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Item 1. Business

2022-03-31 compared with 2021-03-29 · 533 added, 1538 removed, 158 unchanged (93% of the section changed)

As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires,

Silverback, our company, we, us, and our refer to Silverback Therapeutics, Inc., a Delaware corporation.

We are a clinical-stage biopharmaceutical company

with one product candidate in a Phase 1/1b clinical trial, and we are focused on leveraging our proprietary ImmunoTAC technology platform to develop systemically delivered, tissue targeted therapeutics for the treatment of cancer, chronic viral

infections, and other serious diseases.

As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Silverback,”

“our company,”

“we,”

“us,”

and “our”

refer to Silverback Therapeutics, Inc., a Delaware corporation.

We are a biopharmaceutical company focused on leveraging our proprietary ImmunoTAC technology platform to develop systemically delivered, tissue targeted therapeutics for the treatment of chronic viral infections, cancer, and other serious diseases.

Our ImmunoTAC platform is the result of a focused effort to discover ways to systemically deliver disease-modifying small molecules in a directed fashion to sites of disease.

Our platform enables us to strategically pair proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed to specific disease sites.

Initially, we are applying

our platform to create a new class of targeted immuno-oncology agents that direct a myeloid cell activator to the tumor microenvironment (TME) in solid tumors to promote cancer cell killing.

Our lead product candidate, SBT6050, is comprised of a

TLR8 agonist linker-payload conjugated to a HER2-directed monoclonal antibody that targets tumors such as certain breast, gastric and non-small cell lung cancers.

SBT6050 is currently in a Phase 1/1b clinical

trial as a monotherapy and in combination with pembrolizumab, in patients with advanced or metastatic HER2-expressing solid tumors.

In this trial, we have observed changes in pharmacodynamic markers in the first dose cohort, and we anticipate

providing an update on interim data from the Phase 1 single

agent dose-escalation cohorts in the second half of 2021.

SBT6290 is our second product candidate, expanding on the potential of a TLR8 agonist as a payload.

SBT6290 is a TLR8 linker-payload

conjugated to a monoclonal antibody that targets Nectin4, which is expressed in certain bladder, triple negative breast, head and neck, and non-small cell lung cancers.

We anticipate submitting an

investigational new drug application (IND) for SBT6290 in the fourth quarter of 2021.

Our third TLR8 program, SBT8230, is comprised of a TLR8 linker-payload conjugated to an ASGR1 monoclonal antibody that is under development for the treatment of

chronic hepatitis B virus infection (cHBV).

We are also developing agents that localize therapies to modulate important pathways in additional oncology and fibrosis indications using TLR8 and other linker-payloads.

Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in healthy tissues.

Our approach is designed to expand the therapeutic window and avert unacceptable toxicities by directly targeting specific disease sites where our therapeutics are locally active.

In July of 2020, we initiated clinical development of our first ImmunoTAC product candidate, a TLR8 agonist conjugated to a HER2 antibody, SBT6050.

Preclinical data suggested that we would be able to demonstrate a therapeutic window and advance SBT6050 through clinical development as a monotherapy and in combination with standard-of-care agents that had a complementary mechanism-of-action.

Our Phase 1/1b program was designed to measure safety and tolerability, pharmacokinetics (PK), pharmacodynamics (PD) and anti-tumor activity as monotherapy and in combination with pembrolizumab.

On March 28, 2022, we made the decision to discontinue our clinical development program for SBT6050 due to limited monotherapy activity and dose-limiting adverse events when used in combination with pembrolizumab.

SBT6290, comprised of the same linker payload conjugated to a Nectin4 antibody, was expected to show a similar clinical profile and, therefore, we also terminated this program prior to dosing patients.

We have prioritized our resources to focus on the development of SBT8230 and early-stage discovery programs.

Our understanding of TLR8 conjugates in preclinical species and in the clinic guides our interpretation of the preclinical characteristics of SBT8230, an ASGR1 antibody conjugated to a TLR8 agonist linker payload for the treatment of chronic hepatitis B virus (cHBV), which is currently in preclinical development.

ASGR1 is highly expressed in liver and is restricted in its expression to this organ.

Other ASGR1-directed agents, such as those used in RNAi therapies, have shown robust liver localization.

SBT8230 shows biodistribution profiles in non-human primates (NHP) consistent with these agents, which is distinct from SBT6050 and SBT6290.

We believe that efficient liver targeting of SBT8230 via ASGR1 binding has the potential to lead to markedly lower serum exposures of SBT8230 in patients compared to those observed with SBT6050 in the clinic at any dose evaluated.

We believe the preclinical to clinical experience for SBT6050, coupled with the NHP PK, PD, and tolerability data for SBT8230, suggest that the clinical safety, PK and PD profiles for SBT8230 has the potential to be notably different than those for SBT6050, given the large differences in serum exposures and overall conjugate disposition for SBT8230 that are expected in patients due to its efficient liver targeting.

SBT8230 is designed to elicit an anti-viral immune response by targeting TLR8 activation to the liver.

The anti-viral immune response is achieved through activation of myeloid cells and subsequent activation of immune cells that drive an IFNγ

signal, which has been observed in the clinic with SBT6050.

This has been shown by others to drive seroconversion, an important determinant of a functional cure.

We see a significant opportunity in liver-localized immunotherapies as a potential way of achieving durable responses in these patients.

We are focused on advancing SBT8230, our liver-targeted conjugate designed to potently activate human myeloid cells in the liver for the treatment of cHBV.

Further support for investigating TLR8 agonism for the treatment of cHBV comes from selgantolimod (GS-9688), an existing untargeted, orally administered TLR8 agonist being developed by Gilead Sciences.

Selgantolimod has generated anti-viral immune responses in a cHBV animal model.

The clinical development of this untargeted TLR8 agonist has shown promise, but we believe that toxicity prevented the use of a sufficient dose to elicit optimal clinical activity.

We believe liver-localized TLR8 agonism could better realize the potential for effective therapy and potentially lead to functional cure, which is defined as sustained loss of hepatitis B surface antigen (HBsAg) in the blood, in patients suffering from cHBV.

We presented a preclinical update on SBT8230 in the fourth quarter of 2021.

In the first quarter of 2022, we began a Phase 1-enabling toxicology study.

We plan to complete a P hase 1 regulatory submission in the fourth quarter of 2022 and begin a Phase 1 single ascending dose (SAD) study in healthy volunteers in the first half of 2023.

After completing the SAD study, we anticipate initiating a Phase 1 multiple ascending dose (MAD) study in patients with chronic HBV, who are virally suppressed on nucleoside reverse transcriptase inhibitors (NRTI) therapy.

In addition, our internal discovery programs are focused on evaluating and developing new antigen binding domains specific for targets of interest (including antibodies), next-generation linker technologies, and both agonist and antagonist small molecule payloads, that may be combined to create novel tissue-targeted antibody conjugates.

The integration of medicinal chemistry, bioconjugation, protein engineering, bioinformatics, pharmacology, and translational medicine expertise focused on developing tissue-targeted therapies allows us to leverage key learnings from our previous clinical program to bring forward the next generation of therapeutics.

We anticipate providing an update on our discovery pipeline in the fourth quarter of 2022.

Our ImmunoTAC Platform

Our ImmunoTAC platform is the result

of a focused effort to discover ways to systemically deliver disease-modifying small molecules in a directed fashion to sites of disease.

Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in

healthy tissues.

Our approach is designed to increase the therapeutic window and avert unacceptable toxicities by directly targeting specific disease sites where our therapeutics are locally active.

As shown in the figure below, our ImmunoTAC platform is comprised of three components:

Antigen binding domain which is responsible for localizing the therapeutic activity of the payload to the

site of the disease;

Linker - payload a disease-modifying small molecule optimized for potency when conjugated to a

monoclonal antibody via its linker;

Fc region tuned for requisite effector function.

We have built a library of proprietary small molecule linker-payloads and antigen binding domains that allows us to mix and match these components to strategically pair

and create new therapeutic agents.

Our ImmunoTAC Platform Strategically Pairs Antigen Binding Domains with Linker-Payloads to Modulate

Pathways Underlying Difficult-to-Treat Diseases

Our ImmunoTAC platform is the result of a focused effort to systemically deliver disease-modifying small molecules in a directed fashion to sites of disease.

Many potentially promising systemic therapies fail to maximize their therapeutic potential due to toxicities in healthy tissues.

Our approach is designed to localize disease-modifying payloads to specific sites of disease where our therapeutics are locally active.

Our Development Pipeline

Our ImmunoTAC platform drives our development pipeline of tissue targeted therapeutic candidates as summarized in the chart below:

product candidate, SBT6050, is comprised of a TLR8 agonist linker-payload conjugated to a HER2-directed monoclonal antibody and is designed to activate myeloid cells in tumors expressing moderate to high levels of HER2.

TLR8 is expressed in myeloid

cell types prevalent in human tumors and TLR8 agonism can activate a broad spectrum of anti-tumor immune mechanisms.

Therefore, we believe that TLR8 is the optimal target for activating human myeloid cell types in the TME.

Myeloid cells are a class of innate immune cells that develop from common monocyte-dendritic cell progenitor cells and are comprised of both

immunosuppressive and pro-inflammatory subpopulations.

Tumors are permeated with myeloid cells, which can comprise between 5% and 10% of the tumor.

Activation of myeloid cells, either by reprogramming

immunosuppressive myeloid cells towards a more pro-inflammatory phenotype or stimulating other myeloid cells that have been silenced (e.g., dendritic cells), results in direct tumor killing and recruitment of

immune cells.

Further, activated myeloid cells can prime and amplify T cell and natural killer (NK) cell responses, bridging the innate and adaptive immunity to elicit broad, durable anti-tumor responses.

SBT6050 utilizes HER2 to localize and facilitate the delivery of the TLR8 agonist conjugate into myeloid cells in the TME.

Therefore, unlike HER2

targeted therapies that have been approved by the U.S.

Food and Drug Administration (FDA) such as Herceptin (trastuzumab), SBT6050 does not require HER2 to be an oncogenic driver to elicit anti-tumor activity.

Furthermore, SBT6050 recognizes the

HER2 sub-domain II, the pertuzumab epitope, and does not cross-block trastuzumab, allowing for potential combinations with trastuzumab-based agents, which are standard of care therapies in some HER2-expressing

We are currently evaluating the safety and tolerability of SBT6050 in a Phase 1 dose-escalation trial in patients with advanced or

metastatic HER2-expressing solid tumors.

Changes in pharmacodynamic markers have been observed in the first dose-escalation cohort of this trial.

We anticipate providing an update on interim data from the Phase 1 single agent dose-escalation cohorts

in the second half of 2021.

SBT6290 is our second product candidate, expanding on the potential of a TLR8 agonist as a payload.

The same TLR8 linker-payload used in SBT6050 is

conjugated to a monoclonal antibody that targets Nectin4.

Nectin4 is expressed in subsets of solid tumors including bladder, triple negative breast, head and neck, and non-small cell lung cancers, and has been

clinically validated through the approval of the antibody-drug conjugate enfortumab vedotin (Padcev).

We anticipate submitting the IND for SBT6290 in the fourth quarter of 2021.

SBT8230, an ASGR1-TLR8 ImmunoTAC therapeutic,

is our third TLR8 program.

SBT8230 is engineered to potently activate human myeloid cells in the liver for the treatment of cHBV.

Selgantolimod (GS-9688), an existing untargeted, orally administered TLR8

agonist being developed by Gilead Sciences, generated anti-viral immune responses in a cHBV animal model.

The clinical development of this untargeted TLR8 agonist has shown promise, but we believe that toxicity prevented the use of a sufficient dose

to elicit optimal clinical activity.

We believe liver- localized TLR8 agonism could better realize the potential for effective therapy and potentially lead to functional cures, which is defined as sustained loss of hepatitis B surface antigen

(HBsAg) in the blood, in patients suffering from cHBV.

We selected a development candidate for this program in the fourth quarter of 2020, and we anticipate initiating IND-enabling tox studies in the first

quarter of 2022 and submitting the IND in the second half of 2022.

Additional Immuno-Oncology Programs

In addition to SBT6050 and SBT6290, we are evaluating other solid tumor targets to leverage the TLR8 linker-payload paired with additional tumor directed

These targets are differentially expressed on tumors compared to normal tissue.

ASGR1-TGFß

AntagonistFibrosis Program

signaling is a key mediator of fibrosis across multiple organ systems, including the liver.

the liver, TGFß

drives fibrosis initiation and progression through multiple mechanisms, including hepatocyte apoptosis, hepatic stellate cell transdifferentiation to myofibroblasts, and pro-fibrotic

macrophage activation.

Our ASGR1-TGFßR1 antagonist conjugate pairs the ASGR1 antibody used in SBT8230 with a proprietary TGFßR1 antagonist to achieve liver-localized inhibition of TGFß

signaling to treat fibrosis.

Our tissue-directed approach has been designed to prevent toxicities associated with untargeted systemically distributed TGFßR1 antagonist agents.

Our ASGR1-TGFßR1

antagonist conjugates are currently in preclinical testing and have demonstrated potent inhibition of TGFß

signaling in vitro .

We are currently evaluating conjugates in vivo in mouse disease models.

Our goal is to transform the treatment of

cancer and other serious diseases with unmet need using our ImmunoTAC platform to deliver a new class of systemically delivered, tissue-directed, and locally active therapies.

Our goal is to transform the treatment of cHBV, cancer and other serious diseases with unmet need using our ImmunoTAC platform to deliver a new class of systemically delivered, tissue-directed, and locally active therapies.

The key elements of our business strategy are to:

Advance SBT6050 through clinical development in late-stage disease that may allow us to seek expedited

approval using regulatory pathways available from the FDA such as Accelerated Approval, Breakthrough Therapy, Priority Review or Fast Track designation.

In early clinical trials, we will be examining the

anti-tumor activity of SBT6050 in patients that have failed all available therapies associated with clinical benefit, in addition to measuring biomarkers of immune cell activation.

This approach may allow us to seek expedited approval

from the FDA based on surrogate endpoints (through the Accelerated Approval path) and expedited FDA review through programs such as Breakthrough Therapy, Priority Review, or Fast Track

We are evaluating activity broadly across HER2-expressing cancer types, including cancers where no HER2-directed therapies are currently approved, and have identified several tumor types and lines of therapy that potentially present

opportunities for utilizing one or more of these accelerated approval pathways.

Advance SBT6050 subsequently into earlier lines of therapy to maximize patient benefit and commercial success, if

Our long-term clinical development goal is to position SBT6050 in early-line standard of care regimens in key indications to potentially provide benefit to patients.

We seek to accomplish this by evaluating combination therapy

approaches with therapeutics approved as standard of care.

We believe SBT6050 has the potential to be an ideal combination therapy in early line settings.

Maximize the therapeutic potential of TLR8 in oncology and other serious diseases .

We are adapting learnings from our SBT6050 program to expand the TLR8 agonist franchise by conjugating this payload to antibodies that target different tumor antigens that are prevalent in other cancer types.

Additionally, the ability to drive

myeloid cell activation in the liver presents an opportunity to treat cHBV infections, which is our most advanced initiative outside of immuno-oncology.

Demonstrate anti-viral properties of TLR8 in cHBV .

We are applying learnings from our TLR8 agonist oncology programs and clinical experience to maximize the potential of SBT8230.

Maximize the therapeutic potential of SBT8230.

The immune activating mechanism of SBT8230 is complimentary to other treatments for cHBV that interfere with components of the viral life cycle such as nucleoside and nucleotide analogs, capsid inhibitors, and RNAi-based therapies.

Furthermore, our ASGR1 antibody does not cross block GalNAc, allowing for combinations with RNAi-based therapies.

Leverage our ImmunoTAC platform for promising new antibody-linker-payload combinations .

strategically pairing our disease-modulating payloads with tissue targeted antibodies, such as our ASGR1-TGFßR1 antagonist conjugate, to create new therapeutic agents with the goal of providing benefits

to patients who suffer from cancer and other serious diseases.

We plan to continue to leverage our ImmunoTAC platform, discovery of targeted binding proteins (including antibodies), and efficient therapeutic discovery infrastructure to discover and

develop novel small molecule therapeutics and ImmunoTAC conjugates.

Evaluate opportunities to accelerate development timelines and/or enhance the commercial potential of our programs in

partnership with third parties .

We plan to selectively explore potential strategic partnerships on a program-by-program basis with biopharmaceutical partners

whose research, development, commercial, and/or geographic capabilities complement our own.

We are strategically pairing our disease-modulating payloads with tissue targeted binding domains to create new therapeutic agents with the goal of providing benefits to patients.

We plan to continue to leverage our ImmunoTAC platform, discovery of antigen binding domains (including antibodies), new linker technologies and therapeutic discovery infrastructure to discover and develop novel small molecule therapeutics conjugated to antibodies.

Internally and externally source potentially transformative assets and technologies that align with our mission to develop tissue-targeted therapies.

We have extensive expertise in protein engineering, small molecule linker and payload chemistry, and translational medicine that we apply to the discovery and advancement of new tissue-targeted agents to the clinic. 

Our clinical development team is a seasoned group with experience in developing antibody-drug conjugates and other therapeutics across all phases of development.

While we have robust internal discovery capabilities, we also believe that innovative technologies can be acquired through business development activities.

We therefore plan to continue to pursue synergistic, in-licensing opportunities to augment our internal discovery efforts.

Evaluate opportunities to accelerate development timelines and/or enhance the commercial potential of our programs in partnership with third parties .

We plan to selectively explore potential strategic partnerships on a program-by-program basis with biopharmaceutical partners whose research, development, commercial, and/or geographic capabilities complement our own.

We believe strategic partnerships can help mitigate clinical and commercial risk, accelerate timelines, and/or maximize global commercial potential.

We have assembled an

accomplished management team with a proven track record of therapeutic development expertise and of generating meaningful shareholder value.

The members of our team have deep experience in discovering, developing, and commercializing therapeutics

with a particular focus on cancer, having worked at companies such as Synthorx (acquired by Sanofi), Juno Therapeutics (acquired by Celgene), Cascadian Therapeutics (acquired by Seagen (formerly Seattle Genetics)), Acerta Pharma (acquired by

AstraZeneca), Ignyta (acquired by Roche), Roche/Genentech, Seagen (formerly Seattle Genetics), SUGEN (acquired by Pharmacia), and Trubion Pharmaceuticals (acquired by Emergent Biosolutions).

Lead Product Candidate SBT6050:

TLR8 Agonist Conjugated to a HER2 Antibody

SBT6050 is our lead product candidate, engineered using our ImmunoTAC platform.

SBT6050 is comprised of a TLR8 agonist conjugated to a HER2-directed

monoclonal antibody and is designed for subcutaneous delivery with tumor-localized activation of myeloid cells.

Background and Our Approach in Addressing Limitations with Current Immuno-oncology Therapies

Checkpoint inhibitors (CPIs) such as a programmed death receptor-1 (PD-1)

and CTLA-4 blockers have emerged as important foundational immuno-oncology therapies because of their ability to generate durable responses in some patients, in previously intractable cancers and to improve

the overall survival.

Despite the significant benefit for patients with durable responses to CPIs, most patients unfortunately do not respond or have limited benefit.

One of the important reasons why patients do not respond to CPIs is the absence of

a sufficient number of T cells within the tumor.

To achieve an anti-tumor response with a CPI, a baseline level of T cells must already be present in the tumor.

Scientists and clinicians have termed tumors that lack the requisite T cell levels as

immune cell deserts or cold tumors, but more accurately these are T cell deserts.

Solid tumors, including those

resistant to T cell targeted immunotherapy, such as PD-1 and CTLA-4 blockers, are permeated with myeloid cells, which can comprise between 5% and 10% of the

tumorat least twice the number of T cells in the TME.

Myeloid cells are a class of innate immune cells comprised of both immunosuppressive and pro-inflammatory subpopulations.

Activation of myeloid

cells, either by reprogramming immunosuppressive myeloid cells towards a more pro-inflammatory phenotype or stimulating other myeloid cells that have been silenced (e.g., dendritic cells), results in direct

tumor killing and recruitment of immune cells.

Further, activated myeloid cells can prime and amplify T cell and NK cell responses, bridging the innate and adaptive immunity to elicit broad, durable anti-tumor responses.

Successful activation of

myeloid cells can lead to anti-tumor immunity, even in tumors that are refractory to immune checkpoint blockade, which we believe may bring substantial benefit to a larger fraction of patients.

We designed SBT6050 to potently activate the myeloid cell compartment in the TME.

We performed a thorough assessment of innate immune receptors with the

goal of identifying a payload target that was well expressed in human myeloid cells.

We believe TLR8 is unique in its breadth of expression across human myeloid cell subpopulations and its restricted expression to the myeloid cell lineage.

consideration of internally generated data and emerging external research on human myeloid cell biology, we selected TLR8 as the best payload target for activation of myeloid cells resulting in direct tumor killing and recruitment and activation of

additional immune cells, such as T cells and NK cells, to further effect the anti-tumor response.

Activating the Myeloid Cell Compartment Through TLR8

Myeloid cells develop from common monocyte-dendritic cell progenitor cells and are critical mediators of innate immune responses.

These cells are plastic in nature and their function and phenotype are heavily influenced by environmental cues.

In the TME and tumor draining lymph nodes, macrophages, conventional dendritic cells, myeloid derived suppressor cells, and monocytes

are highly prevalent, but also skewed towards inactive or immunosuppressive states.

We have an accomplished management team with a proven track record of therapeutic research and development expertise and of generating meaningful stockholder value.

The members of our team have deep experience in discovering and developing therapeutics, including acalabrutinib, brentuximab vedotin, entrectinib, etanercept, ibrutinib, lisocabtagene maraleucel, sunitinib, tezepelumab, tucatinib, and venetoclax.

Activating the Myeloid Cell Compartment Through Liver-Targeted TLR8 Agonism

As shown in the figure below, TLR8 activation of human myeloid cells plays an important role in the anti-viral immune response in cHBV.

HBV-infected liver is highly immunosuppressive and the activation of macrophages and other myeloid cells in the liver can serve to overcome this immunosuppression.

We believe TLR8 is the optimal target for activating these myeloid cell types due to its restricted expression and function within these cells.

As shown in the

figure below, TLR8 activation of human myeloid cells elicits an anti-tumor response through a multi-pronged mechanism of action, including direct tumor cell killing, recruitment of immune cells, and the secondary activation of NK cells, T cells and

B cells, thus driving both an innate and adaptive immune response against the tumor.

TLR8 is Highly Expressed in Human Myeloid Cell Types That Drive Anti-Tumor Responses When

As a result of the broad immune activation triggered by a TLR8 agonist, systemically administered but untargeted TLR8

small molecule therapeutic candidates from other companies have resulted in an adverse event profile that we believe has limited achieving a dose level sufficient to produce the desired therapeutic benefit.

An exemplary TLR8 small molecule agonist

is motolimod, originally developed by Array Biopharma and licensed to VentiRx.

Motolimod was the first TLR8 specific, but untargeted, agonist tested in the clinic for the treatment of solid tumors.

Early trials of subcutaneously administered

motolimod yielded adverse events we believe to be consistent with broad myeloid cell activation in the periphery, including injection site reactions and symptoms associated with systemic cytokine release, which limited dose-escalation.

we believe that sufficient drug exposure in the TME was not reached to elicit meaningful anti-tumor activity.

Similarly, Gilead Sciences is developing an orally administered untargeted TLR8 agonist for the treatment of cHBV.

This therapeutic has

resulted in adverse events consistent with myeloid cell activation in the gastrointestinal tract, including diarrhea and nausea.

We believe these two cases support our hypothesis that tissue directed, localized activation is critical to maximizing

the therapeutic potential of a TLR8 agonist.

TLR8 was selected as a target for an agonist after bioinformatic and functional assessments of several

innate immune receptor targets.

Important criteria of these targets we considered during our payload selection was intracellular localization and robust expression in myeloid cell compartments, with limited expression in non-immune FcR positive cells.

Our selection of TLR8 as the optimal target to activate myeloid cells without activating other cell types outside of the hematopoietic lineage was supported by both external research

results and internal data.

As shown in figure A below, unlike other intracellular innate immune receptors, TLR8 is highly expressed in human

myeloid cell types, including conventional dendritic cells and macrophages.

Conversely, as shown in figure B below, TLR8 is not expressed in fibroblasts and endothelial cells and we believe this restricted expression will reduce the risk of

toxicities due to on-target, off-cell activation.

TLR8s Expression is Restricted to Human Myeloid Cells

Unlike other intracellular innate immune receptors, TLR8 is highly expressed in human myeloid cell types, including

conventional dendritic cells and macrophages

TLR8 is not expressed in fibroblasts and endothelial cells and we believe this restricted expression will reduce the risk

of toxicities due to on-target, off-cell activation

Following the identification of TLR8 as the optimal receptor to activate myeloid cells in the TME, we designed and created a library of TLR8 agonists.

Our proprietary TLR8 agonists were evaluated in the format of HER2 antibody conjugates for their ability to activate myeloid cells ex vivo .

Within this library, we identified a HER2 antibody-TLR8 conjugate that activated myeloid cells in

moderate and high HER2 settings as is found in HER2-expressing tumors.

Tissue Directed and Localized Activation Through HER2 Expression

Many solid tumors, including those expressing HER2, are refractory to immunotherapy due to minimal T cell infiltrates.

As shown in the figures below,

HER2-expressing tumors (stained in blue, left panel) frequently contain abundant populations of tumor-associated myeloid cells which express TLR8 (stained in yellow, right panel).

HER2-Expressing Tumors and TLR8-Expressing Myeloid Cells are Adjacent in the Human TME

HER2 is an optimal marker to direct therapies like TLR8 agonist conjugates due to its differential expression between

tumors and healthy tissue.

Furthermore, HER2 expression is prevalent in meaningfully large patient sub-populations in a wide variety of tumor types including breast (estimated 83,000), gastric (estimated

6,400), non-small cell lung (estimated 31,500), colorectal (estimated 9,000), bladder (estimated 7,500), uterine (estimated 11,000), pancreatic (estimated 4,000), head and neck (estimated 2,000), ovarian

(estimated 1,100), esophageal (estimated 2,500), and biliary (estimated 3,000) cancers, providing the potential to address a large HER2-expressing tumor agnostic market estimated to be more than 160,000 newly-diagnosed patients annually in the

United States based in part on estimated prevalence rates.

The 2020 American Cancer Society annual report on cancer statistics was used to determine the estimated incidence for each cancer type.

HER2 overexpression and amplification prevalence rates

documented in the literature were applied to the incidence rate for each cancer type to approximate the HER2-overexpressing sub-populations in each cancer type;

30.0%, 16.4%, and 23.2% HER2 overexpression

rates were used for breast cancer, gastric cancer, and non-small cell lung cancer (NSCLC), respectively.

shown in the figure below, the SBT6050 potential mechanism of action is outlined sequentially as follows:

SBT6050 is administered systemically through subcutaneous injection.

Systemic dosing is essential to access myeloid cells

in both primary lesions and metastatic lesions, and in secondary lymphoid organs, to result in productive and durable anti-tumor responses.

SBT6050 is directed to tumors expressing HER2 and the TME, which is permeated with myeloid cells that express Fc g receptors on their cell surface, and TLR8 within endosomes.

Upon co-engagement of the HER2 protein on the tumor and Fc g receptors on the myeloid cell, SBT6050 is designed to be internalized by the myeloid cell into the endo-lysosomal compartment once there is a sufficient

increase in avidity, which is provided by HER2 binding on the tumor cell.

SBT6050s TLR8 linker-payload engages TLR8 present in the endosomes of myeloid cells, which in turn drives

Potential Mechanism of Action:

SBT6050 is Designed to Localize TLR8 Activation of Myeloid Cells

in Tumors via a HER2-Directed Antibody

Preclinical Development of SBT6050

Our preclinical studies have shown the potential for SBT6050 to activate innate and adaptive anti-tumor responses in the TME and demonstrate anti-tumor

activity as a single agent and in combination with standard of care agents such as anti-PD-1 and trastuzumab-based therapies in HER2-expressing solid tumors.

of our preclinical work using SBT6050 in vitro and SBT6050-S (our mouse surrogate) in vivo via subcutaneous delivery demonstrated:

Potent activation of multiple anti-tumor immune mechanisms induced in the presence of HER2-expressing tumor cells.

Equipotent immune cell activation in settings of moderate and high HER2 expression.

Curative activity as a single agent in a xenograft model lacking T cells and B cells, and deficient in NK cells,

highlighting the potential of myeloid cell activation alone to mediate robust tumor cell killing.

Potent single agent activity in tumor models with low tumor infiltrating lymphocytes, highlighting the potential for

clinical activity in tumors displaying immune evasive characteristics.

Anti-tumor responses upon tumor re-challenge without additional dosing,

highlighting the potential for durable effects through the activation and expansion of tumor antigen-specific T memory cells.

Enhanced anti-tumor activity when used in combination with

anti-PD-1 therapy in a CPI-refractory mouse tumor model.

Enhanced anti-tumor activity when used in combination with trastuzumab in a mouse tumor model.

Collectively, these data supported our decision to clinically evaluate the anti-tumor activity of SBT6050 as a single agent and in combination with anti-PD-1 and trastuzumab-based therapeutics in relevant HER2-expressing tumor types.

SBT6050 In Vitro Preclinical Data

In our in vitro studies, SBT6050 potently activated human myeloid cell types, including macrophages, dendritic cells, and monocytes.

activation resulted in the induction of multiple myeloid cell effector functions, including the production of cytokines and chemokines that are critical to the generation of anti-tumor immune responses.

In addition, SBT6050 activation of myeloid

cells in vitro resulted in the subsequent, indirect activation of NK cells and T cells.

In our in vitro studies, SBT6050 also mediated antibody-dependent cellular phagocytosis and antibody-dependent cellular cytotoxicity.

Further, TLR8

agonism drove the downmodulation of SIRP a , highlighting the potential to block the CD47-SIRP a pathway, which, in turn, can potentially enable phagocytosis of tumor and red blood cells.

in vitro studies, human peripheral blood mononuclear cells (PBMC) were co-cultured with HER2 pos or

HER2 neg tumor cell lines in the presence of SBT6050.

As shown in the figures below, SBT6050 potently induced multiple anti-tumor immune activities, including general activation of myeloid cells as

measured by pro-inflammatory cytokine and chemokine production (TNF a ), direct activation of dendritic cells (IL-12p40), and inflammasome activation (IL-18) in the presence of HER2 pos tumor cells.

No activation was seen when

SBT6050 was co-cultured with HER2 neg cells.

SBT6050 Activated Myeloid Cells in the Presence of HER2 pos Tumors

Similar in vitro studies using PBMCs were conducted to compare SBT6050 with conjugates that contain a TLR7

agonist, resiquimod or a resiquimod variant payload that were designed to mimic competitor molecules.

Of note, the EC 50 of the free, unconjugated TLR7 small molecule agonist was 9 nM on a TLR7

reporter line and no activity was observed on a TLR8 reporter line.

The EC 50 of unconjugated resiquimod on TLR7 was ~700 nM and >3 µM on TLR8, demonstrating that resiquimod is a weak

TLR8 agonist.

The resiquimod variant was of slightly better potency compared to resiquimod.

As shown in the figures below, in these internal head-to-head studies SBT6050

demonstrated a

superior ability to induce TNF a , IL-12p40, and IL-18 in the presence of HER2 pos tumor cells.

This highlights the potential for favorable activity of SBT6050, which we believe is due to efficient engagement of

TLR8 in conjugate form.

SBT6050s functional profile was not replicated with conjugates comprised of TLR7-specific or resiquimod-derived agonists.

SBT6050 Was Superior at Activating Human Myeloid Cells Compared to HER2 Antibody Conjugates that Use Either a Selective TLR7 Agonist or Resiquimod

Robust activation of the myeloid cell compartment is also known to trigger an adaptive immune cell response.

additional in vitro study using a similar PBMC assay, SBT6050 induced indirect activation of mediators associated with NK cell and T cell responses

(IFN g and granzyme B), as shown in the figures below.

In a separate in vitro study, the induction of IFN g and granzyme B by SBT6050 was shown to be secondary to myeloid cell activation as blockade of IL-12 and/or IL-18

abrogated the IFN g and granzyme B response.

SBT6050 Indirectly Activated Mechanisms Associated with CTL/NK Cell Responses in the Presence of

HER2 pos Tumors

HER2 expression in tumor cells varies and can be measured by protein expression using

immunohistochemistry (IHC) to understand the amount of HER2 in tumor cells.

It is also common to determine the gene copy number using fluorescence in situ hybridization (FISH) or other methodologies as another way to understand if the HER2 gene

is amplified.

Gene amplification typically results in overexpression of the protein usually at the IHC3+ level, but some HER2-amplified tumors express protein at the IHC2+ level.

It has become standard practice among pathologists to characterize

protein expression using IHC1+, IHC2+ or IHC3+ and also to measure gene copy number because certain FDA-approved therapies, such as Herceptin, are approved in the setting of high HER2 expression levels.

HER2 expression tumors are categorized by either IHC3+ or IHC2+/FISH positive.

Low HER2 expression in the industry is categorized as IHC2+/FISH negative and IHC1+.

In our preclinical, studies we characterized IHC1+ HER2 tumor cells as expressing

less than 25,000 HER2 receptors per cell.

SBT6050 has been tuned to work in settings of IHC2+/FISH negative (moderate expression) as well as IHC3+ (high expression) but not IHC1+ (low expression).

Targeting tumors with moderate HER2 expression

allows us to address a patient population where most current HER2 targeted therapies are not effective.

We believe that avoiding some normal tissues that express low levels of HER2 provides the opportunity for an improved safety and tolerability

As shown in the figures below, our in vitro studies demonstrated that SBT6050 stimulated myeloid cells in the presence of IHC 2+

and 3+, but not in the presence of IHC 1+/- tumor cell lines.

SBT6050 Activated Myeloid Cells Only in the Presence of IHC 2+ and 3+ Tumor Cell

SBT6050 In Vivo Preclinical Data

Background Regarding SBT6050-S

Because mice do not have a functional homologue of human TLR8, we designed SBT6050-S to enable preclinical mouse

studies with a molecule that in mice matches the myeloid cell activation profile of SBT6050.

TLR7 expression in mouse myeloid cells mirrors that of TLR8 in human myeloid cells.

RNA sequencing data published by third parties, as shown in the figures

below, highlight the differential expression of TLR8 and TLR7 across mouse and human myeloid cell sub populations.

Activation of TLR7 in mouse myeloid cells results in a similar downstream functional profile as TLR8 activation does in human myeloid

TLR7 Is Highly Expressed in Mouse Myeloid Cells and TLR8 Is Highly Expressed in Human Myeloid

Cells, Whereas TLR7 Is Expressed at Low Levels in Human Myeloid Cells

SBT6050-S is a proprietary conjugate that contains a selective TLR7

linker-payload and a mouse IgG2a Fc domain to promote uptake in mouse myeloid cells.

Our preclinical data, as shown in the figure below, demonstrated similar in vitro potency of SBT6050 on human myeloid cells and SBT6050-S on mouse myeloid cells.

In addition, the in vitro activity of SBT6050-S is HER2-dependent as is the case for SBT6050 as described earlier.

Functional Results with TLR7 Conjugate, SBT6050-S, on Mouse Myeloid Cells Matched Those of SBT6050 on Human

Myeloid Cells In Vitro

Our SBT6050-S Monotherapy In Vivo Data

Using SBT6050-S in preclinical studies, we have demonstrated that a systemically administered, HER2-directed

myeloid cell agonist activated a broad spectrum of anti-tumor mechanisms and led to curative single agent activity in both a human tumor xenograft model lacking T cells and B cells and with defective NK cells as well as a T cell-excluded syngeneic

mouse tumor model.

In these models, the term curative effects describe the complete clearance of tumors (tumor size of 0 mm 3 ).

As shown in the figures below, SBT6050-S (at 10 mg/kg) demonstrated curative effects as a monotherapy in a human

tumor xenograft (NCI-N87) mouse model that has an absence of T cells along with defective NK cells.

This study was powered for statistical significance using survival as a readout which is defined as tumor

size remaining below 1,000 mm 3 .

Treatment with SBT6050-S resulted in a statistically significant increase in survival as compared to the isotype and HER2

mAb control groups (p value<0.0001).

We believe that the activity of SBT6050-S in this model is indicative of the potential of myeloid cells to drive tumor eradication.

These data indicate that SBT6050 may

have activity in tumors with low or no T cell infiltrate, which we believe has important implications regarding the substantial potential benefit of SBT6050 for patients who do not respond to T cell-directed immunotherapy.

SBT6050-S Drove Robust, Curative Single Agent Activity in T Cell, NK Cell-Deficient Mouse Strains

In addition, in our preclinical studies, administration of

SBT6050-S as a monotherapy resulted in durable curative effects in a HER2-expressing, T cell excluded EMT6 syngeneic mouse tumor model.

EMT6 is a mouse tumor that we engineered to express human HER2.

Expression of human HER2 in this model is moderate, heterogenous, and may be lost over time, which is representative of certain HER2 pos tumor types such as gastric cancer.

While conducted in

immunocompetent mice, the EMT6 model is also known to be resistant to anti-PD-1 treatment because T cells are excluded from tumor entry.

The left panel in the figure

below illustrates tumor cells that were demarcated by H&E staining.

The central panel in the figure below illustrates that in the HER2-EMT6 model, CD8 T cells were sequestered on the periphery of the tumor.

In contrast, the right panel below

illustrates the presence of macrophage infiltrate within this T cell-excluded mouse tumor model.

IHC Staining in EMT6 Tumor Models, Depicting

CD8 T Cells and Macrophages (F4/80)

As shown in the figures below, SBT6050-S (at 10 mg/kg) as a

monotherapy resulted in a complete response (CR) rate, the percentage of animals with tumors < 30 mm 3 at the end of study, of between 40% and 80% in the HER2-EMT6 model, depending on the study.

This study was powered for statistical significance using survival as a readout which is defined as tumor size remaining below 1,000 mm 3 .

Treatment with

SBT6050-S resulted in a statistically significant increase in overall survival when compared to the isotype and HER2 mAb control groups (p value=0.002).

Approximately

30-50% of EMT6 tumor cells express human HER2 at the time of dosing initiation.

Given the lack of stability of HER2 expression in this model, we believe HER2 expression was lost in the tumors of the mice that

did not respond to SBT6050-S in this study.

Treatment with

SBT6050-S Monotherapy Resulted in CR Rate of 40-80% in HER2-EMT6 Model

As shown in the figure on the left below, HER2-EMT6 tumor-bearing mice that were cured by SBT6050-S treatment, meaning that no tumor was detectable, were fully protected from an EMT6 tumor re-challenge, indicative of the generation of immunological memory.

in the figure on the right below, mice that were re-challenged with EMT6 tumors that did not express HER2 were also shown to have complete protection, indicating SBT6050 engendered activation of an anti-tumor

T cell response that was not restricted to HER2.

This is consistent with the expansion of T cells reactive to tumor neoantigens observed in the tumors of mice after treatment with SBT6050-S.

SBT6050-S Conferred HER2-Independent Protection in Preclinical Tumor

Re-Challenge Studies

Preclinical Data Supporting the Potential for Combination of SBT6050 with Other Therapies

In our preclinical studies, SBT6050-S drove robust anti-tumor activity as a single agent and in combination with

standard of care agents.

As shown in the figures below, our preclinical data demonstrated that the single agent activity of SBT6050-S in the immune-competent, checkpoint resistant HER2-EMT6 tumor model was further enhanced when combined with an anti-PD-1.

The Combination of SBT6050-S and

Anti-PD-1 Drove Robust, Durable Anti-Tumor Activity

In a HER2 pos human xenograft mouse model, a combination of low

dose SBT6050-S with trastuzumab greatly enhanced the anti-tumor activity observed with either agent alone.

As shown in the figures below, our preclinical data demonstrated the potential for enhanced clinical

activity with SBT6050 in combination with trastuzumab.

In this study, a lower dose of SBT6050-S (1 mg/kg) was used to allow for the combinatorial benefit to be observed.

A lower dose of SBT6050-S (1 mg/kg) was used as a monotherapy control.

We believe that the potential to combine with trastuzumab-based therapies unlocks the possibility of accessing earlier lines of therapy in breast and gastric

cancer, where trastuzumab is a part of the standard of care.

The Combination of SBT6050-S and

Trastuzumab Drove Robust, Durable Anti-Tumor Activity

SBT6050 Was Well Tolerated in Non-Human Primates by the Subcutaneous Route of

Administration

SBT6050 demonstrated a wide therapeutic window in safety and tolerability studies following repeat subcutaneous

administration including in the GLP toxicology study in non-human primates (NHP) that determined our first-in-human (FIH) dose.

Forty-one NHPs have been administered repeat SC doses of SBT6050 in three NHP toxicity studies.

In two non-GLP studies, 15 NHPs were treated at SC dose levels of 0.1 to 12

mg/kg, with the majority (8 of 15) administered 6 or 12 mg/kg every 2 or 3 weeks (Q2W or Q3W) for 4 doses.

In the GLP toxicity study, 26 NHPs received doses of 2, 6 or 12 mg/kg Q2W for 4 doses, with a

4-week recovery period for the higher two dose levels.

Across the studies, there was no evidence of injection site reactions or cytokine release syndrome (CRS) in any animal.

There were transient, dose-related

hematological, clinical chemistry, and cytokine and chemokine changes reflective of the potential mechanism of action of SBT6050.

Because of the broad therapeutic

window demonstrated in these studies, our FIH starting dose level of 0.3 mg/kg was selected because of its equivalency to the minimum pharmacologically active dose level in NHP and the projection

that this dose level may be pharmacologically active in patients.

The FIH dose levels of immune activators, particularly those that are viewed as having a significant risk of CRS, are typically below the projected pharmacologically active dose of

the agent, resulting in lengthy dose-escalations to an active dose level.

Notably, that is not the case with SBT6050.

Based on the totality of our preclinical data, we believe that we have potential to reach the recommended phase 2 dose (RP2D) for

SBT6050 between the second and fourth dose levels.

Repeat administration of fully human or humanized proteins, such as that included in SBT6050, to

preclinical species, like a NHP, has been extensively evaluated by many organizations over the years and has been found to frequently lead to the generation of anti-drug antibodies (ADA), reflecting the development of immunogenic responses with

repetitive challenge of NHP with non-self or foreign proteins.

Importantly, the generation of ADA against human or humanized proteins in NHP, even when accompanied by

ADA-mediated toxicities such as anaphylaxis, has not been predictive of immunogenicity in humans.

ADA developed against SBT6050 in our NHP toxicology studies.

The formation of ADA against SBT6050 in NHP was

expected given the inherent immunogenicity of humanized proteins in NHP and the potential mechanism of action of SBT6050, which includes the promotion of presentation of foreign antigens by dendritic cells, a mechanism critical to the formation of

immune responses to tumor neoantigens.

The development of ADA in NHP resulted in decreased exposure following repeat dosing.

As has been seen with other immune agonists administered in the presence of ADA in preclinical species, repeat intravenous

dosing with SBT6050 resulted in anaphylaxis but anaphylaxis was not seen in NPH studies using subcutaneous dosing of SBT6050.

While no animal treated with SBT6050 subcutaneously showed signs of acute anaphylaxis, one animal in the highest dose group

was euthanized due to what is believed to be ADA-related immune complex deposits in certain organs.

Given the precedent data in the field, we do not believe that neutralizing ADA formation that affected

SBT6050 exposure in NHP will translate into the clinic.

Nevertheless, a reduction in exposure following repeat dosing of SBT6050 in the Phase 1/1b clinical trial could present a risk for clinical development.

Of note, in our ongoing Phase 1/1b

clinical trial, we have repeat dose pharmacokinetics (PK) after four doses of 0.3 mg/kg for one patient and reductions in SBT6050 exposure were not observed.

Variable ADA titers have been observed across patients ranging from undetectable to low

without impact on pharmacodynamic activity.

SBT6050 Clinical Development Plan and Strategy

SBT6050 demonstrated a wide therapeutic window in our GLP toxicology study in NHP, enabling a FIH starting dose of 0.3 mg/kg, which was projected to be

pharmacologically active and within 2-3 cohorts of where we could potentially achieve anti-tumor activity.

In NHP, 0.5 mg/kg was defined as the minimum pharmacologically active dose as determined by

blood-based biomarkers, 6 mg/kg was determined to be the No Adverse Event Level and the highest dose level evaluated was 12 mg/kg.

Our FIH starting dose of 0.3 mg/kg is the human equivalent of the minimum pharmacologically active dose level in NHP

and projected to be pharmacologically active in patients.

Based on the totality of our preclinical data, we believe that the RP2D will be reached between the second and fourth dose levels in our Phase 1 dose-escalation, particularly if 0.3 mg/kg

demonstrates pharmacological activity as projected from our preclinical modeling.

Additional dose levels may be explored in our Phase 1/1b clinical trial to further characterize the tolerability profile.

At the RP2D, we believe there is potential to

demonstrate single agent anti-tumor activity in dose expansion cohorts.

Our IND for SBT6050 was cleared in June 2020 with a starting dose of 0.3

In July 2020, we initiated a Phase 1/1b FIH, open-label, multicenter, dose-escalation and expansion clinical trial in patients with HER2-expressing solid tumors that have progressed following standard therapies.

The trial is designed to

evaluate the safety, tolerability, PK, pharmacodynamics (PD), immunogenicity, and

anti-tumor activity of SBT6050 as a single agent and in combination with pembrolizumab, a PD-1 inhibitor.

In our Phase 1/1b clinical trial, we are monitoring key PD biomarkers in both the blood and the tumor which have been associated with tumor regression

in our preclinical mouse studies and was observed in our preclinical NHP studies.

Key biomarkers in the blood include elevations in MCP-1, IP-10, and C-reactive protein and induction of additional PD markers indicative of on target mechanism of action such as IFN g .

will be obtaining tumor biopsies at baseline and on treatment to measure biomarkers that correlate with the activation of myeloid cells, T cells and NK cells in cohorts 2 and later.

The trial consists of four parts:

monotherapy dose-escalation and expansion (Part 1), monotherapy dose expansion in tumor-specific cohorts (Part 2),

pembrolizumab combination dose-escalation (Part 3), and a pembrolizumab combination dose expansion cohort (Part 4).

SBT6050 Single Agent Dose-Escalation

and Expansion

In Part 1, a standard 3 + 3 dose-escalation of SBT6050 is planned to study safety, tolerability, and PK of SBT6050, and to

determine the maximum tolerated dose (MTD) and the RP2D.

The MTD is defined as the dose just below the dose level where 2 or more out of 6 patients ( ³ 33%)

experience dose-limiting toxicities (DLTs).

The starting dose of the SBT6050 regimen is 0.3 mg/kg administered via subcutaneous injection once every 14 days.

One or two dose levels may be expanded to 12 patients to obtain additional information to

select the RP2D.

Eligible patients must have HER2-expressing (HER2 IHC 2/3+) or HER2-amplified cancer refractory to or relapsed after standard therapies.

We anticipate enrolling approximately 30 participants in Part 1.

SBT6050 Single Agent Dose Expansion in Tumor-Specific Cohorts

Patients will be enrolled into parallel expansion cohorts based on tumor type and HER2 expression level.

Patients enrolled in the expansion cohorts will

receive SBT6050 at the recommended dose and schedule established in Part 1.

The purpose of Part 2 is to further characterize the tolerability profile of the RP2D and evaluate the anti-tumor activity and PD effects of SBT6050 as a single agent.

Enrollment will follow a Simon 2-stage design.

Planned expansion cohorts, which may also be informed by experience in the dose-escalation phase, include the following tumor types:

HER2 pos breast cancer, n=40.

HER2 low-expressing (IHC2+/amplification negative) breast cancer, n=30.

HER2 pos gastric cancer, n=40.

HER2-expressing (IHC 2/3+) or HER2-amplified non-small cell lung cancer,

HER2-expressing (IHC 2/3+) or HER2-amplified solid tumors, n=30.

SBT6050 Plus Pembrolizumab Dose-Escalation Cohort

Part 3, a standard 3 + 3 dose-escalation of SBT6050 plus the anti-PD-1 CPI, pembrolizumab is planned to determine the MTD and RP2D of SBT6050 when given in combination

with pembrolizumab.

The MTD is defined as above.

SBT6050 will be administered via subcutaneous injection on Days 1, 15, and 29 of 42-day cycles in combination with 400 mg pembrolizumab administered via

intravenous injection on Day 1 of each cycle.

Eligible patients will have HER2-expressing or HER2-amplified solid tumors.

Part 3 of the study will open when changes in PD markers exceeds the pre-defined

criteria for pharmacological activity with demonstration of acceptable safety and tolerability in a cohort treated with

single agent SBT6050.

The pre-defined threshold is based on changes in peripheral PD markers in preclinical studies, and includes C-reactive protein elevation to ³ 150 mg/L and 3-5x changes from baseline in

certain cytokines and chemokines such as IP-10 and/or MCP-1 and induction of additional pharmacodynamic markers indicative of

on-target mechanism of action, such as IFN g .

We anticipate enrolling approximately 15 participants in Part 3.

SBT6050 Plus Pembrolizumab Dose Expansion Cohort

combination treatment expansion part of the trial will be initiated once the RP2D has been defined by the safety monitoring committee from Part 3.

The purpose of Part 4 is to further characterize the tolerability profile of the RP2D and evaluate the

anti-tumor activity and PD effects of SBT6050 in combination with pembrolizumab.

Approximately 30 patients with HER2-expressing or HER2-amplified tumors of multiple histologies will be enrolled.

Update on SBT6050 Phase 1/1b Clinical Trial

November 25, 2020, six patients had been enrolled at 0.3 mg/kg in Part 1 of the study (SBT6050 monotherapy dose-escalation).

This first cohort of patients included two patients who had radiological reassessments, one patient with stable disease at

her 8 and 16 week reassessments, one patient with a greater than 30% reduction in the diameter of her target lesion at 8 weeks per the investigators assessment, and two additional patients that had completed the DLT period and remained on

The most common adverse events included flu-like symptoms (fever, chills, nausea, vomiting, fatigue) and redness and swelling at the injection site.

Changes in pharmacodynamic markers consistent with the potential mechanism of action were

observed in treated patients.

This included increases in plasma levels of CRP (C-reactive protein), a marker of inflammation, increases in MCP-1, IP-10 and IL-6, which are indicative of myeloid cell activation, increases in IFN g , which is a marker for T and NK cell activation, and transient decreases in hemoglobin, which we believe to be due to macrophage phagocytosis.

We anticipate providing an update on interim data from the Phase 1 single agent dose-escalation cohorts in the second half of 2021.

Enrollment and

treatment has been initiated in Part 3 of the study (SBT6050 plus pembrolizumab dose-escalation).

We anticipate providing an update on interim data from the Phase 1 SBT6050 plus pembrolizumab combination in the first half of 2022.

We anticipate

providing a further update on interim data from the Phase 1 monotherapy and combination dose-escalation, as well as a first update of the Phase 1b monotherapy in tumor-specific expansion cohorts and the Phase 1b combination cohort, in the second

half of 2022.

SBT6050 Addressable Market

shown in the figure below, HER2 IHC 2+ and 3+ overexpression and amplification are documented in at least 11 different tumor types including breast (estimated 83,000), gastric (estimated 6,400), non-small

cell lung (estimated 31,500), colorectal (estimated 9,000), bladder (estimated 7,500), uterine (estimated 11,000), pancreatic (estimated 4,000), head and neck (estimated 2,000), ovarian (estimated 1,100), esophageal (estimated 3,000), and biliary

(estimated 3,000) cancers, providing the potential to address a large HER2-expressing tumor agnostic market estimated to be more than 160,000 newly-diagnosed patients annually in the United States based in part on estimated prevalence rates.

IHC2+ and 3+ overexpression in breast cancer, gastric cancer, and NSCLC are 30.0%, 16.4%, and 23.2%, respectively.

Most HER2 targeted therapies require the tumor cells to be dependent on HER2 signaling, often called an oncogenic driver.

oncogenic-driven tumors are limited to subsets of breast and gastric cancer and hence the FDA-approved therapies that require HER2 signaling are limited to these indications as noted in the figure.

does not require the tumor cells to be dependent on HER2 signaling for its anti-tumor activity and instead utilizes

the HER2 protein to deliver the conjugate to adjacent myeloid cells.

We believe that this expands the market opportunity beyond HER2-driven breast and gastric cancer in which targeted HER2 agents

have been approved and are established as standard of care.

Because of the rationale to combine SBT6050 with CPIs, which is supported by our preclinical data, we have noted in the figure below those tumor types with an approved CPI.

Large Potential Market Opportunity for SBT6050 in Tumors that Express HER2 and in Combination with HER2 Targeted Agents and CPIs

HER2 expression rates are well-understood in tumor types for which there is an

FDA-approved HER2 targeted therapy available.

Breast and gastric cancer cases are routinely screened for HER2 expression as a part of the standard of care.

HER2 overexpression has been reported in other tumor

types, but because of the lack of effective therapies targeting cancers outside of breast and gastric, screening is not readily performed.

In calculating our potential addressable market for these tumor types, the figure above shows a range of HER2

expression cited in the literature and the lower end of the range was utilized for market considerations.

In the United States, we believe that, based in part on estimated prevalence rates as described in the figure above, more than 48,000 patients

annually with solid tumors that are refractory to standard of care treatments may benefit from SBT6050 as a single agent or combination therapy, if successfully developed and approved.

In the future, if SBT6050 advances to earlier lines of

treatment, based in part on estimated prevalence rates as described in the figure above, more than 160,000 patients annually may benefit.

considering the market for combination treatment, SBT6050 was specifically designed to bind to the HER2 sub-domain II, the pertuzumab epitope, to enable combinations with trastuzumab-based therapies that bind

to HER2 sub-domain IV such as Herceptin (trastuzumab), Kadcyla (trastuzumab-DM1), and Enhertu (DS-8201), all of which are FDA-approved HER2 agents.

Our preclinical data has demonstrated the potential to use SBT6050 in combination with trastuzumab and CPIs.

We believe that SBT6050 may also have the potential to be combined with

tyrosine kinase inhibitors such as Tukysa (tucatinib), which is approved for combination with trastuzumab and Xeloda (capecitabine) for the treatment of HER2 pos metastatic breast cancer.

considering the market potential for combination therapy, only combinations with trastuzumab and CPIs was utilized in our calculations.

SBT6050 is also active in HER2 IHC 2+ / FISH negative tumors, expanding the market beyond the scope of current approved HER2 targeted therapies

indicated for IHC 3+ and IHC 2+ / FISH positive tumors as shown in the figure below.

We considered this potential market extension in breast cancer and gastric cancer in calculating the potential addressable market.

SBT6050 Potential Addressable Market in Indications with an

FDA-Approved HER2 Targeted Therapy

TLR8 Agonist Conjugated to a Nectin4 Antibody

Our second product candidate, SBT6290, is comprised of the same TLR8 linker-payload used in SBT6050 conjugated to a Nectin4-directed monoclonal antibody.

Nectin4 has been prioritized as our second target based on differential expression of extracellular proteins on tumor cells in comparison to healthy tissue, as well as the degree of myeloid cell infiltrate in the TME.

Nectin4 is overexpressed in

cancers including bladder, triple negative breast, head and neck, and NSCLC, among others.

Nectin4 is a target that has been clinically validated

by Seagen (formerly Seattle Genetics) through the approval of the Nectin4-directed antibody-drug conjugate Padcev.

In 2019, Padcev was approved under the FDAs accelerated approval program indicated for the treatment of adult patients with

locally advanced or metastatic urothelial cancer who have previously received a PD-1 inhibitor, and a platinum-containing chemotherapy.

Targeting Nectin4 to deliver a TLR8 agonist to adjacent myeloid cells presents a significant therapeutic opportunity across different cancers.

in the figure below, the estimated incidence of newly diagnosed patients with bladder, triple negative breast, head and neck cancers, and NSCLC that express Nectin4 represents over 181,000 patients annually in the early line setting.

The estimated

yearly deaths of patients with bladder, triple negative breast, head and neck cancer, and NSCLC that express Nectin4 represents over 73,000 patients with relapsed or refractory cancer annually in the United States.

Nectin4 Overexpression Across Select Tumor Types

Bioinformatic analysis of data from The Cancer Genome Atlas (TCGA) database indicates that myeloid cells are present

in Nectin4-expressing tumor types, as shown in the figure below.

in TCGA, myeloid cells can comprise, on average, between 7% to 14% of the tumor which is higher than the average number of T cells in the same tumor types.

Nectin4-Expressing Tumor Types Are Infiltrated By Myeloid Cells

In our in vitro studies, human PBMCs were co-cultured with Nectin4 pos or Nectin4 neg tumor cell lines in the presence of SBT6290.

As shown in the figures below, SBT6290 potently activated myeloid cells with an EC 50 of ~200 pM, in the presence of Nectin4-expressing tumor cells.

TNF a production was measured as a

marker of myeloid cell activation.

The levels of TNF a induced by SBT6290 matched those observed with SBT6050 when tested in a similar in vitro

Not only did these data highlight the Nectin4-dependent activity of SBT6290, but also demonstrated that the TLR8 linker-payload used in SBT6050 was transferable to antibodies directed to diverse antigens.

SBT6290 Potently Activated Human Myeloid Cells

Nectin4 was recently described to be a ligand for T cell immunoglobulin and ITIM domain (TIGIT).

has emerged as an inhibitor of anti-tumor immune responses and several agents inhibiting this pathway are being tested in clinical trials.

In addition to SBT6290s primary mechanism of action through TLR8 activation, the figure below

demonstrated that the binding of TIGIT to Nectin4-expressing tumor cells was blocked by the binding domain of SBT6290.

SBT6290 Binding Domain

Blocked TIGIT Binding to Nectin4-Expressing Tumor Cells

We engineered a mouse surrogate of SBT6290 (SBT6290-S) using a TLR7 agonist

conjugated to a Nectin4 monoclonal antibody to account for species differences in our in vivo studies, as was described for SBT6050.

As shown in the figure below, SBT6290-S improved overall survival in

a Nectin4-expressing EMT6 mouse model.

This study was powered for statistical significance using survival as a readout which is defined as tumor size remaining below 1,000 mm 3 .

SBT6290-S demonstrated a statistically significant improvement in survival as compared to the two control groups as noted in the figure below.

Administration of SBT6290-S as Monotherapy Resulted in Improved Overall Survival in a Nectin4-Expressing

EMT6 Preclinical Model

As shown in the figure below, subcutaneous administration of

SBT6290-S to mice bearing Nectin4-expressing EMT6 tumors induced the production of cytokines and chemokines in the tumors of treated mice.

MCP-1 and IP-10 upregulation are indicative of myeloid cell activation and IFN g and IL-2

production are indicative of T cell activation in the treated mice.

Administration of SBT6290-S as

Monotherapy Induced the Production of Cytokines and Chemokines in Nectin4-Expressing EMT6Tumors

In a single and repeat dose exploratory safety study, Nectin4-TLR8 conjugate was administered subcutaneously to NHP

at a dose level >10-fold of the anticipated, minimum pharmacologically active dose level, a dose that was also evaluated with SBT6050.

The overall safety, tolerability, PK and PD findings of the

Nectin4-TLR8 conjugate were very similar to those observed with SBT6050 at this dose.

A non-GLP toxicology study for SBT6290 has been completed, and we believe the results are supportive of a wide therapeutic

window similar to that observed with SBT6050.

GLP NHP toxicity studies are expected to commence in first half of 2021.

In parallel, we are in the process of creating a master cell bank for GMP production of SBT6290.

In our pre-IND interactions with the FDA that took place in February 2021, alignment on SBT6290 preclinical, Chemistry, Manufacturing, and Controls (CMC), and clinical plans was achieved.

We anticipate submitting the

SBT6290 IND in the fourth quarter of 2021 and initiating a Phase 1 clinical trial in the first quarter of 2022.

TLR8 is also highly expressed in conventional dendritic cells which promote antigen presentation and the production of cytokines important for the generation of T and B cell responses against hepatitis B virus.

TLR8 is not expressed in T or B lymphocytes, but TLR8 activation in human myeloid cells secondarily induces IFNγ

production by T cells and antibody production by B cells, both shown to be associated with the generation of functional cure in cHBV.

TLR8 is Highly Expressed in Human Myeloid Cell Types That Drive Anti-Viral Responses when Activated

Silverback’s Preclinical and Clinical Development Experience with a HER2-Directed TLR8 Agonist Conjugate, SBT6050

We have gained pre-clinical and clinical experience with TLR8 conjugates through our recently discontinued SBT6050 program.

In this program, a HER2-TLR8 agonist conjugate was administered to 58 patients as monotherapy and in combination with a checkpoint inhibitor at dose levels ranging from 0.15 mg/kg through 1.2 mg/kg with the length of patient experience ranging from 2 weeks through 41 weeks.

We observed a dose response for adverse events related to immune activation, serum PK, serum pharmacodynamic markers, tumor exposure and intratumoral pharmacodynamic markers inclusive of data that demonstrates activation of immune mechanisms in biopsies collected from patients after treatment.

However, antitumor activity was limited in the monotherapy arm, and increased toxicity in combination with checkpoint inhibitors limited dose escalation beyond 0.3 mg/kg.

In the 18 patients treated in combination with pembrolizumab, while we observed decreasing volume stable disease in some patients, we did not see responses meeting RECIST criteria.

Furthermore, at 0.3 mg/kg in combination with pembrolizumab, although there were no DLTs with additional patients and longer follow-up, it was determined that long-term tolerability was challenging.

Several patients experienced grade 3 adverse events in later cycles, including grade 3 hypotension.

Finally, PK and PD at 0.3 mg/kg were suboptimal.

On the other hand, there were important learnings from the SBT6050 clinical program that we are applying to SBT8230.

In the SBT6050 clinical trial, exposures increased with dose and the data demonstrated that the conjugate was stable in circulation.

F ree payload was undetectable in ~98% of blood samples evaluated and in the few samples in which payload was detectable, the levels were at least an order of magnitude below the lowest active concentrations of payload.

SBT6050 induced PD activity indicative of myeloid and natural killer (NK) and/or T cell activation at all dose levels, confirming the proposed mechanism of action of TLR8 agonism, and PD activity was maintained with repeat dosing.

ASGR1 is highly expressed in liver and is restricted in its expression to this organ.

Other ASGR1-directed agents, such as those used by RNAi therapies, have shown robust liver localization.

SBT8230 shows biodistribution profiles in NHP consistent with these agents and is distinct from SBT6050 and SBT6290 in this regard.

TLR8 Agonist Conjugated to an ASGR1 Antibody

As our lead virology program, we have engineered SBT8230 to treat cHBV using our ImmunoTAC platform.

SBT8230 is comprised of an ASGR1 monoclonal antibody

conjugated to the same TLR8 linker-payload as SBT6050 and SBT6290 and is designed to elicit an anti-viral immune response by targeting TLR8 activation to the liver.

We have engineered SBT8230 to treat cHBV by eliciting an anti-viral immune response through targeting TLR8 activation to the liver.

SBT8230 is comprised of an ASGR1 monoclonal antibody conjugated to the same TLR8 linker-payload as SBT6050, but with an average drug antibody ratio (DAR) of about 2 as opposed to the average DAR of about 4 used in SBT6050.

cHBV infection remains a worldwide problem affecting approximately 257 million people and contributing to an estimated 887,000 deaths in 2015.

the United States alone, approximately 860,000 people suffer from cHBV.

cHBV is estimated to be the cause of 60-80% of the worlds primary liver cancers.

There is a significant unmet need for therapies

that can elicit a functional cure for the disease, which is defined as sustained loss of hepatitis B surface antigen (HBsAg) in the blood.

In the United States alone, approximately 860,000 people suffer from cHBV.

cHBV is estimated to be the cause of 60-80% of the world’s primary liver cancers.

There is a significant unmet need for therapies that can elicit a functional cure for the disease, which is defined as sustained loss of HBsAg in the blood.

Many of the approved therapies for cHBV have low functional cure rates or lack durability over time.

Clinical and preclinical evidence by third parties have demonstrated that

IFN g -mediated immune responses, including the activation of

IFN g + T cell and IgG B cell anti-viral responses, can lead to a functional cure in cHBV patients and animal models of HBV.

Clinical and preclinical evidence by third parties have demonstrated that IFN g -mediated immune responses, including the activation of IFN g + T cell and IgG B cell anti-viral responses, can lead to a functional cure in cHBV patients and animal models of HBV.

In HBV transgenic mice, HBV-specific CD4 and CD8 T cells have exhibited the ability to inhibit hepatocellular replication by a noncytopathic process that is mediated primarily by IFN g .

In acutely infected chimpanzees, viral replication was almost completely abolished soon after CD3 and IFN g

mRNA increased in the liver.

Evidence by third parties has demonstrated that HBV-specific IFN g producing CD4 T

cells were associated with viral clearance in patients with cHBV infection.

In acutely infected chimpanzees, viral replication was almost completely abolished soon after CD3 and IFN g mRNA increased in the liver.

Evidence by third parties has demonstrated that HBV-specific IFN g producing CD4 T cells were associated with viral clearance in patients with cHBV infection.

Additionally, these studies have demonstrated that TLR8 agonists were particularly effective in activation of myeloid cells and the induction of IFN g .

The figure below shows IFN g production after human blood or

liver-derived mononuclear cells were stimulated with the indicated TLR agonist.

The figure below shows IFN g production after human blood or liver-derived mononuclear cells were stimulated with the indicated TLR agonist.

TLR8 was unique in its ability to induce IFN g .

TLR8 Drove IFN g Production from Liver

Mononuclear Cells in Third Party Preclinical Studies

In addition, the figures below show concentrations of individual cytokines quantified in the supernatant of purified

PBMC or isolated mononuclear cells from the liver after stimulation with either a TLR8 or TLR7 agonist.

TLR8 agonism, but not TLR7 agonism, induced IFN g

production, along with the production of other cytokines important in the generation of anti-viral immunity such as TNF a ,

IL-1ß, and IL-6, from both liver and blood immune cells.

We believe these data from third parties demonstrate that TLR8 is the agonist of choice for improving the

outcome for patients with cHBV.

TLR8 Drove IFN g Production from Liver Mononuclear Cells in Third Party Preclinical Studies

In addition, the figures below show concentrations of individual cytokines quantified in the supernatant of purified peripheral blood mononuclear cells (PBMC) or isolated mononuclear cells from the liver after stimulation with either a TLR8 or TLR7 agonist.

TLR8 agonism, but not TLR7 agonism, induced IFNγ

production, along with the production of other cytokines important in the generation of anti-viral immunity such as TNFα, IL-1ß, and IL-6, from both liver and blood immune cells.

We believe these data from third parties demonstrate that TLR8 is the agonist of choice for improving the outcome for patients with cHBV.

TLR8 Agonism Drove Cytokine Production

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In a preclinical woodchuck model of cHBV conducted by a third party, oral administration of a TLR8 agonist small molecule, GS-9688 (selgantolimod), was shown to drive seroconversion and reduce woodchuck hepatitis virus S antigen and woodchuck hepatitis B viral levels.

Selgantolimods effectiveness in cHBV patients has been limited,

We believe (i) this is due to not achieving necessary exposures because of DLTs associated with activation of myeloid cells outside of the liver and (ii) that systemically delivered but liver localized TLR8 agonism could improve

the potential for effective therapy and lead to functional cures in cHBV.

SBT8230 is a Liver-Localized TLR8 Agonist Designed to Achieve Functional Cure in

As shown in the figure below, we designed SBT8230 to be comprised of an ASGR1 monoclonal antibody conjugated to a TLR8 linker-payload

with the goal of activating the myeloid cell compartment in liver tissue only.

The conjugate is designed to be internalized in myeloid cells in an FcR-mediated manner when ASGR1 is present on adjacent liver

Selgantolimod’s effectiveness in cHBV patients has been limited, however.

SBT8230 is a Liver-Localized TLR8 Agonist Designed to Combine with other cHBV Drugs to Achieve Functional Cure in cHBV

As shown in the figure below, we designed SBT8230 to be comprised of an ASGR1 monoclonal antibody conjugated to a TLR8 linker-payload with the goal of activating the myeloid cell compartment in liver tissue only.

The conjugate is designed to be internalized in myeloid cells in an FcR-mediated manner when ASGR1 is present on adjacent liver cells.

In addition, the ASGR1 mAb of SBT8230 was designed to bind to an epitope distinct from that recognized by GalNAc to allow for combination with GalNAc-based therapies.

SBT8230 ImmunoTAC is Designed for Liver-localized TLR8 Activation

Background on ASGR1

As with all ADC-based therapeutics, an expression profile differential of the target antigen on healthy tissue relative to target tissues is critical.

As shown in the figure below, the expression of ASGR1 is a liver-restricted scavenger receptor that is highly restricted to this organ.

Furthermore, it is a clinically validated target that has been successfully targeted by GalNAc-based therapeutics.

ASGR1 Expression is Restricted to the Liver

The antibody backbone of SBT8230 has been designed to possess high affinity and specificity for ASGR1 and is not an efficient binder to ASGR2 or CLEC10A.

The specificity and binding profile of the SBT8230 antibody is identical between human and monkey (not shown).

SBT8230’s Backbone Antibody is Highly Specific to ASGR1

The SBT8230 antibody has also been designed to recognize an epitope distinct from that bound by the ASGR1 ligand, GalNAc, allowing for possible combination of SBT8230 with GalNAc-targeted RNAi therapies currently in development for cHBV.

SBT8230’s Backbone Antibody Does Not Block Ligand Binding Allowing for Combination Therapy with GalNAc Targeted Molecules

Potential Mechanism of Action:

SBT8230 is Designed to Localize TLR8 Activation of Myeloid Cells

in the Liver Via a Directed ASGR1 Antibody

As shown in the figures below, in our preclinical studies utilizing human PBMCs ex vivo , ASGR1-TLR8 induced

IFN g -promoting activity through its activation of myeloid cells.

SBT8230 is Designed to Localize TLR8 Activation of Myeloid Cells in the Liver Via a Directed ASGR1 Antibody

The diagram below walks through the potential mechanism of action of SBT8230.

SBT8230 is designed to be administered subcutaneously.

In the liver, the ASGR1 binding domain engages hepatocytes and the Fc domain of the conjugate binds to the Fc g R receptors on myeloid cells.

The increase in Fc g R binding avidity is a result of ASGR co-binding and results in the internalization of the conjugate into the endo-lysosome where TLR8 resides.

SBT8230 directly activates myeloid cells, and these cells in turn activate anti-viral IFN g + T cell and anti-viral B cell immune responses.

As shown in the figures below, ASGR1-TLR8 induced IFNγ-promoting activity through activation of myeloid cells in our preclinical studies utilizing human PBMCs ex vivo.

ASGR1-TLR8 Potently Activated Human Myeloid Cells, Resulting in a Robust IFN g Response

Activation of human myeloid cells by TLR8 was mirrored in mouse myeloid cells by TLR7 as was demonstrated previously

in the SBT6050 and SBT6290 programs.

Therefore, to evaluate the ability of

a liver-targeted myeloid cell agonist conjugate to drive seroconversion in a mouse model of cHBV, we engineered a surrogate for SBT8230 comprised of an ASGR1 monoclonal antibody conjugated to a

TLR7 agonist (ASGR1-S).

Activation of human myeloid cells by TLR8 was mirrored in mouse myeloid cells by TLR7 as was previously demonstrated in our SBT6050 program.

Therefore, to evaluate the ability of a liver-targeted myeloid cell agonist conjugate to drive seroconversion in a mouse model of cHBV, we engineered a surrogate for SBT8230 comprised of an anti-mouse ASGR1 monoclonal antibody conjugated to a TLR7 agonist (SBT8230-S).

The antibody contained an IgG2a Fc domain to facilitate uptake into mouse myeloid cells.

Seroconversion, together with reductions in HBsAg levels and expansion of

IFN g -producing anti-viral T cells, is associated with achievement of functional cures in cHBV.

(adenovirus-hepatis B virus) mouse model is a commonly used preclinical model for cHBV.

Paralleling their inability to drive seroconversion in cHBV patients, cHBV standard of care therapies and other agents that target the HBV life cycle such as

capsid inhibitors, have not resulted in seroconversion in this or similar models.

In contrast, statistically significant increases in seroconversion and reductions in HBsAg was demonstrated with ASGR-S as

compared to the vehicle and unconjugated antibody control groups in the AAV-HBV model, as shown in the figures below.

ASGR1-S Reduced HBsAg and Drove Seroconversion in Mouse AAV-HBV

In addition, ASGR1-S treatment generated potent anti-viral T cell and B cell

immune responses and significantly increased anti-HBV core and S antigen IFN g + T cells and anti-HBsAg+ B cells, as

shown in the figures below.

ASGR1-S Increased IFN g + Anti-Viral T Cells

ASGR1-S Increased B Cells Producing Anti-HBs Antigen Antibodies

Importantly, as shown in the figures below, no changes in serum ALT or body weight were noted after treatment with ASGR1-S as compared to controls.

In addition, there were no findings in the liver by histopathology after treatment with ASGR1-S.

Together, these data indicated that ASGR1-S was well tolerated in the mouse AAV-HBV model.

ASGR1-S Was Well Tolerated in Mice

Initial exploratory NHP toxicology studies demonstrated a wide therapeutic window.

Preclinical studies in mice and

NHP for our ASGR1-TLR8 ImmunoTAC candidate are ongoing.

We selected a development candidate for this program in the fourth quarter of 2020, and we anticipate initiating IND enabling toxicity studies in the first quarter of 2022 and submitting the

IND in the second half of 2022.

Other Programs

Immuno-Oncology Programs

In addition to HER2 and Nectin4, we have selected two undisclosed targets that may enable us to address a broader

range of solid tumor indications.

In these programs, the antibodies have been created and conjugated to the same TLR8 linker-payload utilized in SBT6050 and SBT6290.

In addition, our undisclosed product candidates display an in vitro activity

profile on human immune cells similar to that of SBT6050 and SBT6290.

Further, one of these conjugates was evaluated in an exploratory NHP toxicology study with repeat subcutaneous dosing.

The dose level evaluated in this

study was previously used in NHP toxicology studies with SBT6050 and SBT6290 to demonstrate a therapeutic window.

At this dose level, the undisclosed product candidate was found to have a similar

tolerability profile to SBT6050 and SBT6290, indicating that it may have a similar therapeutic window.

Fibrosis Program:

TGFßR1 Antagonist Conjugated

to an ASGR1 Antibody

We designed our ASGR1-TGFßR1 antagonist conjugate to achieve

liver-localized inhibition of TGFß-signaling to treat fibrosis.

Fibrosis is the overgrowth, hardening and scarring of tissue due to

accumulation of extracellular matrix molecules, such as collagen, that is produced by fibroblasts.

Chronic fibrotic diseases often result in widespread distortion of normal tissue architecture and account for up to 45% of deaths in the United

Fibrosis can occur in most major tissues, however idiopathic pulmonary fibrosis and hepatic cirrhosis are among the more common fibrotic diseases.

Hepatic cirrhosis and hepatocellular carcinoma (HCC) are leading causes of morbidity and mortality worldwide.

Patients with liver cirrhosis are at high

risk of deadly hepatic failure and approximately 80%-90% of HCC develop on a cirrhotic background.

HCC ranks as the sixth most common cancer and, with over 600,000 deaths per annum, it constitutes a major

global health problem.

The most common causes of hepatic cirrhosis in the United States are hepatitis C, alcoholic liver disease, and nonalcoholic liver disease.

Pathway and its Role in Fibrosis

been made to treat the underlying etiologies initiating liver fibrosis, yet significant needs remain for therapies that slow, halt, or reverse fibrosis and thereby prevent late-stage liver failure and HCC.

signaling is a key mediator of

liver fibrosis initiation and progression through multiple mechanisms, including hepatocyte apoptosis, hepatic stellate cell transdifferentiation to myofibroblasts, and pro-fibrotic macrophage activation.

is secreted by many cell types and is implicated in a wide range of cell functions, critically regulating tissue homeostasis and repair,

immune and inflammatory responses, extracellular matrix deposition, and cell differentiation and growth.

In healthy tissues, TGFß

is expressed at a low level to enable homeostatic mechanisms and is also transiently upregulated in response to

tissue injury, which initiates a cascade that results in collagen production and, ultimately, healing of the tissue.

In fibrotic tissue, TGFß

production and signaling is dysregulated and perpetuated, leading to excess collagen deposition in

the absence of acute tissue injury.

While inhibiting the TGFß

receptor kinase domains is the most direct way to down-regulate TGFß

signaling, systemic availability of TGFß

receptor 1 (TGFßR1) antagonists is associated with DLTs due to the homeostatic functions of TGFß

in multiple organ systems.

Preventing TGFß

activity with antibody blockade of ligands

or their activation machinery is challenging due to the presence of multiple ligands and activation mechanisms, and TGFßs sequestration in extracellular matrix.

We believe a systemically delivered TGFßR1 antagonist with

liver-localized activity has the potential to ameliorate liver fibrosis while avoiding the toxicities associated with non-targeted TGFß

receptor inhibition.

Using a similar strategy of liver localization that was employed in our cHBV program, as shown in the figure below, we engineered an ASGR1-TGFßR1 antagonist ImmunoTAC intended to inhibit the TGFß

pathway to treat liver fibrosis.

ASGR1 is a scavenger receptor that is highly expressed exclusively on hepatocytes and internalizes and

recycles rapidly upon engagement.

Thus, the ASGR1-TGFßR1 antagonist conjugate is designed for systemic administration with liver-localized inhibition of the TGFß

ASGR1-TGFßR1 ImmunoTAC Therapeutic is Designed for

Liver-Localized TGFß

Signaling Inhibition for Anti-Fibrotic Effects

As shown in the figure below, our initial preclinical studies with

ASGR1-TGFßR1 antagonist conjugates demonstrated potent inhibition of TGFß

signaling in vitro .

This activity was dependent on ASGR1 binding as no activity was observed on cells with low or no

ASGR1 expression.

ASGR1-TGFßR1 ImmunoTAC Therapeutic:

Potent and Complete Inhibition of

Signaling in pSMAD Reporter Assay

ASGR1 pos pSMAD Reporter Assay

Preclinical studies in mouse disease models are ongoing for this program.

The pharmaceutical industry is highly

competitive and dynamic, owing to rapidly advancing technologies.

We face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, government

agencies and public and private research institutions.

Seroconversion, together with reductions in HBsAg levels and expansion of IFN g -producing anti-viral T cells, is associated with achievement of functional cures in cHBV.

The AAV-HBV (adenovirus-hepatis B virus) mouse model is a commonly used preclinical model for cHBV.

Paralleling their inability to drive seroconversion in cHBV patients, cHBV standard-of-care therapies and other agents that target the HBV life cycle such as capsid inhibitors, have not resulted in seroconversion in this or similar models.

In contrast, statistically significant increases in seroconversion and reductions in HBsAg were demonstrated with SBT8230-S as compared to the vehicle and unconjugated antibody control groups in the AAV-HBV model, as shown in the figures below.

SBT8230-S Reduced HBsAg and Drove Seroconversion in Mouse AAV-HBV Model

In addition, SBT8230-S treatment generated potent anti-viral T cell and B cell immune responses, as indicated by the significantly increased anti-HBV core and S antigen IFN g + T cells and anti-HBsAg+ B cells, as shown in the figures below.

SBT8230-S Increased IFN g + Anti-Viral T Cells

SBT8230-S Increased B Cells Producing Anti-HBs Antigen Antibodies

Importantly, as shown in the figures below, no changes in serum ALT or body weight were noted after treatment with SBT8230-S as compared to controls.

In addition, there were no findings in the liver by histopathology after treatment with SBT8230-S.

Together, these data indicated that SBT8230-S was well tolerated in the mouse AAV-HBV model.

SBT8230-S was Well Tolerated in Mice

SBT8230 is Highly Localized to the Liver in Non-Human Primates, Suggestive of Pharmacological Activity at Low Doses in the Clinic

SBT8230 demonstrates comparable activity on NHP immune cells, supporting the use of NHP to characterize its tolerability, efficiency of liver uptake, and ability to produce robust and localized PD effects.

As shown in the figure below, SBT8230 was targeted to the liver with high efficiency in NHP.

SBT8230 liver exposures (area under the curve, AUC) were over 300 times greater than serum exposures, the latter of which also displayed a very short half-life.

SBT8230 concentration in NHP liver vs serum

Because of the robust liver-localization of SBT8230, the systemic (serum) exposure of SBT8230 is distinct from SBT6050.

As shown in the figure below, when SBT8230 and SBT6050 are dosed at equivalent dose levels, SBT8230 has far lower serum exposure than SBT6050 due to its efficient localization to liver.

The mean estimated liver SBT8230 concentration at this dose in NHP was ~300-fold the maximum serum exposure, which is consistent with the reported liver to plasma exposure ratio of ~260 in NHP for the approved GalNAc-siRNA givosiran (US FDA Pharmacology Review, Givlaari).

Serum exposures of SBT8230 vs SBT6050 in NHP

Liver PD assessments demonstrate that the highly efficient liver uptake of SBT8230 in NHP leads to robust liver-localized PD effects.

The figures below illustrate that RNA levels for multiple markers of myeloid cell activation in liver are markedly increased with SBT8230 treatment.

Of note, PD effects at 0.5 mg/kg are similar overall to those at higher doses, indicating that maximal liver PD effects are achieved at this dose level.

Based on the totality of our preclinical data, we believe that SBT8230 has the potential to induce pharmacological effects in the liver at doses as low as 0.03 mg/kg.

This is below the lowest dose level evaluated for SBT6050, 0.15 mg/kg, that was found to be well-tolerated in patients.

SBT8230 Induced Cytokine mRNA in the Liver but not in Serum

The non-clinical safety and tolerability of SBT8230 has been assessed in two NHP toxicity studies.

In a dose range finding non-GLP study, dose levels of 6, 12 and 25 mg/kg were administered every 2 weeks (Q2W) for 4 doses.

The 6 and 12 mg/kg dose levels were well-tolerated.

At the 25 mg/kg dose level the first dose was well tolerated, but the second or third doses were associated with toxicities that included injection site reactions.

This dose level is >800-fold higher than the dose noted above (0.03 mg/kg) that is expected to be pharmacologically active in patients with HBV.

Across all dose levels, t here were transient, dose-related hematological, clinical chemistry, and cytokine and chemokine changes reflective of the potential mechanism of action of SBT8230.

There was no evidence of cytokine release syndrome (CRS) or liver enzyme elevations observed at any dose level.

SBT8230 Phase 1-Enabling Study Update

We initiated a Phase 1-enabling GLP toxicology study in the first quarter of 2022.

Dose levels of 6, 12 and 18 mg/kg were evaluated on a Q2W schedule for 4 doses.

The in-life portion has recently completed, and bioanalytical assessments are now in progress.

SBT8230 was generally well-tolerated.

Two animals out of 26, one in the 12 mg/kg group and one in the 18 mg/kg group, displayed clinical signs consistent with ADA-mediated toxicity after the fourth and third doses, respectively, and were euthanized.

Repeat administration of fully human or humanized proteins, such as the mAb in SBT8230, to NHP can frequently lead to the generation of ADA and development of associated toxicities, which have been extensively investigated over the years and found to generally not be predictive of toxicities in humans (van Meer 2013;

Kronenberg 2017).

Similar toxicities were also observed with SBT6050 in NHP studies (at 12 mg/kg dose level), but acute ADA-mediated toxicities were not observed in patients dosed with SBT6050.

As noted above, we believe that SBT8230 has the potential to be pharmacologically active in the liver at doses as low as 0.03 mg/kg in humans.

Additional assessments (e.g., histopathology, PK, PD) are ongoing in the GLP toxicology study, and we believe that overall results of the study has the potential to provide favorable safety margins in support of the first-in-human study.

SBT8230 Next Steps

Upon completion of the GLP toxicology studies and GMP manufacturing of SBT8230, we plan to complete a Phase 1 regulatory submission in the fourth quarter of 2022, which includes an umbrella trial with a Phase 1 SAD study in healthy volunteers anticipated to start in the first half of 2023.

GMP manufacturing of the antibody intermediate and ADC drug substance have been completed, with release testing in progress.

Manufacturing and release of lyophilized SBT8230 drug product is on track to be completed in the third quarter of 2022.

After completing the SAD study, we anticipate initiating a Phase 1 MAD study in patients with chronic HBV, who are virally suppressed on NRTI therapy.

Additional ImmunoTAC conjugates

We anticipate providing an update on our discovery pipeline in the fourth quarter of 2022.

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

We face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, government agencies and public and private research institutions.

Any product candidates that we successfully develop and commercialize will compete with existing treatments and new treatments that may become available in the future.

We compete with other companies working to develop immunotherapies and targeted therapies for the treatment of cancer including divisions of large

pharmaceutical and biotechnology companies of various sizes.

These companies are developing therapies of many different modalities including small molecules, monoclonal antibodies, antibody-drug conjugates,

bi-specific antibodies, cell therapies, oncolytic viruses and vaccines.

Specifically, there are many

companies pursuing a variety of approaches to TLR-directed therapies, including Apros Therapeutics, Ascendis, BioNTech, Bolt Biotherapeutics, Bristol Myers Squibb, Checkmate Pharmaceuticals, CureVac, Exicure,

Galaderma, Gilead, Idera, Mologen, Nektar, Novartis, Primmune Therapeutics, Roche, Seven&Eight, Shanghai De Novo, Sumitomo Dainippon, TriSalus, and UroGen.

Other companies using antibody-drug conjugates to target innate immune receptors include

Actym Therapeutics, Mersana, and Takeda Pharmaceuticals.

We compete with other companies working to develop immunotherapies and tissue targeted therapies for the treatment of hepatitis B virus infections, cancer, and other serious diseases, including divisions of large pharmaceutical and biotechnology companies of various sizes.

These companies are developing therapies of many different modalities including small molecules, monoclonal antibodies, antibody-drug conjugates, bi-specific antibodies, cell therapies, oncolytic viruses and vaccines.

Specifically, there are many companies pursuing a variety of approaches to immune modulation and more specifically TLR-directed therapies.

Companies engaging in TLR-directed therapies include Ambrx, Apros Therapeutics, Ascendis, BioNTech, Bolt Biotherapeutics, Bristol Myers Squibb, Checkmate Pharmaceuticals, CureVac, Exicure, Galderma, Gilead, Idera, Mologen, Nektar, Novartis, Primmune Therapeutics, Roche, Seven&Eight Biopharmaceuticals, Shanghai De Novo, Sumitomo Dainippon, Tallac Therapeutics, TriSalus, and UroGen.

Other companies using antibody-drug conjugates to target innate immune receptors include Actym Therapeutics, Mersana, and Takeda Pharmaceuticals.

Immunotherapy and validated pathway approaches are further being pursued by many smaller biotechnology companies as well as larger pharmaceutical companies.

We also face competition from

validated pathway therapy treatments offered by companies such as AstraZeneca, Byondis, Daiichi Sankyo, Genentech, MacroGenics, Pieris, Puma, Seagen (formerly Seattle Genetics), Spectrum Pharmaceuticals, and Zymeworks.

We also face competition from

companies that continue to invest in innovation in the antibody-drug conjugate field, including but not limited to AbbVie, ADC Therapeutics, Astellas, BioAtla, Celldex, CytomX, Eli Lilly and Company, GlaxoSmithKline, Genmab, ImmunoGen, Immunomedics,

Millennium Pharmaceuticals, MorphoSys AG, Novartis, Pfizer, Sanofi, Seagen (formerly Seattle Genetics), Sutro Biopharma, and VelosBio.

Many of our competitors, either alone or with their collaboration partners, have significantly greater

financial resources and expertise in research and development, preclinical testing, clinical trials, manufacturing, and marketing than we do.

Future collaborations and mergers and acquisitions may result in further resource concentration among a

smaller number of competitors.

We also face competition from (i) validated pathway therapy treatments offered by companies such as AstraZeneca, Byondis, Daiichi Sankyo, Klus Pharma, MacroGenics, Pieris, Puma, RemeGen, Seagen, Spectrum Pharmaceuticals, and Zymeworks;

(ii) companies that continue to invest in innovation in the antibody-drug conjugate field, including but not limited to AbbVie, ADC Therapeutics, Astellas, BioAtla, Bicycle Therapeutics, Celldex, CytomX, Eli Lilly and Company, GlaxoSmithKline, Genmab, ImmunoGen, Millennium Pharmaceuticals, MorphoSys AG, Novartis, Pfizer, Sanofi, Seagen, and Sutro Biopharma;

and (iii) companies that are developing assets for the treatment of chronic HBV infection, which include 3SBio, AICuris, Albireo, Aligos, Allovir, Alnylam, Altimmune, Antios, Arbutus, Arcus, Arrowhead, Ascentage, Assembly Biosciences, Blue Jay Therapeutics, Bristol Myers Squibb, Door Pharmaceuticals, Enanta, ENYO Pharma, Excision Bio, Finch Therapeutics, GC Pharma, Gilead, GlaxoSmithKline, Golden Biotechnology Group, Grifols, HEC Pharm, Hepion, Immunocore, ISA pharmaceuticals, Johnson & Johnson, Kineta, Lupin Limited, Merck, Nucorion, Replicor, Roche, SciClone Pharma, Shanghai Henlius Group, Spring Bank, Tasly, TeneoTen, TRACON, Vaccitech, VBI Vaccines, VenatoRx, Vir, VLP Biotech, and Zydus Cadila.

Many of our competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, preclinical testing, clinical trials, manufacturing, and marketing than we do.

Future collaborations and mergers and acquisitions may result in further resource concentration among a smaller number of competitors.

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

These competitors will also compete with us in

recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, our

Our commercial potential could be reduced or eliminated if our competitors develop and commercialize products that are safer, more

effective, have fewer or less severe side effects, are more convenient or are less expensive than products that we may develop.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain

approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market or make our development more complicated.

The key competitive factors affecting the success of all of our programs

are likely to be efficacy, safety and convenience.

These competitors will also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, our programs.

Our commercial potential could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than products that we may develop.

Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market or make our development more complicated.

The key competitive factors affecting the success of all of our programs are likely to be efficacy, safety and convenience.

Manufacturing

Our antibody-drug conjugate is produced by chemical conjugation of a non-cytotoxic linker-payload to a monoclonal

Our antibody-drug conjugate is produced by chemical conjugation of a non-cytotoxic linker-payload to a monoclonal antibody.

We have significant internal expertise in engineering and humanization of antibodies and designing linker-payloads to customize the drug conjugate for a desired target profile.

The small molecule linker-payload is chemically synthesized,

and the antibody is produced by conventional biological process technology.

The manufacturing process involves production of the linker-payload and antibody process intermediates, the conjugation of the intermediates to produce bulk therapeutic

substance, and fill/finish of the therapeutic product.

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

facilities subject to compliance with current good manufacturing practices (cGMP).

We operate on an outsourced model and rely on contracts with third-party development and manufacturing organizations designed to comply with cGMPs to produce and test

the intermediates, therapeutic substance and therapeutic product to support clinical development, and commercialization, if any of our product candidates obtain marketing approval.

We are working with these manufacturers to scale up our

manufacturing capabilities to support our clinical plans.

The small molecule linker-payload is chemically synthesized, and the antibody is produced by conventional biological process technology.

The manufacturing process involves production of the linker-payload and antibody process intermediates, the conjugation of the intermediates to produce bulk therapeutic substance, and fill/finish of the therapeutic product.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities subject to compliance with current good manufacturing practices (cGMP).

We operate on an outsourced model and rely on contracts with third-party development and manufacturing organizations designed to comply with cGMPs to produce and test the intermediates, therapeutic substance and therapeutic product to support clinical development, and commercialization, if any of our product candidates obtain marketing approval.

We are working with these manufacturers to scale up our manufacturing capabilities to support our clinical plans.

We also rely on third parties to package, label, store and distribute our product candidates, as well as for our commercial products if marketing approval is obtained.

We believe that this

strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest on our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the design and

development of our product candidates.

We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest on our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the design and development of our product candidates.

Commercialization Plan

We intend to retain significant development and commercial rights to our product candidates and, if marketing approval is obtained, to commercialize our

product candidates on our own, or potentially with a partner, in the United States and other regions.

We intend to retain significant development and commercial rights to our product candidates and, if we obtain marketing approval, to commercialize our product candidates on our own, or potentially with a partner, in the United States and other regions.

We currently have no sales, marketing or commercial product distribution capabilities and have no experience as a company commercializing products.

We intend to build the necessary infrastructure and capabilities over time for the United States, and potentially other regions, following further advancement of our product candidates.

Clinical data, the size of the addressable patient population,

the size of the commercial infrastructure and manufacturing needs may all influence or alter our commercialization plans.

Clinical data, the size of the addressable patient population, the size of the commercial infrastructure and manufacturing needs may all influence or alter our commercialization plans.

License Agreement

Cell Line License Agreement with WuXi Biologics (Hong Kong) Limited

Technology), to make, use, sell, offer for sale and import a product developed through the use of the WuXi Bio Licensed Technology (WuXi Bio Licensed Product).

The WuXi Bio Licensed Technology is used to manufacture a component of our lead product,

In October 2019, we entered into a cell line license agreement with WuXi Biologics (Hong Kong) Limited (WuXi Bio), pursuant to which we received a non-exclusive, worldwide, sublicensable license under certain of WuXi Bio’s intellectual property rights, know-how and biological materials (WuXi Bio Licensed Technology), to make, use, sell, offer for sale and import a product developed through the use of the WuXi Bio Licensed Technology (WuXi Bio Licensed Product).

The WuXi Bio Licensed Technology is used to manufacture a component of our ImmunoTAC platform.

In January 2020, we paid a license fee of $100,000 to WuXi Bio.

In December 2020, we incurred an additional license fee of $50,000 to WuXi

In December 2020, we incurred an additional license fee of $50,000 to WuXi Bio.

Additionally, if we do not engage WuXi Bio to manufacture the WuXi Bio Licensed Products for our clinical and commercial supplies, we are required to make milestone payments to WuXi Bio upon the achievement of certain sales milestones.

such scenarios, upon achieving certain thresholds for the aggregate annual net sales of a WuXi Bio Licensed Product, we would owe WuXi Bio aggregate milestone payments of up to $10.8 million.

Under such scenarios, upon achieving certain thresholds for the aggregate annual net sales of a WuXi Bio Licensed Product, we would owe WuXi Bio aggregate milestone payments of up to $10.8 million.

The WuXi Bio Agreement will continue indefinitely unless terminated in accordance with the agreement.

The WuXi Bio Agreement may be terminated

(i) by us upon six months written notice provided we pay all amounts due to WuXi Bio through the effective date of termination, (ii) by either party for the other partys material breach that remains uncured for 30 days after

written notice, and (iii) by WuXi Bio after 45 days written notice if we fail to make a payment within 30 days after receiving notice of such failure.

Master Services Agreements

Master Services Agreement with CE3, Inc.

In January 2020, we entered into a master services agreement (MSA) with CE3, Inc.

(CE3) pursuant to which CE3 will perform certain clinical

research and administrative services in connection with our lead product SBT6050, including trial management, site selection, site management, project management, data collection and analysis, and other related services, in support of certain

clinical research and trials.

In addition to the fees for these services, we are obligated to pay the fees and expenses incurred in connection with the services provided by CE3.

The CE3 MSA will expire in January 2025, unless earlier terminated in accordance with the MSA.

The MSA can be terminated (i) by either party at any

time upon 30 days written notice provided any ongoing work order will continue until the termination date set forth in such work order;

(ii) by either party for the other partys material breach that remains uncured for 60 days after

written notice;

(iii) by either party if the other party becomes insolvent or bankrupt;

or (iv) by us if either party is unable to obtain required ongoing review and/or approvals from regulatory agencies in connection with services to be

performed under the MSA.

Master Laboratory Services Agreement with Q Squared Solutions LLC

In May 2020, we entered into a Master Laboratory Services Agreement (MLSA) with Q Squared Solutions LLC (Q Squared) pursuant to which Q Squared will

perform certain project planning, laboratory design consultation, laboratory analysis, data management and other laboratory services in connection with our lead product SBT6050.

In addition to the fees for these services, we are obligated to pay the

fees, expenses and pass-through costs incurred in connection with the services provided by Q Squared.

The Q Squared MLSA will continue until May

2025, at which time it will automatically renew annually unless either party elects not to renew by providing 30 days written notice prior to the date of

an automatic renewal.

Additionally, the MLSA can be terminated (i) by either party at any time upon 90 days written notice;

(ii) by either party for the other partys

material breach that remains uncured for 30 days after written notice;

(iii) by either party if the other party becomes insolvent or files for bankruptcy;

or (iv) by Q Squared if its continued performance of services would constitute

a potential or actual violation of regulatory or scientific standards of integrity.

The WuXi Bio Agreement may be terminated (i) by us upon six months’

written notice provided we pay all amounts due to WuXi Bio through the effective date of termination, (ii) by either party for the other party’s material breach that remains uncured for 30 days after written notice, and (iii) by WuXi Bio after 45 days’

written notice if we fail to make a payment within 30 days after receiving notice of such failure.

Intellectual Property

We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business, including

seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties.

We own the issued patents and patent applications relating to our lead product candidate SBT6050.

Our policy includes seeking to protect

our proprietary position by, among other methods, filing patent applications, in the United States and in jurisdictions outside of the United States, directed to our proprietary technology, inventions, improvements, and product candidates that are

important to the development and implementation of our business.

We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties.

We own the issued patents and patent applications relating to our ImmunoTAC platform and SBT8230.

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

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

We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when

We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available.

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

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to defend and enforce our proprietary rights, including any patents that we may own in the future;

and to operate

without infringing on the valid and enforceable patents and other proprietary rights of third parties.

As of February 28, 2021, our licensed

and owned patent portfolio included four owned U.S.

and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.

As of February 28, 2022, our licensed and owned patent portfolio included five owned U.S.

patents, 30 owned U.S.

provisional and non-provisional patent applications, 13 owned patent applications filed under the Patent Cooperation Treaty

(PCT), 50 owned foreign patent applications filed in 16 different countries or regions, including in Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan, and

South Africa, directed to TLR8 agonists and conjugates, including SBT6050, TGFßR1 antagonists and conjugates, TGFßR2 antagonists and conjugates, TLR7 agonists and conjugates, and various applications of our proprietary antibody

conjugates and antibodies, including antibodies specific for Nectin4 and ASGR, as well as certain of our other proprietary antibodies, compounds, conjugates, formulations, technology, inventions, improvements, and other product candidates.

patents that issue from these pending patent applications will expire between March 2038 and October 2041, absent any patent term adjustments or extensions.

provisional and non-provisional patent applications, eight owned patent applications filed under the Patent Cooperation Treaty (PCT), 19 owned foreign patents, 118 owned foreign patent applications filed in a number of different foreign jurisdictions, including in Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan, and South Africa, directed to TLR8 agonists and conjugates, including SBT8230, TGFßR1 antagonists and conjugates, TGFßR2 antagonists and conjugates, TLR7 agonists and conjugates, and various applications of our proprietary antibody conjugates and antibodies, including antibodies specific for ASGR1, as well as certain of our other proprietary antibodies, compounds, conjugates, formulations, technology, inventions, improvements, and other product candidates.

Any patents that issue from these pending patent applications will expire between March 2038 and November 2042, absent any patent term adjustments or extensions.

We also possess and/or in-license substantial know-how and trade secrets relating to the development and commercialization of our product candidates, including related manufacturing processes and technology.

Specifically, our patent portfolio includes the following families and/or groups of families:

TLR8 Agonists and Conjugates.

TLR8 Agonists and Conjugates and Combination Therapies.

We have four issued U.S.

patents with composition of matter and method of treatment

claims directed to our lead product candidate, SBT6050, and composition of matter, method of treatment, and method of making claims to TLR8 agonist payloads, linker-payloads and conjugates, including conjugates to HER2-directed antibodies.

patents expire in March 2038, absent any patent term extensions.

As of December 31, 2020, we have eight pending U.S.

patent applications, six pending PCT applications, and 24 pending foreign patent applications filed in 16

different countries or regions, including in Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan and South Africa,

with composition of matter claims directed to SBT6050, formulations of SBT6050, and other TLR8 agonists and conjugates, including capped and substituted TLR8 agonist variants and conjugates, as

well as claims to methods of administering SBT6050, and other TLR8 agonists and conjugates, and to methods for treating oncology indications.

Any patents that issue from these pending patent applications will expire between March 2038 and July 2041,

absent any patent term adjustments or extensions.

patents with composition of matter, method of treatment, and method of making claims to TLR8 agonist payloads, linker-payloads and conjugates.

The issued U.S.

patents are projected to expire in March 2038, absent any patent term extensions.

As of February 28, 2022, we have eight pending U.S.

patent applications, one pending PCT application, 19 granted foreign patents, and 56 pending foreign patent applications filed in a number of different foreign jurisdictions, including Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, Taiwan and South Africa, with composition of matter claims directed to TLR8 agonists, conjugates and formulations, including substituted TLR8 agonist variants and conjugates, as well as claims to methods of administering TLR8 agonists and conjugates, to methods of treatment with TLR8 agonists and conjugates, in combination with other therapies.

Any patents that issue from these pending patent applications are projected to expire between March 2038 and October 2040, absent any patent term adjustments or extensions.

We own all the issued U.S.

patents and all the pending patent applications in these patent families.

With respect to our product candidates and processes, we intend to develop and commercialize in the normal course of business, and we intend to pursue

patent protection directed to, when possible, compositions, methods of use, methods of making, dosing, and formulations.

We may also pursue patent protection with respect to manufacturing, therapeutic development processes and technologies, and

therapeutic delivery technologies.

Issued patents can provide protection for varying periods of time, depending upon the date of filing of the

patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.

In general, patents issued for applications filed in the United States can provide exclusionary rights for 20 years from

the earliest effective filing date.

Anti-ASGR1 Antibodies and Conjugates in Viral Infections.

As of February 28, 2022, we have five pending U.S.

patent applications, one pending PCT application, and 37 pending foreign patent applications filed in a number of different foreign jurisdictions, including Australia, Brazil, Canada, China, European region, Hong Kong, Israel, India, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, and South Africa, with composition of matter claims and method of treatment claims directed to our product candidate, SBT8230, including claims directed to anti-ASGR1 antibodies, anti-ASGR1 antibody conjugates to TLR8 or TLR7 agonists, as well as to methods for treating viral infection, such as chronic HBV infections.

Any patents that issue from these pending patent applications will expire between December 2038 and July 2041, absent any patent term adjustments or extensions.

We own all the pending patent applications in these patent families.

With respect to our product candidates and processes, we intend to develop and commercialize in the normal course of business, and we intend to pursue patent protection directed to, when possible, compositions, methods of use, methods of making, dosing, and formulations.

We may also pursue patent protection with respect to manufacturing, therapeutic development processes and technologies, and therapeutic delivery technologies.

Issued patents can provide protection for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.

In general, patents issued for applications filed in the United States can provide exclusionary rights for 20 years from the earliest effective filing date.

In addition, in certain instances, the term of an issued U.S.

patent that is directed to or claims an FDA approved product can be extended to recapture a portion of the term effectively lost as a result of the FDA

regulatory review period, which is called patent term extension.

patent that is directed to or claims an FDA approved product can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period, which is called patent term extension.

The restoration period cannot be longer than five years and the total patent term, including the restoration period, must not exceed 14 years following FDA approval.

patents outside of the United States varies in accordance with the laws of the foreign jurisdiction, but typically is also 20 years from the earliest effective filing date.

However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the

type of patent, the scope of its claims, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent.

The term of patents outside of the United States varies in accordance with the laws of the foreign jurisdiction, but typically is also 20 years from the earliest effective filing date.

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

The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions.

No consistent policy regarding the

scope of claims allowable in patents in the field of immunotherapy has emerged in the United States.

No consistent policy regarding the scope of claims allowable in patents in the field of immunotherapy has emerged in the United States.

The relevant patent laws and their interpretation outside of the United States is also uncertain.

Changes in either the patent laws or their

interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license, and could affect the value of such intellectual property.

In particular,

our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology,

inventions, and improvements.

we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products.

Moreover, even the issued patents

that we license do not guarantee us the right to practice our technology in relation to the commercialization of our products.

Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many

risks and uncertainties.

For example, third parties may have blocking patents that could be used to prevent us from commercializing our product candidates and practicing our proprietary technology, and the issued patents that we in-license 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 could limit the term of patent

protection that otherwise may exist for our product candidates.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and enforce the patent rights that we license, which could affect the value of such intellectual property.

In particular, our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions, and improvements.

With respect to both licensed and company-owned intellectual property, we cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products.

Moreover, even the issued patents that we license do not guarantee us the right to practice our technology in relation to the commercialization of our products.

Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many risks and uncertainties.

In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology.

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For these reasons, we may face competition with respect to our product candidates.

Moreover, because of the extensive time required for development, testing and regulatory review of a potential product,

it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage

the patent provides.

Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

Government Regulation

authorities in the United States at the federal, state and local level and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality

control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, such as our investigational medicines and

any future investigational medicines.

Generally, before a new drug or biologic can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority,

submitted for review and approved by the regulatory authority.

Government authorities in the United States at the federal, state and local level and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, such as our investigational medicines and any future investigational medicines.

Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including imposition of a clinical hold, refusal to approve marketing applications, withdrawal of an approval, import/export delays, issuance of warning letters and other types of enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal investigations and penalties.

Regulatory Approval in the United States

In the United States, pharmaceutical products are subject to extensive regulation by the FDA.

The FDCA, and other federal and state statutes and

regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post- approval monitoring and reporting, sampling, and import and export of

pharmaceutical products.

Biological products used for the prevention, treatment or cure of a disease or condition of a human being are subject to regulation under the FDCA, except the section of the FDCA that governs the approval of new drug

applications, NDAs.

Biological products, such as our ImmunoTAC product candidates, are approved for marketing under provisions of the Public Health Service Act (PHSA), via a BLA.

However, the application process and requirements for approval of BLAs

are very similar to those for NDAs, and biologics are associated with similar approval risks and costs as drugs.

The Federal Food, Drug, and Cosmetic Act (FDCA), and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post- approval monitoring and reporting, sampling, and import and export of pharmaceutical products.

Biological products, such as our ImmunoTAC product candidates, are approved for marketing under provisions of the Public Health Service Act (PHSA), via a biologics license application (BLA).

However, the application process and requirements for approval of BLAs are very similar to those for NDAs, and biologics are associated with similar approval risks and costs as drugs.

Failure to comply with applicable U.S.

requirements may subject a company to a variety of administrative or judicial sanctions, such as

clinical hold, FDA refusal to approve pending NDAs or BLAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Our investigational medicines and any future investigational medicines must be approved by the FDA pursuant to a BLA before they may be legally marketed

in the United States.

requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending NDAs or BLAs, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Our investigational medicines and any future investigational medicines must be approved by the FDA pursuant to a BLA before they may be legally marketed in the United States.

The process generally involves the following:

completion of extensive preclinical laboratory and animal studies in accordance with applicable regulations, including

studies conducted in accordance with GLP requirements;

submission to the FDA of an IND, which must become effective before human clinical trials may begin;

approval by an IRB or independent ethics committee at each clinical trial site before each clinical trial may be commenced;

performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, GCP

requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

completion of extensive preclinical laboratory and animal studies in accordance with applicable regulations, including studies conducted in accordance with GLP requirements;

submission to the FDA of an investigational new drug application (IND), which must become effective before human clinical trials may begin;

approval by an institutional review board (IRB) or independent ethics committee at each clinical trial site before each clinical trial may be commenced;

completion of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, GCP requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

submission to the FDA of a BLA;

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a determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review;

satisfactory completion of one or more FDA pre-approval inspections of the

manufacturing facility or facilities where the biologic, or components thereof, will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the biologics identity,

strength, quality and purity;

satisfactory completion of any potential FDA audits of the clinical trial sites that generated the data in support of the

BLA to assure compliance with GCPs and integrity of the clinical data;

satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the biologic, or components thereof, will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the biologic’s identity, strength, quality and purity;

satisfactory completion of any potential FDA audits of the clinical trial sites that generated the data in support of the BLA to assure compliance with GCPs and integrity of the clinical data;

FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee;

compliance with any post-approval requirements, including REMS, where applicable, and post- approval studies required by

the FDA as a condition of approval.

The preclinical and clinical testing and approval process requires substantial time, effort

and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, or at all.

compliance with any post-approval requirements, including REMS, where applicable, and post- approval studies required by the FDA as a condition of approval.

The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, or at all.

Preclinical Studies

Before testing any biological product candidates in humans, the product candidate must undergo rigorous preclinical testing.

studies include laboratory evaluation of product candidates and formulations, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.

The conduct of

preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical

data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.

An IND is a request for authorization from the FDA to administer an investigational product to humans and must become

effective before human clinical trials may begin.

Preclinical studies include laboratory evaluation of product candidates and formulations, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.

The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies.

An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND.

An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin.

Some long-term preclinical testing may continue after the IND is submitted.

An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or

questions related to one or more proposed clinical trials and places the trial on clinical hold.

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

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

As a result, submission of an IND

may not result in the FDA allowing clinical trials to commence.

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

Clinical Trials

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of

qualified investigators, generally physicians not employed by or under the trial sponsors control.

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control.

Clinical trials must be conducted:

(i) in compliance with federal regulations;

(ii) in compliance with GCPs, an international standard

meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors;

as well as (iii) under protocols detailing, among other things, the objectives of the trial, the parameters to

be used in monitoring safety and the effectiveness criteria to be evaluated in the trial.

(ii) in compliance with GCPs, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors;

as well as (iii) under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated in the trial.

Each protocol involving testing on U.S.

patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

Furthermore, each clinical

trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated

Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

There also are requirements governing the reporting of ongoing clinical trials and completed clinical

trial results to public registries.

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

Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website.

Information related to the product,

patient population, phase of investigation, clinical trial sites and investigators and other aspects of the clinical trial is then made public as part of the registration.

Disclosure of the results of these clinical trials can be delayed in certain

circumstances for up to two years after the date of completion of the trial.

A sponsor who wishes to conduct a clinical trial outside of the United

States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.

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

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

A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.

If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of a BLA.

will accept a well- designed and well-conducted foreign clinical trial not conducted under an IND if the clinical trial was conducted in accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if

deemed necessary.

The FDA will accept a well- designed and well-conducted foreign clinical trial not conducted under an IND if the clinical trial was conducted in accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if deemed necessary.

Clinical trials are generally conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3:

Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are

initially exposed to a single dose and then multiple doses of the product candidate.

The primary purpose of these clinical trials is to assess the metabolism, pharmacokinetics, pharmacologic action, side effect tolerability, safety of the product

candidate, and, if possible, early evidence of effectiveness.

Phase 2 clinical trials generally involve studies in disease-affected patients to evaluate proof of concept and/or

determine the dosing regimen(s) for subsequent investigations.

At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation

of efficacy is conducted.

Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data

necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling.

In most cases, the FDA

requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the biologic.

These Phases may

overlap or be combined.

traditional Phase 1 clinical trials) and provide insight into the anti-tumor effects of the investigational therapy in selected subpopulation(s).

Typically, during the development of oncology therapies, all subjects enrolled in Phase 1 clinical trials are disease-affected patients and, as a

result, considerably more information on clinical activity may be collected during such trials than during Phase 1 clinical trials for non-oncology therapies.

A single Phase 3 or Phase 2 trial with other

confirmatory evidence may be sufficient in rare instances to provide substantial evidence of effectiveness (generally subject to the requirement of additional post-approval studies).

Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate.

The primary purpose of these clinical trials is to assess the metabolism, pharmacokinetics, pharmacologic action, side effect tolerability, safety of the product candidate, and, if possible, early evidence of effectiveness.

Phase 2 clinical trials generally involve studies in disease-affected patients to evaluate proof of concept and/or determine the dosing regimen(s) for subsequent investigations.

At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted.

Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product labeling.

In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the biologic.

These Phases may overlap or be combined.

For example, a Phase 1/2 clinical trial may contain both a dose-escalation stage and a dose expansion stage, the latter of which may confirm tolerability at the recommended dose for expansion in future clinical trials (as in traditional Phase 1 clinical trials) and provide insight into the anti-tumor effects of the investigational therapy in selected subpopulation(s).

Phase 1, Phase 2, Phase 3 and other types of clinical trials may not be completed successfully within any specified period, if at all.

The FDA, the IRB,

or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including non-compliance with regulatory requirements or a finding that the patients are being exposed to an

unacceptable health risk.

Similarly, an IRB can

suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRBs requirements or if the drug or biologic has

been associated with unexpected serious harm to patients.

The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including non-compliance with regulatory requirements or a finding that the patients are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug or biologic has been associated with unexpected serious harm to patients.

Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee.

This group provides authorization for whether a trial may move forward at designated checkpoints based on access to certain data from the trial.

Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry

and physical characteristics of the drug or biologic as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing

quality batches of the product and, among other things, companies must develop methods for testing the identity, strength, quality, potency and purity of the final product.

Additionally, appropriate packaging must be selected and tested, and

stability studies must be conducted to demonstrate that the investigational medicines do not undergo unacceptable deterioration over their shelf life.

Review Process

Following completion of the clinical trials, the results of preclinical studies and clinical trials are submitted to the FDA as

part of a BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the

safety and efficacy of the investigational product to the satisfaction of the FDA.

Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the drug or biologic as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product and, among other things, companies must develop methods for testing the identity, strength, quality, potency and purity of the final product.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the investigational medicines do not undergo unacceptable deterioration over their shelf life.

FDA Review Process

Following completion of the clinical trials, the results of preclinical studies and clinical trials are submitted to the FDA as part of a BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of the FDA.

FDA approval of a BLA must be obtained before a biologic or drug may be marketed in the United States.

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The FDA adjusts the PDUFA user fees on an annual basis.

Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the

first application filed by a small business.

Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The applicant

under an approved BLA is also subject to an annual program fee.

The FDA reviews all submitted BLAs before it accepts them for filing and may

request additional information.

The applicant under an approved BLA is also subject to an annual program fee.

The FDA reviews all submitted BLAs before it accepts them for filing and may request additional information.

The FDA must make a decision on accepting a BLA for filing within 60 days of receipt, and such decision could include a refusal to file by the FDA.

Once the submission is accepted for filing, the FDA begins an in-depth review of the BLA.

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months, from the filing date, in which to complete its initial review of an original BLA for a new molecular

entity and respond to the applicant, and six months from the filing date of an original BLA designated for priority review.

The review process for both standard and priority review may be extended by the FDA for three additional months to consider

certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process can be extended by FDA

requests for additional information or clarification.

Before approving a BLA, the FDA will conduct a

pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements.

The FDA will not approve the product unless it determines that the

manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

The FDA also may audit data from clinical trials to ensure compliance with GCP requirements and the integrity of the data supporting safety and

Additionally, the FDA may refer applications

for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review,

evaluation and a recommendation as to whether the application should be approved and under what conditions, if any.

The FDA is not bound by recommendations of an advisory committee, but it generally follows such recommendations when making decisions

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months, from the filing date, in which to complete its initial review of an original BLA for a new molecular entity and respond to the applicant, and six months from the filing date of an original BLA designated for priority review.

The review process for both standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process can be extended by FDA requests for additional information or clarification.

Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements.

The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

The FDA also may audit data from clinical trials to ensure compliance with GCP requirements and the integrity of the data supporting safety and efficacy.

Additionally, the FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions, if any.

The FDA is not bound by recommendations of an advisory committee, but it generally follows such recommendations when making decisions on approval.

The FDA likely will reanalyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

After the FDA evaluates a BLA, it will issue either an approval letter or a Complete Response Letter.

An approval letter authorizes commercial marketing

of the biologic with specific prescribing information for specific indications.

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

A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form.

Response Letter generally outlines the deficiencies in the BLA and may require additional clinical data, additional pivotal clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or

manufacturing in order for FDA to reconsider the application.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an

opportunity for a hearing.

A Complete Response Letter generally outlines the deficiencies in the BLA and may require additional clinical data, additional pivotal clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing in order for FDA to reconsider the application.

If a Complete Response Letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application or request an opportunity for a hearing.

The FDA has committed to reviewing such resubmissions in two or six months, depending on the type of information included.

Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy

the criteria for approval.

As a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the biologic outweigh the

potential risks to patients.

A REMS can include medication guides, communication plans for healthcare professionals and elements to assure a products safe use (ETASU).

An ETASU can include, but is not limited to, special training or

certification for prescribing or dispensing the product, dispensing the product only under certain circumstances, special monitoring and the use of patient-specific registries.

The requirement for a REMS can materially affect the potential market

and profitability of the product.

Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the products safety or efficacy.

Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval.

As a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the biologic outweigh the potential risks to patients.

A REMS can include medication guides, communication plans for healthcare professionals and elements to assure a product’s safe use (ETASU).

An ETASU can include, but is not limited to, special training or certification for prescribing or dispensing the product, dispensing the product only under certain circumstances, special monitoring and the use of patient-specific registries.

The requirement for a REMS can materially affect the potential market and profitability of the product.

Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA

may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals

in the United States but for which there is no reasonable expectation that the cost of developing and making the product for this type of disease or condition will be recovered from sales of the product in the United States.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States but for which there is no reasonable expectation that the cost of developing and making the product for this type of disease or condition will be recovered from sales of the product in the United States.

Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent

and its potential orphan use are disclosed publicly by the FDA.

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

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

If a product that has orphan designation subsequently receives the first FDA approval 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 to market the same product for the same indication for seven years from the date of such approval, except in limited circumstances,

such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety, or providing a major contribution to patient care, or in instances of drug supply issues.

Competitors, however, may

receive approval of either a different product for the same indication or the same product for a different indication.

In the latter case, because healthcare

professionals are free to prescribe products for off-label uses, the competitors product could be used for the orphan indication despite another

products orphan exclusivity.

FDAs determination of whether two ADCs are the same product for purposes of orphan drug exclusivity is

based on a determination of sameness of the monoclonal antibody element and the functional element of the conjugated molecule.

Two ADCs are deemed to be the same product if the complementarity determining region sequences of the antibody and the

functional element of the conjugated molecule are the same.

If a product that has orphan designation subsequently receives the first FDA approval 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 to market the same product for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety, or providing a major contribution to patient care, or in instances of drug supply issues.

Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication.

In the latter case, because healthcare professionals are free to prescribe products for off-label uses, the competitor’s product could be used for the orphan indication despite another product’s orphan exclusivity.

FDA’s determination of whether two ADCs are the same product for purposes of orphan drug exclusivity is based on a determination of sameness of the monoclonal antibody element and the functional element of the conjugated molecule.

Two ADCs are deemed to be the same product if the complementarity determining region sequences of the antibody and the functional element of the conjugated molecule are the same.

A difference in either of those two elements can result in a determination that the molecules are different.

Expedited Development and Review Programs

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

Fast track designation may be granted for products that are intended to treat a serious or life-threatening disease or condition for which there is no

effective treatment and preclinical or clinical data demonstrate the potential to address unmet medical needs for the condition.

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

Fast track designation may be granted for products that are intended to treat a serious or life-threatening disease or condition for which there is no effective treatment and preclinical or clinical data demonstrate the potential to address unmet medical needs for the condition.

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

sponsor of a new biologic candidate can request the FDA to designate the candidate for a specific indication for fast track status concurrent with, or after, the submission of the IND for the candidate.

The FDA must determine if the biologic

candidate qualifies for fast track designation within 60 days of receipt of the sponsors request.

For fast track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a fast track

products BLA before the application is complete.

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

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

Any product submitted to the FDA for marketing, including under a fast track program, may

be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

Breakthrough therapy designation may be granted for products that are intended, alone or in combination with one or more other products, to treat a

serious or life-threatening condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints.

Under the breakthrough

therapy program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with, or after, the submission of the IND for the biologic candidate.

must determine if the biological product qualifies for breakthrough therapy designation within 60 days of receipt of the sponsors request.

The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with

the sponsor throughout the development process, providing timely advice to the product sponsor regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary project lead for the review team and

taking other steps to design the clinical studies in an efficient manner.

Priority review may be granted for products that are intended to treat a

serious or life-threatening condition and, if approved, would provide a significant improvement in safety and effectiveness compared to available therapies.

The FDA will attempt to direct additional resources to the evaluation of an application

designated for priority review in an effort to facilitate the review.

Accelerated approval may be granted for products that are intended to treat a

serious or life-threatening condition and that generally provide a meaningful therapeutic advantage to patients over

existing treatments.

A product eligible for accelerated approval may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a

clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or

prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how

a patient feels, functions or survives.

The accelerated approval pathway is most often used in settings in which the course of a disease is long, and an extended period of time is required to measure the intended clinical benefit of a product, even

if the effect on the surrogate or intermediate clinical endpoint occurs rapidly.

Thus, accelerated approval has been used extensively in the development and approval of products for treatment of a variety of cancers in which the goal of therapy is

generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large studies to demonstrate a clinical or survival benefit.

The accelerated approval pathway is contingent on a

sponsors agreement to conduct additional post-approval confirmatory studies to verify and describe the products clinical benefit.

These confirmatory trials must be completed with due diligence and, in some cases, the FDA may require that

the trial be designed, initiated and/or fully enrolled prior to approval.

Failure to conduct required post-approval studies, or to confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the product from the market

on an expedited basis.

The sponsor of a new biologic candidate can request the FDA to designate the candidate for a specific indication for fast track status concurrent with, or after, the submission of the IND for the candidate.

The FDA must determine if the biologic candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

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

This “rolling review”

is available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast track product may be effective.

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

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

Breakthrough therapy designation may be granted for products that are intended, alone or in combination with one or more other products, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints.

Under the breakthrough therapy program, the sponsor of a new biologic candidate may request that the FDA designate the candidate for a specific indication as a breakthrough therapy concurrent with, or after, the submission of the IND for the biologic candidate.

The FDA must determine if the biological product qualifies for breakthrough therapy designation within 60 days of receipt of the sponsor’s request.

The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process, providing timely advice to the product sponsor regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary project lead for the review team and taking other steps to design the clinical studies in an efficient manner.

Priority review may be granted for products that are intended to treat a serious or life-threatening condition and, if approved, would provide a significant improvement in safety and effectiveness compared to available therapies.

The FDA will attempt to direct additional resources to the evaluation of an application designated for priority review in an effort to facilitate the review.

Accelerated approval may be granted for products that are intended to treat a serious or life-threatening condition and that generally provide a meaningful therapeutic advantage to patients over existing treatments.

A product eligible for accelerated approval may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions or survives.

Thus, accelerated approval has been used extensively in the development and approval of products for treatment of a variety of diseases in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large studies to demonstrate a clinical or survival benefit.

The accelerated approval pathway is contingent on a sponsor’s agreement to conduct additional post-approval confirmatory studies to verify and describe the product’s clinical benefit.

These confirmatory trials must be completed with due diligence and, in some cases, the FDA may require that the trial be designed, initiated and/or fully enrolled prior to approval.

Failure to conduct required post-approval studies, or to confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the product from the market on an expedited basis.

All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for

qualification or the time period for FDA review or approval may not be shortened.

Furthermore, fast track designation, breakthrough therapy designation, priority review and accelerated approval do not change the standards for approval, but may

expedite the development or approval process.

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

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

Additional Controls for Biologics

To help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for products

whose attributes cannot be precisely defined.

The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and

critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the United States and between states.

To help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined.

The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases in the United States and between states.

After a BLA is approved, the product may also be subject to official lot release as a condition of approval.

As part of the manufacturing process, the

manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA

together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturers tests performed on the lot.

The FDA may also perform certain confirmatory tests on lots of some products,

such as viral vaccines, before releasing the lots for distribution by the manufacturer.

As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot.

The FDA may also perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer.

In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency and effectiveness of biological products.

with drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

As with drugs, after approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

Pediatric Information

Under the Pediatric Research Equity Act (PREA), BLAs or supplements to BLAs must contain data to assess the safety and effectiveness of the biological

product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the biological product is safe and effective.

The FDA may grant full or partial waivers,

or deferrals, for submission of data.

targeted cancer product intended for the treatment of an adult cancer and is directed at a molecular target that the FDA has determined is substantially relevant to the growth or progression of a pediatric cancer.

The Best Pharmaceuticals for Children Act (the BPCA) provides a six-month extension of any

exclusivitypatent or non-patentfor a biologic if certain conditions are met.

Conditions for exclusivity include the FDAs determination that information relating to the use of a new biologic

in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe.

Under the Pediatric Research Equity Act (PREA), BLAs or supplements to BLAs must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the biological product is safe and effective.

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

PREA generally does not apply to any biological product for an indication for which orphan designation has been granted but does apply to BLAs for orphan-designated biologics if the biologic is a molecularly targeted cancer product intended for the treatment of an adult cancer and is directed at a molecular target that the FDA has determined is substantially relevant to the growth or progression of a pediatric cancer.

The Best Pharmaceuticals for Children Act (the BPCA) provides a six-month extension of any exclusivity—patent or non-patent—for a biologic if certain conditions are met.

Conditions for exclusivity include the FDA’s determination that information relating to the use of a new biologic in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe.

Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers.

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Once a BLA is approved, a product will be subject to certain post-approval requirements.

For instance, the FDA closely regulates the post-approval

marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label

promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.

Biologics may be marketed only for the approved indications and in a manner consistent with the provisions of the approved

For instance, the FDA closely regulates the post-approval marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.

Biologics may be marketed only for the approved indications and in a manner consistent with the provisions of the approved labeling.

Physicians, on the other hand, may prescribe products for off-label uses.

Although the FDA and other regulatory agencies do not regulate a physicians choice of drug treatment made in the

physicians independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not

Companies may only share truthful and not misleading information that is otherwise consistent with a products FDA approved labeling.

Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued.

Companies may only share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling.

Adverse event reporting and submission of periodic safety summary reports is required following FDA approval of a BLA.

The FDA also may require

post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.

In addition, quality

control, biological product manufacture, packaging and labeling procedures must continue to conform to cGMPs after approval.

Biologic manufacturers and certain of their subcontractors are required to register their establishments with the FDA and

certain state agencies.

Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects a biologic products manufacturing facilities to assess compliance with cGMPs.

manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs.

Regulatory authorities may withdraw product approvals or request product recalls if a company fails to

comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems

occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of

unanticipated severity or frequency, or with manufacturing processes or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety

information, imposition of post-market studies or clinical studies to assess new safety risks or imposition of distribution or other restrictions under a REMS program.

The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.

In addition, quality control, biological product manufacture, packaging and labeling procedures must continue to conform to cGMPs after approval.

Biologic manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies.

Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects a biologic product’s manufacturing facilities to assess compliance with cGMPs.

Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs.

Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks or imposition of distribution or other restrictions under a REMS program.

Other potential consequences include, among other things:

restrictions on the marketing or manufacturing of the product, suspension of the approval, complete withdrawal of the

product from the market or product recalls;

restrictions on the marketing or manufacturing of the product, suspension of the approval, complete withdrawal of the product from the market or product recalls;

fines, warning or other enforcement-related letters or holds on post-approval clinical studies;

refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product license

refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product license approvals;

product seizure or detention, or refusal to permit the import or export of products;

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Patent Term Restoration and Marketing Exclusivity

upon the timing, duration and specifics of FDA approval of our product candidates, some of our U.S.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act, informally known as the

Hatch-Waxman Act.

Depending upon the timing, duration and specifics of FDA approval of our product candidates, some of our U.S.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act.

The Hatch Waxman Act permits a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process.

Patent term extension (PTE), however, cannot extend the remaining term of a

patent beyond a total of 14 years from the products approval date.

The PTE period is generally one half the time between the effective date of an IND and the submission date of a BLA, plus the time between the submission date of a BLA and the

approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence.

Only one patent applicable to an approved drug is eligible for such an extension, only those claims

covering the approved drug, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent.

The USPTO, in consultation with the FDA, reviews and

approves the application for any PTE or restoration.

Patent term extension (PTE), however, cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The PTE period is generally one half the time between the effective date of an IND and the submission date of a BLA, plus the time between the submission date of a BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence.

Only one patent applicable to an approved drug is eligible for such an extension, only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent.

The USPTO, in consultation with the FDA, reviews and approves the application for any PTE or restoration.

Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.

In the future, we or our licensors may apply for PTE for our

owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

However, an extension might not be granted

because of, for example, our or our licensors failure to exercise due diligence during the testing phase or regulatory review process, failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents or

any other failure to satisfy applicable requirements.

In the future, we or our licensors may apply for PTE for our owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

However, an extension might not be granted because of, for example, our or our licensors’

failure to exercise due diligence during the testing phase or regulatory review process, failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents or any other failure to satisfy applicable requirements.

Moreover, the applicable time period or the scope of patent protection afforded could be less than requested.

There is no guarantee that the applicable authorities, including the FDA in the

United States, will agree with our assessment of whether any extensions should be granted, and if granted, the length of such extensions.

Biosimilars and

The Biologics Price Competition and Innovation Act of 2009 (the BPCIA) created an abbreviated approval pathway for biological

products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.

Biosimilarity, which requires that the biological product be highly similar to the reference product

notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency, can be shown through

analytical studies, animal studies and a clinical trial or trials.

Interchangeability requires that a biological product be

biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple

times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference

biological product without such alternation or switch.

A reference biological product is granted 12 years of data exclusivity from the time of

first licensure of the product and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

licensure typically means the initial date the particular product at issue was licensed in the United States.

Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a biological

product if the licensure is for a supplement for the biological product or for a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest or other related entity) for a change (not

including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength, or for a modification to the structure of the

biological product that does not result in a change in safety, purity or potency.

There is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether any extensions should be granted, and if granted, the length of such extensions.

Biosimilars and Exclusivity

The Biologics Price Competition and Innovation Act of 2009 (the BPCIA) created an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed reference biological product.

Biosimilarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency, can be shown through analytical studies, animal studies and a clinical trial or trials.

Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch.

A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

“First licensure”

typically means the initial date the particular product at issue was licensed in the United States.

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

The BPCIA is complex and only recently implemented by the FDA.

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Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty.

Regulatory Approval in the European Union

The EMA is a decentralized scientific agency of the European Union.

It coordinates the evaluation and monitoring of centrally authorized medicinal

It is responsible for the scientific evaluation of applications for EU marketing authorizations, as well as the development of technical guidance and the provision of scientific advice to sponsors.

The EMA decentralizes its scientific

assessment of medicines by working through a network of about 4,500 experts throughout the European Union, nominated by the member states.

The EMA draws on resources of over 40 National Competent Authorities of European Union member states.

The process regarding approval of medicinal products in the European Union follows roughly the same lines as in the United States and likewise generally

involves satisfactorily completing each of the following:

preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU

Good Laboratory Practice regulations;

submission to the relevant national authorities of a clinical trial application (CTA) for each trial in humans, which must

be approved before the trial may begin in each country where patient enrollment is planned;

performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each

proposed indication;

submission to the relevant competent authorities of a MAA, which includes the data supporting safety and efficacy as well

as detailed information on the manufacture and composition of the product in clinical development and proposed labelling;

satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or facilities,

including those of third parties, at which the product is produced to assess compliance with strictly enforced cGMP;

potential audits of the non-clinical and clinical trial sites that generated the

data in support of the MAA;

review and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the

Preclinical Studies

Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animal

studies, in order to assess the quality and potential safety and efficacy of the product.

The conduct of the preclinical tests and formulation of the compounds for testing must comply with the relevant international, EU and national legislation,

regulations and guidelines.

The results of the preclinical tests, together with relevant manufacturing information and analytical data, are submitted as part of the CTA.

Clinical Trials

Pursuant to the Clinical Trials Directive

2001/20/EC, as amended (the Clinical Trials Directive), a system for the approval of clinical trials in the European Union has been implemented through national legislation of the member states.

Under this system, approval must be obtained from the

competent national authority of each European Union member state in which a clinical trial is planned to be conducted.

To this end, a CTA is submitted, which must be supported by an investigational medicinal product dossier and further supporting

information prescribed by the Clinical Trials Directive and other applicable guidance documents including but not being limited to the clinical trial protocol.

Furthermore, a clinical trial may only be started after a competent ethics committee has

issued a favorable opinion on the clinical trial application in that country.

Directive 2001/20/EC will be replaced by Regulation (EU)

536/2014, which entered into force on June 16, 2014 and is due to fully apply from late 2021.

The Regulation introduces an authorization procedure based on a single submission via a single EU portal, an assessment procedure leading to

a single decision, as well as transparency requirements (the proactive publication of clinical trial data in the EU database).

Since October 2016, based on its Policy 0070, the EMA has been publishing clinical data submitted by pharmaceutical

companies to support their MAA for human medicines under this centralized procedure.

Manufacturing and import into the EU of investigational

medicinal products is subject to the holding of appropriate authorizations and must be carried out in accordance with cGMP.

Review and Approval

Authorization to market a product in the European Union member states proceeds under one of four procedures:

a centralized authorization procedure, a

mutual recognition procedure, a decentralized procedure or a national procedure.

Since our products by their virtue of being antibody-based biologics fall under the centralized procedure, only this procedure will be described here.

Certain drugs, including medicinal products developed by means of biotechnological processes, must be approved via the centralized authorization

procedure for marketing authorization.

A successful application under the centralized authorization procedure results in a marketing authorization from the European Commission, which is automatically valid in all European Union member states.

other European Economic Area member states (namely Norway, Iceland and Liechtenstein) are also obligated to recognize the European Commission decision.

The EMA and the European Commission administer the centralized authorization procedure.

Under the centralized authorization procedure, the Committee for Medicinal Products for Human Use (the

CHMP), serves as the scientific committee that renders opinions about the safety, efficacy and quality of human products on behalf of the EMA.

The CHMP is composed of experts nominated by each member states national drug authority, with one of

them appointed to act as Rapporteur for the co-ordination of the evaluation with the possible assistance of a further member of the CHMP acting as a Co-Rapporteur.

approval, the Rapporteur(s) continue to monitor the product throughout its life cycle.

The CHMP is required to issue an opinion within 210 days of receipt of a valid application, though the clock is stopped if it is necessary to ask the applicant

for clarification or further supporting data.

The process is complex and involves extensive consultation with the regulatory authorities of member states and a number of experts.

Once the procedure is completed, a European Public Assessment Report

If the CHMP concludes that the quality, safety and efficacy of the medicinal product is sufficiently proven, it adopts a positive opinion.

The CHMPs opinion is sent to the European Commission, which uses the opinion as the basis

for its decision whether or not to grant a marketing authorization.

If the opinion is negative, information is given as to the grounds on which this conclusion was reached.

After a drug has been authorized and launched, it is a condition of maintaining the marketing authorization that all aspects relating to its quality,

safety and efficacy must be kept under review.

Sanctions may be imposed for failure to adhere to the conditions of the marketing authorization.

In extreme cases, the authorization may be revoked, resulting in withdrawal of the product from sale.

Conditional Approval and Accelerated Assessment

Article 14(7) of Regulation (EC) 726/2004, a medicine that would fulfill an unmet medical need may, if its immediate availability is in the interest of public health, be granted a conditional marketing authorization on the basis of less complete

clinical data than are normally required, subject to specific obligations being imposed on the authorization holder.

These specific obligations are to be reviewed annually by the EMA.

The list of these obligations shall be made publicly accessible.

Such an authorization shall be valid for 12 months, on a renewable basis.

When an application is submitted for a marketing authorization in respect

of a drug for human use which is of major interest from the point of view of public health and in particular from the viewpoint of therapeutic innovation, the applicant may request an accelerated assessment procedure pursuant to Article 14(9) of

Regulation (EC) 726/2004.

Under the accelerated assessment procedure, the CHMP is required to issue an opinion within 150 days of receipt of a valid application, subject to clock stops.

We believe that some of the disease indications in which our

product candidates are currently being or may be developed in the future qualify for this provision, and we will take advantage of this provision as appropriate.

Period of Authorization and Renewals

authorization is initially valid for five years and may then be renewed on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state.

this end, the marketing authorization holder shall provide the EMA or the competent authority with a version of the file in respect of quality, safety and efficacy, including all variants introduced since the marketing authorization was granted, at

least six months before the marketing authorization ceases to be valid.

Once renewed, the marketing authorization shall be valid for an unlimited period, unless the European Commission or the competent authority decides, on justified grounds

relating to pharmacovigilance, to proceed with one additional five-year renewal.

Any authorization which is not followed by the actual placing of the drug on the EU market (in case of centralized procedure) or on the market of the authorizing member

state within three years after authorization shall cease to be valid (the so-called sunset clause).

Without prejudice to the law on the protection of industrial and commercial property, marketing

authorizations for new medicinal products benefit from an 8+2+1 year period of regulatory protection.

This regime consists of a regulatory data protection period of eight years plus a concurrent market exclusivity of 10 years plus an additional

market exclusivity of one further year if, during the first eight years of those 10 years, the marketing approval holder obtains an approval for one or more new therapeutic indications which, during the scientific evaluation prior to their approval,

are determined to bring a significant clinical benefit in comparison with existing therapies.

Under the current rules, a third party may reference the preclinical and clinical data of the reference product beginning eight years after first approval,

but the third party may market a generic version of the reference product after only 10 (or 11) years have lapsed.

Orphan Drug Designation

Regulation (EC) 141/2000 states that a drug shall be designated as an orphan drug if its sponsor can establish (i) that it is intended for the

diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the European Union when the application is made, or that it is intended for the diagnosis, prevention or

treatment of a life-threatening, seriously debilitating or serious and chronic condition in the European Union and that without incentives it is unlikely that the marketing of the drug in the European Union would generate sufficient return to

justify the necessary investment;

and (ii) that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the European Union or, if such method exists, the drug will be of

significant benefit to those affected by that condition.

Regulation (EC) 847/2000 sets out criteria for the designation of orphan drugs.

application for designation as an orphan product can be made any time prior to the filing of an application for approval to market the product.

Marketing authorization for an orphan drug leads to a 10-year

period of market exclusivity, which means that no similar medicinal product can be authorized in the same indication.

This period may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer

meets the criteria for orphan drug designation, for example because the product is sufficiently profitable not to justify continued market exclusivity.

In addition, derogation from market exclusivity may be granted on an individual basis in very

selected cases, such as consent from the marketing authorization holder, inability to supply sufficient quantities of the product or demonstration of clinically relevant superiority by a similar medicinal product.

Medicinal products

designated as orphan drugs pursuant to Regulation (EC) 141/2000 are eligible for incentives made available by the European Union and by the member states to support research into, and the development and availability of, orphan drugs.

If the MAA of a medicinal product designated as an orphan drug pursuant to Regulation (EC) 141/2000 includes the results of all studies conducted in

compliance with an agreed PIP, and a corresponding statement is subsequently included in the marketing authorization granted, the 10-year period of market exclusivity will be extended to 12 years.

Data Privacy and Security Laws

Numerous state, federal and

foreign laws govern the collection, dissemination, use, access to, confidentiality and security of health-related information.

In the United States, numerous federal and state laws and regulations, including the federal Health Insurance Portability

and Accountability Act of 1996, as amended (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), state data breach notification laws, state health information privacy laws, and federal and

state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure, and protection of health-related and other personal

information could apply to our operations or the operations of our partners.

State laws may be more stringent, broader in scope or offer greater individual rights with respect to protected health

information (PHI) than HIPAA, and state laws may differ from each other, which may complicate compliance efforts.

Entities that are found to be in violation of HIPAA, as the result of a breach of unsecured PHI, a complaint about privacy practices,

an audit by the U.S.

Department of Health and Human Services (HHS), or other instances of non-compliance, may be subject to significant civil, criminal, and administrative fines and penalties and/or additional

reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

Even when HIPAA does not apply, according to the FTC, violating consumers privacy rights or failing to take appropriate steps to keep

consumers personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act.

The FTC expects a companys data security measures to be reasonable and appropriate

in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Individually identifiable health information is

considered sensitive data that merits stronger safeguards.

Certain states have also adopted comparable privacy and security laws and regulations,

some of which may be more stringent than HIPAA.

For example, California enacted the CCPA, on June 28, 2018, which went into effect on January 1, 2020.

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

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

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches

that is expected to increase data breach litigation.

Further, the collection, transfer, processing and other use of personal data, including health

data of individuals within the EEA and the United Kingdom, is governed by the GDPR, which came into effect in May 2018.

The GDPR imposes strict requirements on controllers and processors of personal data of individuals within the EEA and the United

Kingdom, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing

safeguards to protect the security and confidentiality of personal data, providing notification of data breaches and taking certain measures when engaging third-party processors.

The GDPR prohibits the transfer of personal data to countries outside

the EEA, such as the United States, which are not considered by the European Commission to provide an adequate level of data protection.

Switzerland has adopted similar restrictions.

Failure to comply with the requirements of the GDPR and the

related national data protection laws of the EEA member states and the United Kingdom may result in substantial fines and other administrative penalties.

The GDPR and related data protection laws may impose additional responsibility and liability in

relation to personal data that we collect and process and we may be required to put in place additional mechanisms ensuring compliance with such rules.

This may be onerous and adversely affect our business, financial condition, results of operations

and prospects.

Much like the Anti-Kickback

Statute prohibition in the United States, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the EU.

The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of European Union member states, such as the U.K.

Bribery Act 2010.

Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians and other healthcare professionals in certain European Union member states

must be publicly disclosed.

Moreover, agreements with physicians and other healthcare professionals often must be the subject of prior notification and approval by the relevant individuals employer, his or her competent professional

organization and/or the regulatory authorities of the individual European Union member states.

These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the European Union member states.

Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

As a result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty.

International Regulation

In addition to regulations

in the United States and Europe, a variety of foreign regulations govern clinical trials, commercial sales and distribution of product candidates.

The approval process varies from country to country and the time to approval may be longer or shorter

than that required for FDA or European Commission approval.

In addition to regulations in the United States, a variety of foreign regulations govern clinical trials, commercial sales and distribution of product candidates.

The approval process varies from country to country and the time to approval may be longer or shorter than that required for FDA approval.

Other Healthcare Laws and Regulations and Legislative Reform

Healthcare and Privacy Laws and Regulations

providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.

Our operations, including any arrangements with healthcare providers,

physicians, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws that may affect the business or financial arrangements and relationships through which we would market, sell and distribute

our products.

Our current and future operations are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to CMS, HHS (including the Office of Inspector General, Office for Civil

Rights and the Health Resources and Service Administration), the U.S.

Healthcare providers, including physicians, and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval.

Our operations, including any arrangements with healthcare providers, including physicians, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws that may affect the business or financial arrangements and relationships through which we would market, sell and distribute our products.

Our current and future operations are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to CMS, the U.S.

Department of Health and Human Services (HHS) (including the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S.

Department of Justice (DOJ) and individual U.S.

Attorney offices within the DOJ, and state and local governments.

The healthcare laws that may affect our ability to operate

include, but are not limited to:

The federal Anti-Kickback Statute, which prohibits any person or entity from, among other things, knowingly and willfully

soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of an item or service

reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.

The term remuneration has been broadly interpreted to include anything of value.

A person or entity does not need to have

actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

The federal Anti-Kickback Statute has also been interpreted to apply to arrangements between pharmaceutical manufacturers on the

one hand and prescribers, purchasers and formulary managers on the other hand.

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn

narrowly and require strict compliance in order to offer protection.

Federal civil and criminal false claims laws, such as the FCA, which can be enforced by private citizens through civil qui

tam actions, and civil monetary penalty laws prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making,

using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.

For example, pharmaceutical companies have been prosecuted

under the FCA in connection with

their alleged off-label promotion of drugs, purportedly concealing price concessions in the pricing information submitted to the government for government

price reporting purposes, and allegedly providing free product to customers with the expectation that the customers would bill federal healthcare programs for the product.

In addition, a claim including items or services resulting from a violation

of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes any request or demand for money

or property presented to the U.S.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to cause the submission of false or fraudulent

HIPAA, among other things, imposes criminal liability for executing or attempting to execute a scheme to defraud any

healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and creates federal criminal

laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same

to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to

have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

HIPAA, as amended by HITECH, and their respective implementing regulations, impose requirements on certain covered

healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them, and their covered subcontractors, that involve the use, or disclosure of, individually identifiable

health information, relating to the privacy, security, and transmission of such individually identifiable health information.

Federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and

activities that potentially harm consumers.

The federal transparency requirements under the Physician Payments Sunshine Act, created under the Patient Protection and

Affordable Care Act (the Affordable Care Act), which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Childrens Health Insurance Program (with

certain exceptions) to report annually to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals and

physician ownership and investment interests, including such ownership and investment interests held by a physicians immediate family members.

Effective January 1, 2022, these reporting obligations will extend to include transfers of

value made during the previous year to certain non-physician providers such as physician assistants and nurse practitioners.

Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate

and timely manner to government programs.

Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that

potentially harm consumers.

State and foreign laws that are analogous to each of the above federal laws, such as anti-kickback and false claims laws,

that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers, and state laws that require

manufacturers to report information related to

payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.

State and foreign laws that require pharmaceutical companies to implement compliance programs, comply with the

pharmaceutical industrys voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other healthcare

The healthcare laws that may affect our ability to operate include, but are not limited to:

The federal Anti-Kickback Statute, which prohibits any person or entity from, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

The federal Anti-Kickback Statute has also been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand.

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection.

Federal civil and criminal false claims laws, such as the FCA, which can be enforced by private citizens through civil qui tam actions, and civil monetary penalty laws prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.

For example, pharmaceutical companies have been prosecuted under the FCA in connection with their alleged off-label promotion of drugs, purportedly concealing price concessions in the pricing information submitted to the government for government price reporting purposes, and allegedly providing free product to customers with the expectation that the customers would bill federal healthcare programs for the product.

In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand”

for money or property presented to the U.S.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause”

the submission of false or fraudulent claims.

The federal Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), among other things, imposes criminal liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and creates federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services.

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

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

Federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

The federal transparency requirements under the Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act (the Affordable Care Act), which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members.

Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs.

Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

State and foreign laws that are analogous to each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers, and state laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information.

State and foreign laws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other healthcare providers;

state laws that require the reporting of marketing expenditures or drug pricing, including information pertaining to and justifying price increases;

state and local laws that require the registration of pharmaceutical sales

representatives;

state and local laws that require the registration of pharmaceutical sales representatives;

and state laws that prohibit various marketing-related activities, such as the provision of certain kinds of gifts or meals;

state laws that require the posting of information relating to clinical trials and their outcomes.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations.

Legislative Reform

We operate in a

highly regulated industry, and new laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, related to healthcare availability, the method of delivery and payment for healthcare products and

services could negatively affect our business, financial condition and prospects.

There is significant interest in promoting healthcare reforms, and it is likely that federal and state legislatures within the United States and the governments of

other countries will continue to consider changes to existing healthcare legislation.

For example, the United States and state governments continue

to propose and pass legislation designed to reduce the cost of healthcare.

We operate in a highly regulated industry, and new laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, related to healthcare availability, the method of delivery and payment for healthcare products and services could negatively affect our business, financial condition and prospects.

There is significant interest in promoting healthcare reforms, and it is likely that federal and state legislatures within the United States and the governments of other countries will continue to consider changes to existing healthcare legislation.

For example, the United States and state governments continue to propose and pass legislation designed to reduce the cost of healthcare.

In 2010, the U.S.

Congress enacted the Affordable Care Act, which included changes to the coverage and reimbursement of drug products under government healthcare programs

Congress enacted the Affordable Care Act, which included changes to the coverage and reimbursement of drug products under government healthcare programs such as:

increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program;

established a branded prescription drug fee that pharmaceutical manufacturers of certain branded prescription drugs must

pay to the federal government;

expanded the list of covered entities eligible to participate in the 340B drug pricing program by adding new entities to

established a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers

outpatient drugs to be covered under Medicare Part D;

extended manufacturers Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in

Medicaid managed care organizations;

expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to

additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers Medicaid rebate liability;

created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for

certain drugs and biologics, including our product candidates, that are inhaled, infused, instilled, implanted or injected;

established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative

clinical effectiveness research, along with funding for such research;

established a Center for Medicare and Medicaid Innovation at the CMS to test innovative payment and service delivery models

to lower Medicare and Medicaid spending, potentially including prescription drug spending;

established a branded prescription drug fee that pharmaceutical manufacturers of certain branded prescription drugs must pay to the federal government;

expanded the list of covered entities eligible to participate in the 340B drug pricing program by adding new entities to the program;

extended manufacturers’

Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’

Medicaid rebate liability;

created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including our product candidates, that are inhaled, infused, instilled, implanted or injected;

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

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

created a licensure framework for follow-on biologic products.

There have been executive, judicial and congressional challenges to certain aspects of the Affordable Care Act.

For example, in

2017, the U.S.

Congress enacted legislation informally titled the Tax Cuts and Jobs Act (the Tax Act), which eliminated the tax-based shared responsibility payment imposed by the Affordable Care Act on certain

individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the individual mandate. On December 14, 2018, the U.S.

District Court for the Northern District of Texas held that

the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed by the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well.

On December 18, 2019, the

Court of Appeals for the Fifth Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act

are invalid as well.

Supreme Court is currently reviewing the case, although it is unknown when a decision will be made.

Further, although the U.S.

Supreme Court has not yet ruled on the constitutionality of the Affordable Care Act, on

January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver

programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.

It is unclear how the Supreme Court ruling, other such litigation,

and the healthcare reform measures of the Biden administration will impact the Affordable Care Act.

It is difficult to predict the future legislative landscape in healthcare and the effect on our business, results of operations, financial condition

and prospects.

In addition, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to

reduce healthcare costs.

For example, in 2017, the U.S.

Congress enacted legislation informally titled the Tax Cuts and Jobs Act (the Tax Act), which eliminated the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.”

On June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Thus, the Affordable Care Act will remain in effect in its current form.

Prior to the U.S.

Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.

It is possible that the Patient Protection and Affordable Care Act (“PPACA”) will be subject to judicial or Congressional challenges in the future.

It is unclear how any such challenges, and the healthcare reform measures of the Biden administration will impact the Affordable Care Act.

It is difficult to predict the future legislative landscape in healthcare and the effect on our business, results of operations, financial condition and prospects.

In addition, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs.

In 2011, the U.S.

Congress enacted the Budget Control Act, which included provisions intended to reduce the federal deficit.

The Budget Control Act resulted in the imposition of 2% reductions in Medicare payments to

providers beginning in 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021, absent additional

Congressional action.

The Budget Control Act resulted in the imposition of 2% reductions in Medicare payments to providers beginning in 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2031, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, absent additional Congressional action.

Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

In addition, in 2012, the U.S.

Congress enacted the American Taxpayer Relief Act, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer

treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

If government spending is further reduced, anticipated budgetary shortfalls may also impact the

ability of relevant agencies, such as the FDA, to continue to function at current levels, which may impact the ability of relevant agencies to timely review and approve research and development, manufacturing and marketing activities, which may

delay our ability to develop, market and sell any product candidates we may develop.

Moreover, any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, or any

significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues.

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

resulted in several congressional

inquiries and proposed legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and

reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and

policy initiatives.

For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that seek to implement several of the administrations

As a result, the FDA released a final rule on September 24, 2020, effective November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, HHS

finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by

Congress enacted the American Taxpayer Relief Act, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Moreover, any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues.

Furthermore, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several congressional inquiries and proposed legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

As a result, the FDA released a final rule and guidance in September 2020 providing pathways for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been

delayed pending review by the Biden administration until March 22, 2021.

On November 20, 2020, CMS issued an interim final rule implementing the Trump administrations Most Favored Nation executive order, which would tie Medicare Part

B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the U.S.

District Court in Northern California issued a nationwide

preliminary injunction against implementation of the interim final rule.

It is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives.

Individual states in the United States have also become

increasingly active in passing legislation and 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.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to

determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

On November 20, 2020, CMS issued an interim final rule implementing the Trump administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 27, 2021, CMS issued a final rule that rescinded the Most Favored Nation interim final rule.

In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,”

with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

No legislation or administrative actions have been finalized to implement these principles.

Congress is also considering additional health reform measures.

Individual states in the United States have also become increasingly active in passing legislation and 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.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

We expect that additional state and federal healthcare reform measures will be adopted in the future.

possible that additional governmental action will be taken in response to the COVID-19 pandemic.

Environmental, Health

and Safety Laws and Regulations

We and our third-party contractors are subject to numerous environmental, health and safety laws and

regulations, including those governing laboratory procedures and the use, generation, manufacture, distribution, storage, handling, treatment, remediation and disposal of hazardous materials and wastes.

Hazardous chemicals, including flammable and

biological materials, are involved in certain aspects of our business, and we cannot eliminate the risk of injury or contamination from the use, generation, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials

In particular, our product candidates use PBDs, which are highly potent cytotoxins that require special handling by our and our contractors staff.

In the event of contamination or injury, or failure to comply with environmental,

health and safety laws and regulations, we could be held liable for any resulting damages, fines and penalties associated with such liability could exceed our assets and resources.

Environmental, health and safety laws and regulations are becoming

increasingly more stringent.

It is also possible that additional governmental action will be taken in response to the COVID-19 pandemic.

Environmental, Health and Safety Laws and Regulations

We and our third-party contractors are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the use, generation, manufacture, distribution, storage, handling, treatment, remediation and disposal of hazardous materials and wastes.

Hazardous chemicals, including flammable and biological materials, are involved in certain aspects of our business, and we cannot eliminate the risk of injury or contamination from the use, generation, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials and wastes.

In the event of contamination or injury, or failure to comply with environmental, health and safety laws and regulations, we could be held liable for any resulting damages, fines and penalties associated with such liability could exceed our assets and resources.

Environmental, health and safety laws and regulations are becoming increasingly more stringent.

We may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.

Pharmaceutical Coverage, Pricing and Reimbursement

availability and extent of coverage and adequate reimbursement by governmental and private third-party payors are essential for most patients to be able to afford expensive medical

In both domestic and foreign markets, sales of our product candidates will depend substantially on the extent to which the costs of our product candidates will be covered by

third-party payors, such as government health programs, commercial insurance, and managed healthcare organizations.

The availability and extent of coverage and adequate reimbursement by governmental and private third-party payors are essential for most patients to be able to afford expensive medical treatments.

In both domestic and foreign markets, sales of our product candidates will depend substantially on the extent to which the costs of our product candidates will be covered by third-party payors, such as government health programs, commercial insurance, and managed healthcare organizations.

These third-party payors decide which products will be covered and establish reimbursement levels for those products.

Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payors determination that use of

a product is:

Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is:

a covered benefit under its health plan;

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neither experimental nor investigational.

Obtaining coverage approval and reimbursement for a product from a government or other third-party payor is a time-consuming and costly process that

could require us to provide supporting scientific, clinical and cost- effectiveness data for the use of our products to the payor.

We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement at a

satisfactory level.

If coverage and adequate reimbursement of our future products, if any, are unavailable or limited in scope or amount, such as may result where alternative or generic treatments are available, we may be unable to achieve or

sustain profitability.

Obtaining coverage approval and reimbursement for a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost- effectiveness data for the use of our products to the payor.

We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement at a satisfactory level.

Adverse coverage and reimbursement limitations may hinder our ability to recoup our investment in our product candidates, even if such product candidates obtain regulatory approval.

For products administered under the

supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such products.

Additionally, separate reimbursement for the product itself or the treatment or

procedure in which the product is used may not be available, which may impact physician utilization.

There is significant uncertainty related to

the insurance coverage and reimbursement of newly approved products.

For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such products.

Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products.

There is no uniform policy for coverage and reimbursement in the United States and, as a result, coverage and reimbursement can differ significantly from payor to payor.

United States, private payors often, but not always, follow Medicare coverage and reimbursement policies with respect to newly approved products.

It is difficult to predict what third- party payors will decide with respect to coverage and

reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products.

Further, one payors determination to provide coverage and adequate reimbursement for a product

does not assure that other payors will also provide coverage and adequate reimbursement for that product.

We may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product

In the United States, private payors often, but not always, follow Medicare coverage and reimbursement policies with respect to newly approved products.

It is difficult to predict what third- party payors will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products.

Further, one payor’s determination to provide coverage and adequate reimbursement for a product does not assure that other payors will also provide coverage and adequate reimbursement for that product.

We may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates.

There can be no assurance that our product candidates will be considered medically necessary or cost-effective.

In addition to third-party payors, professional organizations and patient advocacy groups such as the National Comprehensive

Cancer Network and the American Society of Clinical Oncology can influence decisions about reimbursement for new medicines by determining standards for care.

Therefore, it is possible that any of our product candidates, even if approved, may not be

covered by third-party payors or the reimbursement limit may be so restrictive that we cannot commercialize the product candidates profitably.

addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.

Similar challenges to obtaining coverage and reimbursement,

applicable to pharmaceutical or

biological products, will apply to companion diagnostics.

Additionally, if any companion diagnostic provider is unable to obtain reimbursement or is inadequately reimbursed, that may limit the

availability of such companion diagnostic, which would negatively impact prescriptions for our product candidates, if approved.

Reimbursement

agencies in Europe may be more restrictive than payors in the United States.

For example, a number of cancer products have been approved for reimbursement in the United States but not in certain European countries.

In Europe, pricing and

reimbursement schemes vary widely from country to country.

In addition to third-party payors, professional organizations and patient advocacy groups can influence decisions about reimbursement for new medicines by determining standards for care.

Therefore, it is possible that any of our product candidates, even if approved, may not be covered by third-party payors or the reimbursement limit may be so restrictive that we cannot commercialize the product candidates profitably.

In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.

Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will apply to companion diagnostics.

Additionally, if any companion diagnostic provider is unable to obtain reimbursement or is inadequately reimbursed, that may limit the availability of such companion diagnostic, which would negatively impact prescriptions for our product candidates, if approved.

Reimbursement agencies in Europe may be more restrictive than payors in the United States.

In Europe, pricing and reimbursement schemes vary widely from country to country.

For example, some countries provide that products may be marketed only after an agreement on reimbursement price has been reached.

Such pricing negotiations with governmental authorities can

take considerable time after receipt of marketing approval for a product.

Such pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product.

Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.

countries require the completion of additional health technology assessments that compare the cost-effectiveness of a particular product candidate to currently available therapies.

Within the European Union legislation relating to and regulation of

the reimbursement of medicinal products, and to control the prices of such products, is a matter for individual member states.

European Union member states may approve a specific price for a product, may adopt a system of direct or indirect controls

on the profitability of the company placing the product on the market or monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.

Reference pricing used by various European Union member states and parallel

distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.

Furthermore, many countries in the European Union have increased the amount of discounts required on

pharmaceutical products, and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union.

The downward pressure on

healthcare costs in general, and prescription products in particular, has become increasingly intense.

Other countries require the completion of additional health technology assessments that compare the cost-effectiveness of a particular product candidate to currently available therapies.

Within the European Union legislation relating to and regulation of the reimbursement of medicinal products, and to control the prices of such products, is a matter for individual member states.

European Union member states may approve a specific price for a product, may adopt a system of direct or indirect controls on the profitability of the company placing the product on the market or monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.

Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.

Furthermore, many countries in the European Union have increased the amount of discounts required on pharmaceutical products, and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union.

The downward pressure on healthcare costs in general, and prescription products in particular, has become increasingly intense.

As a result, there are increasingly higher barriers to entry for new products.

There can be no assurance that any country that has reimbursement

limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.

Accordingly, the reimbursement for any products in Europe may be reduced compared with the

United States and may be insufficient to generate commercially reasonable revenues and profits.

Furthermore, the containment of healthcare costs

has become a priority of foreign and domestic governments as well as private third-party payors.

There can be no assurance that any country that has reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.

Accordingly, the reimbursement for any products in Europe may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Furthermore, the containment of healthcare costs has become a priority of foreign and domestic governments as well as private third-party payors.

The prices of drugs have been a focus in this effort.

Governments and private third-party payors have attempted to control costs by limiting coverage

and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.

We also expect to experience pricing pressures due to the trend towards managed healthcare, the increasing

influence of health maintenance organizations and additional legislative changes.

These and other cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower-than-anticipated product

Governments and private third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably.

We also expect to experience pricing pressures due to the trend towards managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.

These and other cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower-than-anticipated product revenues.

In addition, the publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries.

If pricing is set at unsatisfactory

levels or if coverage and adequate reimbursement of our products is unavailable or limited in scope or amount, our revenues and the potential profitability of our product candidates in those countries would be negatively affected.

If pricing is set at unsatisfactory levels or if coverage and adequate reimbursement of our products is unavailable or limited in scope or amount, our revenues and the potential profitability of our product candidates in those countries would be negatively affected.

Corporate Information

We were incorporated under the laws

of the State of Delaware on January 4, 2016.

We were incorporated under the laws of the State of Delaware on January 4, 2016.

Our principal executive offices are located at 500 Fairview Ave N, Suite 600, Seattle, Washington 98109, and our telephone number is (206) 456-2900.

corporate website address is www.silverbacktx.com.

Our corporate website address is www.silverbacktx.com.

Information contained on, or accessible through, our website shall not be deemed incorporated into and is not a part of this Annual Report on Form 10-K.

have included our website in this Annual Report on Form 10-K solely as an inactive textual reference.

Silverback Therapeutics, Silverback, the Silverback logo, ImmunoTAC, and other trademarks, trade names or service

marks of Silverback Therapeutics, Inc.

Our periodic and current reports are available on our website, free of charge, as soon as reasonably practicable after filing.

We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference.

“Silverback Therapeutics,”

“Silverback,”

the Silverback logo, “ImmunoTAC,”

“Seeking Victory for Patients,”

and other trademarks, trade names or service marks of Silverback Therapeutics, Inc.

appearing in this Annual Report on Form 10-K are the property of Silverback Therapeutics, Inc.

All other trademarks, trade names and service marks appearing in this

Annual Report on Form 10-K are the property of their respective owners.

All other trademarks, trade names and service marks appearing in this Annual Report on Form 10-K are the property of their respective owners.

Employees and Human Capital Resources

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Of these employees, 31 held Ph.D., Pharm.D.

degrees, and 43 were engaged in

research, development and technical operations.

As of such date, we had 51 employees based at our headquarters in Seattle, Washington.

degrees, and 65 were engaged in research, development and technical operations.

As of such date, we had 77 employees based at our headquarters and satellite office in Seattle, Washington.

On March 28, 2022, our board of directors approved a corporate restructuring plan pursuant to which, among other things, our workforce will be reduced by 27%, with substantially all of the reduction in personnel expected to be completed by July 15, 2022.

For further information, see Part II, Item 9B, “Other Information”

in this Annual Report.

Our employees are not represented by labor unions or covered by collective bargaining agreements.

We consider our

relationship with our employees to be good.

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 cash-based performance bonus awards.

We consider our relationship with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing , and integrating our existing and additional employees.

We believe that we have been successful in attracting and retaining talented personnel to support our expanding business, though competition for personnel in our industry is intense.

We monitor recruiting efforts using a variety of metrics, including cycle times, cost per hire, information on the retention of business-critical hires (such as medical directors and executives), and the percentage of budgeted openings filled on time and on budget.

We also track voluntary and involuntary turnover rates for business-critical talent, time in role, and job level.

We offer competitive pay and benefits designed to attract and retain exceptional talent and drive company performance.

In setting appropriate compensation levels, we look at the average base pay rate for each position based on market data.

We also offer an annual cash incentive program and long-term equity incentive plans designed to assist in attracting, retaining, and motivating employees and promoting the creation of long-term value for stockholders.

Our standard employee benefits include paid and unpaid leaves, medical, dental and vision insurance coverage, a 401(k) plan, short- and long-term disability, life insurance, flexible spending accounts, and an employee stock purchase plan.

We also offer a variety of voluntary benefits that allow employees to select options that meet their needs, including a long-term care plan, telehealth, an employee assistance program, and wellness programs.

We benchmark our benefits program against others in our industry on an annual basis.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business