMO for regulatory compliance and quality control and assurance, including compliance with cGMP requirements and comparable standards relating to methods, facilities, and controls used in the manufacturing, processing, testing, and packing of product candidates, which are intended to ensure that biological products have acceptable safety profiles and that they consistently meet applicable requirements and specifications, and our CDMOs may be unable to satisfy applicable compliance and quality requirements in accordance with our timelines or at all.

Additional risks include reliance on the CDMO for volume production, the possibility of breach of or inability to perform its obligations under the manufacturing agreement by the CDMO (including a failure to synthesize and manufacture our product candidates in accordance with our product specifications, failure to properly scale-up manufacturing processes, or failure to deliver sufficient quantities of product candidates in a timely manner), and the possibility of termination or nonrenewal of the agreement by the CDMO at a time that is costly or damaging to us.

For example, certain of our CDMOs may be unable to manufacture sufficient supply of our product candidates or materials used in their manufacture, in particular, if and as we implement commercial cGMP practices or scale up manufacturing for later-stage clinical trials and potential commercialization.

If we experience any issues with respect to the risks described above, we may be required to seek a replacement CDMO, which could require significant internal resources, delay our ongoing manufacturing activities, and ultimately be unsuccessful.

If we were unable to timely find an adequa

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What changed 10-K

Item 1. Business